Measuring subjective expectations

Researchers interested in making inference on decision-making under uncertainty face a basic identification problem as many combinations of preferences and expectations can lead to the same observed choice. One way to mitigate this problem is to ask decision-makers directly about their subjective expectations. This is particularly relevant in developing countries where people face even more uncertainty than in developed countries.

MiSoC Co-I Delavande’s earlier work shows that it is feasible and extremely useful to ask probabilistic expectations from survey respondents in developing countries to better understand their decision-making. Delavande pursued further important methodological developments on how best to ask expectations in developing countries (e.g., Delavande et al. 2017) and with many relevant methodological applications (e.g. HIV in sub-Saharan Africa, education in Pakistan, early childhood development in Pakistan).

The risk of HIV infection is one of the most important examples of this, and recent MiSoC research has made an important contribution to our understanding of the role of HIV policy. Delavande and Kohler (2016), published in the Review of Economics Studies, implemented new methods for measuring individuals’ expectations about the impact of HIV on survival, own and partners’ HIV status and the risk of transmission to study risky sexual behaviour in Malawi. Analysis of the accuracy of these expectations showed that information policies would be beneficial in term of reducing risky sexual behaviour if focused on mortality risks, but not if focused on transmission risk. This information intervention has been implemented in Malawi by Delavande and co-authors with success at curtailing risky sexual behaviour. From a methodological point of view, this study emphasizes the importance of collecting expectations data within information intervention to understand the mechanisms for why they are effective (or not).