A behavioural economic analysis of agricultural investment decisions in Uganda

c. Trust for Africa's Orphans (TAO)

c. Trust for Africa's Orphans (TAO)

Dr Arjan Verschoor, University of East Anglia

Start date: 20 February 2012   |   End date: 19 February 2015

Project webpage
Research Councils UK project page

Presentation: Status Quo Bias in Investment and Insurance Behaviour
Paper: Nature's Frames, Reference Lotteries and Truly Risky Choice: Evidence from a Ugandan Field Lab (2013)
Journal article: Investment Behaviour, Risk Sharing and Social Distance
Journal article: Conflicting risk attitudes
Policy brief: Risk-taking, risk-sharing and underinvestment in agriculture in eastern Uganda – Policy lessons
Stakeholder engagement report: Co-producing policy recommendations: Lessons from DEGRP project "A behavioural economic analysis of agricultural investment decisions in Uganda"
Graphic: Stakeholder engagement process (or here)
Journal article: Lab and life: Does risky choice behaviour observed in experiments reflect that in the real world?

Farmers in developing countries operate in extraordinarily difficult environments. Policies that aim to increase agricultural productivity, for example agricultural lending, research and extension, rural infrastructure and crop insurance, need to take into account how farmers make agricultural investment decisions.  However, crucial elements of their decision-making habits that relate to risky choices are not well understood.

This research project took place in east Uganda, and aimed to advance the understanding of how farmers who face numerous threats to their livelihoods take risky investment decisions. Participants responded to real monetary incentives to identify the significant features of their decision-making habits. Firstly potential biases in risky choice behaviour were studied by using lotteries to measure whether certain risks tend to be exaggerated (or alternatively, downplayed) in participants’ minds. Secondly the influence of social interaction on risky choice behaviour was studied.