Wait and Sell: Farmers' individual preferences and crop storage in Burkina Faso
This paper investigates the reasons why African farmers who face similar financial constraints and agro-ecological conditions differ in storage behavior. We argue that even in cases when farmers are unconstrained and benefit from facilitated access to granaries, we can establish a causal link between discount rate and storage in a framework where agents are still time-consistent. We first provide a simple on farm storage model which shows mechanisms at stake when taking into account both risk and time preferences. We then test the model's predictions using original data on agricultural decisions, collected from 1500 farmers in two regions of Burkina Faso, who were also asked hypothetical risk aversion and time discounting questions. We provide a identification strategy which tackles the issue of self-selection in market participation. We find a statistically significant impact of risk and time preferences on storage behavior for unconstrained farmers. Our results are robust to various measures of risk and time preferences. This paper presents one of the first set of field evidence that links risk aversion and time discounting to observed agricultural decisions.
| Main Authors: | , , , |
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| Format: | conference_item biblioteca |
| Language: | eng |
| Published: |
s.n.
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| Subjects: | J10 - Manutention, transport, stockage et conservation des produits agricoles, U10 - Informatique, mathématiques et statistiques, |
| Online Access: | http://agritrop.cirad.fr/578983/ http://agritrop.cirad.fr/578983/1/ID578983.pdf |
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| Summary: | This paper investigates the reasons why African farmers who face similar financial constraints and agro-ecological conditions differ in storage behavior. We argue that even in cases when farmers are unconstrained and benefit from facilitated access to granaries, we can establish a causal link between discount rate and storage in a framework where agents are still time-consistent. We first provide a simple on farm storage model which shows mechanisms at stake when taking into account both risk and time preferences. We then test the model's predictions using original data on agricultural decisions, collected from 1500 farmers in two regions of Burkina Faso, who were also asked hypothetical risk aversion and time discounting questions. We provide a identification strategy which tackles the issue of self-selection in market participation. We find a statistically significant impact of risk and time preferences on storage behavior for unconstrained farmers. Our results are robust to various measures of risk and time preferences. This paper presents one of the first set of field evidence that links risk aversion and time discounting to observed agricultural decisions. |
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