Arno Riedl : "The Convergent and External Validity of Risk and Time Preference Elicitation Methods: Controlling for Measurement Error in a Large Population Sample"

Abstract:

"We evaluate the convergent and external validity of several commonly used risk and time preference elicitation methods with and without controlling for measurement error using the obviously related instrumental variable (ORIV) approach (Gillen et al., 2019). Preferences are elicited in a large sample of the Dutch population (N = 4,282) and linked to actual and self-reported field behavior in financial, occupational, and Covid-19 related health domains based on register data and survey questions. We find that controlling for measurement error improves the correlation between methods, suggesting that not accounting for measurement error can partly explain the lack of convergent validity among risk and time preference elicitation methods found in previous studies. In addition, we find differences between revealed and stated preference methods in terms of their external validity for risk preferences but not for time preferences. For risk preferences, stated methods correlate well with most types of field behavior and correlations are of economic significance, whereas revealed methods are at best weakly related to field behavior. In contrast, for time preferences both stated and revealed methods correlate well with field behavior. The difference between revealed and stated methods for risk preferences appears not to be driven by the higher complexity of the incentivized tasks."

Arno Riedl studied economics at the University of Vienna. He is professor of public economics at Maastricht University. In his research he uses an interdisciplinary approach to investigate human behavior.

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