Beliefs, Signal Quality, and Information Sources: Experimental Evidence on Air Quality in Pakistan

• In Event: Institutions and Information in Environmental Public Goods Provision

Abstract

An emerging body of empirical work emphasizes the demand for accurate information about air pollution in developing cities. Governments in developing countries, however, often struggle to provide consistent and reliable air quality information. Consequently, various stakeholders, including citizens' groups, international and bilateral agencies, and research institutions, have begun providing air quality information in the absence of reliable local government services. For example, in Lahore, a citizens' group called Pakistan Air Quality Initiative (PAQI) crowd-sources low-cost monitors across the city and publishes their readings on social media. Private alternatives may improve citizens' access to air quality information. However, the efficacy of private alternatives may depend upon citizens' preferences for and beliefs about the accuracy of the information sources.

We study how citizens in a developing city form beliefs about air quality and modify their behavior as they infer the quality of information from its attributed source. We conduct a randomized information intervention to address the following research questions; First, are citizens willing to pay for air quality information, regardless of the sources to which it is attributed? Second, holding quality constant, is there a differential willingness to pay for air quality information by the source? Third, how are beliefs about the service quality and the state of air pollution levels affected by the sources to which they are exposed? And lastly, does exposure to information from various sources induce differential policy preferences for environmental services?

We conduct an intervention in which we send daily air quality forecasts via SMS to a sample of residents in one of Lahore's working-class neighborhoods. We experimentally vary the salience of information sources. In one arm, respondents are told that the forecasts are constructed using data from the Punjab Environmental Protection Department (EPD), a government agency responsible for reporting on air quality. On the other arm, respondents are told that the forecasts are constructed using data from a citizens' group called Pakistan Air Quality Initiative (PAQI). The experimental setup allows us to measure not only if and how citizens value air quality information but also how they value and trust the sources from which the information comes.

The results show that participants place a high value on receiving air quality information: their average WTP for two more months of service was PKR 238, approximately the price of a month’s worth of standard mobile services. Importantly, labeling the service as governmental or non-governmental did not lead to significant differences in WTP. However, individuals who were told the forecasts came from the government viewed them as 12% less accurate, even though the forecast content was identical across treatments. Moreover, participants developed stronger preferences for whichever source they had been assigned, as measured through a donation game and a series of stated-preference measures. These results suggest that actual experience with an information service may shift attitudes toward that provider. These findings broaden our understanding of how competition in public goods provision influences consumer behavior, especially when credibility is at stake.

Author

• Shotaro Nishimura Nakamura, Federal Trade Commission
  Presenting Author