IDEAS home Printed from https://ideas.repec.org/a/bla/agecon/v51y2020i3p323-341.html
   My bibliography  Save this article

Measurement errors in agricultural data and their implications on marginal returns to modern agricultural inputs

Author

Listed:
  • Kibrom A. Abay

Abstract

The low uptake of modern agricultural technologies in sub‐Saharan African countries has encouraged researchers to revisit the returns to (or profitability of) these agricultural inputs. A related strand of literature is exploring the allocative efficiency of these factors of production in African agriculture. However, all these studies rely on self‐reported agricultural data, which are prone to nonclassical measurement errors, the errors in these data are correlated with the true values of variables of interest. In this article we investigate the implication of measurement errors in self‐reported agricultural input and production data on marginal returns to these modern agricultural inputs. We consider a generic two‐sided measurement error problem where both production and inputs can be measured with error, and these errors can be correlated. We employ both self‐reported and objective measures of production and plot size to compute output elasticities under these alternative measurement scenarios. We find that using self‐reported production and plot size overestimates output elasticities and hence marginal returns to modern agricultural inputs (including chemical fertilizer and improved seed). These results are noteworthy in terms of informing conventional technology diffusion strategies as well as in view of revisiting existing presumptions about the profitability of modern agricultural inputs.

Suggested Citation

  • Kibrom A. Abay, 2020. "Measurement errors in agricultural data and their implications on marginal returns to modern agricultural inputs," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 323-341, May.
  • Handle: RePEc:bla:agecon:v:51:y:2020:i:3:p:323-341
    DOI: 10.1111/agec.12557
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/agec.12557
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Esther Duflo & Michael Kremer & Jonathan Robinson, 2011. "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 101(6), pages 2350-2390, October.
    2. Kibrom A. Abay & Leah Bevis & Christopher B. Barrett, 2019. "Measurement Error Mechanisms Matter: Agricultural Intensification with Farmer Misperceptions and Misreporting," NBER Working Papers 26066, National Bureau of Economic Research, Inc.
    3. Esther Duflo & Michael Kremer & Jonathan Robinson, 2008. "How High Are Rates of Return to Fertilizer? Evidence from Field Experiments in Kenya," American Economic Review, American Economic Association, vol. 98(2), pages 482-488, May.
    4. Carletto,Calogero & Gourlay,Sydney & Murray,Siobhan & Zezza,Alberto & Carletto,Calogero & Gourlay,Sydney & Murray,Siobhan & Zezza,Alberto, 2016. "Cheaper, faster, and more than good enough : is GPS the new gold standard in land area measurement ?," Policy Research Working Paper Series 7759, The World Bank.
    5. Sheahan, Megan & Barrett, Christopher B., 2017. "Ten striking facts about agricultural input use in Sub-Saharan Africa," Food Policy, Elsevier, vol. 67(C), pages 12-25.
    6. Abay, Kibrom A. & Abate, Gashaw T. & Barrett, Christopher B. & Bernard, Tanguy, 2018. "Correlated non-classical measurement errors, ‘second best’ policy inference and the inverse size-productivity relationship in agriculture:," IFPRI discussion papers 1710, International Food Policy Research Institute (IFPRI).
    7. Christine M. Moser & Christopher B. Barrett, 2006. "The complex dynamics of smallholder technology adoption: the case of SRI in Madagascar," Agricultural Economics, International Association of Agricultural Economists, vol. 35(3), pages 373-388, November.
    8. Fermont, Anneke & Benson, Todd, 2011. "Estimating yield of food crops grown by smallholder farmers: A review in the Uganda context," IFPRI discussion papers 1097, International Food Policy Research Institute (IFPRI).
    9. Minten, Bart & Koro, Bethlehem & Stifel, David, 2013. "The last mile(s) in modern input distribution: Evidence from Northwestern Ethiopia," ESSP working papers 51, International Food Policy Research Institute (IFPRI).
    10. Arthi, Vellore & Beegle, Kathleen & De Weerdt, Joachim & Palacios-López, Amparo, 2018. "Not your average job: Measuring farm labor in Tanzania," Journal of Development Economics, Elsevier, vol. 130(C), pages 160-172.
    11. Tesfamicheal Wossen & Tahirou Abdoulaye & Arega Alene & Pierre Nguimkeu & Shiferaw Feleke & Ismail Y Rabbi & Mekbib G Haile & Victor Manyong, 2019. "Estimating the Productivity Impacts of Technology Adoption in the Presence of Misclassification," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(1), pages 1-16.
    12. Spielman, David J. & Byerlee, Derek & Alemu, Dawit & Kelemework, Dawit, 2010. "Policies to promote cereal intensification in Ethiopia: The search for appropriate public and private roles," Food Policy, Elsevier, vol. 35(3), pages 185-194, June.
