This ICR is
approved for one-time collection under the requirements of XXXX.
While OMB supports the exploratory nature of this experimental
study on risk preferences, OMB requires the following to improve
the practical utility of this line of research: 1. Incentives (1):
OMB believes that there is ERS provided inconclusive evidence on
how increasing payment amounts to student participants in
experimental studies are related to their performance (Holt and
Laury 2002, and Holt and Laury 2005). Given the weak relationship
between payment amounts and performance and the unlikelihood of
reaching the payment amount of $100 (i.e., the conditional
probability of realizing a payment of $100 is 0.52%), OMB believes
capping the payment amounts to $100 may be sufficient to generate
enough variability in the experimental results to satisfy the goals
of this research. Accordingly, payments to respondents under this
clearance may not exceed $100 (excluding $10 show-up fee). Please
note that the payments to participants of economic experiments are
not same as incentives offered to respondents to surveys. The $110
cap which includes all payments to experimental subjects including
the show-up fee only applies to economic experimental subjects. 2.
Incentives (2): OMB believes that there is there is an extensive
literature on the relationship between payment amount and
performance in social and behavioral science research. However, the
conclusions resulting from those research studies on this topic
were not uniform and some were even contradictory or controversial.
OMB welcomes ERS proposed submission of supplementalWe would like
the ERS to submit a literature review of the relationship between
payment amount and performance that will provide a comprehensive
picture of the research findings in the social and behavioral
science research literature. ERS should also use the experiments
proposed to conduct its own analysis of the relationship between
payment amounts and performance and submit the results of that
analysis to OMB. 3. Literature Review: OMB welcomes ERS’ proposed
submission ofERS has not submitted a comprehensive review of the
experimental economics literature on risk preferences. Rather ERS
submitted a review of empirical economics literature on the effect
of USDA commodity support programs on agricultural production
choices and their effects on the environment. While improving USDA
commodity support program may be an end goal of understanding
farmer risk preferences, ERS must providehas not provided a
discussion on how the empirical literature on agricultural
production choices and effects on environment are related in this
ICR. ERS must provide the relevant literature review for the ICR
being submitted. If ERS submits reviews of related economic
literature, the agency must explain how these different fields are
related for the purposes of the ICR. 4. Cumulative Prospect Theory
and Myopic Loss Aversion: ERS offers cumulative prospect theory and
myopic loss aversion as potential explanations as why ERS models
tend to over-predict farmer enrollment levels in USDA insurance and
conservation programs. The ERS models are based on expected utility
theorem. Aside from hypothesizing that the farmer behavior may be
more consistent with cumulative prospect theory or myopic loss
aversion (e.g., testing for correlation between risk preferences
based on cumulative prospect theory and myopic loss aversion and
demand elasticities for crop insurance), ERS doesn’t offer much in
terms of modeling or theoretical predictions based on different
theories of behavior. OMB welcomes ERS’ proposed discussion onERS
should discuss whether the research protocol is capable of
identifying the level of difference between the predictions of
expected utility theorem, cumulative prospect theory and myopic
loss aversion. If ERS cannot model the difference between the
predicted levels of behavior, ERS must demonstrate how this
research furthers the understanding in experimental economics in
general or other indicators of practical utility. 5. Use of Student
Experimental Subjects: ERS proposes to use a university student
population as a first step to examine and to further understanding
of risk preferences that will lead to refinements in USDA models of
program participation. OMB agrees that the ease of administration
and low cost associated with using convenience samples of
university students is appropriate for exploratory investigations
such as whether the subjects understand the concepts the
researchers are trying to convey, whether the subjects use similar
or different language to convey the concepts that are being
explored, and whether the experimental protocols are working as
expected. Although ERS explicitly states that the purpose of this
research ICR is not to produce policy relevant estimates, ERS does
not explain how this exploratory research will inform further
research on risk preferences. ERS should expect to provide the
necessary research agenda for future ICR(s) associated with this
exploratory experimental economics ICR to clarify the practical
utility of this study. Furthermore, ERS should expect to provide
the necessary research agenda for future ICRs associated with any
exploratory experimental economics ICRs (aka research ICRs) to
clarify the practical utility of research ICRs. 6. Lack of Plans to
Conduct Preliminary Work to Assess Farmer Risk Preferences: ERS has
not provided to OMB any plans to extend the risk preference
research to farmer population. OMB encourages ERS to undertake
further work to ensure that farmer subjects understand the concepts
the researchers are trying to convey, develop experimental
protocols and any associated instruments to use appropriate
language to convey the concepts that are being explored, testing
for validity of the experimental protocol, and develop appropriate
sampling plan for the target farmer population. OMB believes that
without this work, ERS exploratory experimental economics may have
very limited practical utility.
Inventory as of this Action
Requested
Previously Approved
07/31/2020
36 Months From Approved
2,500
0
0
861
0
0
0
0
0
This data collection will use an
experiment with university students to study individual risk
preferences and demand for crop insurance and cover crop programs.
Outputs from the experiment will be used to inform future
experiments with farmers.
US Code:
7 USC
2204 Name of Law: General duties of Secretary; advisory
functions; research and development
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
Supporting Statement URI Part B 20170706.docx
Demographic Questionnaire