Connecting-Africa | Find publications

Advanced search

Find:


Title Relating risk preferences and risk perceptions over different agricultural risk domains: Insights from Ethiopia
Full text https://research.wur.nl/en/publications/relating-risk-preferences-and-risk-perceptions-over-different-agr
Date 2023
Author(s) Feyisa, Ashenafi Duguma; Maertens, Miet; de Mey, Yann
Abstract Households in developing countries are exposed to various shocks and risks, which leaves them vulnerable as they typically have limited resources to cope with them. Even though a large body of development literature has focused on the role of risk in rural livelihoods, the focus is often on single sources of risk and taking a unidimensional view on risk preference. This paper explores the diversity in risk perception and risk preferences of Ethiopian households by combining incentivized field experiments with detailed primary household survey data. We disentangle the relationship between risk perception and risk preferences using an innovative combination of time framing and instrumental variable estimation approaches. We find that our respondents are exposed to multiple past shocks and perceive multiple sources of future threats across different agricultural risk domains. Our respondents can be characterized as relatively risk-averse and loss-averse, and they also overweight unlikely extreme outcomes. We find a statistically significant association between the prospect theory risk preferences parameters'risk aversion, loss aversion, and probability weighting'and overall risk perception, domain-specific risk perceptions (except for the personal domain) and the impact dimension of future risk. Our findings make an important contribution to our understanding of farm households' risk behavior, and can guide prioritizing development efforts to stimulate better informed and well-targeted risk management policy interventions.
Subject(s) Agricultural risk; Loss aversion; Probability weighting; Prospect theory; Risk aversion; Risk preferences
Language en
Relation https://edepot.wur.nl/582182
Type of publication Article/Letter to editor
Format text/html
Source World Development 162 (2023); ISSN: 0305-750X
Rights Wageningen University & Research
Identifier 10.1016/j.worlddev.2022.106137
Repository Wageningen - University of Wageningen
Added to C-A: 2022-12-05;09:08:20