Alistair Munro

• D.Phil
• Professor (Full) at National Graduate Institute for Policy Studies

A host of experiments have examined theories of risky choice using "individuals". However, many important economic decisions are taken within multi-adult "households". This paper reports on the first economic experiment designed to test theories of household choice. We use established couples and face them individually and jointly with decisions in...

A theory is proposed in which preferences are conditional on reference points. It is related to Tversky and Kahneman’s reference-dependent preference theory, but is simpler and deviates less from conventional consumer theory. Preferences conditional on any given reference point satisfy conventional assumptions. Apart from a continuity condition, th...

In the light of the Japanese government's intensive efforts to decontaminate areas affected by radioactive Caesium from Fukushima dai-ichi nuclear power plant, I create a framework for assessing the merits of management options. In particular I consider delayed intervention as a possible policy. Delay can be optimal because allowing the natural dec...

This paper investigates experimentally how changes in wage rates and entitlements affect individual productivity in lab-in-the-field experiments run with married couples from rural regions in Uganda. We design a game in which the production task itself is straightforward, but where the rules governing payment vary across subjects and between rounds...

While the use of surveys to understand perception of climate change and adaptation is common in research on agriculture, the reliability of some aspects of the methodology is largely untested. In particular, there is limited evidence on (i) the degree to which measures of perception are sensitive to questionnaire design, (ii) the accuracy of recall...

Underinvestment in agriculture – a major cause of rural poverty – may be due to difficulties in detecting ‘contingency’, defined as the influence one may exert on the outcome of a decision-making situation. Recently experienced contingency may create a mismatch between perceived and actual contingency in an investment decision-making situation, lea...

Vulnerability to poverty (VTP) is the downside risk of falling into poverty over a specified time horizon. Here, we investigate the links from VTP and mental health, using a panel from rural Vietnam. VTP has a significant and adverse connection with an index of depression with coefficients that are not only statistically significant but indicate a...

Forecasting the future impact of climate change on migration is difficult, for many reasons, including the interactive and dynamic nature of many decisions and the heterogeneity of behavior. One popular solution, agent-based models (ABM) cope well with dynamics and heterogeneity, but often lack rigorous foundations in terms of individual behavior....

Weitzman’s classic insight on the virtues of allocating a scarce good via the price system or through rationing is applied to the problem of distributing masks, when the use of a mask provides a positive external benefit. I show that if a market leaves some individuals without a mask (when potentially there is supply for all), then rationing may be...

The quantification of how aspects of a job are valued by employees sheds light on the potential for labor market reform in Japan. Using a nationwide sample of 1,046 working-age adults, we conduct a choice experiment that examines individuals’ willingness to trade wages against job characteristics such as the extent of overtime, job security, the po...

Given the importance of the household as a resource allocation mechanism, considerable interest exists in its efficiency. Most of the non-experimental evidence for inefficiency comes from West African farm households in which husbands and wives pursue separate productive activities. Using experiments, we test for efficiency of spouses’ resource all...

This book presents the definitive exposition of ‘prospect theory’, a compelling alternative to the classical utility theory of choice. Building on the 1982 volume, Judgement Under Uncertainty, this book brings together seminal papers on prospect theory from economists, decision theorists, and psychologists, including the work of the late Amos Tvers...

This paper investigates experimentally how changes in wage rates and entitlements affect individual productivity in lab-in-the-field experiments run with married couples from rural regions in Uganda. We design a game in which the production task itself is straightforward , but where the rules governing payment vary across subjects and between round...

Although polygamy is common in many parts of the world, most economic analysis of the household focuses on monogamy. We use simple public good games to investigate experimentally theories of household behavior. A unique aspect of our research is that half our sample are polygynous households recruited systematically from villages in rural areas sou...

