Why Do Households Forego High Returns from Technology Adoption

33 Pages Posted: 7 Feb 2015

See all articles by Gunther Bensch

Gunther Bensch

RWI Leibniz Institute for Economic Research

Michael Grimm

Erasmus University Rotterdam; University of Passau; IZA; DIW Berlin

Jörg Peters

RWI - Leibniz Institute for Economic Research; University of Passau - Business Administration and Economics

Date Written: August 6, 2014

Abstract

Around 3 billion people in developing countries rely on woodfuels for their daily cooking needs with profound negative implications for their workload, health, and budget as well as the environment. Improved cookstove (ICS) technologies in many cases appear to be an obvious solution. Despite continuous efforts of the international community to disseminate ICS, take up rates in most developing countries are strikingly low. In this paper, we examine the reasons for (non-)adoption of a very simple ICS in urban Burkina Faso. As a first result, we find that ICS users save between 20 and 30 percent of fuels compared to traditional stoves making the investment a very profitable one. Nonetheless, adoption rates are low at a mere 10 percent. It turns out that the major deterrent of adoption are the upfront investment costs – which are much more important than access to information, taste preferences, or the woman’s role in the household. These findings suggest that more direct promotion strategies such as subsidies would help the household to overcome its liquidity constraints and hence improve adoption rates.

Keywords: Household technology adoption; liquidity constraints; weak beliefs; norms and traditions; energy access; Sub-Saharan Africa

JEL Classification: D01, D12, D80, O33, Q56

Suggested Citation

Bensch, Gunther and Grimm, Michael and Peters, Jörg, Why Do Households Forego High Returns from Technology Adoption (August 6, 2014). Ruhr Economic Paper No. 498, Available at SSRN: https://ssrn.com/abstract=2561216 or http://dx.doi.org/10.2139/ssrn.2561216

Gunther Bensch

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Michael Grimm (Contact Author)

Erasmus University Rotterdam ( email )

Kortenaerkade 12
P.O. Box 29776
The Hague, 2502LT
Netherlands

HOME PAGE: http://www.iss.nl

University of Passau ( email )

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Passau, 94032
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HOME PAGE: http://www.wiwi.uni-passau.de/grimm.html

IZA ( email )

P.O. Box 7240
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DIW Berlin ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Jörg Peters

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany
0049-201-8149-247 (Phone)

HOME PAGE: http://www.rwi-essen.de

University of Passau - Business Administration and Economics ( email )

Wirtschaftswissenschaftliche Fakultaet
Passau, D-94030
Germany

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