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Applying New Insights from Behavioral Economics to Old Puzzles in International Agricultural Development

Paper Session

Saturday, Jan. 7, 2023 8:00 AM - 10:00 AM (CST)

New Orleans Marriott
Hosted By: Agricultural and Applied Economics Association
  • Chairs:
    Ashok Mishra, Arizona State University
  • Jonathan Malacarne, University of Maine

Locus of Control as a Moderator of the Relationship Between Experience and Learning

Jonathan Malacarne
,
University of Maine

Abstract

This paper analyses agricultural technology adoption and beliefs about the perceived returns to
adoption using the lens of locus of control. Locus of control—or the extent to which households
believe that outcomes are determined by one’s actions rather than by external forces— has
previously been linked to human capital investments (Abay et al.,2017; Lajaaj & Macours, 2021).
This paper draws on data from 2,500 maize-growing households in Mozambique and explicitly
models (i) the pathway through which locus of control is formed and (ii) the influence of locus of
control on technology adoption through beliefs about the returns to investment. The relationship
between past weather shocks and current beliefs about the ability to affect outcomes is estimated
first—both for life broadly and for the specific domain of agriculture. These individual-specific
locus of control measures are then related to the perceived returns to agricultural investment and,
finally, to observed investment decisions. This paper differs from economic research on hope and
aspirations by viewing the behavioral influence on decision-making not as a failure on the part of
the individual but as an outflow of living in an objectively risky environment.

Aspirations, Cognitive Function, and Economic Performance: An Investigation among Smallholder Farm Managers in India

Selina Bruns
,
University of Gottingen
Bernard Dalheimer
,
Kiel University

Abstract

This paper investigates the interactive effects of cognitive function and aspirations on smallholder
farm productivity. Specifically, this paper (i) measures the level of cognitive function and
aspirations of smallholder farmers, (ii) models the production process of farm output, (iii)
estimates productivity and efficiency by means of stochastic frontier analysis, and (iv) measures
the effect of cognitive function and aspirations to explain differences in economic performance.
This research relies on a farm survey collected among 1,200 smallholder producers in Bangaluru,
India, in 2022. In this study, the conventional input-output and technology data, alongside
conventional socioeconomic control variables, is augmented by assessing self-assessed aspirations
(Villacis et al., 2022; Knapp et al., 2021) and cognitive function—measured using the Raven's
Progressive Matrices test. (Mani et al., 2013; Schilbach et al., 2016; Raven and Rust, 2008). This
paper extends the literature on empirical poverty research by linking cognitive function with
aspirations. While several studies have focused on either of the two in both theoretical and
empirical analyses, this study overcomes this restriction. It proposes a framework to investigate
the effects of these drivers jointly.

Aspirations, Risk Preferences, and Investments in Agricultural Technologies

Alexis Villacis
,
Arizona State University
Jeffrey Bloem
,
USDA Economic Research Service
Ashok Mishra
,
Arizona State University

Abstract

This paper examines the relationship between aspirations and investment in agricultural
technologies while accounting for the influence of risk preferences—a potentially important
omitted variable in previous studies. This study uses data collected among cacao farmers in
Ecuador and lab-in-the-field experiments to elicit risk preference parameters. This research tests
the theoretical predictions implied in the work of Genicot and Ray (2017), which demonstrate the
possibility of an inverted U-shape relationship between the income aspirations gap and
investments. Although several studies test for an inverted U-shaped relationship or behavior
consistent with "aspirations frustration" (Janzen et al., 2017; Ross, 2019; Bloem, 2021; McKenzie,
Mohpal, and Yang, 2022), none of them have examined investments in agricultural technologies.
This research finds that an inverted U-shaped relationship between the income aspirations gap and
investments in agricultural technologies exists when considering relatively long-term investments
(e.g., farm renovations) but not when considering relatively short-term investments (e.g., fertilizer
use). More importantly, this study shows that the observed inverted U-shaped relationship is robust
to the inclusion of experimentally elicited risk preference parameters.

Discussant(s)
Hope Michelson
,
University of Illinois
JEL Classifications
  • A1 - General Economics