Wait and sell: farmers' individual preferences and crop storage in Burkina Faso

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Date

5 juin 2020

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INRAE

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info:eu-repo/semantics/OpenAccess


Mots-clés

discount rate risk aversion storage agriculture Q - Agricultural and Natural Resource Economics • Environmental and Ecological Economics/Q.Q1 - Agriculture/Q.Q1.Q13 - Agricultural Markets and Marketing • Cooperatives • Agribusiness Q - Agricultural and Natural Resource Economics • Environmental and Ecological Economics/Q.Q1 - Agriculture/Q.Q1.Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets Q - Agricultural and Natural Resource Economics • Environmental and Ecological Economics/Q.Q1 - Agriculture/Q.Q1.Q16 - R&D • Agricultural Technology • Biofuels • Agricultural Extension Services Q - Agricultural and Natural Resource Economics • Environmental and Ecological Economics/Q.Q1 - Agriculture/Q.Q1.Q18 - Agricultural Policy • Food Policy D - Microeconomics/D.D0 - General D - Microeconomics/D.D1 - Household Behavior and Family Economics/D.D1.D14 - Household Saving; Personal Finance -fin]/Risk Management [q-fin.RM]


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Tristan Le Cotty et al., « Wait and sell: farmers' individual preferences and crop storage in Burkina Faso », Archive Ouverte d'INRAE, ID : 10670/1.pp1zcg


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This paper investigates the reasons why African farmers differ in storage behavior and estab- lishes a causal link between farmers’ time and risk preferences and storage.We first provide a styl- ized onfarmstorage model inwhich impatience and risk aversion interact in the storage decision process. We show that impatience decreases grain storage whereas risk aversion may increase or decrease the quantity of grain stored from the harvest season to the lean season. We then test these propositions using original data on agricultural decisions, which we have collected from 1,500 farmers in two regions of Burkina Faso, who were also asked hypothetical questions about risk aversion and time discounting. Parameterized to our data, the model predicts that stored quantities decrease with impatience and increase with risk aversion. We then turn to an econo- metric analysis and provide an identification strategy which tackles a sample selection issue in our data. Consistently with the model, we find a negative impact of impatience and a positive impact of risk aversion on the storage level. The effects are statistically significant and robust to various measures of time and risk preferences. This paper provides one of the first set of field evi- dence that links risk aversion and time discounting to observed agricultural decisions.

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