Parametric and Non-Parametric Estimation of Soil Conservation Impact on Productivity in the Northwestern Ethiopian Highlands

The impact of fanya juu bunds on productivity in a high rainfall area in the Ethiopian highlands is analyzed based on data from a cross section household survey with multiple plot observations per household. The results from parametric and non-parametric analysis indicated that productivity from conserved plots was lower than from non-conserved plots. The Oaxaca-Blinder productivity decomposition results showed that there was little difference in plot characteristics between conserved and non-conserved plots, however the returns to those characteristics were higher for non-conserved plots. The sensitivity analysis, increasing fodder grass production on bunds, suggests that there are possibilities to make conserved plots as productive as non-conserved ones. The findings imply that fanya juu bunds may be inappropriate to the local conditions under the existing condition. Farmers in the study area reported that these bunds h ave problem of water-logging, reduce land available for production, and create difficulties in turning the ox-drawn plough due to narrow bund sp acing. Apart from these, there is no attempt made to integrate these bunds with soil fertility management techniques. Overall, these results yield important lessons for future design of conservation technologies that have both physical and economic benefits as well as that are best suited to the local conditions.Yield decomposition, soil conservation, switching regression, stochastic dominance analysis, matching methods, Land Economics/Use, Productivity Analysis, C21, C23, Q12, Q15, Q16,

Tenure Insecurity, Transaction Costs in the Land Lease Market and their Implications for Gendered Productivity Differentials

This study sets out to assess the link between land leasing behavior and productivity differentials between male and female-headed households. A double-moral hazard model allows us to show that landlord's tenure insecurity leads to sub-optimal level of effort on tenant's part, via its impact on the likelihood of contract renewal. The landlord's enforcement ability is also shown to increase the optimal level of effort. The empirical findings support the hypothesis that female heads of households have higher tenant turnover and lower enforcement ability. The results, however, show that contract renewal is not strongly linked to productivity.productivity, female headed households, contract length, enforcement ability, Land Economics/Use, D2, Q12, Q15, C21, C7,

Impact of Land Certification on Land Rental Market Participation in Tigray Region, Northern Ethiopia

There is a renewed interest in whether land reforms can contribute to market development in Africa and whether land reforms can be pro-poor. This paper uses unique household panel data from Tigray region in Ethiopia to assess the impact of the 1998 low-cost land registration and certification reform on land rental market participation over a period of eight years after the reform, using random effects probit and tobit panel data models for land leased out and leased in, while correcting for unobservable heterogeneity and endogeneity of having certificate. The analysis revealed that the land reform contributed to increased land rental market participation. Female-headed households became more willing to rent out land and making land available for more efficient producers. Average areas leased out and leased in increased after certification. The land rental market remained characterised with significant and non-convex transaction costs also after the reform as evidenced by significant state dependence, a low response to own holding size and a high share of non-participation in the land market, leaving room for further improvement.Land certification; land rental market; panel data analysis; unobserved heterogeneity; household response; female-headed households

FOOD-FOR-WORK FOR POVERTY REDUCTION AND THE PROMOTION OF SUSTAINABLE LAND USE: CAN IT WORK?

