Behavioral Biases among Producers: Experimental Evidence of Anchoring in Procurement Auctions (with Paul J. Ferraro, Kent D. Messer, and Collin Weigel; Forthcoming at The Review of Economics and Statistics)
Experimental research in behavioral economics focuses on consumer behaviors. Similar experimental research on profit-maximizing producers is rare. In three field experiments involving commercial agricultural producers in the US, we detect evidence of anchoring in competitive auctions for conservation contracts related to nutrient and pest management that were worth, on average, nearly nine thousand dollars. In these auctions, the value of the starting cost-share bid was randomized to be either 0% or 100%. When the starting value was 100%, final bids were 46% higher, on average. We find weak evidence that experience with conservation contracts may modestly attenuate the anchoring effect.
AEA RCT Registry ID: AEARCTR-0007219
Trouble with Zero: The Limits of Subsidizing Technology Adoption (with Hemant K. Pullabhotla and Kathy Baylis. Journal of Development Economics, 2022)
Do users value a free technology less than one they pay for? In a two-stage randomized trial of improved grain storage technology in India, we test whether subsequent user willingness-to-pay is affected by free distribution compared to a small positive price. We find paying an initial price of zero has a strong negative effect on users’ long-run willingness-to-pay but is not associated with differences in either reported use or benefits derived from the technology. The lower valuation implies a 20 to 30 percent decrease in long-run adoption, suggesting free distribution can stifle future markets for repeat-purchase goods.
AEA RCT Registry ID: AEARCTR-0006661
Choosing Plan B over Plan A: Risk Compensation Theory and Contraceptive Choice in India (with Hemant K. Pullabhotla and Mary Arends-Kuenning. Demography, 2021)
Can women’s contraceptive method choice be better understood by applying risk compensation theory? This theory implies that people act with greater care when the perceived risk of an activity is higher and with less care when it is lower. We examine how access to emergency contraceptives pills (ECPs) in India affected women’s contraceptive method choices and incidence of sexually transmitted infections (STIs). Although ECPs substantially reduce the risk of pregnancy, they are less effective than other contraceptive methods and do not reduce the risk of STIs. Using an exogenous policy change, we test whether having access to ECPs leads people to substitute away from other methods of contraception, such as condoms, thereby increasing the risk of both unintended pregnancy and STIs. We find evidence for risk compensation in terms of reduced use of condoms, but none for increases in rates of sexually transmitted infections. We also find evidence that providing easy access to ECPs leads to substitution away from less effective traditional contraception methods.
Data publicly available from Government of India website.
Is a Replicability Crisis on the Horizon for Environmental and Resource Economics? (with Paul J. Ferraro, Review of Environmental Economics and Policy, 2020). Editor's Choice Featured Article.
Environmental and resource economists pride themselves on the credibility of their empirical research. In other disciplines, however, the credibility of empirical research is increasingly being debated by scholars. At the core of these debates are critiques of widespread practices, such as selectively reporting results or using designs with low statistical power, and critiques of the professional incentives that encourage these practices. These critiques have led to claims of a “replicability crisis” in science. We show that questionable research practices are also prevalent in the environmental and resource economics literature. We argue that the discipline needs to take the potential harm from these practices more seriously. To mitigate this harm, we recommend changes in the norms and practices of funders, editors, peer reviewers, and authors.
More than Quantity: Improving Measurement of Food Loss and Evaluation of Loss-Reduction Technologies (with Hemant K. Pullabhotla and Kathy Baylis; Revise and Resubmit at Food Policy)
Measures of food loss often focus on quantity, ignoring quality and economic losses. As a result, evaluations of loss-reduction technology focus largely on reducing quantity losses, leading to incomplete measurement of benefits of technology. Using two randomized experiments of improved storage with farmers in India, we provide evidence on three key issues: (1) food losses affect all aspects of food security, and not just quantity, (2) the largest share of losses comes from quality and economic losses to farm households, and (3) evaluations of loss-reduction technology that focus only on gains in quantity fail to capture 60 to 70% of the benefits of technology. Our results show that improved storage can reduce quantity, quality, and economic losses. When given access to improved storage, farmers change storage behavior and market engagement, amplifying the benefits derived from the technology. We show that technology evaluations that do not account for changes in farmer behavior underestimate the benefits of the technology. Our cost-benefit analysis shows that farmers recover the full unsubsidized cost of the improved storage technology in one agricultural season.
Credibility Crisis in Agricultural Economics (with Paul J. Ferraro; Applied Economic Perspectives and Policy, 2022) Featured Article.
We provide empirical evidence of research practices that can undermine the credibility of empirical research in agricultural economics. We find that, in four popular journals, most studies are underpowered, a characteristic that, when coupled with publication bias, yields unreliable and exaggerated effect sizes. This problem is exacerbated by selective reporting of statistically significant results and multiple hypothesis testing without any adjustments to statistical inferences. Survey respondents self-report engaging in practices that are consistent with these empirical findings. Addressing these problems in agricultural economics will require that editors, reviewers, and donors change the norms and incentives for authors.
Pre-Analysis Plan, Data, and Code available here.
Demand for Food Safety: Evidence from Experimental Field Auctions in India (with Kathy Baylis, Hemant K. Pullabhotla and Gowthami Venkateswaran; Manuscript in Preparation)
Poor food safety in developing countries is often attributed to lower willingness-to-pay (WTP) for safe food among end consumers. Using random price auctions, we elicit revealed preference WTP of all supply chain actors for food safety characteristics (i.e. lower aflatoxin in food grains). We find that lack of information about the detrimental health effects of unsafe food explains consumers’ low WTP for food safety. Providing information to end-consumers about the harmful effects of aflatoxin contaminated grains significantly increases their WTP for government or private certified safe food. We argue that coupled with access to safe storage technology, information interventions can increase demand for certified safe food in developing countries.
What Happens When Everyone Knows Behavioral Economics? Implications for the Behavioral Sciences and Policy Design (with Paul J. Ferraro, Kent D. Messer and Dustin Tracy; Manuscript in Preparation)
As behavioral science-based interventions become a popular policy tool, awareness about common behavioral biases has also increased in the public domain. A better understanding of behavioral insights can either increase their effectiveness by increasing public acceptance, or decrease their effectiveness by helping potential participants overcome their cognitive biases. We build a conceptual model of how awareness about behavioral insights can change the effectiveness of behavioral science-based tools. Using two randomized experiments, we offer empirical evidence that increased awareness does not reduce the effectiveness of behavioral science-based interventions.
Research In Progress
Subsidizing Now and Anchoring Later? Addressing the Behavioral Science of Promoting Long-Run Technology Adoption through Short-Run Subsidies (with Kathy Baylis)
Impact of Targeted Anti-Poverty Programs on the Environment: A Multi-Country Analysis (with Paul J. Ferraro)