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Risk Preferences and Farmers' Livelihood Strategies: A Case Study from Eastern Ethiopia

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  • Molla Alemayehu
  • Joost Beuving
  • Ruerd Ruben

Abstract

Low‐return livelihood strategies are crucial drivers of food insecurity that may cause irreversible long‐term damage to livelihoods. Experiments and survey results were used to examine the relative importance of risk preference and socio‐economic characteristics for households' decision to engage in specific livelihood strategies in rural Ethiopia. Agricultural intensification and diversification are prevailing strategies, and farming households who participate in non‐farm activities are better off than others. Education, information access, household income and cooperative membership correlate significantly with high participation rates in non‐farm activities and on‐farm diversification. Risk preference is an especially important barrier to households' participation in these strategies. Therefore, policy interventions that help to expand farmers' asset base and reduce entry barriers to these strategies are required to improve smallholders' welfare. Copyright © 2018 John Wiley & Sons, Ltd.

Suggested Citation

  • Molla Alemayehu & Joost Beuving & Ruerd Ruben, 2018. "Risk Preferences and Farmers' Livelihood Strategies: A Case Study from Eastern Ethiopia," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(8), pages 1369-1391, November.
    • Handle: RePEc:wly:jintdv:v:30:y:2018:i:8:p:1369-1391
    DOI: 10.1002/jid.3341
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    Cited by:

    1. Deolu-Ajayi, Ayodeji O. & Aranguiz, Adolfo Alvarez & Alho, Carlos Francisco Brazão Vieira & Siegmund-Schultze, Marianna & Ndambi, Asaah & Selassie, Yihenew G. & Abebe, Yenesew & Groot, Jeroen C.J. & H, 2023. "Integrated analysis of opportunities and trade-offs for mixed crop-livestock farm types in Amhara, Ethiopia," Agricultural Systems, Elsevier, vol. 208(C).
    2. Doan Nainggolan & Faizal Rahmanto Moeis & Mette Termansen, 2023. "Does risk preference influence farm level adaptation strategies? – Survey evidence from Denmark," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(7), pages 1-23, October.
    3. Bonan, Jacopo & LeMay-Boucher, Philippe & Scott, Douglas, 2022. "Can hypothetical measures of time preference predict actual and incentivised behaviour? Evidence from Senegal," World Development, Elsevier, vol. 159(C).
    4. Omotuyole Isiaka Ambali & Toritseju Begho, 2021. "Examining the relationship between farmers' perceived trust and investment preferences," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(8), pages 1290-1303, November.
    5. Patrick Opoku Asuming, 2023. "Risk attitudes and asset diversification: Evidence from Ghana," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(5), pages 915-960, July.
    6. Yueyue He & Tanveer Ahmed, 2022. "Farmers’ Livelihood Capital and Its Impact on Sustainable Livelihood Strategies: Evidence from the Poverty-Stricken Areas of Southwest China," Sustainability, MDPI, vol. 14(9), pages 1-24, April.
    7. Mbanze, Aires Afonso & Viera da Silva, Carina & Ribeiro, Natasha Sofia & Silva, João F. & Santos, José Lima, 2020. "A Livelihood and Farming System approach for effective conservation policies in Protected Areas of Developing Countries: The case study of the Niassa National Reserve in Mozambique," Land Use Policy, Elsevier, vol. 99(C).

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