Scandinavian Working Papers in Economics
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Centre for Land Tenure Studies, Norwegian University of Life Sciences CLTS Working Papers, Centre for Land Tenure Studies, Norwegian University of Life Sciences

No 8/17:
Probability Weighting and Input Use Intensity in a State-Contingent Framework

Stein T. Holden () and John Quiggin

Abstract: Climate risk represents an increasing threat to poor and vulnerable farmers in drought-prone areas of Africa. This study assesses the fertilizer adoption responses of food insecure farmers in Malawi, where Drought Tolerant (DT) maize was recently introduced. A field experiment, eliciting risk attitudes of farmers, is combined with a detailed farm household survey. A state-contingent production model with rank-dependent utility preferences is estimated. Over-weighting of small probabilities was associated with less use of fertilizer on all maize types and particularly so on the more risky improved maize types.

Keywords: Climate risk; state-contingent production; subjective probability weighting; technology adoption; adaptation; maize; Drought Tolerant maize; fertilizer use; (follow links to similar papers)

JEL-Codes: C93; D03; O33; Q12; Q18; (follow links to similar papers)

40 pages, May 5, 2017

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