Does heterogeneity in goals and preferences affect allocative and technical efficiency? A case study in Northern Nigeria

Household characteristics are commonly used to explain variation in smallholder efficiency levels. The underlying assumption is that differences in intended behavior are well described by such variables, while there is no a priori reason that this is the case. Moreover, heterogeneity in farmer goals and preferences, in relation to the role of the farm enterprise, are not well documented in developing countries. This paper makes a contribution to fill this gap, by empirically determining heterogeneity in farmer goals and attitudes in Nigeria through a pair-wise ranking, supplemented with Likert scales. Factor analysis is used to reduce these data into behavioral factors. We estimate technical and allocative efficiency levels and analyze how these are related to farm characteristics and the identified behavioral factors. The models in which both intended behavior and farmer characteristics are included give a significantly better fit over models in which only household characteristics are included. These regression results suggest that the socio-economic environment affects efficiency levels both directly and indirectly, through changes in goals and attitudes. Additional research in rural areas of developing countries should establish how agricultural policies should account for this heterogeneity.

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JEL Codes:
D13; Q12
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Contributed Paper

 Record created 2017-04-01, last modified 2020-10-28

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