Risk Aversion and Gender Gaps in Technology Adoption by Smallholder Farmers: Evidence from Ethiopia

Abstract

Adoption of chemical fertilizers is a high-risk and high-return investment option for smallholder agricultural households that heavily rely on rainfall. I document a persistent gap of above 10% in the adoption of chemical fertilizer between male- and female-headed smallholder farmers in Ethiopia. This gender gap remains after accounting for household characteristics, access to complimentary farm inputs, access to credit, soil quality, and crop selection. Using historical variability of rainfall at the district level as a measure of a district’s risk of crop failure, I find strong evidence that the gender gap in fertilizer adoption increases with the level of risk in the district. I explore the role of two competing hypotheses to explain this observation: gender difference in risk aversion and differential access to consumption smoothing/liquidity constraints by male- and female-headed households. I find strong evidence that gender differences in access to consumption smoothing/liquidity constraints play a minimal role, implying that gender difference in risk aversion plays the dominant role. This is consistent with a bulk of lab and field experimental studies that find evidence that women tend to be more risk-averse than men.