Assessing rhetoric and reality in the predictability of aid

human development, aid, trade, security

Understanding the investment and abandonment behavior of poor households: An empirical investigation

"This paper uses models of irreversible investment under uncertainty to examine the investment and abandonment behavior of poor rural households. It considers the decision of Ugandan coffee-farming households to invest in or abandon coffee trees. The observed levels of investment and abandonment are found to be consistent with models of investment that allow for irreversibility, uncertainty, fixed costs and liquidity constraints. The findings highlight the importance of addressing volatility, irreversibility, fixed costs and liquidity constraints in order to increase households' responsiveness to changes in the fundamentals, and to enable households to recover from shocks to their capital stock." from Author's AbstractInvestment, Uncertainty, Fixed costs, Shocks, Models of friction, High-value agriculture,

An experiment on the impact of weather shocks and insurance on risky investment

We conduct a framed field experiment in rural Ethiopia to test the seminal hypothesis that insurance provision induces farmers to take greater, yet profitable, risks. Farmers participated in a game protocol in which they were asked to make a simple decision: whether to purchase fertilizer, and if so, how many bags. The return to fertilizer was dependent on a stochastic weather draw made in each round of the game protocol. In later rounds of the game protocol, a random selection of farmers made this decision in the presence of a stylized weather-index insurance contract. Insurance was found to have some positive effect on fertilizer purchases. Purchases were also found to depend on the realization of the weather in the previous round. We explore the mechanisms of this relationship and find that it may be the result of both changes in wealth weather brings about and changes in perceptions of the costs and benefits of fertilizer purchases.Fertilizer, field experiment, hypothesis, input response, Insurance,

Adoption of weather index insurance: Learning from willingness to pay among a panel of households in rural Ethiopia

In this paper we examine which farmers would be early entrants into weather index insurance markets in Ethiopia, were such markets to develop on a large scale. We do this by examining the determinants of willingness to pay for weather insurance among 1,400 Ethiopian households that have been tracked for 15 years as part of the Ethiopia Rural Household Survey. This provides both historical and current information with which to assess the determinants of demand. We find that educated, rich, and proactive individuals were more likely to purchase insurance. Risk aversion was associated with low insurance take-up, suggesting that models of technology adoption can inform the purchase and spread of weather index insurance. We also assess how willingness to pay varied as two key characteristics of the contract were varied and find that basis risk reduced demand for insurance, particularly when the price of the contract was high, and that provision of insurance through groups was preferred by women and individuals with lower levels of education.index-insurance, Risk, Willingness to pay (WTP),

Quality control in non-staple food markets: Evidence from India

"Using original data collected about growers, traders, processors, markets, and village communities, we compare the situation in four states – Tamil Nadu, Uttar Pradesh, Maharashtra, and Orissa. We examine the way that information about crop attributes is conveyed (or not) along the value chain. We also document the infrastructure available at the level of the market. We find that little information circulates about unobservable crop characteristics. Growers receive a price premium when they dry, grade, and pack their produce, but we find no evidence that information about crop health and safety or agricultural practices circulates through the value chain or that growers are encouraged to follow specific agricultural practices for quality purposes. Market infrastructure is deficient regarding sanitation, with few public toilets, inadequate drainage, and no coordinated pest control." from Authors' AbstractFood marketing, Food safety, Food quality, Value chain,

Breaking the norm: An empirical investigation into the unraveling of good behavior

We present results from an artefactual field experiment conducted in rural Peru that considers how observing nonreciprocal behavior influences an individual's decision to reciprocate. Specifically, we consider the behavior of second movers in a trust game, assessing how their decision to reciprocate is influenced by the observed behavior of others and the extent to which their actions can be observed. In documenting how an external shock to the number observed not to reciprocate influences reciprocation, the paper endeavors to provide some insight into how reciprocity can unravel when individuals are learning behavior in a new market institution.artefactual field experiment, norms, nonreciprocal behavior, Trust, Markets, Institutions,

The poorest and hungry: Looking below the line

Poverty reduction, Poverty dynamics, Hunger, Trends in global hunger, MDGs, Development assistance,

Characteristics and causes of severe poverty and hunger:

Poverty reduction, Poverty, Hunger, Landlessness in rural areas, Poverty dynamics, Measuring severe poverty, Characteristics of poor and hungry, Women,

Selling at the farm-gate or travelling to market

Using detailed survey data from Uganda, this paper examines coffee producers sell to itinerant traders or directly to markets, where they can get a higher price but must incur a transport cost. We find that selling to the market is more likely when the quantity sold is large and the market close by. Wealthy farmers are less likely to sell to the market, possibly because the shadow value of their time is higher. But if they have a large quantity of coffee for sale, they are more likely to sell it to the market. They are also more likely to travel to a distant market, These findings are consistent with their better ability to pay for public transportation.