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Probabilistic Expectations in Developing Countries

Author

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  • Adeline Delavande

    () (Institute for Social and Economic Research, University of Essex, CO4 3SQ Colchester, United Kingdom)

Abstract

Many decisions are made under uncertainty, and individuals are likely to form subjective expectations about the probabilities of events that are relevant to their decisions. I review here a recent and growing literature that uses probabilistic expectations elicited from survey respondents in developing countries. I first present an illustrative model of one particular decision under uncertainty—the choice of a college—to exemplify the importance of subjective expectations data for identification purposes. I then review existing evidence emphasizing that it is feasible to elicit probabilities from survey respondents in low-literacy settings and describe common patterns of answers. Finally, I describe existing applications, many of which seek to assess how expectations influence behavior, in various domains, including health, education, agricultural production, and migration.

Suggested Citation

  • Adeline Delavande, 2014. "Probabilistic Expectations in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 1-20, August.
    • Handle: RePEc:anr:reveco:v:6:y:2014:p:1-20
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-072413-105148
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    Citations

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    Cited by:

    1. Chattopadhyay, Mriduchhanda & Arimura, Toshi H. & Katayama, Hajime & Sakudo, Mari & Yokoo, Hide-Fumi, 2020. "Subjective Probabilistic Expectations, Household Air Pollution, and Health: Evidence from cooking fuel use patterns in India," Discussion Papers 2020-05, Graduate School of Economics, Hitotsubashi University.
    2. Victoria Baranov & Hans-Peter Kohler, 2018. "The Impact of AIDS Treatment on Savings and Human Capital Investment in Malawi," American Economic Journal: Applied Economics, American Economic Association, vol. 10(1), pages 266-306, January.
    3. Alok Kumar, 2019. "Subjective Income Expectations and Risks in Rural India," Journal of Developing Areas, Tennessee State University, College of Business, vol. 53(3), pages 11-25, Summer.
    4. Rajesh Ramachandran & Christopher Rauh & Anh Mai Le, 2016. "Discriminatory attitudes and indigenous language promotion: Challenges and solutions," WIDER Working Paper Series 078, World Institute for Development Economic Research (UNU-WIDER).
    5. Pamela Giustinelli & Charles F. Manski, 2018. "Survey Measures Of Family Decision Processes For Econometric Analysis Of Schooling Decisions," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 81-99, January.
    6. Charles F. Manski, 2018. "Survey Measurement of Probabilistic Macroeconomic Expectations: Progress and Promise," NBER Macroeconomics Annual, University of Chicago Press, vol. 32(1), pages 411-471.
    7. Delavande, Adeline & Zafar, Basit, 2014. "University choice: the role of expected earnings, non-pecuniary outcomes and financial constraints," ISER Working Paper Series 2014-38, Institute for Social and Economic Research.
    8. Barron, Kai, 2020. "Belief updating: does the `good-news, bad-news' asymmetry extend to purely financial domains?," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics.
    9. Agarwal, Sandip Kumar, 2017. "Subjective beliefs and decision making under uncertainty in the field," ISU General Staff Papers 201701010800006248, Iowa State University, Department of Economics.
    10. Alok Kumar, 2019. "Subjective Income Expectations and Risks in Rural India," Journal of Developing Areas, Tennessee State University, College of Business, vol. 53(3), pages 11-25, Summer.
    11. Olivier Armantier & Giorgio Topa & Wilbert Van der Klaauw & Basit Zafar, 2017. "An overview of the Survey of Consumer Expectations," Economic Policy Review, Federal Reserve Bank of New York, issue 23-2, pages 51-72.
    12. Agarwal, Sandip & Jacobs, Keri L. & Weninger, Quinn, 2016. "Elicitation of Subjective Beliefs: A Pilot study of farmers' nitrogen management decision-making in Central Iowa," ISU General Staff Papers 201601010800001005, Iowa State University, Department of Economics.
    13. Pamela Giustinelli & Matthew D. Shapiro, 2018. "SeaTE: Subjective ex ante Treatment Effect of Health on Retirement," Working Papers wp382, University of Michigan, Michigan Retirement Research Center.
    14. Rajesh Ramachandran & Christopher Rauh, 2016. "Discriminatory attitudes and indigenous language promotion: Challenges and solutions," WIDER Working Paper Series wp-2016-78, World Institute for Development Economic Research (UNU-WIDER).
    15. Zelalem Yilma & Owen O’Donnell & Anagaw Mebratie & Getnet Alemu & Arjun S. Bedi, 2015. "Subjective Expectations of Medical Expenditures and Insurance in Rural Ethiopia," Tinbergen Institute Discussion Papers 15-120/V, Tinbergen Institute.
    16. Elisabeth Grewenig & Philipp Lergetporer & Katharina Werner, 2020. "Gender Norms and Labor-Supply Expectations: Experimental Evidence from Adolescents," CESifo Working Paper Series 8611, CESifo.
    17. Aurélien Baillon & Aleli Kraft & Owen O'Donnell & Kim van Wilgenburg, 2019. "A behavioral decomposition of willingness to pay for health insurance," Tinbergen Institute Discussion Papers 19-077/I, Tinbergen Institute.
    18. Elisa M Maffioli & Manoj Mohanan, 2018. "Touching beliefs: Using touchscreen technology to elicit subjective expectations in survey research," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-15, November.
    19. Ramachandran, R. & Rauh, C., 2020. "The Imperium of the Colonial Tongue? Evidence on Language Policy Preferences in Zambia," Cambridge Working Papers in Economics 20107, Faculty of Economics, University of Cambridge.
    20. Mriduchhanda Chattopadhyay & Toshi H. Arimura & Hajime Katayama & Mari Sakudo & Hide-Fumi Yokoo, 2019. "Subjective Probabilistic Expectations, Indoor Air Pollution, and Health: Evidence from cooking fuel use patterns in India," RIEEM Discussion Paper Series 1910, Research Institute for Environmental Economics and Management, Waseda University.
    21. Pamela Giustinelli & Charles F. Manski & Francesca Molinari, 2018. "Tail and Center Rounding of Probabilistic Expectations in the Health and Retirement Study," NBER Working Papers 24559, National Bureau of Economic Research, Inc.
    22. Adeline Delavande & Jinkook Lee & Seetha Menon, 2017. "Eliciting Survival Expectations of the Elderly in Low-Income Countries: Evidence From India," Demography, Springer;Population Association of America (PAA), vol. 54(2), pages 673-699, April.
    23. Yonatan Eyal, 2020. "Self-Assessment Variables as a Source of Information in the Evaluation of Intervention Programs: A Theoretical and Methodological Framework," SAGE Open, , vol. 10(1), pages 21582440198, January.
    24. Kim, Taehoon & Kim, Jinho, 2020. "Linking adolescent future expectations to health in adulthood: Evidence and mechanisms," Social Science & Medicine, Elsevier, vol. 263(C).

    More about this item

    Keywords

    subjective expectations; beliefs; expected returns to education; expected HIV status; expected income;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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