Fukubukuro (or lucky bag) is a familiar institution in Japan and elsewhere in which the exact contents of a New Year sales item are hidden from the consumer before purchase. Motivated by the fukubukuro example and the lack of evidence on risk attitudes in lotteries involving goods, we conduct a laboratory experiment in which the outcomes are bundle...

Incentivising the social discounting task impacts the measurement of altruism in a student population. Incentivised subjects are more altruistic at close social distances, especially subjects who are less altruistic, thus providing evidence of reciprocal altruism. There is also some evidence of hypothetical bias among more altruistically inclined s...

This paper reports on a social discounting experiment conducted with university students in South Africa. In line with other social discounting task experiments, participants identify target individuals at different degrees of intimacy in their social network and then make 10 choices involving sums of money for themselves or their targets. For an a...

Recipient questionnaire. (DOCX)

Social discounting task. (DOCX)

Subject questionnaire. (DOCX)

Using a combined data set of radiation levels and property prices from Fukushima and Miyagi prefectures that runs from 2009 to early 2017, the economic impact of radiation from the Fukushima nuclear accident is assessed. A 1 percent rise in radiation is associated with approximately 0.051 percentage drop in housing prices and though the level of ra...

We provide an examination of the linkage between environmental regulation stringency and the demand for and supply of abatement goods and services. To that end we construct a five-equation simultaneous model that links environmental regulation stringency to abatement output through various underlying simultaneous mechanisms. This system is then est...

Based on a survey conducted with evacuees from the Fukushima radiation-affected region of Japan we examine intentions to return, eventually to the family homes. Many respondents do not intend to return, particularly those from tsunami-affected towns, but higher income households and those who evacuated to the same town are more likely to go back. I...

Impure public goods combine a private good with a public good. Often, impure public goods have a charitable or ethical dimension, giving ethically motivated consumers a convenient option to contribute to public goods through the marketplace (in addition to direct donations). Impure public goods could potentially promote ethical giving or alternativ...

Experiments with family groups are rare, but since many decisions are taken at the household level or occur within the household it is an important area to investigate. This paper provides a survey of the recent experimental work on intra-household decision-making. I discuss some of the challenges involved in doing experiments with couples and fami...

Green goods such as recycled paper stationary or carbon-neutral flights provide increasingly popular examples of impure public goods. Motivated by theoretical treatments of green goods as a bundle of private and public characteristics in proportions fixed by the provider, we design an experiment with two linked treatments to test how the presence o...

This paper examines how education subsidy to basic schools has affected school enrollment in rural Ghana. The quest to achieve Universal Primary Education led to the introduction of the Free Compulsory Universal Basic Education policy in the mid-1990s, abolishing all fees in basic schools. The question then is, to what extent have those spending in...

This paper examines the choice of health care and progressivity of health care services in Ghana. Using a combination of benefit incidence analysis and a discrete choice model and data from the Ghana Living Standards Survey, our results give clear evidence of progressivity with consistent ordering: postnatal and prenatal services are the most progr...

In many countries, spouses routinely hide income, consumption and assets from one another. In this paper, I provide a theoretical model in which hiding is costly and only some expenditure can be hidden. I characterise the set of ex ante Pareto efficient allocations and show by means of extended examples that in some cases it can be efficient for on...

We provide an examination of the linkage between environmental regulation stringency and the demand for and supply of abatement goods and services. To that end we construct a five-equation simultaneous model that links environmental regulation stringency to abatement output through various underlying simultaneous mechanisms. This system is then est...

By using a unique cross-sectional dataset of Chinese industrial firms, this paper investigates the external and internal effects of human capital on firms’ environmental performance. The result shows that firms have better environmental compliance because they are ‘pushed’ into making compliance decision by internal driver of human capital and ‘pul...

Questions from the experiments (from the version given to couples—for individuals ‘we’ becomes ‘I’)

In Uttar Pradesh, teams of four are engaged to dig soil under the NREGA programme. In one treatment spouses work together; in the other treatment they work in separate teams. Working with spouses is associated with significantly higher output.

