Preferences and Economic Decision-Making

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DESCRIPTION (provided by applicant): Although individual preferences and attitudes play a central role in many models of family decision-making, they have proven to be very difficult to measure in socio-economic surveys. As a step towards filling that gap, this project will design, field and evaluate an innovative set of measures of three important domains of preferences in conjunction with six waves of a specially designed longitudinal household survey. The field site is rural Mexico. For each respondent, we will measure inter-personal preferences towards family members, neighbors and strangers (from other villages), attitudes towards risk and inter-temporal preferences using three modes. First, drawing on well-established protocols in the behavioral experiments literature, respondents will complete decision-based tasks that carry cash payments in central "laboratories" in their own village. Second, these incentivized tasks will be adapted to a home setting and implemented in conjunction with the household survey. Third, interview questions that attempt to elicit information about these domains of preferences will be included in each wave of the survey. Detailed information about the lives of each respondent and their families will be recorded in the broad-purpose household survey. These alternative and possibly complementary measures of preferences will be carefully evaluated. In addition to comparing their reliability, stability and internal validity, the richness of the survey data will be full exploited to assess the external validity of each measure by relating it to characteristics and behaviors, including household resource allocation decisions. The preference measures will also be evaluated by exploiting random variation in the distribution of resources within households, induced by the study design. The project will produce uniquely rich public use data that provide unparalleled opportunities for better understanding the dynamics of individual and family decision-making. This research has the potential to suggest new directions for improving measures of preferences in household surveys.