Alternatives for Risk Elicitation in the Field

Although field experimental methods are the workhorse of researchers interested in risk preferences, practitioners find surveys easier to implement. This paper compares results from experimental versus survey-based methods to elicit farmers’ risk attitudes, in context-free and context-specific decision settings. We then explore how the different survey estimates of risk preferences relate to real-life farming choices in a population of coffee farmers in Costa Rica. Our results indicate that one should be careful when extrapolating risk attitudes across contexts. Contextualized, survey-based estimates of risk preferences do not correlate with general context-free survey estimates, yet context-free survey estimates do predict risk-taking behavior in a context-free risk experiment. Importantly, context-specific survey estimates are associated with risk-taking in the same agricultural real-life context, while context-free survey estimates are not. Practitioners interested primarily in using risk preferences as inputs into policy design should make sure that preferences are elicited in the specific context targeted by the potential policy instrument.