To pay or not to pay: Measuring risk preferences in lab and field

Measuring risk preferences in the field is critical for policy, however, it can be expensive and may generate unequal payoffs due to bad luck. For instance, the commonly used measure of Holt and Laury (2002) relies on a dozen of lottery choices and payments which makes it time consuming and costly, but also raises moral concerns as a result of the unequal payments generated by the lotteries. We propose a short version of the Holt and Laury (2002) which produces in the lab (Spain) the same results as the long HL. Using the short HL in the field (Honduras and Nigeria), we observe that paying or not for the measurement of risk preferences produces the same findings. Our low-cost approach makes the measurement of risk preferences simpler, faster and cheaper in the lab and field.