Disentangling Poor Smallhold: er Farmers’ Risk Preferences and Time Horizons: Evidence from a Field Experiment in Ethiopia

Molla Alemayehu*, Joost Beuving, Ruerd Ruben

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


This paper considers the economic behaviour of smallholder farmers in eastern Ethiopia and its effects on their poverty status, looking specifically at how farmers deal with production risk and various time horizons. Earlier studies in rural Africa suggested that these are interlinked but that remains analytically unsatisfactory. Through experiments, we seek to disentangle risk preferences and time horizons regarding their impact on poverty. We find that the studied farmers are highly risk-averse and time-impatient; few farmers make longer-term investments. This appears to be covariant with wealth and household indicators, with poorer, less-educated farmers with smaller landholdings making less risky investments, thus yielding smaller returns, which shorten their time horizons. This finding is relevant for rural development policies, in particular suggesting how untying the Gordian knot of risk and time that reproduces rural poverty depends on the simultaneous operation of market and state forces.

Original languageEnglish
Pages (from-to)558-580
JournalEuropean Journal of Development Research
Issue number3
Early online date15 Oct 2018
Publication statusPublished - Jul 2019



  • Ethiopia
  • Experimental economics
  • Risk behaviour
  • Rural poverty
  • Smallholder farmers
  • Time preference

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