    13. Calogero Carletto & Sydney Gourlay & Paul Winters, 2015. "Editor's choice From Guesstimates to GPStimates: Land Area Measurement and Implications for Agricultural Analysis," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 24(5), pages 593-628.
    14. Aurélie P. Harou & Yanyan Liu & Christopher B. Barrett & Liangzhi You, 2017. "Variable Returns to Fertiliser Use and the Geography of Poverty: Experimental and Simulation Evidence from Malawi," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 26(3), pages 342-371.
    15. Bart Minten & Bethlehem Koru & David Stifel, 2013. "The last mile(s) in modern input distribution: Pricing, profitability, and adoption," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 629-646, November.
    16. Tavneet Suri, 2011. "Selection and Comparative Advantage in Technology Adoption," Econometrica, Econometric Society, vol. 79(1), pages 159-209, January.
    17. Shahidur Rashid & Nigussie Tefera & Nicholas Minot & Gezahegn Ayele, 2013. "Can modern input use be promoted without subsidies? An analysis of fertilizer in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 44(6), pages 595-611, November.
    18. Abay, Kibrom A. & Bevis, Leah E.M. & Barrett, Christopher B., 2019. "Measurement Error Mechanisms Matter: Agricultural intensification with farmer misperceptions and misreporting," 2019 Sixth International Conference, September 23-26, 2019, Abuja, Nigeria 295189, African Association of Agricultural Economists (AAAE).
    19. Abay, Kibrom A. & Blalock, Garrick & Berhane, Guush, 2017. "Locus of control and technology adoption in developing country agriculture: Evidence from Ethiopia," Journal of Economic Behavior & Organization, Elsevier, vol. 143(C), pages 98-115.
    20. Gourlay, Sydney & Kilic, Talip & Lobell, David B., 2019. "A new spin on an old debate: Errors in farmer-reported production and their implications for inverse scale - Productivity relationship in Uganda," Journal of Development Economics, Elsevier, vol. 141(C).
    21. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843, Elsevier.
    22. Kibrom A. Abay & Guush Berhane & Alemayehu Seyoum Taffesse & Kibrewossen Abay & Bethelhem Koru, 2018. "Estimating Input Complementarities with Unobserved Heterogeneity: Evidence from Ethiopia," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 495-517, June.
    23. Hyslop, Dean R & Imbens, Guido W, 2001. "Bias from Classical and Other Forms of Measurement Error," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 475-481, October.
    24. Sheahan, Megan & Black, Roy & Jayne, T.S., 2013. "Are Kenyan farmers under-utilizing fertilizer? Implications for input intensification strategies and research," Food Policy, Elsevier, vol. 41(C), pages 39-52.
    25. Desiere, Sam & Jolliffe, Dean, 2018. "Land productivity and plot size: Is measurement error driving the inverse relationship?," Journal of Development Economics, Elsevier, vol. 130(C), pages 84-98.
    26. Binswanger-Mkhize, Hans P. & Savastano, Sara, 2017. "Agricultural intensification: The status in six African countries," Food Policy, Elsevier, vol. 67(C), pages 26-40.
    27. Liverpool-Tasie, Lenis Saweda O. & Omonona, Bolarin T. & Sanou, Awa & Ogunleye, Wale O., 2017. "Is increasing inorganic fertilizer use for maize production in SSA a profitable proposition? Evidence from Nigeria," Food Policy, Elsevier, vol. 67(C), pages 41-51.
    28. Boisvert, Richard N., 1982. "The Translog Production Function: Its Properties, Its Several Interpretations and Estimation Problems," Research Bulletins 182035, Cornell University, Department of Applied Economics and Management.
    29. Carletto, Calogero & Savastano, Sara & Zezza, Alberto, 2013. "Fact or artifact: The impact of measurement errors on the farm size–productivity relationship," Journal of Development Economics, Elsevier, vol. 103(C), pages 254-261.
    30. Jeffrey D Michler & Emilia Tjernström & Simone Verkaart & Kai Mausch, 2019. "Money Matters: The Role of Yields and Profits in Agricultural Technology Adoption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(3), pages 710-731.
    31. William J. Burke & Thom. S. Jayne & J. Roy Black, 2017. "Factors explaining the low and variable profitability of fertilizer application to maize in Zambia," Agricultural Economics, International Association of Agricultural Economists, vol. 48(1), pages 115-126, January.
    32. Alemayehu Seyoum Taffesse & Fanaye Tadesse, 2017. "Pathways Less Explored—Locus of Control and Technology Adoption," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 26(suppl_1), pages 36-72.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kibrom A. Abay & Leah E. M. Bevis & Christopher B. Barrett, 2021. "Measurement Error Mechanisms Matter: Agricultural Intensification with Farmer Misperceptions and Misreporting," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 498-522, March.