Although households are responsible for many important decisions, they have rarely been the subject of economics experiments. We conduct a series of linked and incentivized experiments on decision-making, designed to see if the anomalies typically found in individual choice experiments are found when the subjects are couples from long-term relation...

Economic analysis of nuclear accidents and their aftermath is comparatively rare. In this paper, in the light of the Japanese government’s intensive efforts to decontaminate areas affected by radioactive Caesium from Fukushima dai‐ichi nuclear power plant, we create a cost‐benefit framework for assessing the merits of decontamination strategies. Us...

Experiments measuring risk and time preferences in developing countries have tended to have relatively small samples and geographically concentrated sampling. This large-scale field experiment uses a Holt-Laury mechanism to elicit the preferences of 1289 randomly selected subjects from 94 villages covering six out of seven agro-climatic zones acros...

Council of the UK as part of its Risk and Human Behaviour Programme (award number L MG1 25 2053). Robert Sugden’s work was also supported by the Leverhulme Trust. 1 This paper reports an exercise in a research methodology that we believe is new to experimental economics: adversarial collaboration. An adversarial collaboration is an investigation ca...

We use experimental data from variants of public good games to test for household efficiency among married couples in rural Uganda. Spouses frequently do not maximise surplus from cooperation and perform better when women are in charge of allocating the common pool. Women contribute less to this household common pool than men and opportunism is wid...

Dyson and Moore (1983) posit that women in South India enjoy relatively more agency than in the North. Their conclusions have become part of the standard picture of Indian rural society. In this paper, we examine using experimental data the implications of this regional contrast in female autonomy for the efficiency of family decision-making. We ta...

This paper uses different versions of a voluntary contribution mechanism in experimental games to test for household efficiency. Efficiency is decisively rejected in all treatments casting doubt on ‘unitary’ and ‘collective’ household models – significant amounts of potential surplus are not realised. Efficiency is rejected whether initial endowmen...

Using samples of polygamous and non-polygamous households from villages in rural areas south of Kano,Northern Nigeria we test basic theories of household behaviour. Husbands and wives play two variants of a voluntary contributions game in which endowments are private knowledge, but contributions are public. In one variant, the common pool is split...

Purpose – The purpose of this paper is to examine the incidence of public education subsidies in Ghana. Since the late 1990s, Ghana’s government has increasingly recognized human capital as key to alleviating poverty and income inequality, causing dramatic increases of government expenditures to the education sector. At the same time user fees have...

This paper examines the incidence of public health subsidies in Ghana using the Ghana Living Standards Survey. Using a combination of (uniform) benefit incidence analysis and a discrete choice model, our results give a clear evidence of progressivity with consistent ordering: postnatal and prenatal services are the most progressive, followed by cli...

Ethical goods are increasingly available in markets for conventional goods giving pro-ethically motivated consumers a convenient option to contribute to public goods. In a previous experiment we explored the behavioural relevance of impure public goods in a within-subject setting and observed reduced aggregate pro-social behavior in the presence of...

This chapter examines the broad implications of anomalies for the economics of public policy. A central aim is to set out a general framework for the kinds of models which might be usefully employed to explore public policy issues. Parts of the chapter provide specific illustrations of these different types of models; later chapters provide other i...

The previous chapter discussed the impact of markets on anomalies. This chapter reverses the direction of causation. In particular I offer three examples of how reference-dependent preferences may be expected to affect market outcomes. The first example focuses on the single, competitive market; the second example explores monopolistic competition,...

Environmental economics has been slow to incorporate the full and complex nature of the household into its analytical structures and to reflect empirical evidence on household decision-making. This paper provides an overview of some of the main unanswered questions.

We give semiparametric identification and estimation results for econometric models with a regressor that is endogenous, bound censored and selected,called a Tobin regressor. First, we show that true parameter value is set identified and characterize the identification sets. Second, we propose novel estimation and inference methods for this true va...

