Impact of development interventions on individual risk preferences: Evidence from a field-lab experiment and survey data

Noemi Pace and Silvio Daidone

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2024, vol. 111, issue C

Abstract: In rural settings, individual risk preferences represent one of the channels driving the shift from low-return/low-risk activities towards high-return/high-risk activities. This study takes advantage of data collected for the impact evaluation of the Child Grants Programme, an unconditional cash transfer program, and the Sustainable Poverty Reduction through Income, Nutrition and Access to Government Services (SPRINGS) project, a community development package, in rural Lesotho. The paper has two major goals. First, we investigate the effects of the programs on risk preferences measured via laboratory experiments in the field and a survey instrument. Second, we perform a mediation analysis to quantify the extent to which the programs affect risky investment decisions in real life through changes in risk preferences. Results show that the combination of programs decreases risk aversion, partially mediating the impact of the programs on risky agricultural investment decisions in real life.

Keywords: Laboratory experiment in the field; Risk preferences; Cash transfers; Community development interventions (search for similar items in EconPapers)
JEL-codes: D81 I38 O12 O55 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:111:y:2024:i:c:s2214804324000764

DOI: 10.1016/j.socec.2024.102238

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