Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers
The optimal design of informal contracts in agricultural value chains depends on when farmers prefer to be paid for their output. While the evidence from time preference experiments suggests a preference for early payments, field studies often indicate that farmers will defer regular payments if giv...
| Autores principales: | , |
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| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Informa UK Limited
2020
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/142698 |
| _version_ | 1855529394649432064 |
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| author | Kramer, Berber Kunst, David |
| author_browse | Kramer, Berber Kunst, David |
| author_facet | Kramer, Berber Kunst, David |
| author_sort | Kramer, Berber |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | The optimal design of informal contracts in agricultural value chains depends on when farmers prefer to be paid for their output. While the evidence from time preference experiments suggests a preference for early payments, field studies often indicate that farmers will defer regular payments if given the opportunity. In this study, we explicitly test whether farmers are more patient regarding regular, earned income than regarding experimental windfall payments. We asked farmers in a dairy cooperative in Kenya to allocate both their milk income and a one-time gift between an early and a deferred payment date. We find that a large majority of participants deferred their milk payments, while rarely choosing to defer the gift. Participants’ survey responses suggest that we observe this difference because of mental accounting: participants earmarked their regular milk payments, but not the gift, to save for bulky expenditures. We conclude that deferred payments can provide value to producers by functioning as a savings device, even when decisions over windfall income suggest a preference for early payments. |
| format | Journal Article |
| id | CGSpace142698 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2020 |
| publishDateRange | 2020 |
| publishDateSort | 2020 |
| publisher | Informa UK Limited |
| publisherStr | Informa UK Limited |
| record_format | dspace |
| spelling | CGSpace1426982024-10-25T07:58:57Z Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers Kramer, Berber Kunst, David supply chains dairy farming milk farmers cooperatives milk payments The optimal design of informal contracts in agricultural value chains depends on when farmers prefer to be paid for their output. While the evidence from time preference experiments suggests a preference for early payments, field studies often indicate that farmers will defer regular payments if given the opportunity. In this study, we explicitly test whether farmers are more patient regarding regular, earned income than regarding experimental windfall payments. We asked farmers in a dairy cooperative in Kenya to allocate both their milk income and a one-time gift between an early and a deferred payment date. We find that a large majority of participants deferred their milk payments, while rarely choosing to defer the gift. Participants’ survey responses suggest that we observe this difference because of mental accounting: participants earmarked their regular milk payments, but not the gift, to save for bulky expenditures. We conclude that deferred payments can provide value to producers by functioning as a savings device, even when decisions over windfall income suggest a preference for early payments. 2020-01-01 2024-05-22T12:10:53Z 2024-05-22T12:10:53Z Journal Article https://hdl.handle.net/10568/142698 en Open Access Informa UK Limited Kramer, Berber; and Kunst, David. Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers. 2020. Journal of Development Studies 56(5): 1048-1064. https://doi.org/10.1080/00220388.2019.1632436 |
| spellingShingle | supply chains dairy farming milk farmers cooperatives milk payments Kramer, Berber Kunst, David Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers |
| title | Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers |
| title_full | Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers |
| title_fullStr | Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers |
| title_full_unstemmed | Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers |
| title_short | Intertemporal choice and income regularity: Non-fungibility in the timing of income among Kenyan farmers |
| title_sort | intertemporal choice and income regularity non fungibility in the timing of income among kenyan farmers |
| topic | supply chains dairy farming milk farmers cooperatives milk payments |
| url | https://hdl.handle.net/10568/142698 |
| work_keys_str_mv | AT kramerberber intertemporalchoiceandincomeregularitynonfungibilityinthetimingofincomeamongkenyanfarmers AT kunstdavid intertemporalchoiceandincomeregularitynonfungibilityinthetimingofincomeamongkenyanfarmers |