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.

BREAKING DOWN '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.
 

RELATED TERMS
  1. Organizational Behavior - OB

    Organizational Behavior (OB) is the study of the way people interact ...
  2. Experimental Economics

    A branch of economics that focuses on individual behavior in ...
  3. Michigan Leadership Studies

    A well-known series of leadership studies that commenced at the ...
  4. Behavioral Economics

    The study of psychology as it relates to the economic decision ...
  5. Survival Analysis

    A branch of statistics which studies the amount of time that ...
  6. Policy Year Experience

    The premiums and losses associated with insurance policies that ...
Related Articles
  1. Investing Basics

    A Quick Guide On Behavioral Funds

    Investopedia explores the working of behavioral funds, their benefits and risks, and an analysis of their past returns.
  2. Professionals

    The Key To CFP Exam Success

    Up to 60 of the questions on this test are case studies. Are you up for the challenge?
  3. Personal Finance

    Does a Shorter Work Week Lead to Greater Productivity?

    While technology has significantly increased labor productivity, institutional changes, such as a shorter work week, could also be very productive.
  4. Professionals

    Sampling Considerations

    CFA Level 1 - Sampling Considerations
  5. Active Trading Fundamentals

    Understanding Investor Behavior

    Discover how some strange human tendencies can play out in the market, posing the question: are we really rational?
  6. Investing

    What's Behind the Decline in Productivity Numbers? 

    There are several theories and hypotheses about low productivity numbers in the American economy. This article examines some of them.
  7. Personal Finance

    How to Manage Corporate Change in the Modern Economy

    Change can make employees uncomfortable, but these keys can help ease the transition and increase morale.
  8. Fundamental Analysis

    Psychopaths In The Trading Room

    Learn about a study that compares the behaviors of some stockbrokers to that of certifiable psychopaths.
  9. Personal Finance

    How Much Will It Cost To Study Abroad In The U.K.?

    The most popular destination for U.S. students studying abroad has a lot to offer – and ways to make it affordable.
  10. Trading Systems & Software

    Guide to TD Ameritrade's Thinkorswim - Chart Analysis Tools

    Chart analysis tools include indicators, drawing tools and chart pattern recognition. There are countless ways to analyze charts and thinkorswim provides loads of tools for doing so. Charts ...
RELATED FAQS
  1. Should a small business test the substitution effect on its products before launch?

    Explore the substitution effect and find out how small businesses may evaluate how this principle impacts their own products. ... Read Answer >>
  2. Does the law of diminishing marginal returns only apply to labor?

    Learn more about how the law of diminishing returns is used by economists and businesses. Find out more about the laws of ... Read Answer >>
  3. What's the difference between the income effect and the price effect?

    Learn what the price effect is and how it is related to consumer spending. Learn what two components make up the price effect ... Read Answer >>
  4. Is there any way to reverse the law of diminishing marginal returns?

    Learn more about how consumer spending, supply and demand impact production decisions. Find out more about the law of diminishing ... Read Answer >>
  5. What are some examples of ways that sensitivity analysis can be used?

    Understand the concept of sensitivity analysis and learn about the wide variety of disciplines to which it can be applied. Read Answer >>
  6. What effect do stock buybacks have on the economy?

    Learn about the effect of stock buybacks on the economy. Stock buybacks lead to rising stock prices as the supply of stock ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center