Money Matters: The Role of Yields and Profits in Agricultural Technology Adoption

46 Pages Posted: 22 May 2018

See all articles by Jeffrey Michler

Jeffrey Michler

University of Saskatchewan

Emilia Tjernstrom

University of Wisconsin - Madison

Simone Verkaart

Wageningen University and Research Center (WUR), Students

Kai Mausch

World Agroforestry Centre

Date Written: April 10, 2018

Abstract

Despite the growing attention to technology adoption in the economics literature, knowledge gaps remain regarding why some valuable technologies are rapidly adopted, while others are not. This paper contributes to our understanding of agricultural technology adoption by showing that a focus on yield gains may, in some contexts, be misguided. We study a technology in Ethiopia that has no impact on yields, but that has nonetheless been widely adopted. Using three waves of panel data, we estimate a correlated random coefficient model and calculate the returns to improved chickpea in terms of yields, costs, and profits. We find that farmers' comparative advantage does not play a significant role in their adoption decisions and hypothesize that this is due to the overall high economic returns to adoption, despite the limited yield impacts of the technology. Our results suggest economic measures of returns may be more relevant than increases in yields in explaining technology adoption decisions.

Keywords: Technology adoption; heterogeneity; correlated random coefficients; Ethiopia

JEL Classification: C33, O13, Q16

Suggested Citation

Michler, Jeffrey and Tjernstrom, Emilia and Verkaart, Simone and Mausch, Kai, Money Matters: The Role of Yields and Profits in Agricultural Technology Adoption (April 10, 2018). Available at SSRN: https://ssrn.com/abstract=3174824 or http://dx.doi.org/10.2139/ssrn.3174824

Jeffrey Michler (Contact Author)

University of Saskatchewan ( email )

College of Education
Saskatoon, Saskatchewan S7N 5A7
Canada

Emilia Tjernstrom

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

Simone Verkaart

Wageningen University and Research Center (WUR), Students ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

Kai Mausch

World Agroforestry Centre ( email )

Nairobi
Kenya

Register to save articles to
your library

Register

Paper statistics

Downloads
60
Abstract Views
349
rank
364,831
PlumX Metrics