In order to understand the extent of the information barrier to adoption of a household technology, we designed a randomized controlled trial on willingness to pay (WTP) for solar lanterns in India. We gave high quality solar lanterns to randomly selected `seed' households in a non-electri ed region of the state of Uttar Pradesh. Three friends of the seed household were randomly assigned to one of the following three groups: control, passive learning and incentivized communication. We elicit WTP from the control group when the seed receives the solar lantern.
We use a dynamic system GMM regression on ve rounds of panel data to estimate the impact of international remittances on consumption of urban Ethiopian households, who spend more than 70% of their consumption budget on food. Results suggest that international remittances play a signi cant role in augmenting household consumption. A 1% increase in remittances from abroad leads to a 0.10% increase in household consumption.
This article contributes to a growing body of empirical literature relating credit constraints and incomplete insurance to investment decisions. We use panel data from rural Ethiopia to investigate whether participation in a safety net program enhances fertilizer adoption. Using a difference-in-differences estimator and inverse propensity score weighting, we find that participation in Ethiopia's food-for-work (FFW) program increased fertilizer adoption in the short run, but not in the long run.
The Willingness to Pay for Vaccination against Tick-Borne Encephalitis and Implications for Public Health Policy: Evidence from Sweden
The increasing incidence of tick-borne encephalitis (TBE) in Sweden and several other European countries has sparked a discussion about the need for a public vaccination strategy. However, TBE vaccination coverage is incomplete and there is little knowledge about the factors influencing vaccination behavior. Based on a survey of 1,500 randomly selected respondents in Sweden, we estimate vaccination coverage in areas with different TBE risk levels and analyze the role of vaccine price and other factors influencing the demand for vaccination.
In many research projects, stakeholder interaction is ad hoc rather than strategic and systematic. This guide provides advice on good practice, strategies and tools for researchers and research groups interested in finding effective ways to involve stakeholders in their research and have an impact on society.
Many economists have long held that carbon pricing—either through a carbon tax or cap-and-trade—is the most cost-effective way to decarbonize energy systems, along with subsidies for basic research and development. Meanwhile, green innovation and industrial policies aimed at fostering low-carbon energy technologies have proliferated widely. Most of these predate direct carbon pricing.
A growing set of policies involve transfers conditioned upon socially desired actions, such as attending school or conserving forest. However, given a desire to maximize the impact of limited funds by avoiding transfers that do not change behavior, typically some potential recipients are excluded on the basis of their characteristics, their actions or at random. This paper uses a laboratory experiment to study the behavior of individuals excluded on different bases from a new incentive that encourages real monetary donations to a public environmental conservation program.
Migration as an Adaptation Strategy to Weather Variability: An Instrumental Variables Probit Analysis
There is solid scienti c evidence predicting that a large part of the developing world will su er a greater incidence of extreme weather events, which may increase the incidence of displacement migration. We draw on the new economics of migration to model migration decisions of smallholder and rain-dependent farm households in rural Ethiopia and investigate both the ex-ante and ex-post impacts of climate variables. Using detailed household survey panel data matched with rainfall data, we show that weather variability - measured by the coecient of
In search of double dividends from climate change interventions: evidence from forest conservation and household energy transitions. Stockholm: Expert Group for Aid Studies (EBA).
Climate change is the greatest challenge facing humanity, and we are only starting to address it. Climate change scenarios indicate that poor people in developing countries will be particularly negatively affected, e.g. by increased temperature reducing their harvests or flooding due to sea-level rise and extreme weather events. There are also expectations that greenhouse gas (GHG) emissions can be costefficiently reduced in developing countries through for example reduced deforestation or improved stoves.
This paper uses three rounds of a rich panel data set to investigate the determinants of household cooking fuel choice and energy transition in urban Ethiopia. It is observed that the expected energy transition did not occur following economic growth in Ethiopia during the decade 2000–2009.
Risk aversion has generally been found to decrease in income. This may lead one to expect that people in poor countries will be more risk averse than inhabitants of rich countries. Recent comparative findings with students suggest the opposite, potentially giving rise to a risk-income paradox. Findings with students, however, may result from selection effects. We test whether a paradox indeed exists by measuring the risk preferences of over 500 household heads across several regions in the highlands of Ethiopia.
This paper tests the effect of stake size on ambiguity attitudes. Compared to a baseline condition, the paper find subjects to be more ambiguity seeking for small probability gains and large-probability losses under high stakes. They are also more ambiguity averse for large-probability gains and small-probability losses. the study traces these effects back to stake effects on decisions under risk (known probabilities) and uncertainty (unknown probabilities). For risk the paper replicates previous findings.
