Leveling with Friends: Social Networks and Indian Farmers’ Demand for Agricultural Custom Hire Services

44 Pages Posted: 20 Feb 2014

See all articles by Nicholas Magnan

Nicholas Magnan

International Food Policy Research Institute (IFPRI)

David J. Spielman

International Food Policy Research Institute (IFPRI)

Travis J. Lybbert

University of California, Davis - Department of Agricultural and Resource Economics

Kajal Gulati

International Food Policy Research Institute (IFPRI)

Date Written: November 2013

Abstract

Technology-driven gains in agricultural productivity and profitability can dramatically improve quality of life for the rural poor in developing countries. Extension efforts to disseminate agricultural technologies typically assume that farmers learn from early adopters who catalyze the diffusion process. This research was undertaken to understand how information about a new agricultural technology is transmitted through social networks, and what effect information gained through social networks has on technology demand at the household level. The technology in question is laser land leveling (LLL) — a resource-conserving technology — which we introduced in eastern Uttar Pradesh, India as part of the study. Using an experimental auction, we obtain farmers’ willingness-to-pay for the technology and identify potential adopters. We then randomly select half of these farmers to actually receive LLL services on their land, creating random variation in the number of adopters in each farmer’s social network. We conduct a second auction one year later with the same sample of farmers and estimate network effects on farmers’ updated willingness-to-pay. Four main results emerge: First, exposure to LLL through networks occurs primarily through visits to adopting farmers’ fields. Second, having a first-generation adopter in a farmer’s network increases the farmer’s valuation of LLL by nearly 30 percent on average. Third, the network effects on demand are importantly conditioned on benefits associated with LLL, which implies that learning — rather than mimicry — is driving increases in demand. Fourth, network effects are strongest between poor farmers.

Keywords: India, South Asia, Asia, productivity, lasers, technology transfer, social learning, network effects, technology adoption, experimental auction

JEL Classification: O13, O14, Q16

Suggested Citation

Magnan, Nicholas and Spielman, David J. and Lybbert, Travis J. and Gulati, Kajal, Leveling with Friends: Social Networks and Indian Farmers’ Demand for Agricultural Custom Hire Services (November 2013). IFPRI Discussion Paper 01302, Available at SSRN: https://ssrn.com/abstract=2373213 or http://dx.doi.org/10.2139/ssrn.2373213

Nicholas Magnan (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

David J. Spielman

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Travis J. Lybbert

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States

Kajal Gulati

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

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