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Smallholder Farmer Risk Preferences in Northern Ghana:Evidence from a Controlled Field Experiment

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  • Francis H. Kemeze
  • Mario J. Miranda
  • John K. M. Kuwornu
  • Henry Anim-Somuah

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.

Suggested Citation

  • Francis H. Kemeze & Mario J. Miranda & John K. M. Kuwornu & Henry Anim-Somuah, 2020. "Smallholder Farmer Risk Preferences in Northern Ghana:Evidence from a Controlled Field Experiment," Journal of Development Studies, Taylor & Francis Journals, vol. 56(10), pages 1894-1908, October.
    • Handle: RePEc:taf:jdevst:v:56:y:2020:i:10:p:1894-1908
    DOI: 10.1080/00220388.2020.1715945
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    Cited by:

    1. Ruishi Si & Xueqian Zhang & Yumeng Yao & Qian Lu, 2022. "Risk Preference, Health Risk Perception, and Environmental Exposure Nexus: Evidence from Rural Women as Pig Breeders, China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(1), pages 151-178, July.

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