The Value of Advice: Evidence from the Adoption of Agricultural Practices

Speaker: Shawn A. Cole
Venue
: LIDC Building, 36 Gordon Square London WC1H 0PD, Upper Meeting Room
Time: 5 pm to 6:30 pm
Date: 14th March 2016

Attempts to explain dramatic differences in agricultural productivity around the world typically focus on farm size, risk aversion, and credit constraints, with an emphasis on how they might serve to limit technology adoption. This paper takes a different tack: can managerial practices explain this variation in productivity? A randomized evaluation of the introduction of a mobile phone-based agricultural consulting service, Avaaj Otalo (AO), to farmers in Gujarat, India, reveals the following. Demand for agricultural advice is substantial and farmers offered the service turn less often to traditional sources of agricultural advice. Management practices change as well: farmers invest more in recommended agricultural inputs, resulting in dramatic increases in average yield for cumin (26.3%), as well as improvements in cotton yield (3.5%) for a sub-group that received frequent reminders to use the service. Our design allows us to estimate peer effects, and we find treated farmers with more treated peers are more likely to change behavior; and evidence that non-study farmers whose peers were treated also change cropping decisions. Farmers appear willing to follow advice without understanding why it is correct: we do not observe gains in agricultural knowledge. We estimate that each dollar spent on providing the service yields a return of $10. These findings highlight the importance of managerial practices in facilitating technology adoption in agriculture.

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