Behavioural attitudes toward risk and time, as well as behavioural biases such as present bias, are thought to be important drivers of unhealthy lifestyle choices. This paper makes the first attempt to explore the possibility of training the mind to alter these attitudes and biases, in particular health-related behaviors, using a randomized controlled experiment. The training technique we consider is a well-known psychological technique called \mindfulness", which is believed to improve self-control and reduce stress.
Does Adoption of Multiple Climate-Smart Practices Improve Farmers’ Climate Resilience? Empirical Evidence from the Nile Basin of Ethiopia
There is a paucity of information on the conditions under which multiple climate-smart practices are adopted and on the synergies among such practices in increasing household resilience by improving agricultural income. This study analyzes how heat, rainfall, and rainfall variability affect farmers’ choices of a portfolio of potential climate-smart practices – agricultural water management, improved crop seeds and fertilizer – and the impact of these practices on farm income in the Nile Basin of Ethiopia.
Difference in Preferences or in Preference Orderings? Comparing Choices of Environmental Bureaucrats, Recreational Anglers, and the Public
Do Environmental Protection Agency (EPA) bureaucrats represent the general public or are they more in line with an interest group? We study preferences for environmental policy using a choice experiment (CE) on three populations; the general public, Swedish EPA bureaucrats, and recreational anglers. We also test for existence of multiple preference orderings, i.e., whether responses differ depending on the decision role assigned.
Individual status quo modelling for a rural water service in Rwanda: application of a choice experiment
Abstract: In Rwanda, rural water supply is not uniformly distributed. Rural areas are characterized by differences in the distance to the nearest water point and in water quality for domestic water, by watering frequency and water availability for irrigation water, and by the price for both. A household's perception of further improvements in water supply will, therefore, depend heavily on the situation it currently faces. The authors used a choice experiment to model how the individual status quo (SQ) affects preferences.
Abstract: This paper demonstrates that unintended effects of climate policies (Green Paradox effects) also arise in general equilibrium when countries compete for mobile factors of production (capital and resources/energy). Second, it shows that countries have a rationale to use strictly positive source-based capital taxes to slow down resource extraction. Notably, this result comes about in the absence of any revenue requirements by the government, and independently of the elasticity of substitution between capital and resources in production.
Abstract: In this paper, we acknowledge that the mitigation of and adaptation to climate change have differential fiscal impacts. Whereas mitigation typically raises fiscal revenues, adaptation is costly to the taxpayer and to a greater extent the more distortionary the tax system is. In an OLG model with majority voting, we analyze how the choices of mitigation and adaptation are distorted under a lump-sum and a distortionary income tax regime.
Forthcoming in Journal of Economic Geography.
Abstract: In this paper, we examine the relative influence of individual decisions on joint household decisions, and whether and to what extent joint choices are more or less patient than individual choices in households. We find that both spouses have a significant influence on joint decisions, whereas husbands on average have a stronger influence than wives. Moreover, we find a substantial share of choice shifts from individual to joint household decisions, i.e. joint decisions are either more patient or more impatient than both individual choices.
Read about EfD research applied around the developing world during 2017. Take a look at each EfD Center's Stories!
We investigate the effect of remittances from migrated family members on informal inter-household transfers, an issue that has received limited attention in the literature. Using rich panel data from urban Ethiopia, we show that receiving international remittances increases the value of private domestic inter-household transfers, whereas receiving domestic remittances does not have any e ect.
Understanding unethical behavior is essential to many phenomena in the real world. The vast majority of existing studies have relied on stated behavior in surveys and some on incentivized experiments in the laboratory. In this paper, we carry out a field experiment in a unique setting. A survey more than one year before the field experiment allows us to compare stated unethical behavior with revealed behavior in the same situation. Our results indicate a strong discrepancy between stated and revealed behavior.
This paper contributes to a growing body of empirical literature relating credit constraints and incomplete insurance to investment decisions. We use panel data from rural Ethiopia to investigate whether participation in a safety net program enhances fertilizer adoption. Using a difference-in-difference estimator and inverse propensity score weighting, we found that participation in Ethiopia's food-for-work (FFW) program increased fertilizer adoption. Results also
Abstract: We analyze a typical principal-agent relationship in the context of international climate policy, in which the principals of two countries first decide whether to merge their domestic emission permit markets to form an international market. In the second stage, they delegate the decision on domestic permit supply to an agent. We find that principals have an incentive to select agents who care less for environmental damages than they do themselves.
