Measuring Trust and the Value of Statistical Lives: Evidence from Bangladesh

Abstract

This thesis includes five self-contained essays. The first three essays relate to the measurement of trust using both an experimental and a survey approach, and the other two essays relate to the measurement of the value of (statistical) life using stated preference methods.

Essay 1: The proportion of money sent, which is typically assumed to reflect trust, decreased significantly as the stake size was increased in a trust game conducted in rural Bangladesh. Nevertheless, even with very large stakes, most senders and receivers sent substantial fractions.

Essay 2: Trust is measured using both survey questions and a trust experiment using random sample of individuals in rural Bangladesh. We found no significant effect of the social distance between Hindus and Muslims in the trust experiment in terms of fractions sent or returned, but the responses to the survey questions indicate significant differences: Hindus, the minority, trust other people less in general, and Hindus trust Muslims more than the other way around.

Essay 3: Levels of trust are measured by asking standard survey questions on trust and by observing the behavior in a trust game using a random sample in rural Bangladesh. Follow-up questions and correlations between the sent amount in the trust game and stated expectations reveal that the amount sent in the trust game is a weak measure of trust. The fear of future punishment, either within or after this life, for not being sufficiently generous to others, was the most frequently stated motive behind the respondents’ behavior, highlighting the potential importance of motives that cannot be inferred directly from people’s behavior.

Essay 4: Using the contingent valuation method in developing countries to value mortality risk reduction is particularly challenging because of the low level of education of the respondents. In this paper, we examine the effect of training the respondents regarding probabilities and risk reductions, in addition to using visual aids to communicate risk and risk reductions, in a contingent valuation survey. Our results indicate a significantly higher willingness to pay (WTP) for the trained sub-sample, and WTP is sensitive to the magnitude of risk reduction both with and without the training.

Essay 5: By assuming that an individual has preferences concerning different states of the world and these preferences can be described by an individual social welfare function, we explore the relative value of statistical life using survey data from Bangladesh. We apply a pair-wise choice experiment on life-saving programs to elicit individuals’ preferences regarding differences in the values of statistical lives related to age. We find that the relative value decreases strongly with age and that people have strong preferences for saving more life-years, rather than lives per se. Moreover, in specific follow-up questions, it is again elicited that a majority of the respondents believe that it is better, from a social point of view, to save younger individuals.