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Measuring risk attitudes among Mozambican farmers:

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  • de Brauw, Alan
  • Eozenou, Patrick

Abstract

Although farmers in developing countries are generally thought to be risk averse, little is known about the actual form of their risk preferences. In this paper, we use a relatively large field experiment to explore risk preferences related to sweet potato production among a sample of farmers in northern Mozambique. We explicitly test whether preferences follow the constant relative risk aversion (CRRA) utility function and whether farmers follow expected utility theory or rank dependent utility theory in generating their preferences. We find that we can reject the null that farmers'preferences follow the CRRA utility function in favor of the more flexible power risk aversion preferences. In a mixture model, we find that about three-fourths of farmers in our sample develop risk preferences by rank dependent utility. We also find that by making the common CRRA assumption in our sample, we poorly predict risk preferences among those who are less risk averse.

Suggested Citation

  • de Brauw, Alan & Eozenou, Patrick, 2011. "Measuring risk attitudes among Mozambican farmers:," HarvestPlus Working Papers 6, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:harvwp:6
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    Cited by:

    1. Petraud, Jean & Boucher, Stephen & Carter, Michael, 2015. "Competing theories of risk preferences and the demand for crop insurance: Experimental evidence from Peru," 2015 Conference, August 9-14, 2015, Milan, Italy 211383, International Association of Agricultural Economists.
    2. Ihli, Hanna Julia & Chiputwa, Brian & Musshoff, Oliver, 2013. "Do Changing Probabilities or Payoffs in Lottery-Choice Experiments Matter? Evidence from Rural Uganda," Discussion Papers 158146, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    3. Urquía-Grande, Elena & Rubio-Alcocer, Antonio, 2015. "Agricultural infrastructure donation performance: Empirical evidence in rural Ethiopia," Agricultural Water Management, Elsevier, vol. 158(C), pages 245-254.
    4. Bauermeister, Golo-Friedrich & Mußhoff, Oliver, 2017. "Multiple switching behavior in different display formats of multiple price lists," DARE Discussion Papers 1706, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    5. Malan, Benoît & Saitone, Tina L. & Sexton, Richard J., 2015. "Marketing Cooperatives in Developing Countries: Who Joins Them and How Can They Do Better?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205522, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    6. Reimer, Jeffrey & Fisher, Monica, 2014. "Are modern varieties always better? An economic analysis of maize varietal selection," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 9(4), December.
    7. Bauermeister, Golo-Friedrich & Mußhoff, Oliver, 2016. "Risk Attitude And Inconsistencies - Does The Choice Of Display Format And Risk Elicitation Method Influence The Outcomes?," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244764, German Association of Agricultural Economists (GEWISOLA).
    8. Ward, Patrick S. & Singh, Vartika, 2013. "Risk and Ambiguity Preferences and the Adoption of New Agricultural Technologies: Evidence from Field Experiments in Rural India," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150794, Agricultural and Applied Economics Association.
    9. Annemie Maertens & A. V. Chari & David R. Just, 2014. "Why Farmers Sometimes Love Risks: Evidence from India," Economic Development and Cultural Change, University of Chicago Press, vol. 62(2), pages 239-274.
    10. Deb, Rahul & Suri, Tavneet, 2013. "Endogenous emergence of credit markets: Contracting in response to a new technology in Ghana," Journal of Development Economics, Elsevier, vol. 101(C), pages 268-283.
    11. Milla Nyyssölä & Jukka Pirttilä & Susanna Sandström, 2014. "Technology Adoption and Food Security in Subsistence Agruculture – Evidence from a Group-Based Aid Project in Mozambique," Finnish Economic Papers, Finnish Economic Association, vol. 27(1), pages 1-33, Autumn.
    12. Bauermeister, Golo & Musshoff, Oliver, 2016. "Risk Aversion and Inconsistencies - Does the Choice of Risk Elicitation Method and Display Format Influence the Outcomes?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235348, Agricultural and Applied Economics Association.
    13. Holden , Stein T. & Quiggin, John, 2015. "Climate risk and state-contingent technology adoption: The role of risk preferences and probability weighting," Working Paper Series 15-2015, Norwegian University of Life Sciences, School of Economics and Business.
    14. repec:oup:erevae:v:44:y:2017:i:2:p:285-308. is not listed on IDEAS
    15. Holden, Stein T., 2015. "Risk Preferences, Shocks and Technology Adoption: Farmers’ Responses to Drought Risk," CLTS Working Papers 3/15, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    16. Suzuki, Aya, 2014. "Risk on Dynamic Behavior of Farmers in the Export Market: A Case from the Pineapple Industry in Ghana," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170665, Agricultural and Applied Economics Association.
    17. Ihli, Hanna Julia & Chiputwa, Brian & Musshoff, Oliver, 2016. "Do Changing Probabilities or Payoffs in Lottery-Choice Experiments Affect Risk Preference Outcomes? Evidence from Rural Uganda," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(2), May.

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