The results from this exercise were reported by B&E (1993). Using a Cobb-Douglas functional form to model crop production, they found the extension variable to be highly statistically significant and estimated the marginal rate of return on investment in extension at about 350% (using the 415 observations that had all the necessary data). Subsequently, a data processing error in the creation of the extension variable was discovered, and after correcting for the error, B&E (1997) noted that the key qualitative results did not change.5

# **Issues**

The main concerns relate to model specification and data-related problems. The data issues are dealt with first to allow subsequent comparisons across different model specifications meaningful. On specification, the functional form issue is discussed first followed by a discussion on the omitted region-specific factors.

# _Data Problems_

As part of the ongoing OED impact evaluation of agricultural extension projects in Kenya, an attempt was made to match up the 1990 farm-level output with the output from the 1982 RHBS data. For this purpose, both the 1990 B&E survey data and the 1982 RHBS data were obtained.<sup>6</sup> A household- and cluster-level comparison across the years, however, revealed some differences and inconsistencies.

The most significant issue is the method of aggregation across crops to arrive at the farmlevel output. A comparison of farm-level output across the years shows a significant drop in farm output (after accounting for farm area) from 1982 to 199O.' These changes were surprising and did not have a ready explanation. Further examination of the plot- and crop-level data from the 1990 survey, however, revealed that output quantities from different crops had been aggregated to estimate the farm-level output (and used as the dependent variable in B&E production function estimation). Also, in the 1990 survey, output data were collected only for 5 major crops (maize, beans, soghum, millet and potatoes).

Needless to say, the production-function estimates reported by B&E (1993 and 1997) are less than appropriate. Nevertheless, it should be noted that the 5 crops, on average, constitute about 70% of farm output value from the 1982 sample data and about 68% from the 1997 sample

- 5Quantitatively, a re-estimation yields a statistically significant coefficient on extension of 0.25 instead of the 0.29 reported in B&E, 1993. The corresponding estimate of the returns to extension in Kenya is 278% (based on 418 "complete" observations). However, as discussed below, further measurement errors have been discovered and the revised estimate is no longer valid.

- 6The generous assistance of Robert Evenson and Vishva Bindlish in making available the 1990 data set, and of Steven Block for the 1982 data, is warmly acknowledged.

- 7The significance of the differences first came to light during an ongoing DEA analysis of technical and efficiency changes from 1982 to 1990 and 1990 to 1997. The initial results indicated significant technological regression from 1982 to1990 and significant technological progress from 1990 to 1997 (details forthcoming in Gautam and Alevy, 1999). Neither could be satisfactorily explained by the events that have taken place in Kenya since 1982, and prompted a closer look at the data.

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