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 Tjernström

The University of Sydney - School of Economics; University of Sydney

Simone Verkaart

Wageningen University and Research Center (WUR), Students

Kai Mausch

World Agroforestry Centre

Multiple version iconThere are 2 versions of this paper

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 Tjernström, 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 Tjernström

The University of Sydney - School of Economics ( email )

Rm 370 Merewether (H04)
The University of Sydney
Sydney, NSW 2006 2008
Australia

University of Sydney ( email )

P.O. Box H58
Australia Square
Sydney, NSW 2006
Australia

HOME PAGE: http://https://emiliatjernstrom.com

Simone Verkaart

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

Hollandseweg 1
Wageningen, 6706KN
Netherlands

Kai Mausch

World Agroforestry Centre ( email )

Nairobi
Kenya

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