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Comprehension and risk elicitation in the field: Evidence from rural Senegal

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  • Charness, Gary
  • Viceisza, Angelino

Abstract

In the past decade, it has become increasingly common to use simple laboratory games and decision tasks as a device for measuring both the preferences and understanding of rural populations in the developing world. This is vitally important for policy implementation in a variety of areas. In this paper, we report the results observed using three distinct risk elicitation mechanisms, using samples drawn from the rural population in Senegal, West Africa. Whatever the intellectual merits of a particular elicitation strategy, there is little value in performing such tests if the respondents do not understand the questions involved. We test the understanding of and the level of meaningful responses to the typical Holt-Laury task, to a simple binary mechanism pioneered by Gneezy and Potters in 1997 and adapted by Charness and Gneezy in 2010, and to a nonincentivized willingness-to-risk scale à la Dohmen et al. We find a disturbingly low level of understanding with the Holt-Laury task and an unlikely-to-be-accurate pattern with the willingness-to-risk question. On the other hand, the simple binary mechanism produces results that closely match the patterns found in previous work, although the levels of risk-taking are lower than in previous studies. Our study is a cautionary note against utilizing either sophisticated risk-elicitation mechanisms at the possible cost of seriously diminished levels of comprehension or nonincentivized questions in the rural developing world.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1135.

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Date of creation: 2011
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Handle: RePEc:fpr:ifprid:1135

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Keywords: comprehension; risk elicitation; laboratory experiments in the field; rural;

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Citations

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Cited by:
  1. Li Hao & Daniel Houser & Lei Mao & Marie Claire Villeval, 2014. "A Field Study of Chinese Migrant Workers' Attitudes Toward Risks, Strategic Uncertainty, and Competitiveness," Working Papers 1047, George Mason University, Interdisciplinary Center for Economic Science.
  2. Ihli, Hanna Julia & Musshoff, Oliver, 2013. "Understanding the Investment Behavior of Ugandan Smallholder Farmers: An Experimental Analysis," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150331, Agricultural and Applied Economics Association.
  3. Filippin, Antonio & Crosetto, Paolo, 2014. "A Reconsideration of Gender Differences in Risk Attitudes," IZA Discussion Papers 8184, Institute for the Study of Labor (IZA).
  4. Ward, Patrick S. & Singh, Vartika, 2013. "Risk and Ambiguity Preferences and the Adoption of New Agricultural Technologies: Evidence from Field Experiments in Rural India," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150794, Agricultural and Applied Economics Association.
  5. Paolo Crosetto & Antonio Filippin, 2013. "The “bomb” risk elicitation task," Journal of Risk and Uncertainty, Springer, vol. 47(1), pages 31-65, August.
  6. Vieider, Ferdinand M. & Lefebvre, Mathieu & Bouchouicha, Ranoua & Chmura, Thorsten & Hakimov, Rustamdjan & Krawczyk, Michal & Martinsson, Peter, 2013. "Common components of risk and uncertainty attitudes across contexts and domains: Evidence from 30 countries," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-402, Social Science Research Center Berlin (WZB).
  7. Ihli, Hanna Julia & Musshoff, Oliver, 2013. "Investment Behavior of Ugandan Smallholder Farmers: An Experimental Analysis," Discussion Papers 154775, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
  8. Sule Alan & Nazli Baydar & Teodora Boneva & Thomas Crossley & Seda Ertac, 2013. "Parental socialisation effort and the intergenerational transmission of risk preferences," IFS Working Papers W13/12, Institute for Fiscal Studies.
  9. Ihli, Hanna Julia & Chiputwa, Brian & Musshoff, Oliver, 2013. "Do Changing Probabilities or Payoffs in Lottery-Choice Experiments Matter? Evidence from Rural Uganda," Discussion Papers 158146, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
  10. Charness, Gary & Gneezy, Uri & Imas, Alex, 2013. "Experimental methods: Eliciting risk preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 43-51.
  11. Paolo Crosetto & Antonio Filippin, 2013. "A Theoretical and Experimental Appraisal of Five Risk Elicitation Methods," Jena Economic Research Papers 2013-009, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  12. Norbert Hirschauer & Oliver Musshoff & Syster C. Maart-Noelck & Sven Gruener, 2014. "Eliciting risk attitudes -- how to avoid mean and variance bias in Holt-and-Laury lotteries," Applied Economics Letters, Taylor & Francis Journals, vol. 21(1), pages 35-38, January.
  13. Helena Szrek & Li-Wei Chao & Shandir Ramlagan & Karl Peltzer, 2012. "Predicting (un)healthy behavior: A comparison of risk-taking propensity measures," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 7(6), pages 716-727, November.
  14. Ward, Patrick S. & Singh, Vartika, 2014. "Risk and ambiguity preferences and the adoption of new agricultural technologies: Evidence from field experiments in rural India:," IFPRI discussion papers 1324, International Food Policy Research Institute (IFPRI).

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