Are non-fungible payments attractive when they reduce risk exposure? Evidence from Colombia.

We conducted a lab-in-the-field experiment in which 214 Colombian rural workers must choose between cash or voucher payment for completing a real effort task. Although the voucher may be perceived as non-fungible, it halves the probability of suffering a negative shock that will reduce the participant's payment by two-thirds. Participants made four decisions in which we vary the voucher values such that this payment method offers, in expectation, between 88% to 123% of the cash payment (fixed across decisions). We find that uptake rates go from 32% to 56%, from the least to the most generous voucher. These rates are consistently larger compared to a reference sample of undergrad students from the same region (p-values from the χ2 tests for all four decisions fall below 0.035). Our between-subjects variations reveal that presenting the vouchers in descending order yields a higher uptake than the ascending order (p < 0.001 for the corresponding coefficient in a tobit and ordered logit regressions including municipality characteristics, an effect driven by the two decisions with the lowest voucher values, with p-values of 0.008 and 0.072 in the χ2 tests, respectively). We interpret this result as an endowment effect of the voucher's risk reduction.