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

Tristan Le Cotty, Elodie Maitre D'Hotel, Raphael Soubeyran and Julie Subervie

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Abstract: Abstract 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.

Keywords: discount rate; risk aversion; storage; agriculture (search for similar items in EconPapers)
Date: 2020-06-05
Note: View the original document on HAL open archive server: https://hal.science/hal-01123355v1
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Citations: View citations in EconPapers (1)

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Working Paper: Wait and sell: farmers' individual preferences and crop storage in Burkina Faso (2020)
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