Attitudes Toward Risk: Experimental Measurement in Rural India

Binswanger, Hans P.

doi:10.2307/1240194

Cited by 1,297 publications

(888 citation statements)

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“…Economic field experiments exploring people's risk preferences in developing countries have a long tradition, starting with Binswanger (1980;. In more recent studies risk and time preferences have been jointly elaborated.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

“…Most studies on risk preferences use expected utility theory and implicitly assume that risk aversion comes solely from the concavity of a subject's utility function (Binswanger 1980;Wik et al 2004;Brick, Visser, and Burns 2012;Hardeweg, Menkhoff, and Waibel forthcoming). Tversky and Kahneman's (1979; prospect theory is an expansion of expected utility theory in two ways: (i) the differentiation in the value of gains and losses, and (ii) the weighting of outcome probabilities.…”

Section: Risk Preferencesmentioning

confidence: 99%

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Simultaneous Estimation of Risk and Time Preferences among Small‐scale Cattle Farmers in West Africa

Liebenehm¹,

Waibel²

2014

American J Agri Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThis study investigates risk and time preferences of small-holder cattle farmers in West Africa. We apply a discounted utility model and jointly estimate a prospect theory-based utility function and a quasi-hyperbolic discounting function using a maximum likelihood method. Results show that West African farmers are less lossaverse and are more patient than suggested by comparable studies in Asian developing countries. The main factors influencing farmers' risk and time preferences are cattle herd size and net revenue from sales of cattle products.

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Section: Conceptual Frameworkmentioning

confidence: 99%

Section: Risk Preferencesmentioning

confidence: 99%

Simultaneous Estimation of Risk and Time Preferences among Small‐scale Cattle Farmers in West Africa

Liebenehm¹,

Waibel²

2014

American J Agri Economics

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“…Risk neutral farmers (0 equals zero) only care about maximizing profits, so they generally choose to cultívate high profit, but risl<y crops. As farmers become more risk averse (0 > 0), they will refuse to accept risk and will choose less-risl<y crop mixes even if that means sacrificing part of their potential profit.^ Numerous theoretical (Friedman and Savage, 1948;Von Neuman and Morgenstern, 1944) and empirical studies (Binswanger, 1980;Chavas, 2004) indicate that farmers typically behave in risk-averse ways and that they behave as utility maximizers rather than profit maximizers only. Ignoring risk-averse behavior may actually lead to unacceptable and unreal results in farm planning models (Hazell and Norton, 1986).…”

Section: The Economic Modelmentioning

confidence: 99%

Integrated assessment of policy interventions for promoting sustainable irrigation in semi-arid environments: A hydro-economic modeling approach

Ferrer

Varela‐Ortega

Purkey

2013

Journal of Environmental Management

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Keywords:Water management Sustainable irrigation Hydro-economic modeling Policy analysis Semi-arid regions Sustaining irrigated agriculture to meet food production needs while maintaining aquatic ecosystems is at the heart of many policy debates in various parts of the world, especially in arid and semi-arid áreas. Researchers and practitioners are increasingly calling for integrated approaches, and policy-makers are progressively supporting the inclusión of ecological and social aspects in water management programs. This paper contributes to this policy debate by providing an integrated economic-hydrologic modeling framework that captures the socio-economic and environmental effects of various policy initiatives and climate variability. This modeling integration includes a risk-based economic optimization model and a hydrologic water management simulation model that have been specified for the Middle Guadiana basin, a vulnerable drought-prone agro-ecological área with highly regulated river systems in southwest Spain. Namely, two key water policy interventions were investigated: the implementation of mínimum environmental ñows (supported by the European Water Framework Directive, EU WFD), and a reduction in the legal amount of water delivered for irrigation (planned measure included in the new Guadiana River Basin Management Plan, GRBMP, still under discussion). Results indícate that current patterns of excessive water use for irrigation in the basin may put environmental ñow demands at risk, jeopardizing the WFD's goal of restoring the 'good ecological status' of water bodies by 2015. Conñicts between environmental and agricultural water uses will be stressed during prolonged dry episodes, and particularly in summer low-ñow periods, when there is an important increase of crop irrigation water requirements. Securing mínimum stream ñows would entail a substantial reduction in irrigation water use for rice cultivation, which might affect the profitability and economic viability of small rice-growing farms located upstream in the river. The new GRBMP could contribute to balance competing water demands in the basin and to increase economic water productivity, but might not be sufficient to ensure the provisión of environmental ñows as required by the WFD. A thoroughly revisión of the basin's water use concession system for irrigation seems to be needed in order to bring the GRBMP in Une with the WFD objectives. Furthermore, the study illustrates that social, economic, institutional, and technological factors, in addition to bio-physical conditions, are important issues to be considered for designing and developing water management strategies. The research initiative presented in this paper demonstrates that hydro-economic models can explicitly intégrate all these issues, constituting a valuable tool that could assist policy makers for implementing sustainable irrigation policies.

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“…20 The restriction to the unit interval is easily relaxed to allow γ to belong to any open interval (0, c) for a known constant c. The choice of c is consistent with findings in experimental studies of the elicitation of risk-aversion parameters (see e.g. Binswanger, 1980) which find that a substantial fraction of poor households in rural India have rates of risk-aversion within this interval. 21 The risk-aversion parameter γ is allowed to depend upon exogenous agent characteristics x a as well as malaria status (which implies state dependent utility).…”

Section: Parametric Utility Specificationmentioning

confidence: 71%

Bednets, Information and Malaria in Orissa

et al. 2009

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We study the identification and estimation of key parameters in a basic model of technology adoption when specifically collected information on subjective beliefs and expectations about the technology's impact is available. We discuss identification with both non-parametrically and parametrically specified utility as well as parametric and semi-parametric specifications for unobserved heterogeneity. We propose parametric and semi-parametric estimation methods to recover underlying preferences and use the model to study the adoption of bednets among poor households in rural Orissa (India). We carry out counterfactual exercises to examine the effects of price and belief changes on net ownership decisions. The results suggest that net purchase decisions are relatively insensitive to changes from current prices and beliefs. The methods proposes here should have applicability to other discrete choice settings with non-linear indices. JEL: I1,I3 Key words: Malaria, Expectations, Bednets, Identification, Median Restrictions * We thank seminar participants at UC Berkeley, Yale, UC Riverside, USC, UVA and the World Bank for useful comments. We also thank Han Hong, Michael Luca, Luigi Pistaferri, Priya Satia, John Strauss and Frank Wolak for helpful discussions. We are deeply indebted to Bharat Integrated Social Welfare Agency for facilitating access to villages covered by their microfinance network; to Lakshmi Krishnan and Benita Sarah Matthew for their superb work in supervising the project; and to the whole team of survey monitors in Sambalpur for their tireless efforts. We are also very grateful to Annie Duflo and the Center for Micro Finance for invaluable help in making this study possible. The authors gratefully acknowledge financial support from the Center for Micro Finance (Chennai, India) and the Stanford Presidential Fund for Innovation in International Studies. We are solely responsible for all errors and omissions. Aprajit Mahajan,

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Attitudes Toward Risk: Experimental Measurement in Rural India

Cited by 1,297 publications

References 4 publications

Simultaneous Estimation of Risk and Time Preferences among Small‐scale Cattle Farmers in West Africa

Simultaneous Estimation of Risk and Time Preferences among Small‐scale Cattle Farmers in West Africa

Integrated assessment of policy interventions for promoting sustainable irrigation in semi-arid environments: A hydro-economic modeling approach

Bednets, Information and Malaria in Orissa

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