Smallholder identities and social networks: the challenge of improving productivity and welfare

This paper challenges economists’ general neglect of the social and psychological context in which smallholders make agricultural production decisions. The objective of the paper is to push for a more robust and useful understanding of why more productive technologies and natural resource management practices are often not adopted extensively or quickly in low-income agrarian societies where the benefits from adoption appear especially great and what, if anything, can and should be done to stimulate faster productivity growth in the socio-psychological context of such settings.The authors attempt to formulate and empirically validate an analytical framework explaining both individual productivity and technology adoption behaviour and also explains the aggregate properties of social systems characterised by persistently low productivity. The first part of the paper suggests such a framework, which considers social and psychological phenomena equally with material considerations in trying to understand microeconomic behaviour. The second part of the paper provides empirical evidence.The authors main conclusions include:Economists rarely adequately credit that individuals intrinsically value not just material well-being, but also the friendships that result from their social networks and the self-image that comes from their identitiessmall, short-lived interventions can have persistent effects by inducing endogenous shifts from low-level to higher-level productivity equilibriawhen individual choices are framed by others' decisions, modest changes to private incentives that induce behavioural change can have significant effects on community-level behaviour. Finding the tipping points or thresholds at which such changes can be induced is a central task for applied researchersimproving poor farmers' access to financial services may also enable them to overcome the short-term costs of social sanctions in order to undertake desirable investment in long-term productivity gainsproductivity will increase as identities become based more on innovativeness and material performance or as preferences adapt to place more emphasis on physical satisfaction and less on nonmaterial sources of wellbeing.[adapted from author]