Field Experiments and
Environmental Economics
A typology (Harrison and List, 2005)
Subject pool Framing
Environment
Conventional lab
Students
Abstract
Imposed
Artefactual field
Nonstudents
Abstract
Imposed
Framed field
Nonstudents
Commodity
Imposed
Natural field
Nonstudents
Commodity
Natural
So two important aspects of a natural field experiment:
-Non student sample
-“They do not know that they are being studied” and the act in an
environment they naturally undertake the task.
Why do experiments at all?
Can deal with a number of problems that we have with RP and SP data
including:
-Problems with endogeneity
-Problems with correlation among variables
-Problems with causality
-Problems with hypothetical bias
Historically, experiments were made in the lab. To test theories, for example
the perfect competition model.
But there is now a strong movement towards field experiments.
Mainly in development economics, but also in behavioral economics. But
very few in environmental economics (despite the frequent use of lab
experiments)
Examples of natural field experiment questions
- Does increased auditing reduce corruption?
- Do textbooks at schools increase academic test scores?
-Do people donate more money if they know how much others have
contributed?
The last one (charitable giving) is of interest for environmental economics,
and perhaps the one most studied with field experiment. However, how this
transfers over to contribution to “real” public goods is not clear.
So for environmental economics:
-Contribution to public goods
-Use of common property resources
-Effects and effectiveness of regulations, policies such as information and
labelling.
-Valuation?
Problems with field expeiment
Main problem
Ethical issues? Can we change the conditions in which public goods related
to health and the environment are provided?
- how useful is ex-post information about program effectiveness and can we
generalize our findings?
- more difficult to control
- cannot always generate the variations that we want
- expensive
An example of a social dilemma situation in the field
Road 1
1111
Rice field
canal
Pathway
eld
1100 meters
Rural Vietnam
• Goverment is in charge of larger scales of public good
• Voluntary contribution in 2005 by villagers  a wooden
bridge. But it is now highly degraded.
• Can they get togther and build a concrete bridge?
bridge
Road 2
school
Rice field
Mekong
river
What we learned from the field
-They village is in need of a new bridge
- Last time they built the bridge it was funded by voluntary contributions of
money and time.
-Building a new concrete bridge would be expensive for the village
Our experiment
-We collaborated with an NGO and provided money sufficient enough to
build a concrete bridge.
- But we wanted to learn more about factors that can affect peoples
contributions, so we designed a natural field experiment.
- In particular we want to study the role of social influence:
oSocial information effects/conditional cooperation
oDefault option effects
Social information and defaults
Social information and voluntary contribution
Lab experiments with public good games (Keser and van Winden 2000,
Fischbacher et al 2001; Bardsley and Sausgruber, 2005)
Field experiment with charitable giving (List and Lucking-Reiley 2002; Frey
and Meier 2004; Landry et al 2006; Alpizar et al 2008; Shang and Croson
2009)
Default options and choices: Empitical studies on pension savings
(Crinqvist and Thaler 2004), car insurance (Johnson et al 1993), pro-social
behavior (Johnson and Goldstein 2003)
The experiment: Threshold PG game
The threshold public good experiment with refund policy and proportional
rebate rule
Succeed in providing the public
good
Fail in providing the public good
ox i :
contribution amount of household i
oGi: marginal benefit from the public good
oN = 200 households
oEndowment E = 400.000 VND (~ $23)
oThreshold T= 40 million VND
oNash equilibria (examples):
Each contributes zero
Each contributes at the threshold level (T/N = 200.000 VND)
The experiment: explaining to the subjects
Each family has 400,000 dong provided by the project. We would like to ask how
your family would want to use this money. You can choose any amount to allocate to
construction of the bridge.
The concrete bridge will be established if all families contribute in total 40 million
dong or more. This means that if the total contribution is equal or above 40 million
dong, the project will use this money, add more funding in order to meets the costs of
the bridge and take the responsibility to build up the bridge. If the total amount of
money collected is more than 40 million dong, the excess amount will be returned to
your family according to the proportion you contribute to the concrete bridge.
