Abstract
PurposeMental budgeting, as a part of mental accounting theory, is expected to impact a household's budgetary management in terms of expenses. The purpose of this paper is to study whether and how mental budgeting can explain differences in farmers' reactions to different incentives of low-toxicity pesticide use.Design/methodology/approachBased on data from a survey of 393 vegetable farmers in the Sichuan Province, this analysis, using a Likert Scale approach, first explores whether farmers utilize mental budgeting. Secondly, using a Probit model, this paper analyzes how mental budgeting affects farmers' intentions to switch to low-toxicity pesticide use when faced with different incentives.FindingsThe results show that the majority of farmers categorize agricultural inputs into different groups and that 26.46% of the investigated farmers utilize mental budgeting for pest control practices. In addition, farmers who utilizing mental budgeting report a higher willingness to switch to low-toxicity pesticides when they're presented with a specific subsidy. Furthermore, if offered a price premium for quality, the willingness to switch to low-toxicity pesticides for farmers utilizing mentally budget is lower compared to other farmers.Originality/valueThis paper examines the existence of mental budgeting among farmers. It provides a better understanding of how farmers categorize agricultural inputs and their mental mechanisms with respect to agricultural expenses. Finally, this paper is the first to study the effects of mental budgeting on farmers' reactions to different incentives aimed at stimulating the adoption of low-toxicity pesticides.
Highlights
Pest control is a pivotal activity for maintaining the yield and quality of agricultural production
We focused on three categories of agricultural inputs: seeds, fertilizers and pest control measures
A subsidy generates income effects specific to the mental budgeting of pest control and our results suggest that increased budgets will change the demand structure for pest control measures if a farmer uses such a budgeting procedure in decision making
Summary
Pest control is a pivotal activity for maintaining the yield and quality of agricultural production. The misuse and overuse of pesticides has caused several food. China Agricultural Economic Review Vol 13 No 3, 2021 pp. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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