Just Ask Them Twice: Choice Probabilities and Identification of Ex ante returns and Willingness-To-Pay

Abstract

One of the exciting developments in the stated preference literature is the use of probabilistic stated preference experiments to estimate semi-parametric population distributions of ex ante returns and willingness-to-pay (WTP) for a choice attribute. This relies on eliciting several choices per individual, and estimating separate demand functions, at the cost of possibly long survey instruments. This paper shows that the distributions of interest can be recovered from at most two stated choices, without requiring ad-hoc parametric assumptions. Hence, it allows for significantly shorter survey instruments. The paper also shows that eliciting probabilistic stated choices allows identifying much richer objects than we have done so far, and therefore, provides better tools for ex ante policy evaluation. Finally, it showcases the feasibility and relevance of the results by studying the preference of high ability students in Cote d'Ivoire for public sector jobs exploiting a unique survey on this population. Our analysis supports the claim that public sector jobs might significantly increase the cost of hiring elite students for the private sector.

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