In the opening chapter, I defined merit-worthy in a manner which, while quite orthodox, masked the degree of disagreement which has characterised attempts to define the concept in a form useful to economists. As John Head put it in his retrospective of 1990.

At the heart of the merit goods problem there is a fundamental issue of agency. If some individuals are to surrender at least part of their consumer sovereignty to other individuals then for individual welfare to improve it is not enough for the agents to have superior information or decision-making powers, they must also have the incentive to serv...

There are many different means by which non-market decisions can be formalised. Some of the approaches regularly employed such as contingent valuation and the travel cost method share a common underlying philosophy (e.g. welfarism), but some do not. Advocates of Citizens‘ Juries (e.g. Crosby,1991) or consensus conferences, attach as much value to t...

In the last few chapters we have been considering the manipulation of the price and income terms in the generalised demand function x(p,m,f). In this chapter the focus is on non-standard fiscal policy, meaning the manipulation of the f term in order to achieve government goals. For instance, Cullis et al. (2000), suggest that because individuals wh...

We test core theories of the household,using variants of a public good game,and

We have touched on issues surrounding tax in several of the previous chapters. In Chapter 7, for instance, several of the standard merit wants models were analysed. The basic theme of this chapter is that even with an incomplete welfare ranking it is possible to make some claims about the nature of desirable tax policies. I support this argument in...

The central propositions of welfare economics rest on the twin assumptions that each individual makes choices so as to maximize his or her own welfare and that social welfare is an increasing function of individual welfare alone. This approach, denoted standard welfare economics in Chapter 1, most starkly set out in microeconomic theory texts (e.g....

In economics, the term ‘anomaly’ usually refers to behaviour which does not conform to the predictions of rational choice models . The argument of the introductory chapter was that anomalies are sufficiently common within economic behaviour and that there is sufficient predictability in decision-making biases to provide useful guidance for policy m...

The economist’s advice to society rests largely on a picture of citizens as infinitely rational beings, shrewd, calculating and above all consistent in their behaviour. But as the last thirty years of economic experiments and field work has revealed, humans are far from perfectly consistent. On the contrary, choices and preferences often seem highl...

Although households are responsible for many important decisions, they have rarely been the subject of economics experiments. We conduct a series of linked and incentivized experiments on decision-making, designed to see if the anomalies typically found in individual choice experiments are found when the subjects are couples from long-term relation...

An impure public good is a commodity that combines public and private characteristics in fixed proportions. Green goods such as dolphin-friendly tuna or green electricity programs provide increasings popular examples of impure goods. We design an experiment to test how the presence of impure public goods affects pro-social behaviour. We set paramet...

Although genetically modified (GM) organisms have attracted a great deal of public attention, analysis of their economic impacts has been less common. It is, perhaps, spatial externalities where the divergence between efficient and unregulated outcomes is potentially largest, because the presence of transgenic crops may eliminate or severely reduce...

Using a sample of established couples, we conduct an experiment on household decision-making. Individual partners first make a series of dichotomous choices between household goods and vouchers for experiences and then the couple jointly face the same choices. A random lottery device is used to incentivize the decisions. We find clear evidence of t...

We examine the feasibility of using a massively multiplayer online role-playing game (MMORPG) to test economic theories. As a test vehicle we use the well-known hypothesis about the relationship between market experience and the endowment effect. Our results confirm earlier field experiments that individuals with more trading experience are less li...

While a dominated choice involves a situation in which one option clearly dominates another on all relevant dimensions, an asymmetrically dominated choice typically arises where at least two options do not dominate each other and one (but not both) of those options does dominate a third option. We demonstrate that the introduction of such an asymme...

We examine the physical and mental health effects of providing care to an elderly mother on the adult child caregiver. We address the endogeneity of the selection in and out of caregiving using an instrumental variable approach, and carefully control for baseline health and work status of the adult child using fixed effects and Arellano-Bond estima...

