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Essays On The Effects of Risk and Ambiguity Attitudes On Production Choices Of Smallholder Fish Farmers In Southern Ghana

Crentsil, Christian (2018) Essays On The Effects of Risk and Ambiguity Attitudes On Production Choices Of Smallholder Fish Farmers In Southern Ghana. Doctor of Philosophy (PhD) thesis, University of Kent,. (KAR id:65734)

Language: English
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This thesis contains four empirical chapters which together contribute to behavioural economics in the area of fish production in a developing country context. The key thread connecting all the empirical studies is the behavioural characteristic of farmers (risk and ambiguity attitudes) elicited through incentivised field experiments and general survey questions.

1. It elicits and compares the risk attitudes of within-subject sample of smallholder fish farmers in southern Ghana using three of the frontier methods used to elicit risk attitudes in the literature. The risk attitudes elicited from these methods are employed in the subsequent chapters of this thesis to investigate how risk preferences affect production efficiency and technology adoption.

3. It assesses whether the risk attitude measures can predict farmer responses to questions on hypothetical economic choices.

The second empirical analysis attempts to answer the question: to what extent does a fish farmer's risk attitude affect his/her level of economic efficiency? This is predicated on the assumption that the types, levels and frequency of application of inputs could be influenced by the risk attitudes of farmers. Data on the units of inputs, outputs and prices are collated from the farmers in an earlier survey, and their risk attitudes obtained from the previous chapter are then juxtaposed on their production data. The economic efficiency of the farmers is assessed with both the Stochastic Frontier Analysis (SFA) and the Corrected Ordinary Least Squares (COLS) techniques. While the former assumes that all deviations from the cost frontier are due to farmer-specific factors (including risk attitudes) and stochastic factors, the latter, a deterministic procedure, attributes all deviations from the frontier to farmer-specific factors. The evidence from this chapter suggests that over 80% of the total deviation from the cost frontier results from stochastic factors beyond the control of the farmers. It is also found that risk attitudes play no significant role in the economic efficiency of fish production in the study area. Based on the findings, it is concluded that stochastic factors, such as government policies, may have a greater impact on economic efficiency rather than risk attitudes of farmers.

In the final empirical study, attention is on how ambiguity attitudes affect the farming decisions of smallholder fish farmers, using the speed of adopting the AST technology as an example of such decisions. The speed of technology adoption is analysed with the hazard/survival model. Additionally, this chapter introduces and interacts the number of previous adopters in the same village with ambiguity attitude as a better test of the effect of ambiguity aversion on farmers' decisions. Where a farmer cannot predict with certainty the yield to be obtained from the new technology, an ambiguity averse farmer is expected to adopt the technology late. Ambiguity attitudes are elicited with Ellsberg's (1961) two-colour urn experiment. The results from this chapter show that the average fish farmer is ambiguity averse. However, risk aversion, but not ambiguity aversion, has a significant effect on the speed of adopting the AST technology in the study area, confirming the robustness of the finding in the previous chapter. I also find that the speed of adopting this technology increases with the number of prior adopters in the same village. The lack of any significant impact of ambiguity attitudes in determining the speed of adopting this technology suggests that there are other important determinants of adopting this technology, rather than lack of information about it, that affect other technology adoption decisions.

Overall, this thesis demonstrates and presents the elicitation of risk and ambiguity preferences outside the usual laboratory setting by engaging fish farmers in a field experiment involving real cash incentives, as well as field surveys. The experiments and methods employed are at the frontier of research in the field of development economics. The results of the analysis presented in this thesis indicate that that risk preferences are sensitive to the method of elicitation, as well as the context or domain in which it is elicited. While contrary to findings from other studies, risk averse farmers are more prone to adopt improved fish farming technologies earlier than farmers who are not risk averse. This conclusion is plausible because the technologies may be perceived as risk-reducing by the farmers. This outcome remains robust when ambiguity aversion is introduced into the analysis of the technology adoption decision. Therefore, research on farmer production choices should take their risk attitudes into account, and such risk attitude measures should be elicited in a manner that is compatible with the context of operation of the farmers.

Item Type: Thesis (Doctor of Philosophy (PhD))
Thesis advisor: Wahhaj, Zaki
Thesis advisor: Gschwandtner, Adelina
Uncontrolled keywords: Risk Attitudes, Ambiguity Attitudes, Fish Farming, Ghana, Economic Efficiency, Technology Adoption
Divisions: Faculties > Social Sciences > School of Economics
SWORD Depositor: System Moodle
Depositing User: System Moodle
Date Deposited: 15 Jan 2018 17:10 UTC
Last Modified: 09 Apr 2020 03:09 UTC
Resource URI: (The current URI for this page, for reference purposes)
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