Are religious farmers more risk taking? Empirical evidence from Ethiopia

Abstract

There is growing evidence that religiosity affects important socio-economic outcomes. A potential channel through which religiosity affects these outcomes is by shaping individuals' risk preferences. We combine a lab-in-the-field experiment, survey, and focus-group discussions to investigate the effect of religiosity on risktaking among rural people in Ethiopia. We find evidence that religious farmers are more risk-taking. The effect is likely driven by the trust/belief in God as the omniscient and just power in determining outcomes under uncertainty. This is further corroborated by results from follow-up focus-group discussions.

The Impact of Personal Religiosity on Individuals’ Investment Decisions

“…The findings are of material significance when Islam disapproves excessive consumption by notion of Israf. Kahsay, Kassie, Medhin, & Hansen (2022) review the growing evidence that socioeconomic settings are affected by religiosity in Ethiopian settings. The study investigates the individual farmers' risk preferences in rural Ethiopia, through combination of a lab and in the field experiment.…”

Activation of Religious Concepts in the Brain Lead to Greater Risk Taking

“…In other words, do devout individuals who follow their religious beliefs closely exhibit higher levels of risk-taking behaviors compared to those who are not "as religious"? Recent studies such as Kahsay et al 2022 have started laying the groundwork for answering this question, with their results stating that Ethiopian farmers who display higher levels of religiosity tend to exhibit greater risk-taking behaviors with their farming specifically. Based on surveys and focus-group discussions with their participants, the authors of this study claimed that "the belief in God as the omniscient and just power in determining outcomes induces farmers to take up risky options" (Kahsay et al 2022).…”

“…Recent studies such as Kahsay et al 2022 have started laying the groundwork for answering this question, with their results stating that Ethiopian farmers who display higher levels of religiosity tend to exhibit greater risk-taking behaviors with their farming specifically. Based on surveys and focus-group discussions with their participants, the authors of this study claimed that "the belief in God as the omniscient and just power in determining outcomes induces farmers to take up risky options" (Kahsay et al 2022). Despite the fact that their figures and data analyses strongly support their findings, the researchers cautioned their readers "to take care when interpreting our results" (Kahsay et al 2022), as the effects of confounding variables such as socioeconomic status (SES) and distance between places of worship and residential homes were not fully explored.…”

“…Based on surveys and focus-group discussions with their participants, the authors of this study claimed that "the belief in God as the omniscient and just power in determining outcomes induces farmers to take up risky options" (Kahsay et al 2022). Despite the fact that their figures and data analyses strongly support their findings, the researchers cautioned their readers "to take care when interpreting our results" (Kahsay et al 2022), as the effects of confounding variables such as socioeconomic status (SES) and distance between places of worship and residential homes were not fully explored. As a result, a significant amount of research will need to be conducted in this field before the literature is able to provide a definitive answer to the relationship between religiosity and risk-taking.…”