Decision-makers have a wide variety of competing and complementary methods for non-market valuation, but there is little formal advice on the choice of method. I offer a formal approach, using a loss function (the mean square error) to compare contingent valuation, Citizens'Jury and methods where by intention only a portion of total value is estima...

Decision-makers have a wide variety of competing and complementary methods for non-market valuation, but there is little formal advice on the choice of method. I offer a formal approach, using a loss function (the mean square error) to compare contingent valuation, Citizens' Jury and methods where by intention only a portion of total value is estim...

This paper estimates mortality and fertility rates prevailing in Ireland during the 25-year period before the Great Irish Famine of 1845-1849. A technique is developed to estimate the age-specific mortality level during the Famine and the number of Famine-related deaths. The paper concludes that fertility rates were declining during the period 1821...

Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effect...

I show household and individual willingness to pay are equal if and only if household choices satisfy income pooling, providing a test of whether the individual respondent speaks for the household—an assumption implicit in much stated preference practice.

This paper reports an ‘adversarial collaboration’—a project carried out by two individuals or research groups who, having proposed conflicting hypotheses, seek to resolve their dispute. It describes an experiment which investigates whether, when individuals consider giving up money in exchange for goods, they construe money outlays as losses or as...

While a dominated choice involves a situation in which one option clearly dominates another on all relevant dimensions, an asymmetrically dominated choice typically involves more than two options in which at least two options do not dominate each other but one (but not both) of those options does dominate a third option. We demonstrate that the int...

We present a new experimental investigation of preference reversal. Although economists and psychologists have suggested a variety of accounts for this phenomenon, the existing data do not adequately discriminate between them. Relative to previous studies, our design offers enhanced control for economic explanations and new tests of psychological h...

This paper estimates mortality and fertility rates prevailing in Ireland during the 25-year period before the Great Irish Famine of 1845-1849. A technique is developed to estimate the age-specific mortality level during the Famine and the number of Famine-related deaths. The paper concludes that fertility rates were declining during the period 1821...

The existence of part–whole bias has been hotly disputed in the recent contingent valuation literature. This paper reports on an experiment into part–whole bias. Employing vouchers for parts of a restaurant meal and using an incentive compatible procedure, valuations of the parts and of the whole were elicited. The sum of the valuations of the part...

Although genetically modified organisms (GMOs) have recently attracted a great deal of public attention, analysis of their economic impact has been far less common. This paper puts forward variants of a simple model of crop production, each one tailored to a particular aspect of transgenic food technology. The focus is on the possibility of monopol...

Given the evidence against the unitary model of the household, there is a need to understand the predictions of alternative household models within the context of contingent valuation. This paper derives the relationship between household and individual willingness to pay (WTP) for the non- cooperative model of the household. We stress the dependen...

We present the results of an experiment involving established couples, which uses choices between lotteries to test some economic models of household decision-making. Subjects make choices individually and jointly and are asked to make predictions about their partner's choices. Income pooling is not rejected in joint choice but has less explanatory...

A previous draft of this paper was entitled “Should we ban the terminator gene?” The answer from this paper is ‘not necessarily’ but there are clear indications that under some circumstances GM crops may lower welfare. Monopolisation in itself though is not a cause of welfare loss, since the usual route to monopoly control for a new technology is v...

Just as individuals have preferences regarding the various goods and services they purchase every day, they also hold preferences regarding public goods such as those provided by the natural environment. However, unlike private goods, environmental goods often cannot be valued by direct reference to any market price, which makes economic analysis o...

A theory is proposed in which preferences are conditional on reference points. It is related to Tversky and Kahneman’s reference-dependent preference theory, but is simpler and deviates less from conventional consumer theory. Preferences conditional on any given reference point satisfy standard assumptions. Apart from a continuity condition, the on...