Food-for-work (FFW) programs are commonly used both for short-term relief and long-term development purposes. In the latter capacity, they are increasingly used for natural resources management projects. Barrett, Holden and Clay (forthcoming) assess the suitability of FFW programs as insurance to cushion the poor against short-term, adverse shocks that could, in the absence of a safety net, have permanent repercussions. In this paper we explore the complementary question of FFW programs' potential to reduce poverty and promote sustainable land use in the longer run through induced changes in investment patterns. FFW programs commonly aim to produce or maintain potentially valuable public goods necessary to stimulate productivity and thus income growth. Among the most common projects are road building, reforestation, and the installation of terracing or irrigation. In the abstract, public goods such as these are unambiguously good. There is a danger, however, that such programs could discourage private soil and water conservation and crowd out private investment. How important are such effects and when are these effects small or large and when and how can they be reduced? How do market characteristics, timing and design of FFW programs affect this? When, where and how can FFW programs more efficiently reduce poverty and promote more sustainable land management? The paper aims to answer these questions. Much recent empirical research has focused on the shorter-term targeting issue of whether FFW and related workfare programs efficiently target the poor (Dev 1995, Von Braun 1995, Webb 1995, Subbarao 1997, Clay et al. 1998, Devereux 1999, Jayne et al. 1999, Ravallion 1999, Teklu and Asefa 1999, Atwood et al. 2000, Gebremedhin and Swinton 2000, Haddad and Adato 2001, Jalan and Ravallion 2001). Much less research has been focused on the longer-term effects of FFW. Yet the large share of hunger worldwide arises due to chronic deprivation and vulnerability, not short-term shocks (Speth 1993, Barrett 2002). Also most of the FFW programs in Ethiopia have long-term development goals and are formally distinguished from the disaster relief FFW programs (Aas and Mellemstrand 2002). It is therefore appropriate to evaluate these programs based on their long-term goals and not only on the basis of short-term targeting. In a case study in Tigray Aas and Mellemstrand (2002) found that the FFW recipients considered the long-term benefits of FFW as more important than the short-term benefits of food provision. FFW programs may produce valuable public goods. For example, Von Braun et al. (1999) report multiplier effects of a FFW-built road in the Ethiopian lowlands. Public provision of public goods may be socially desirable because private investment in soil and water conservation and tree planting may be well below socially optimal levels due to poverty and market imperfections (Holden, Shiferaw and Wik 1998, Holden and Shiferaw 2002, Holden and Yohannes 2002, Pender and Kerr 1998), tenure insecurity (Gebremedhin and Swinton 2000, Holden, Benin, Shiferaw and Pender 2003), lack of technical knowledge and coordination problems across farms (Hagos and Holden 2002). There is, however, also a danger that FFW programs crowd out private investments (Gebremedhin and Swinton 2000). We analyze these issues using multiple methods. First, section II introduces a simple theoretical framework for understanding the analytically ambiguous effects of FFW programs on sustainable land use patterns. We first present the basic intuition in a static framework to illustrate the selection, crowding out and targeting issues, before generalizing it to a dynamic model to illustrate the possible insurance and crowding in effects of FFW. Section III then uses an applied, dynamic bio-economic farm household model applied to a less-favoured area in Ethiopia to investigate via numerical simulation how household welfare and land use patterns vary with changes in environmental and FFW program design parameters. Section IV presents econometric evidence based on survey panel data from northern Ethiopia to assess the relationship between FFW and private investment in conservation. Section V discusses our findings and fleshes them out a bit with further empirical evidence. Section VI concludes.Food Security and Poverty, Q18, O1, Q2, I1,

Numeracy skills learning of children in Africa: - Are disabled children lagging behind?

Significant progress has been achieved in universal basic education in African countries since the late 1990s. This study provides empirical evidence on the within- and across-country variation in numeracy skills performance among children based on nationally representative data from eight African countries (DR Congo, The Gambia, Ghana, Lesotho, Sierra Leone, Togo, Tunisia, and Zimbabwe). We assess whether and to what extent children with disabilities lag in numeracy skills and how much it depends on their type of disabilities. More specifically, we explore whether disabled children benefit equally from better school system quality. The assessment is analysed as a natural experiment using the performance of non-disabled children as a benchmark and considering the different types of disabilities as random treatments. We first evaluate the variation in average numeracy skills in the eight African countries. They can roughly be divided into low- and high-numeracy countries. We apply Instrumental Variable (IV) methods to control the endogeneity of completed school years when assessing subjects’ school performance and heterogeneous disability effects. Children with vision and hearing disabilities are not especially challenged in numeracy skills performance. The low numeracy skills among physically and intellectually disabled children are mainly attributable to their limited school attendance. Children with multiple disabilities are constrained both by low school attendance and by poor numeracy skills return to schooling. The average differences in school performance across the high- versus low-numeracy skill country groups are larger than the within-group average differences for disabled versus non-disabled kids. This indicates that school enrolment and quality are crucial for children’s learning of numeracy skills, and that disabled children benefit equally from better school quality across these African countries

Can the risky investment game predict real world investments?

The incentivized risky investment game has become a popular tool in lab-in-the-field experiments for its simplicity and ease of comprehension compared to some of the more complex Multiple Choice List approaches that have been more commonly used in laboratory experiments. We use a field experiment to test whether the game can predict real-world investments by the same subjects based on the assumption that the game can provide a reliable measure of risk tolerance and that risk tolerance is an important predictor of investment behavior. The results show that the game cannot predict investment behavior in our sample. There are two reasons for this. First, we find substantial measurement error and low correlation when the game is repeated one year later for the same subjects. Measurement error is so large in our sample that the “obviously related instrumental variable” (ORIV) approach of Gillen, Snowberg and Yariv (2019) could not remedy the problem. Second, the game appears to suffer from low asset integration due to narrow bracketing, explaining its limited predictive power and the failure to detect attenuation bias due to measurement error. Subjects’ cognitive memory of the game played one year earlier is strongly positively related to investment intensity in the game and this result is much enhanced when correcting for the endogeneity of cognitive memory

