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On spatially dependent risk preferences: The case of Nigerian farmers

Lookup NU author(s): Dr Francisco ArealORCiD

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This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).

Abstract

Rice farmers’ attitudes toward risk-taking have been identified as one of the factors affecting investment decisions and wealth accumulation. While existing studies have identified the socio-economic factors driving farmers’ risk attitudes, spatial variables that may correlate with decisions are often ignored in the risk models due to difficulties in measurement. We studied unobserved spatial heterogeneity in farmer’s risk preferences by incorporating spatial dependency into a farmer’s risk preference model. We used data from a survey conducted with Nigerian farmers between March and May 2016. The survey collected information on 2016 farmers’ socio-demographic characteristics and farm attributes including its geographical location as well as information on the quality of roads. In addition, a set of experiments design to elicit famers’ attitudes toward risk were conducted. We estimated a spatial autoregressive model using the instrumental variable method. We found that unobserved spatial heterogeneity (e.g., soil, topographic farmers emulating each other) was present in farmer’s risk preferences along with socio-demographic variables such as age, gender, marital status, and religion and farm characteristics such as farm size and road quality. These results are relevant for policy decision-making processes.

Publication metadata

Author(s): Ambali OI, Areal FJ, Georgantzis N

Publication type: Article

Publication status: Published

Journal: Sustainability

Year: 2021

Volume: 13

Issue: 11

Online publication date: 25/05/2021

Acceptance date: 21/05/2021

Date deposited: 25/05/2021

ISSN (electronic): 2071-1050

Publisher: MDPI

URL: https://doi.org/10.3390/su13115943

DOI: 10.3390/su13115943

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