The carrot or the chase? Distinguishing earned and anticipated discounts in public transportation

We study a loyalty program in public transportation to disentangle the causal effects of two key behavioral drivers of customer expenditure: the “anticipation effect” (the prospect of earning a future reward) and the “consumption effect” (the impact of using an earned reward). To do so, we analyze “ZVV Bonus”, a program by Switzerland’s largest regional tariff association, using panel data from approximately 485,000 individuals. The program’s design, which awarded credits for single-ticket purchases for use in the following month, allows for its interpretation as a natural experiment, which we evaluate using a within-subject difference-in-differences (DiD) approach. Finding that the baseline DiD estimates are likely biased due to violations of the parallel-trends assumption, we propose and apply a novel offline-benchmarked trend-correction method, which leverages aggregated offline sales trends to construct a counterfactual that is robust to common time-varying demand shocks. Our corrected estimates show that while the anticipation effect significantly increased gross expenditure, the consumption effect was negligible and associated with a near one-to-one cannibalization of sales. Consequently, the program resulted in a net revenue loss for the tariff association. Our findings suggest that for high-frequency services, such as public transportation, the anticipation of a reward is a more powerful motivator than the reward itself.