B02: Household preferences and decision behavior and the provision of public goods.

Changing framework conditions – caused e.g. by urbanization – are likely to be reflected in changing preferences at the individual level. To date, there is little knowledge on how preferences change over the lifetime of individuals that are exposed to rapid urbanization and concurrent changes in income, lifestyle and modernization. A good understanding of individual preferences, their stability and potential drivers of change is, however, essential to explaining and predicting behavioural responses to changing framework conditions. Changing framework conditions – and the concurrent changes in preferences – are also likely to be reflected in farm-level decision-making. In particular, increasing competition for land and water resources affects land use decisions and the adoption of agricultural technologies. The land use and technology decisions made at the farm-level are further reflected in the provision of ecosystem services, which in turn interact with preferences of the population. Thus, in order to understand land use change and the provision of ecosystem services along the rural-urban interface under dynamically changing framework conditions, we propose to analyze social and environmental preferences, individual investment decisions and their associations with the provision of ecosystem services using panel data.

More specifically, the project aims to address three objectives: First, we analyze the factors influencing individual preferences (social, environmental, risk, time preferences) and their evolution over time and space. Second, we use experimental approaches to investigate how socio-economic and policy factors modify investment decisions in irrigation technologies along the rural-urban interface. Third, we analyse how the relationship between socio-economic characteristics, preferences and ecosystem services provision changes over time and space.

In order to address these three research objectives, we collect panel data from 1275 households along two rural-urban transects of Bengaluru. Building on the first wave of data collected during Phase I of FOR2432, we will implement the second wave of the survey in close collaboration with other projects of FOR2432. As in the previous Phase, this will provide the overall sampling framework for other projects within FOR2432, who will continue to work with sub-samples of the households interviewed inthis project (B01, B03, C04, C05, A03), or at on-farm sites chosen from the surveyed households (A01, A02, C01). Besides the socio-economic survey hat will be conducted with the whole sample, in B02 we will also implement framed field experiments with a sub-sample of 600 households to address the second research objective.

Prof. Dr. M. Wollni
Internationale Agrarökonomie
Universität Göttingen

Prof. Dr. O. Mußhoff
Landwirtschaftliche Betriebslehre
Universität Göttingen

Verena Preuße
Doctoral Researcher

Anjo Grebe

Doctoral Researcher

Indian partner project:
Attitudes and decisions of agricultural households in the rural-urban interface: A survey and comparative analysis

K.C. Lalitha & M.S. Nataraju, University of Agricultural Sciences, Bangalore

Preferences, decision-making behaviour of households and public good provision

In order to understand structural change and the provision of public goods along the rural-urban interface under dynamically changing framework conditions, we propose to analyze social and environmental preferences, individual investment and disinvestment decisions and their associations with public good outcomes. More specifically, the project aims to address four objectives: First, we analyse the factors influencing individual risk, time, social and environmental preferences and their evolution along the rural-urban interface. Second, we investigate investment and disinvestment decisions of households along the rural-urban gradient. In particular, we will test whether the classical investment theory or the real options approach is more appropriate to predict investment and disinvestment decisions. Third, we combine the data to analyse in how far individual investment and disinvestment behaviour can be explained by individual characteristics and preferences as well as changing framework conditions as induced by urbanization. Fourth, we investigate the relationship between socio-economic characteristics and preferences and the provision of environmental public goods.

In order to address the above research objectives, we will collect data from 1,200 households along two rural-urban transects of Bangalore in collaboration with C05. This will constitute the overall sampling framework for other projects within FOR2432, which will work with sub-samples of the households interviewed in this project (B01, B02, B03, A03), or at on-farm research sites chosen from the surveyed households (A01, A02, C01). A standardized questionnaire will be used to collect data on socio-economic household characteristics, social and environmental preferences and life satisfaction. Trust, risk, and time preferences will be elicited using experimental games integrated into the survey. In addition, we will use discrete choice experiments to obtain environmental preferences regarding different ecosystem services identified in collaboration with B01. We will also compile a detailed inventory of public goods provided in each of the neighbourhoods included in the socio-economic household survey. Finally, behavioural experiments will be carried out with a sub-sample of 600 households to investigate investment and disinvestment decisions as well as contributions to a public good.

Dr. Manuel Santos Silva
Dr. Monish Jose
Dr. Johannes Wegmann
Dr. Johannes Bettin