The Impact of Development Interventions on Individual Risk Preferences : Evidence from a Field-Lab Experiment and Survey Data

In poor rural settings, individual risk preferences represent one of the channels driving the shift from low-return/low-risk activities towards high-return/high-risk activities. This study takes advantage of the data collected for the impact evaluation of an unconditional cash transfers program and a community development package in rural Lesotho. The paper has two main goals. First, we investigate the effects of the programs on risk preferences measured via laboratory experiments in the field and survey instrument. Second, we conduct a mediation analysis to quantify the extent to which the programs affect risky investment decisions in real life through changes in risk preferences