If the families are unable to contribute in total 40 million dong, your contribution will
be returned to you, and the concrete bridge will not be built.
Your family is under absolutely no obligation to contribute any money to the concrete
bridge, as these monies are yours. Even when your family is not willing to contribute
or just willing to contribute a small amount, and if the bridge goes on operation, you
have the full right of using the bridge because the bridge is a common property.
No one in the commune, not even the officials, will know about your decision. We will
keep your contribution information in secret.
The experiment: treatments
An experiment and a follow-up survey (1 month later)
5 anonymous treatments:
oNo social information and no default option
oHigh social information at 300,000 VND and no default option
oLow social information at 100,000 VND and no default option
oNo social information and default option at zero contribution
oNo social information and default option at full contribution
Social information:”typical previous contribution of others”
Default option: a metal card with a magnetic token
The experiment: design in the field
The experiment format:
oExperiment at home
o15 solicitors
o1 day experiment (Saturday afternoon and Sunday morning)
The experiment: challenges
oA realistic
and credible experiment?
→Pre-experiment tasks and information
→Contract
oSize of endowment and threshold?
→ Study on WTP in another village
oInformation leakage?
→Saturday on one side of the bridge, Sunday the other side
→15 solicitors
oSolicitor biases?
→ Well trained and experienced
Results: raw data
Treatment
Obs.
Mean contribution
in 1,000 dong
Share of contributions
=0
= 100
= 200
= 300
= 400
(stdv.)
Reference treatment
40
287.5 (199.7)
0.000
0.125
0.275
0.075
0.475
Low social information
41
247.6 (132.3)
0.025
0.244
0.268
0.073
0.366
High social information
39
284.6 (108.9)
0.000
0.128
0.282
0.205
0.385
Default at zero
38
245.3 (130.4)
0.000
0.132
0.263
0.079
0.342
Default at full
42
288.1 (141.3)
0.071
0.119
0.167
0.024
0.500
Control variables
Variables
Definition
Mean
Household size
Number of household members
3.84
Age
Age in year
49.0
Education
1 = No schooling; 2 = Grade 1-5, 3 = Grade 6 – 9, 4 =
2.47
Grade 10 – 12; 5 = Vocational school
Monthly income
Household monthly income in hundred thousand
18.13
Use the bridge
1 = use the bridge at least twice a month
0.45
Cost of social events
Monthly expenditures for “social events” e.g. wedding, and
196
different kinds of ceremony
Member of party
= 1 if member of the communist party
0.10
Association
= 1 if member of a local association
0.49
Punish
How likely is it that people who do not participate in
2.59
community activities will be criticized or sanctioned? =1
very likely …=5 very unlikely
Rice land
Size of rice lands that are currently reaping in congs (1
4.54
cong = 1/10 hectare)
Saturday
= 1 if experiment conducted on Saturday afternoon
0.57
Results: regression
Variable
High social information
Low social information
Coeff.
-11.510
Coeff.
5.488
-61.378**
-53.325**
Default at full contribution
-12.041
-2.247
Default at zero contribution
-48.795*
-51.958**
Household size
Age
3.685
0.059
1.860
-0.349
Education
8.918
-5.370
Income
0.304
0.658
1.125
27.092
12.969
0.172**
0.264
46.072*
18.984
0.217***
71.237***
43.721***
-15.408
-17.494
Rice land
Communist party member
Association
Social events
Use the bridge
Day of experiment
Punish
-19.725***
Guess others contribution
0.718***
No guess of others contribution
Constant
149.388***
129.616
104.618
Summary and lessons learnt
A field public good experiment:
oContribution to a real public good
oCharacterised by heterogeneity
Significant and substantial effects
oLow social information: contribute 22% less compared to no
information
oZero contribution default option: contribute 20% less compared to
average contribution.
It was possible to implement the natural field experiment, although some
problems were difficult to solve, and compromises had to be made.