Putting One’s Money Where One’s Mouth is: Increasing Saliency in the Field

Abstract

We present a novel approach to address the difference between stated and paid choices and evaluate its effectiveness using a field experiment. In an experiment on local water management, some households were randomly treated with the saliency method. This involves incentivizing the respondents before making the valuation decision by making each decision financially relevant. Our results show that the differences between treatments is small in aggregate. However, we find that the treatment increases estimates of the marginal utility of income, especially among low-income households. The treatment also affects estimates of preferences for specific attributes by reducing willingness to pay for public-good like attributes. Respondents with greater self-reported green preferences are more susceptible to the treatment in attribute space.