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Putting Your Money Where Your Month Is

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  • Brent, Daniel A.
  • Gangadharan, Lata
  • Leroux, Anke
  • Raschky, Paul

Abstract

We present a novel approach to address differences between stated and paid choices by incentivizing stated choices in a randomized field experiment. The treatment increases the incentives in the field by making each decision financially relevant. Our results show that the treatment increases estimates of the marginal utility of income, with the effect being economically and statistically significant in aggregate. We develop a stylized model that formalizes the extent of hypothetical bias implied by our empirical results by allowing for alternative treatment-induced channels. Under a range of plausible parameter values our results indicate hypothetical bias in approximately 95% of the parameter space with a mean hypothetical bias of 60%. Heterogeneous treatment effects indicate that low income respondents are more susceptible to hypothetical bias.
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  • Brent, Daniel A. & Gangadharan, Lata & Leroux, Anke & Raschky, Paul, 2016. "Putting Your Money Where Your Month Is," 2016 Conference (60th), February 2-5, 2016, Canberra, Australia 235377, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare16:235377
    DOI: 10.22004/ag.econ.235377
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    More about this item

    Keywords

    Marketing; Public Economics;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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