panel structure of the LSMS-ISA data allows us to make some progress in addressing the endogeneity problems facing existing related studies that are based on observational data (see the survey papers provided by Birkhaeuser et al., 1991; Evenson, 2001), in particular through our ability to include farm fixed effects and proxies for agricultural shocks. Yet, – obvious endogeneity concerns remain, due to the possibility that time-varying shocks other than those that we can control for – affect both demand for extension and outcomes, and the results should be interpreted as suggestive correlations in the data. Results are reported in Appendix D. We find that access to extension services is positively associated with a number of relevant farm outcomes. This particularly holds for agricultural advisory services that are provided at farmers’ own request. The quantitative magnitudes of our estimates imply that receiving agricultural advice is associated with a 7% larger value of harvest and 8% higher profits (defined as value of harvest net of costs for seeds, fertilizer, and agrochemicals).<sup>30</sup> Thus, as long as farmers’ beliefs are consistent with the outcomes observed in the data, there is no reason to assume that farmers abstain from requesting extension services because they believe that the provided advice is not useful (also recall that more than 80% of farmers that received advice rate it as useful or very useful in our sample; see Table 1).

In addition to the ability to distinguish between solicited and unsolicited advice, the data also allow an analysis of potential channels through which extension might affect farm outcomes. We find a significant link between extension services and use of modern farm inputs (mainly fertilizer and improved seeds), which are commonly argued to be important determinants of agricultural productivity (Evenson and Gollin, 2003; Morris et al., 2007; Duflo et al., 2011). Another concern might be that the observed correlation between shocks and received extension services may be driven by supply-side effects rather than the proposed mechanism through increases in farmers’ demand for advice. For example, this might be the case if access to extension services was affected by limited supply (e.g., because these services are often understaffed), and the supply of extension is partly in response to adverse shocks. While to some extent this could be captured through fixed effects in the analysis, our data do not allow us to fully rule out the possibility that (part of) the observed correlation between shocks and received extension services is due to such supply side Finally, non-agricultural shocks may affect farmers’ demand for extension by creating a need for advice on optimal farm practices with respect to labor inputs. Yet, in our analysis of the relation between receiving advice and farmers’ production choices, we do

> 30We stress again that due to the endogeneity concerns stated above, we cannot interpret the estimates as causal. Note further that irrespective of these quantitative estimates, the mere observation of a positive association between shocks and solicited advice might be interpreted as an indication of farmers’ perception that returns to participating in extension programs are indeed positive (otherwise they would not ask for extension in light of negative shocks).

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