Information Provision and Farmers' Risk Attitudes in India: Evidence From Field Experiments

Abstract

Farmers often make farming decisions under risk and uncertainty, and their risk attitudes influence agricultural practices. Their risk attitudes may not be constant at the individual level and might be influenced by information acquisition, a crucial determinant of agricultural decision-making associated with uncertainties. We study the relationship between farmers' general risk attitudes and information provision by examining the impact of a government-led soil health information provision programme on their risk attitudes, conducting field experiments and surveys in India. We analyse the collected data using both non-parametric inferential techniques, such as the Mann-Whitney and chi-squared tests, and parametric methods, including probit and negative binomial regressions. The result shows that the soil health information provision influences farmers to be risk-averse, possibly by enhancing their confidence in combatting land degradation, as it provides additional information and recommendations on soil health and fertiliser usage (dosages and types). We also find that the perception of farmland degradation encourages farmers to take risks, while climate change experiences make them more risk-averse, suggesting an adaptive shift in their risk attitudes aimed at minimising economic loss. Farmers' risk attitudes significantly influence long-term sustainability and short-term economic loss management in agriculture. Our findings suggest that static (e.g., soil health) and dynamic (e.g., farmland degradation with future consequences) information can be leveraged through information provision mechanisms to influence farmers' risk attitudes, helping to balance long-term sustainability with short-term economic outcomes in agriculture.