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Consumption risk, technology adoption, and poverty traps : evidence from Ethiopia

Author: Stefan Dercon
Publisher: [Washington, D.C.] : World Bank, [2007]
Series: Policy research working papers (Online), 4257.
Edition/Format:   eBook : Document : International government publication : EnglishView all editions and formats
Summary:
Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented-the differential ability of households to take on risky production technologies for fear of the welfare  Read more...
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Genre/Form: Electronic books
Additional Physical Format: Print version:
Dercon, Stefan.
Consumption risk, technology adoption, and poverty traps.
[Washington, D.C.] : World Bank, Africa Region, Poverty Reduction and Economic Management Unit 2, [2007]
(OCoLC)166215702
Material Type: Document, Government publication, International government publication, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Stefan Dercon
OCLC Number: 166215705
Notes: Title from PDF file as viewed on 8/13/2007.
Reproduction Notes: Electronic reproduction. [S.l.] : HathiTrust Digital Library, 2010. MiAaHDL
Description: 1 online resource (41 pages) : illustrations.
Details: Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002.
Series Title: Policy research working papers (Online), 4257.
Responsibility: Stefan Dercon and Luc Christiaensen.

Abstract:

Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented-the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data for Ethiopia. Historical rainfall distributions are used to identify the counterfactual consumption risk. Controlling for unobserved household and time-varying village characteristics, it emerges that not just ex-ante credit constraints, but also the possibly low consumption outcomes when harvests fail, discourage the application of fertilizer. The lack of insurance causes inefficiency in production choices.

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