Spatial Dependence of Time Preferences: Evidence from Field Experiment from Nigerian Farmers

Abstract

Decisions relating to time may show some level of spatial heterogeneity. However, such spatial dependence tendency is often ignored in decision analyses especially time preferences, which defines the tendency for an individual to have strong preferences for present outcomes over delayed outcomes. We tested the hypothesis of spatially dependent time preference and examined spatial heterogeneity in time preferences among rice farmers using data from an experimental and survey conducted in Ogun State Nigeria during the 2016 cropping season. We employed Spatial Autoregressive (SAR) model estimated using instrumental variable (IV) method and control for farm, farmers’ specific and institutional factors such as road quality. We found most of the sampled farmers are impatient. In addition, older rice farmers, Christians, married rice farmers and those residing in poor or bad road network areas show higher tendency for impatient. More interestingly, our results statistically showed evidence of spatial dependence in rice farmers’ time preferences suggesting most farmers exhibit similar inter-temporal behaviour as their neighbours. We conclude such neighbourhood influence which relate to social interaction effects have important implications in the dissemination of information relating to improved farm practices and technological innovation especially in the rural areas.

Keywords: decision, impatience, location, rice farmers, spatial dependence, time preference