Bednets, Information and Malaria in Orissa

Abstract

We study the identification and estimation of key parameters in a basic model of technology adoption when specifically collected information on subjective beliefs and expectations about the technology's impact is available. We discuss identification with both non-parametrically and parametrically specified utility as well as parametric and semi-parametric specifications for unobserved heterogeneity. We propose parametric and semi-parametric estimation methods to recover underlying preferences and use the model to study the adoption of bednets among poor households in rural Orissa (India). We carry out counterfactual exercises to examine the effects of price and belief changes on net ownership decisions. The results suggest that net purchase decisions are relatively insensitive to changes from current prices and beliefs. The methods proposes here should have applicability to other discrete choice settings with non-linear indices. JEL: I1,I3 Key words: Malaria, Expectations, Bednets, Identification, Median Restrictions * We thank seminar participants at UC Berkeley, Yale, UC Riverside, USC, UVA and the World Bank for useful comments. We also thank Han Hong, Michael Luca, Luigi Pistaferri, Priya Satia, John Strauss and Frank Wolak for helpful discussions. We are deeply indebted to Bharat Integrated Social Welfare Agency for facilitating access to villages covered by their microfinance network; to Lakshmi Krishnan and Benita Sarah Matthew for their superb work in supervising the project; and to the whole team of survey monitors in Sambalpur for their tireless efforts. We are also very grateful to Annie Duflo and the Center for Micro Finance for invaluable help in making this study possible. The authors gratefully acknowledge financial support from the Center for Micro Finance (Chennai, India) and the Stanford Presidential Fund for Innovation in International Studies. We are solely responsible for all errors and omissions. Aprajit Mahajan,

Measuring subjective expectations in developing countries: A critical review and new evidence

“…This leads them to conclude that one cannot reject the hypothesis that respondents' answers conform to the basic laws of probabilities. Mahajan et al (2008) use 10 stones as a visual aid to get participants in Orissa, India to express probabilities and ask individuals the Table 1 Does the subjective mean do better than asking "what do you expect" in predicting the future? Dependent variable: December 2005 profits of Sri Lankan microenterprises.…”

“…However, we believe that given the growing interest in measuring subjective expectations, there is value in including such questions purely for conducting methodological comparisons. 17 An exception isMahajan et al (2008) who find significant use of focal answers or 0, 5 or 10 fingers when asking people expectations of the likelihood of getting malaria with and without bednets.18 Giné et al (2009) show that there is no observable time trend in the historical data of the onset of the monsoon, and thus, the subjective expectation can be compared to a historical that weighs each year equally.…”

Understanding the income gradient in college attendance in Mexico: The role of heterogeneity in expected returns

“…This paper shows how these data can be used in the estimation of a simple school choice model. In a different context, Mahajan, Tarozzi, Yoong, andBlackburn (2011) study identification and estimation of key preference parameters in a model of technology adoption when data on subjective expectations about technology's impact are available.…”

Estimating network economies in retail chains: a revealed preference approach

“…Using arguments from Hyslop and Imbens (), Mahajan et al. () establish robustness of the maximum score estimator to this form of “prediction error” in the context of a simpler single‐agent binary discrete choice problem. We conjecture that under possibly stronger conditions, similar results might obtain in our more complex setting as well…”