We investigate whether a social information campaign aimed at reducing water use causes a spillover effect on the use of electricity. On average, water use decreased by 6 percent for a treatment group for whom we conducted a social information campaign on their use of water, compared with that of a control group. We identify a spillover effect on electricity use among households that had efficient use of water before the campaign. The effect is sizeable; this group has almost 9 percent lower use of electricity after the campaign compared with the control group.
Social Norms and Information Diffusion in Water-Saving Programs Evidence from a Randomized Field Experiment in Colombia
This paper investigates direct and spillover effects of a social information campaign aimed at encouraging residential water savings in Colombia. The campaign was organized as a randomized field experiment, consisting of monthly delivery of consumption reports, including normative messages, for one year. Results indicate that social information and appeals to norm-based behavior reduce water use by up to 6.8 percent in households directly targeted by the campaign.
Abstract: In this paper, we analyze water demand by urban households in Rwanda who currently lack a piped connection into their home. The analysis uses data from a cross-sectional survey. The results show that public taps are the most widely used water source and that the demand for water from this source is more inelastic than that for water from other water sources. Although some households combine different sources of water, the majority in the sample uses only one source.
Abstract: Gendered food security gaps between female- and male-headed households (FHHs and MHHs) can be decomposed into two sets of components: those explained by observable differences in levels of resource use, and those due to unobserved differences affecting the returns to the resources used. Employing exogenous switching ordered probit and binary probit regression models, this paper examines the gendered food security gap and its causes in rural Malawi.
Abstract: We compare of the performance of emission taxes between Colombia and Sweden in an experimental setting where subjects are regulated through environmental taxes and had to decide on emission levels, compliance behavior, and adoption of an environmentally friendly technology. Our design allows us to analyze the role of variations in the stringency of the policy enforcement
Abstract: In this paper, we conduct a high stake experiment in rural China to investigate the determinants of individual and joint decisions regarding intertemporal choices, and estimate the relative influence of spouses on the joint decisions. We use the Convex Time Budget experimental method to elicit individual and joint decisions on how much money to allocate to an early and a later date. We find that the rates of return have significant effects on the decisions, yet both individual and joint decisions exhibit present-biased time preferences.
Abstract: We examine whether and to what extent joint choices are more or less patient and time - consistent than individual choices in households. We use data from an artefactual field experiment where both individual and joint time preferences were elicited. We find a substantial shift from individual to joint household decisions. Interestingly, joint decisions do not only generate beneficial shifts, i.e., patient and time - consistent shifts. On the contrary, a majority of the observed shifts are impatient and time - inconsistent shifts.
Doing good with other people’s money: A charitable giving experiment with students in environmental sciences and economics
Abstract: We augment a standard dictator game to investigate how preferences for an environmental project relate to willingness to limit others’ choices. We explore this issue by distinguishing three student groups: economists, environmental economists, and environmental social scientists. We find that people are generally disposed to grant freedom of choice, but only within certain limits. In addition, our results are in line with the widely held belief that economists are more selfish than other people.
Common components of risk and uncertainty attitudes across contexts and domains: evidence from 30 countries
Abstract: Attitudes towards risk and uncertainty have been indicated to be highly context-dependent, and to be sensitive to the measurement technique employed. We present data collected in controlled experiments with 2,939 subjects in 30 countries measuring risk and uncertainty attitudes through incentivized measures as well as survey questions. Our data show clearly that measures correlate not only within decision contexts or measurement methods, but also across contexts and methods.
Abstract: We investigate the relationship between social class belonging and contributions to local public goods. By utilizing the social class classifications in Colombia and an experimental design based on the strategy method, we can both study contributions to public goods and classify subjects into contribution types. We find similar contribution levels between high and medium-low social classes and also similar distributions of contributor types. However, low social class members conditionally contribute a significantly higher level than high social class members.
Abstract: This paper experimentally investigates if and how beliefs, trust, and risk attitudes are associated with cooperative behavior. By applying incentivized elicitation methods to measure these concepts, we find that beliefs about others' cooperation and trust are positively correlated with cooperation in a public goods game. However, even though contributing to a public good resembles a situation of making decisions under strategic uncertainty, elicited risk preferences do not seem to explain cooperation in a systematic way.
Abstract: Previous research studies suggest a lower degree of positional concerns among people from poor countries. Yet the evidence is limited and most often builds on the assumption that people's reference groups are the same across all individuals. We conduct a survey experiment in urban Ethiopia that is modified to include multiplicity of reference groups. We estimate positional concerns considering various reference groups to test whether the low positional concerns found in the literature are due to misspecification of the reference groups.
