An experiment on the link between risk preferences and the willingness to become a farmer

Abstract

This study investigates the link between risk preferences of agricultural students and their willingness to become a farmer. We conducted an incentivized experiment with 577 students of an agricultural university in Indonesia. Discriminating between alternative theories of decision-making under risk, we find that students' risk preferences behave in accordance with cumulative prospect theory, but risk preferences are not predictive of students' willingness to become a farmer. Framing the experimental lottery task in either an agricultural or a general entrepreneurship context does not alter the predictive power for the willingness to become a farmer. Our results contribute to the debates on risk and farm generational renewal, as well as the (lack of) parallelism in behavioral field experiments.