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http://ssrn.com/abstract=1434645
 
 

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Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya


Esther Duflo


Massachusetts Institute of Technology (MIT) - Department of Economics; Abdul Latif Jameel Poverty Action Lab (J-PAL); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Bureau for Research and Economic Analysis of Development (BREAD)

Michael Kremer


Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER); Center for Global Development

Jonathan Robinson


University of California, Santa Cruz

July 2009

NBER Working Paper No. w15131

Abstract:     
While many developing-country policymakers see heavy fertilizer subsidies as critical to raising agricultural productivity, most economists see them as distortionary, regressive, environmentally unsound, and argue that they result in politicized, inefficient distribution of fertilizer supply. We model farmers as facing small fixed costs of purchasing fertilizer, and assume some are stochastically present-biased and not fully sophisticated about this bias. Even when relatively patient, such farmers may procrastinate, postponing fertilizer purchases until later periods, when they may be too impatient to purchase fertilizer. Consistent with the model, many farmers in Western Kenya fail to take advantage of apparently profitable fertilizer investments, but they do invest in response to small, time-limited discounts on the cost of acquiring fertilizer (free delivery) just after harvest. Later discounts have a smaller impact, and when given a choice of price schedules, many farmers choose schedules that induce advance purchase. Calibration suggests such small, time-limited discounts yield higher welfare than either laissez faire or heavy subsidies by helping present-biased farmers commit to fertilizer use without inducing those with standard preferences to substantially overuse fertilizer.

Number of Pages in PDF File: 46

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Date posted: July 21, 2009  

Suggested Citation

Duflo, Esther and Kremer, Michael and Robinson, Jonathan, Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya (July 2009). NBER Working Paper No. w15131. Available at SSRN: http://ssrn.com/abstract=1434645

Contact Information

Esther Duflo (Contact Author)
Massachusetts Institute of Technology (MIT) - Department of Economics ( email )
50 Memorial Drive
Room E52-252G
Cambridge, MA 02142
United States
617-258-7013 (Phone)
617-253-6915 (Fax)
Abdul Latif Jameel Poverty Action Lab (J-PAL) ( email )
Cambridge, MA
United States
HOME PAGE: http://www.povertyactionlab.org/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Bureau for Research and Economic Analysis of Development (BREAD) ( email )
Duke University
Durham, NC 90097
United States
Michael Kremer
Harvard University - Department of Economics ( email )
Littauer Center
Rm. 207
Cambridge, MA 02138
United States
Brookings Institution
1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Center for Global Development
2055 L St. NW
5th floor
Washington, DC 20036
United States
Jonathan Robinson
University of California, Santa Cruz ( email )
Santa Cruz, CA 95064
United States
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