Hawthorne Effect

Definition of 'Hawthorne Effect'


The inclination of people who are the subjects of an experimental study to change or improve the behavior being evaluated only because it is being studied, and not because of changes in the experiment parameters or stimulus. The Hawthorne Effect refers to the fact that people will modify their behavior simply because they are being observed. The effect gets its name from one of the most famous industrial history experiments that took place at Western Electric’s factory in the Hawthorne suburb of Chicago in the late 1920s and early 1930s. However, subsequent analysis on the effect by University of Chicago economists in 2009 revealed that the original results were likely overstated.

Investopedia explains 'Hawthorne Effect'




The Hawthorne experiments were originally designed by the National Research Council to study the effect of shop-floor lighting on worker productivity at a telephone parts factory in Hawthorne. However, the researchers were perplexed to find that productivity improved not just when the lighting was improved, but also when the lighting was diminished. Productivity improved whenever changes were made in other variables such as working hours and rest breaks. The researchers concluded that the workers’ productivity was not being affected by the changes in working conditions, but rather by the fact that someone was concerned enough about their working conditions to conduct an experiment on it.
 


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  2. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  3. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  4. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  5. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  6. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
Trading Center