Hutton researchers promote the use of experimental economic methods

"The goal was to promote the use of economic experiments in interdisciplinary research on land and resource use in rural Scotland"

By Peter Cock, James Gurd, Laure Kuhfuss and Simone Piras

An interdisciplinary Hutton team – including two agricultural economists, a computational scientist, and a graduate researcher – has run a project to introduce economic experiments to their colleagues and PhD students. The project, funded by the Macaulay Development Trust (MDT), entailed participation in a real economic experiment. The goal was to promote the use of such methods in interdisciplinary research on land and resource use in rural Scotland, while a mobile laboratory was set up in parallel.

What are economic experiments? As with field trials, the idea behind economic experiments is to test assumptions under a controlled setting. Participants are asked to take part in a series of choices following a rigorous and standardised protocol. Because participants make the same choices under different circumstances, researchers can isolate the effect of these circumstances (treatments) on decision-making. This controlled setting is the main advantage of experiments, as real-life behaviours are being influenced by many uncontrollable elements. Experimental protocols can be replicated and reproduced, allowing the verification of the robustness of findings.

Are there different types of economic experiments? There are a range of approaches, but those we hope to run at the Hutton, all rely on participants playing serious “games” reproducing real-life decisions. Such type of experiments may differ in the pool of participants (students or the population of interest) and the level of framing (context) provided. A decontextualised experiment would entail choosing between unframed alternatives (e.g., A or B), while a contextualised experiment would frame the choices as an actual decision (e.g., donating for the management of a national park). In economics a key feature of experiments is the use of actual incentives – usually cash payments whose amount depends on the decisions made. These incentives ensure that participants reveal their true preferences, reducing strategic bias or social desirability/conformity bias that could characterise responses in an interview or questionnaire.

What information can economic experiments provide? First, experiments can improve the understanding of individual behaviours and decisions and the role of factors such as risk, loss or inequality aversion, social norms, pro-social and pro-environmental preferences, etc. This understanding can in turn be fed into decision-making models to inform policies and/or support the development of innovations, increasing their likely adoption by end-users. Experiments can also serve as small-scale tests of new interventions before selecting the most promising designs for a larger scale pilot.

And what is a mobile experimental economic lab? Simply put – a set of networked tablets, plus a master computer and the tools for moving them around Scotland and setting up a session, for example in a community hall or in a rural school as shown below. The tablets are networked so participants can interact anonymously, allowing collection of information about the impact of such interaction.

A mobile laboratory (tablets and netbooks) set up for running economic experiments in a rural school. Photo taken by Simone Piras in the framework of the project "How do you eat? A pilot project looking at appreciating and not wasting food in the context of food and agri-environmental education", (originally in Italian), funded by the Emilia-Romagna Region (Italy).

Which type of experiment was run in the MDT project, and how did it go? Hutton employees and PhD students played a lottery game testing their attitude to risk (shown below), and a five-round “volunteer’s dilemma” in which someone had to bear a cost in order to deliver a public good that otherwise was not generated. They were asked to play as farmers in a catchment subject to flooding, or residents in a small rural community. At least one of the farmers had to provide their field as a flood plain to avoid everyone from losing their yield at the cost of their own production; at least one of the rural residents had to open and tidy up the local community centre so that their fellow residents could enjoy their time there. All of this was without knowing the identity of their fellow players or communicating. The experiment was programmed using the open-source software oTree, and was run online.

The lottery game played by Hutton colleagues visualised on a computer screen.

Participants proved to be more risk-averse than a rational payoff-maximising player would be. Second, they showed to be very altruist, as we observed very high numbers of volunteers, honouring the Hutton core value and culture of “leading by example” and “working together for better outcomes”. Unfortunately, the sample was small and not representative of the population of resource users and managers, otherwise many problems such as overexploitation would be easily solved. These results were presented in a debriefing workshop, when Sophie Thoyer illustrated the benefits of experiments for the design of agricultural policy, and Matteo Ploner explained the type of social dilemmas underpinning experiments.

Are there Hutton projects that make use of experiments? Economic experiments are already embedded in at least four other projects, including H2020 FoodLAND, H2020 FRAMEwork, and two projects of the Scottish Government's Rural and Environment Science and Analytical Services Division’s Strategic Research Programme (2022–2027) which will study farmers’ behaviour and the dynamics of community wealth generation.The MDT team are open to further collaboration.

This blog post was funded by the Macaulay Development Trust in the framework of the project “Introducing experimental methods for the study of resource- and land-related decisions in rural Scotland”.

Disclaimer: The views expressed in this blog post are the views of the author(s), and not an official position of the institute or funder.