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2015-03-20 | project

Social Learning, Gender, and Willingness-to-pay for Solar Lanterns

Electricity has yet to reach many of the households in Africa and South Asia. Extending the grid to the most rural regions requires high levels of investment that are often hard to come about. Solar power serves as a decentralized solution to the problem of energy poverty, and is slowly diffusing throughout rural Africa and rural South Asia. However, tight household budget constraints, poor product quality and little local expertise in photovoltaic technologies stand in the way of faster adoption. Another barrier might be found in how individuals tend to place higher trust on the recommendation from their friends and relatives who have experienced a new product, as opposed to if the recommendation came from a person with higher hierarchical power or external to the village. This project is an attempt to better understand the effects of social networks on the diffusion and adoption of new technologies. In particular, we investigate if having friends or relative that had a chance to experience solar lanterns for their personal use increases an individual's willingness to pay for a solar lantern.

 

Background and motivation

There is a well-established body of literature in mainstream economics which models the crucial role of social learning in diffusion of new technology and brining economic growth in an endogenous technological set-up. The theory has in recent years been extended to understand the feature of technological innovation and diffusion in agriculture in developing countries. Using carefully constructed empirical strategies, this strand of literature identifies the impact of social networks in promoting social learning and adoption of new technologies in rural areas of developing countries.

One limitation of these earlier studies is the assumption of “passive learning”, a situation where people learn about new technologies from their peers without cost which let them learn about the viability of the new technology. In view of this, Yishay and Mobarak, design a randomized field experiment in 2014 and document that provision of incentives to disseminators of information about the new technology significantly affects the power of social networks. As a result, these authors argue that incentivizing dissemination of information about new technologies within social networks in developing countries would have significant productivity impact.

In this project, we build on the experiment by Yishay and Mobarak and implement a randomized controlled evaluation of the impact of social networks on diffusion and willingness-to-pay for low-cost and effective solar lanterns in rural India. The contributions are two-fold: First we would like to understand if the role of incentivized social network on adoption and willingness-to-pay of a new technology would differ based on the gender of the information communicator. There is well-documented evidence on gender difference in behavior and economic decision in both developed and developing countries. It would therefore be important to understand if gender difference could affect the degree of information spill-over regarding new technologies. Second, unlike most studies in the literature which consider adoption of new agricultural technologies, we consider diffusion of simple and inexpensive solar lamps which do not take time to observe and are not sensitive to local conditions. 

Theme 1: Individual behaviour, cooperation and trust.

    Principal investigator

  • Other authors:
    Alem, Yonas
    Dugoua, Eugenie
    Urpelainen, Johannes