Digging into Background Risk: Experiments with Farmers and Students

Herberich, David; List, John A.

doi:10.1093/ajae/aar070

Cited by 39 publications

(31 citation statements)

References 19 publications

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“…S1). Our field data are consistent with both theoretical predictions1819 and data from laboratory experiments2021222324 showing that individuals who are exposed to substantial background risk are less willing to invest in a risky option in accordance with the “risk-vulnerability hypothesis”18.…”

Section: Resultssupporting

confidence: 86%

Evidence of genotypic adaptation to the exposure to volcanic risk at the dopamine receptor DRD4 locus

Faurie

Mettling

Bchir³

et al. 2016

Sci Rep

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Humans have colonized and adapted to extremely diverse environments, and the genetic basis of some such adaptations, for example to high altitude, is understood. In some cases, local or regional variation in selection pressure could also cause behavioural adaptations. Numerous genes influence behaviour, such as alleles at the dopamine receptor locus D4 (DRD4), which are associated with attitude toward risk in experimental settings. We demonstrate genetic differentiation for this gene, but not for five unlinked microsatellite loci, between high- and low risk environments around Mount Merapi, an active volcano in Java, Indonesia. Using a behavioural experiment, we further show that people inhabiting the high risk environment are significantly more risk averse. We provide evidence of a genetic basis for this difference, showing that heterozygotes at the DRD4 locus are more risk averse than either homozygotes. In the high risk environment, allele frequencies are equilibrated, generating a high frequency of heterozygotes. Thus it appears that overdominance (i.e. selective advantage of heterozygotes) generates negative frequency dependent selection, favouring the rarer allele at this locus. Our results therefore provide evidence for adaptation to a marginal habitat through the selection of a neurocognitive trait with a genetic basis.

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Section: Resultssupporting

confidence: 86%

Evidence of genotypic adaptation to the exposure to volcanic risk at the dopamine receptor DRD4 locus

Faurie

Mettling

Bchir³

et al. 2016

Sci Rep

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“…The farmers' selection of these strategies to cope with shocks could depend on the strategies selected earlier within a production cycle and thus informing their decisions about current and future selection. In this study, AIV farmers were asked whether or not they responded to shocks and to list the type of coping strategies that they used for each shock during the survey period 4 .…”

Section: The Empirical Model Specificationmentioning

confidence: 99%

“…Based on characteristics of the depend variables, we opt to use a count data 4 In this context, the possibility of using simultaneous coping strategies against simultaneous shocks was acknowledged, therefore all the coping strategies used to cope with either production or marketing shocks during the 12 months prior to the survey were counted to represent the extent of their ability to cope with either type of shock. Agricultural Sciences model, allowing for an independent estimation of the decision stage and outcome stage, simultaneously.…”

Section: The Empirical Model Specificationmentioning

confidence: 99%

Coping with Shocks and Determinants among Indigenous Vegetable Smallholder Farmers in Kenya

Ngenoh¹,

Kebede²,

Bett³

et al. 2018

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Farm households in developing countries are faced with various challenges one of which is occurrence of unexpected negative events namely shocks. Shocks could be caused by extreme adverse natural events (droughts, storms, flood, and landslides) and market-related events (fuel, food, input and output price fluctuations, volatilities and price hikes). Most of these shocks affect production systems, food markets and local economies, all of which have direct effects on food security. This study explores the prevalence of shocks among indigenous vegetable farmers in Kenya followed by an assessment of the type of coping strategies in response to these shocks. We find that over two thirds of farmers have coping strategies that are not based on market-related insurance mechanisms; rather they use strategies such as working for more hours and selling assets. We analyze which socioeconomic and institutional factors determine households' decision and extent of coping with shocks. The results showed that access to high-value markets and market information were the major factors informing their decision and extent of using coping strategies along with access to critical services such as credit, extension, and farmer groups. This has significant policy implications regarding the dissemination of information and promotion of credit markets through mobile phone-based platforms for easy accessibility in remote rural areas. Social capital should be encouraged because it acts as a necessary and sufficient conduit for information dissemination and mutual support to help farmers' access critical services and resources needed for successful and sustainable implementation of relevant and appropriate coping strategies.

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“…Second, shocks and risk can have long-lasting negative effects on development (Dercon, 2004;Elbers et al, 2007). Third, living with shocks may be regarded as making decisions with "background risk" which is known to increase risk aversion (Eeckhoudt et al, 1996;Harrison et al, 2007;Herberich & List, 2012). Thus shocks do not just have negative direct effects but possibly also indirect amplifying effects via changing risk attitude.…”

Section: Introductionmentioning

confidence: 99%

Shocks, Individual Risk Attitude, and Vulnerability to Poverty among Rural Households in Thailand and Vietnam

2015

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We examine whether the experience of shocks influences individual risk attitude. We measure risk attitude via a simple survey item, compiled among more than 4,000 households in Thailand and Vietnam.The experience of adverse shocks, which is typical for poor and vulnerable households, is related to a higher degree of risk aversion, even when controlled for a large set of socio-demographic variables.Therefore, shocks perpetuate vulnerability to poverty via their effect on risk attitude. We extend this general finding to various categories of shocks and find differences between Thailand and Vietnam. This suggests that risk-coping strategies profit from case-specific design.JEL-Classification: O12, D 81, R2

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Digging into Background Risk: Experiments with Farmers and Students

Cited by 39 publications

References 19 publications

Evidence of genotypic adaptation to the exposure to volcanic risk at the dopamine receptor DRD4 locus

Evidence of genotypic adaptation to the exposure to volcanic risk at the dopamine receptor DRD4 locus

Coping with Shocks and Determinants among Indigenous Vegetable Smallholder Farmers in Kenya

Shocks, Individual Risk Attitude, and Vulnerability to Poverty among Rural Households in Thailand and Vietnam

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