The Value of Advice: Evidence from Mobile Phone-Based Agricultural Extension
Shawn Allen Cole
Harvard Business School
A. Nilesh Fernando
November 21, 2012
Harvard Business School Finance Working Paper No. 13-047
Attempts to explain the astonishing differences in agricultural productivity around the world typically focus on farm size, farmer risk aversion, and credit constraints, with an emphasis on how they might serve to limit technology adoption. This paper takes a different tack: can managerial practices explain this variation in productivity? A randomized evaluation of the introduction of a mobile-phone based agricultural consulting service, “Avaaj Otalo (AO)” to cotton farmers in Gujarat, India, reveals the following. Demand for agricultural advice is high, with more than half of farmers calling AO in the first seven months. Farmers offered the service turn less often to other farmers and input sellers for agricultural advice. Management practices change as well: we observe an increase in the adoption of more effective pesticides, and reduced expenditure on less effective and hazardous pesticides. Treated farmers also sow a significantly larger quantity of cumin, a lucrative but risky crop. Interestingly, use of the service is increasing in the level of farmer education, but education levels do not affect the size of treatment effects. Farmers appear willing to follow advice without understanding why the advice is correct: the average respondent does not demonstrate improved agricultural knowledge, though there is some evidence educated farmers learn from the service.
Number of Pages in PDF File: 47
JEL Classification: O12, O13, Q16
Date posted: November 23, 2012
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