Poverty, politics, and preferences: Field Experiments and survey data from Vietnam

Abstract

We conducted field experiments to investigate how wealth, political history, occupation, and other \ndemographic variables (from a comprehensive earlier household survey) are correlated with risk, \ntime discounting and trust in Vietnam. Our experiments suggest risk and time preferences depend \non the stage of economic development. In wealthier villages, people are less loss-averse and more \npatient. Our research also shows people who participate in ROSCAs (rotating credit associations) \nare more patient than non-participant, but those who participate in bidding ROSCAs are less patient \nand more risk averse than those who participate in fixed ROSCAs. Results from a trust game \ndemonstrate both positive and negative effects of communism. Villagers in the South tend to invest \nmore in low-income partners without expecting repayment. On the other hand, people in the north \nare more trustworthy but do not pass on more money to the poor. Our findings also suggest market \nactivities, like starting a small trade business, are correlated with trust and trustworthiness. We also \ncontribute to experimental methodology by using choices that separate different aspects of risk \naversion and time preferences in behavioral economics specifications.

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