Syndicate content

Add new comment

Submitted by Guy Stecklov on

We appreciate the attention given to our paper. Also agree with many of his suggestions offered by Markus for future directions. Regarding the concern just raised on how we can know this is under- and not over-reporting - we took this concern seriously. Several basic arguments are made in the paper although we acknowledge these are only validated indirectly. The most pertinent I’ll copy more or less directly from the (sadly) gated paper, which I’m happy to share with direct email to me:

(a) In general, evidence suggests that income and expenditures tend to be underreported in Indian survey data (Bakshi, 2008; Deaton and Kozel, 2005). Furthermore, earlier evidence argues that income is typically more prone to misreporting and underreporting than are expenditures (Deaton, 1997). This suggests that the level of correspondence between income and expenditures can be viewed as a marker of data consistency… the gap between income and expenditures is greater in treatment households suggests that incentives are leading to more underreporting of income…
(b) If the promise of an incentive is driving a desire to present oneself as needy and deserving of further assistance, we would expect to find that the effect is largest for reports on non- essential expenditures. This is exactly what we show in Table 8: there is little influence of incentives on essentials or basic commodities, but expenditures on luxury items are strongly affected by the incentive. They drive much of the results in terms of expenditures. The same can be said about the least visible asset categories such as appliances, jewellery and recreation (see Table 9).
(c) Incentives have no influence on how visible indicators of wealth are reported (Table 10) despite the significant reduction in reported income, expenditures and non-visible assets.
(d) Finally, the lack of any clear directional effect of incentives across a wide range of demo- graphic, political and socially sensitive variables means that incentives are not generating a broadly felt increase in exchange motivations: one of the suggested mechanisms through which it should lead to more honest data reporting. This itself reduces the likelihood that exchange or obligations arising from the promise of payment are central factors in how incentives affect behaviour.