Measuring Subjective Expectations in Developing Countries: A Critical Review and New Evidence
AbstractThe majority of economic decisions taken by individuals are forward looking and thus involve their expectations of future outcomes. Understanding the expectations that individuals have is thus of crucial importance to designing and evaluating policies in health, education, finance, migration, social protection, and many other areas. However, the majority of developing country surveys are static in nature and do not contain information on the subjective expectations of individuals. Possible reasons given for not collecting this information include fears that poor, illiterate individuals do not understand probability concepts, that it takes far too much time to ask such questions, or that the answers add little value. This paper provides a critical review and new analysis of subjective expectations data from developing countries and refutes each of these concerns. The authors find that people in developing countries can generally understand and answer probabilistic questions, such questions are not prohibitive in time to ask, and the expectations are useful predictors of future behavior and economic decisions. The paper discusses the different methods being tried for eliciting such information, the key methodological issues involved, and the open research questions. The available evidence suggests that collecting expectations data is both feasible and valuable, suggesting that it should be incorporated into more developing country surveys.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4824.
Length: 35 pages
Date of creation: 01 Jan 2009
Date of revision:
Subjective Expectations; Survey Methodology; Development.;
Other versions of this item:
- Delavande, Adeline & Giné, Xavier & McKenzie, David, 2011. "Measuring subjective expectations in developing countries: A critical review and new evidence," Journal of Development Economics, Elsevier, vol. 94(2), pages 151-163, March.
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-14 (All new papers)
- NEP-DEV-2009-02-14 (Development)
- NEP-HAP-2009-02-14 (Economics of Happiness)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- World Bank Working Paper on Measuring Expectations
by Liam Delaney in Geary Behaviour Centre on 2009-08-19 19:49:00
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