Gender differences in investments and risk preferences

We analyze individual investment behavior among 822 young men and women that are members of 111 formal business groups in northern Ethiopia.We collected baseline data and investment data one year later combined with incentivized field experiments to obtain dis-aggregated risk preference data. We find that business women on average invest significantly less at individual level than business men but Cohen’s d values for the gender difference are moderate in size. Women are found to have higher Constant Relative Risk Aversion coefficients, to be more loss averse, but also to be more optimistic in their expectations than men. Women were also poorer in non-land assets, came from more land-poor parents and had lower incomes. The gender differences in risk attitudes and baseline endowments could explain some of but not all of the gender differences in investments

Numeracy Skills, Decision Errors, and Risk Preference Estimation

Basic numeracy skills are obviously important for rational decisionmaking when agents are facing choices between risky prospects. Poor and vulnerable people with limited education and numeracy skills live in risky environments and have to make rational decisions in order to survive. How capable are they to understand and respond rationally to economists’ tools for the elicitation of risk preferences? Can we make designs that are simple enough for them to give rational responses that reveal their true preferences? And how much does variation in their limited numeracy skills contribute to decision errors and the estimated sizes of their risk preference parameters? Finally, we ask whether Expected Utility (EU) theory is sufficient or whether Rank Dependent Utility (RDU) does better in the analysis of decision errors and risk preferences in our context. We try to answer these research questions based on a large sample of rural youth business group members from Ethiopia based on two variants of a Certainty Equivalent - Multiple Choice List (CE-MCL) approach with 12 and 10 Choice Lists (CLs) per subject. Numeracy skill scores are constructed based on a math test with 15 contextualized questions. The experiment facilitates the estimation of structural models while separating the effects of numeracy skills on decision errors in a Fechner error specification that is a function of numeracy skills and experimental design characteristics. The structural models estimate alternatively Expected Utility (EU) and Rank Dependent Utility (RDU) models, the latter with two-parameter Prelec probability weighting functions.It allows us to assess whether limited numeracy skills are correlated with EU-type risk tolerance (utility curvature) and RDU-type of probabilistic risk tolerance in the form of probabilistic insensitivity and optimism/pessimism bias. We find that weak numeracy skills are associated with slightly less risk tolerance in EU models, with stronger probabilistic insensitivity in RDU models, and with more random noise (Fechner error) in both types of models. However, even the subjects with the weakest numeracy skills performed quite well in the simple CE-MCL experiments with the binary choice elicitation approach, indicating that it was capable of revealing the risk preferences of such subjects with very low numeracy skills as they produced only marginally more decision errors than subjects with better numeracy skills

Measurement Error and Farm Size: Do Nationally Representative Surveys Provide Reliable Estimates?

We assess the reliability of measured farm sizes (ownership holdings) in the Living Standard Measurement Study – Integrated Surveys on Agriculture (LSMS-ISA) in Ethiopia and Malawi based on three survey rounds (2012, 2014, 2016) in Ethiopia and four rounds (2010, 2013, 2016, 2019) in Malawi. By using the balanced panel of households that participated in all the rounds, we utilized the within-household variation in reported and measured ownership holdings that, to a large extent, were measured with GPSs and/or with rope and compass. While this gives reliable measures of reported holdings, we detect substantial under-reporting of parcels over time within households. We find that the estimated farm sizes within survey rounds are substantially downward biased due to systematic and stochastic under-reporting of parcels. Such biases are substantial in the data from both countries, in all survey rounds, and in all regions of each country. Based on the analyses, we propose that the maximum within-household reported farm sizes over several survey rounds provide a more reliable proxy for the actual farm size distributions, as these maximum sizes are less likely to be biased due to parcel attrition. The ignorance of this non-classical measurement error is associated with a downward bias in the range of 20-30% in average and median farm sizes and an upward bias in the Gini-coefficients for farm size distributions. We propose ideas for follow-up research and improvements in collecting these data types and draw some policy implications

Intertemporal Choice Lists and Maximal Likelihood Estimation of Discount Rates

The experiments designed to estimate real-life discount rates in intertemporal choice often rely on ordered choice lists, where the list by design aims to capture a switch point between near- and far-future alternatives. Structural models like a Samuelson discounted utility model are often fitted to the model using maximal likelihood estimation. We show that dominated tasks, that is, choices that do not define the switch point, may bias ML estimates profoundly and predictably. More (less) dominated near future tasks give higher (lower) discount rates. Simulation analysis indicates estimates may remain largely unbiased using switch point-defining tasks only