Smallholder Farmer Risk Preferences in Northern Ghana:Evidence from a Controlled Field Experiment. Issue 10 (2nd October 2020)

• Record Type: Journal Article
• Authors: Kemeze, Francis H.; Miranda, Mario J.; Kuwornu, John K. M.; Anim-Somuah, Henry
• Is Part Of: Journal of development studies. Volume 56:Issue 10(2020)
• Page Start: 1894
• Page End: 1908
• Publication Date: 2020-10-02
• Subjects: Economic development -- Periodicals; Economic history -- 1945- -- Periodicals; Developing countries -- Economic conditions -- Periodicals; Développement économique -- Périodiques; Histoire économique -- 1945- -- Périodiques; Pays en voie de développement -- Conditions économiques -- Périodiques; 338.91
• DOI: 10.1080/00220388.2020.1715945
• Languages: English
• ISSNs: 0022-0388

Abstract

Abstract: We conduct a controlled field experiment to elicit risk preferences among maize farmers in Northern Ghana. Farmers participating in the experiment were asked to choose from a menu of lotteries representing different hypothetical probability distributions over yields produced by 'traditional' and 'high yield' maize varieties. We estimate a Rank-Dependent Utility Model (RDU) with an Expo-Power utility function, allowing for systematic subjective underweighting or overweighting of outcome probabilities and non-constant relative risk aversion. Based on our estimates, we cannot reject the hypotheses that decisions made by farmers in our study can be uniformly characterised by conventional Von Neumann–Morgenstern expected utility theory (EUT), but reject the hypothesis that farmers exhibit constant relative risk aversion.