title: Spatial dependence in decision making: implications for improved rice technology adoption decisions in Nigeria
Creators: name: Ambali, Omotuyole Isiaka
Publisher: name: University of Reading
Year: 2023

description: Improved agricultural technology plays a key role in the economic advancement of both the developed and developing countries. Notwithstanding, the rate of diffusion of the agricultural technological innovation in developing countries is of great concern. Specifically, in Nigeria adoption of improved farm technology has been at the front of this debate. In terms of their attitudes towards risk taking and temporal perspectives, farmers in the developing countries have been described as being risk averse and impatience. Yet, these attitudes in addition to neighbourhood or spatial dependence effects may influence the adoption of improved agricultural technology. This study therefore investigates the roles of risk preference and time preference as well as the spatial dependence effects in improved rice technology adoption decisions. Combinations of experimental, qualitative and quantitative data obtained from the four agricultural zones in Ogun State Nigeria were used for the study. Rice farmers’ risk preference and time preference are elicited using panel lotteries and front-end delay methods, respectively. Using a power function weights matrix that enable the examination of limit of spatial dependence, Instrumental Variable (IV) method was applied to examine the effects of spatial dependence on risky decision making as well as in intertemporal decisions. In addition, a structural model is estimated using Instrumental Variable (IV) probit model to examine first, the effects of risk preference and spatial dependence in adoption decisions; and second, the effects of time preference and spatial dependence in adoption decisions. The results reveal that most sampled farmers are risk avoidant, have high subjective discount rates and low adoption rates. Relative to the non-adopters, the adopters of improved rice varieties are significantly more willing to take risky decisions and are oriented towards the long terms implications of being patience. In addition to socioeconomic factors, the findings show that rice farmers’ risk and time preferences are spatially correlated up to 60 km radius indicating rice farmers within this distance are more likely to have similar adoption pattern. The results obtained from employing instrumental variable probit reveal that farmers’ specific factors, location, institutional factors and perceptions about improved rice technology attributes significantly determine rice farmers’ adoption decisions. More importantly, risk and time preferences are not only endogenous but also significant factors explaining rice farmers’ decisions to adopt improved rice technology. It is evident that cluster plays significant roles in decision making, and thus matters in the diffusion of improved agricultural innovation. Decisions to adopt improved rice varieties are not only significantly influenced by less willingness to take risks but also short-sightedness towards present consumption (impatience). Therefore, specific attention should be paid to the heterogeneity in farmers’ locations as well as their risktaking ability and level of impatience which drive their attitudes when designing and implementing agricultural technological innovation.