Abstract: Poverty and altered planning horizons brought on by the HIV/AIDS epidemic can change individual discount rates, altering incentives to conserve natural resources. Using longitudinal household survey data from Western Kenya, we estimate the effects of health status on investments in soil quality, as indicated by households’ agricultural land fallowing decisions.
What Determines Gender Inequality in Household Food Security in Kenya? Application of Exogenous Switching Treatment Regression
Abstract: This paper explores the link between the gender of a household head and food security in rural Kenya. The results show that the food security gap between male-headed households (MHHs) and female-headed households (FHHs) is explained by their differences in observable and unobservable characteristics. FHHs’ food security status would have been higher than it is now if the returns (coefficients) on their observed characteristics had been the same as the returns on the MHHs’ characteristics.
Abstract: Common identity and peer punishment have been identified as crucial means to reduce free riding and promote cooperation in teams. This paper examines the relative importance of these two mechanisms under two income distributions in team cooperation. In a repeated public good experiment, we use different combinations of homogeneous/heterogeneous endowments, strong/weak identity, and absence/presence of peer punishment.
Abstract: Harrington (J Public Econ 37: 29-53, 1988) shows that a suitable strategy for regulators to make enforcement more efficient is to target surveillance resources according to past compliance records. Such scheme generates enforcement leverage as non-compliance triggers greater future scrutiny increasing the expected costs of non-compliance beyond the avoidance of immediate fines.
We analyze optimal social discount rates when people derive utility from relative consumption, i.e. their own consumption level relative to the consumption level of others. We compare the social, private, and conventional Ramsey rates. Assuming a positive growth rate, we find that (1) the social discount rate exceeds the private discount rate if the importance of relative consumption increases with consumption, and that (2) the social discount rate is lower than the Ramsey rate given quasi-concavity in own and others' consumption and risk aversion with respect to others' consumption.
Land conflicts in developing countries are costly both directly and through increased land degradation. An important policy goal is to create respect for borders. This often involves mandatory, expensive interventions. We propose a new policy design, which in theory promotes neighborly relations at low cost. A salient feature is the option to by-pass regulation through consensus. The key idea combines the insight that social preferences transform social dilemmas into coordination problems with the logic of forward induction.
When designing schemes such as conditional cash transfers or payments for ecosystem services, the choice of whom to select and whom to exclude is critical. We incentivize and measure actual contributions to an environmental public good to ascertain whether being excluded from a rebate can affect contributions and, if so, whether the rationale for exclusion influences such effects. Treatments, i.e., three rules that determine who is selected and excluded, are randomly assigned.
This thesis consists of three self-contained chapters on issues related to spillover effects of behavioral and policy interventions aimed at reducing negative incentives provided by consumption and production subsidies, and discusses the implications for environmental policy design. The first two chapters investigate spillover effects of a behavioral intervention aimed at incentivizing residential water savings in Colombia.
Improving welfare through climate-friendly agriculture: The case of the System of Rice Intensification
We use rich survey data to investigate the economic impact of a climate-friendly rice farming method known as the system of rice intensification (SRI) on the welfare of rain-dependent smallholder farmers in Africa. SRI reduces water consumption by half, which makes it a promising farming system in the adaptation to climate change in moisture-constrained areas, and it does not require flooding of rice fields, resulting in reduced methane emissions.
An attempt to reconcile the effects of temperature on economic productivity at the micro and macro levels produces predictions of global economic losses due to climate change that are much higher than previous estimates.
The Climate conference in ParisDecember 2015 is described as “last chance” or “5 to twelve” but in the climate arena there is a risk that we have over-utilized the doomsday vocabulary already in the run-up to Copenhagen, 2009 the better part of a decade ago. For those who have worked on climate issues for several decades it poses a special challenge to calibrate language.Words like “immediate” need careful explanation.
Make wind and solar power even cheaper by opening up access to the electricity gridand ending fossil-fuel subsidies, urge Gernot Wagner and colleagues. Putting a price on carbon dioxide and other greenhouse gases to curb emissions must be the centrepiece of any comprehensive climate-change policy. We know it works: pricing carbon creates broad incentives to cut emissions. Yet the current price of carbon remains much too low relative to the hidden environmental, health and societal costs of burning a tonne of coal or a barrel of oil. The global average price is below zero, once half a trillion dollars of fossil-fuel subsidies are factored in.
The EfD Report 2014/15 gives you an excellent overview of the EfD centres´ achievements during 2014 and ongoing work during 2015. Ranging from interesting policy stories on how economic research is put to use around the world to collaborative research programs, a wide range of publications, and our academic capacity building program.