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The Influence of Neighbours

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  • 1. The Influence of Neighbours P. Krishnan & M. Patnam Cambridge University, UKAdoption of Seed and Fertiliser in Ethiopia
  • 2. Slow Adoption• Adoption of fertiliser and improved seeds key to increased land productivity• However, the adoption and diffusion of such technologies has been slow• Many potential reasons
  • 3. Reasons for low adoption• Constraints on supply/distribution• Credit constraints (Dercon)• Behaviorial (overestimating patience) (Duflo et al)• Heterogenous and uncertain returns (Suri)• Imperfect information (Udry & Conley)• We concentrate on the last
  • 4. ERHS 1999-2009 1999 2009Adopt new seed % 0.18 0.23Use fertiliser % 0.62 0.64Neighbours adopting new seed % 0.17 (0.25) 0.21 (0.25)Neighbours using fertiliser % 0.59 (0.34) 0.63 (0.34)Correlation: own and neighbour seed adoption 0.51 0.29Correlation: Own and neighbour fertiliser adoption 0.31 0.17
  • 5. Seed and Fertiliser adoption Adoption of new seed across the decade did not adopt seed adopted new seed 2009 2009did not adopt seed 1999 663 (69%) 157 (16%)adopted new seed 1999 82 (8%) 70 (7%) Adoption of fertiliser across the decade did not adopt fertiliser adopted fertiliser 2009 2009did not adopt fertiliser 1999 258 (27%) 177 (18%)adopted fertiliser 1999 92 (9%) 445 (46%)
  • 6. Differences between adopters and non-adopters• Seed: More educated, less oxen, no real differences in wealth• Fertiliser: Wealthier, more and better land. better educated• Both: More extension visits in 99• Key difference: adopters are more likely to have neighbours who are adopters too
  • 7. Identifying the effects of neighbours• Spatial neighbours based on a distance of 1 km from the household.• Instrument for the average neighbours decision to adopt : the non-overlapping sets of neighbours - or neighbours of neighbours• Affect the decisions of spatial neighbours directly - but not the households own decision.
  • 8. Impacts of neighbours on seed adoption Adoption 1999 Adoption 2009 Probit IV Probit Probit IV ProbitNeighbours adopt (sd.23/.24) -0.15 (0.07)** 0.46 (0.20)** -0.11(0.07) 0.47 (0.25)**Cragg-Donald F 136.47 57.94Sample Size 972 Changes over time in seed adoption OLS IV Neighbours adopt -0.17 (0.08)** 0.49 (0.28)** Cragg-Donald F 72.46 Sample Size 972 *Significant at 10% ** Significant at 5% ***Significant at 1%
  • 9. The importance of neighbours• An increase of one standard deviation in the average neighbours adoption raises the probability of own adoption by about 11% in 1999 and 12% in 2009.• Average adoption rates range from 0.18-0.23, so this is large - more than double current levels.
  • 10. Neighbours influence on fertiliser adoption Adoption fertiliser 1999 Adoption fertiliser 2009 Probit Probit IV Probit Probit IVNeighbours adopt 0.18 (0.09)* 0.53 (0.21)** 0.10 (0.11) 0.53 (0.36)Cragg-Donald F 22.98 57.94Sample Size 972 Change over time in fertiliser adoption OLS IV Neighbours adopt 0.09 (0.07) 0.41(0.22)* Cragg-Donald F 120.35 Sample Size 972
  • 11. Impacts of neighbours again• A one standard deviation increase in the average fertiliser adoption of neighbours raises own probabilities of adoption of fertiliser by 19%.• The effects are similar in both years• A substantial effect given that adoption is already about 62% in the survey areas.
  • 12. Impact on own adoption, given levels of adoption by neighbours
  • 13. Summary• Seed: The speed of diffusion through learning from others increases until local diffusion levels of 70 percent have been reached• Fertiliser: these benefits from learning appear to tail off at about 30 percent diffusion levels.• In both cases: an increase by 10 percent in diffusion in the neighbourhood increases the probability of adopting by about 5 percent at current levels of diffusion
  • 14. Is this really learning? So what?• We examine improved seed that is bought• Potentially, supply constraints might mean sharing of seed more important• Yes, likely to be learning but..• Learning from others is a powerful tool, but is not amenable to rapid change through policy, as it reflects steady but careful learning from the experiences of others.