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Heterogeneity in Time Preferences for an Investment in Irrigation

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Listed:
  • Kent Kovacs
  • Heather Snell

Abstract

We use a random time parameter bivariate probit to estimate individual time preferences using exponential and hyperbolic discounting forms for agricultural producers making an irrigation investment. The standard deviation estimate of the random time parameter suggests that there is substantial unobserved heterogeneity in time preferences across farmers. We control for time preference heterogeneity by making the time parameter a function of farm and personal characteristics. Using multiple irrigation techniques correlates with producers who are less patient for the investment. Education or participation in a government cost-share program for a similar irrigation investment correlates with greater patience by producers.

Suggested Citation

  • Kent Kovacs & Heather Snell, 2021. "Heterogeneity in Time Preferences for an Investment in Irrigation," Land Economics, University of Wisconsin Press, vol. 97(4), pages 819-835.
    • Handle: RePEc:uwp:landec:v:97:y:2021:i:4:p:819-835
    Note: DOI: 10.3368/le.97.4.060120-0075R1
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    File URL: http://le.uwpress.org/cgi/reprint/97/4/819
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    Cited by:

    1. Kent F. Kovacs & Shelby Rider, 2022. "Estimating the Demand for In Situ Groundwater for Climate Resilience: The Case of the Mississippi River Alluvial Aquifer in Arkansas," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 367-381, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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