    2. Abay, Kibrom A. & Abate, Gashaw T. & Barrett, Christopher B. & Bernard, Tanguy, 2019. "Correlated non-classical measurement errors, ‘Second best’ policy inference, and the inverse size-productivity relationship in agriculture," Journal of Development Economics, Elsevier, vol. 139(C), pages 171-184.
    3. Mensah, Edouard R. & Kostandini, Genti, 2020. "The inverse farm size-productivity relationship under land size mis-measurement and in the presence of weather and price risks: Panel data evidence from Uganda," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304477, Agricultural and Applied Economics Association.
    4. Helfand, Steven M. & Taylor, Matthew P.H., 2021. "The inverse relationship between farm size and productivity: Refocusing the debate," Food Policy, Elsevier, vol. 99(C).
    5. Kazushi Takahashi & Rie Muraoka & Keijiro Otsuka, 2020. "Technology adoption, impact, and extension in developing countries’ agriculture: A review of the recent literature," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 31-45, January.
    6. Mugizi, Francisco M.P. & Matsumoto, Tomoya, 2021. "A curse or a blessing? Population pressure and soil quality in Sub-Saharan Africa: Evidence from rural Uganda," Ecological Economics, Elsevier, vol. 179(C).
    7. Kibrom A. Abay & Guush Berhane & Garrick Blalock, 2018. "Locus of Control and Technology Adoption in Africa: Evidence from Ethiopia," Working Papers PMMA 2018-04, PEP-PMMA.
    8. Estelle Koussoubé & Céline Nauges, 2017. "Returns to fertiliser use: Does it pay enough? Some new evidence from Sub-Saharan Africa," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 44(2), pages 183-210.
    9. Holden, Stein T., 2018. "The Economics of Fertilizer Subsidies," CLTS Working Papers 9/18, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 16 Oct 2019.
    10. van Dijk, Michiel & Morley, Tomas & van Loon, Marloes & Reidsma, Pytrik & Tesfaye, Kindie & van Ittersum, Martin K., 2020. "Reducing the maize yield gap in Ethiopia: Decomposition and policy simulation," Agricultural Systems, Elsevier, vol. 183(C).
    11. Regassa, Mekdim D. & Melesse, Mequanint B., 2020. "Access to credit and heterogeneous effects on agricultural technology adoption: Evidence from large rural surveys in Ethiopia," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304499, Agricultural and Applied Economics Association.
    12. Omotilewa, Oluwatoba J. & Jayne, Thomas S. & Muyanga, Milu & Aromolaranc, Adebayo & Liverpool-Tasieb, Lenis Saweda O. & Awokuseb, Titus, 2020. "A revisit of farm size and productivity: Empirical evidence from a wide range of farm sizes in Nigeria," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304210, Agricultural and Applied Economics Association.
    13. Abay, Kibrom A. & Blalock, Garrick & Berhane, Guush, 2017. "Locus of control and technology adoption in developing country agriculture: Evidence from Ethiopia," Journal of Economic Behavior & Organization, Elsevier, vol. 143(C), pages 98-115.
    14. Gashaw Tadesse Abate & Tanguy Bernard & Alan de Brauw & Nicholas Minot, 2018. "The impact of the use of new technologies on farmers’ wheat yield in Ethiopia: evidence from a randomized control trial," Agricultural Economics, International Association of Agricultural Economists, vol. 49(4), pages 409-421, July.
    15. William J. Burke & Sieglinde S. Snapp & Thom S. Jayne, 2020. "An in‐depth examination of maize yield response to fertilizer in Central Malawi reveals low profits and too many weeds," Agricultural Economics, International Association of Agricultural Economists, vol. 51(6), pages 923-940, November.
    16. Porteous, Obie, 2020. "Trade and agricultural technology adoption: Evidence from Africa," Journal of Development Economics, Elsevier, vol. 144(C).
    17. Abay, Kibrom A. & Berhane, Guush & Taffesse, Alemayehu Seyoum & Koru, Bethlehem & Abay, Kibrewossen, 2016. "Understanding farmers’ technology adoption decisions: Input complementarity and heterogeneity:," ESSP working papers 82, International Food Policy Research Institute (IFPRI).
    18. Kopper, Sarah A. & Jayne, Thomas S. & Snapp, Sieglinde S., 2020. "Sifting through the weeds: Understanding heterogeneity in fertilizer and labor response in Central Malawi," Ecological Economics, Elsevier, vol. 169(C).
    19. Oyinbo, Oyakhilomen & Chamberlin, Jordan & Vanlauwe, Bernard & Vranken, Liesbet & Kamara, Alpha & Craufurd, Peter & Maertens, Miet, 2018. "Farmers' preferences for site-specific extension services: Evidence from a choice experiment in Nigeria," Working Papers 276175, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    20. Michelson, Hope & Fairbairn, Anna & Ellison, Brenna & Maertens, Annemie & Manyong, Victor, 2021. "Misperceived quality: Fertilizer in Tanzania," Journal of Development Economics, Elsevier, vol. 148(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:agecon:v:51:y:2020:i:3:p:323-341. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.