Abstract
AbstractThere is a growing literature that incorporates not only economic preferences, such as risk preferences, but also personality and aspirations into economic choice models. Here, we investigate how these concepts relate to each other and can explain observed economic choices. More specifically, we explore the role of risk preferences, personality (self‐efficacy and locus of control), and aspirations for farmers’ choices to adopt preventive measures against pests, buy cropinsurance, and to be entrepreneurially active. To this end, a sample of 568 Swiss fruit growers is analyzed. We find that for the adoption of preventive measures against pests, the best predictors are the farmers’ locus of control and their aspirations. For crop insurance demand, all behavioral variables, and especially risk preferences, contribute to explain farmers’ choices. For farmers’ entrepreneurial choice, we find that locus of control and their risk preferences are the best predictors. Our results reveal considerable domain specificity of preferences, personality, and aspirations in economic choice models.
Highlights
Economic choice models attempt to explain as many economic choices with as few parameters as possible (Rabin, 2013)
We investigate the role of risk preferences, personality, and aspirations, and how these concepts are interrelated in explaining three different economics choices taken by 568 fruit growers in Switzerland
We find that locus of control and aspirations are the best predictors for the decision to use preventive measures against pests
Summary
Economic choice models attempt to explain as many economic choices with as few parameters as possible (Rabin, 2013). For all three economics choices, that is, taking preventive measures against pests, buying crop hail insurance, and entrepreneurial choice (starting self-processing and direct marketing of the produce), we hypothesize that risk preferences, personality and aspirations contribute to explain farmers’ choice. These variables might contribute differently to the three economic choices analyzed. Wuepper (2020) finds that among European farmers, parts of their locus of control, self-efficacy, and other behavioral characteristic all have a cultural dimension, which are strongly correlated. This is found for farmers in Ghana, where self-efficacy, locus of control and time preferences operationalized (Wuepper & Sauer, 2016)
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