Abstract: Price variation is a typical feature of markets in low and middle income countries. Retail firms that regularly stock food staples and other household commodities face substantial price variation when purchasing in wholesale markets. How much of this input price variation passes through to output prices for rural customers? I use a panel of firm-level wholesale and retail prices from 270 urban and rural retail firms in Tanzania to evaluate passthrough from input price shocks on staple food prices. Rural firms smooth both negative and positive input price shocks more than urban firms. Urban firms passthrough nearly 95% of input price increases, while rural firms passthrough only 55% of input price increases. Price adjustments are asymmetric; rural firms passthrough more cost savings and less cost increases, suggesting that rural customers enjoy partial insurance from negative price shocks. By exploring possible mechanisms, I find evidence that smaller community size among rural firms is associated with lower passthrough on negative price shocks. At the same time, distance to markets and competitive pressure matters as well - rural firms with more competitors and further from urban markets have higher passthrough rates, consistent with a competitive market framework with transaction costs. STEG Working Paper Series Link.
Presentations: NEUDC, STEG Annual Conference, BREAD Conference, Purdue University
Abstract: Weather forecasts are an example of a public good that is often distributed at-scale without charging users. This feature can make measuring the benefits of weather forecast distribution challenging because information spillovers are likely; people like to talk about the weather and weather information is often available from a variety of sources. Despite the ubiquity of weather information, small-scale farmers often lack access to high-quality weather forecasts that are tailored to help them make production decisions. We implement a randomized experiment with 400,000 cotton growers in Pakistan and vary the share of farmers treated with large clusters (tehsils). We show that treated and untreated farmers in high-saturation clusters update their farming behavior in line with forecasts. Directly treated farmers in high saturation tehsils are 37-67% more likely to avoid rain when irrigating and applying fertilizer and pesticides. Control farmers in highly saturated tehsils are 22-46% more likely to avoid rain compared to controls in low-saturation tehsils. For heat avoidance, results follow a similar pattern but are statistically weaker. Direct information sharing is a plausible pathway - control farmers in high saturation areas were 8% more likely than control farmers in low saturation areas to report discussing weather information with peers. At the end of the season, estimates for yields are positive but imprecise and there is evidence that input expenditure increased.
In collaboration with Precision Development and CERP. Funding support from IFAD, Chae Family Economics Research Fund, NBER Social Learning Fund. [AEA Social Science Registry]
Presentations: University of Illinois ACES, University of Chicago AI in Weather Workshop, Cornell University, Development Innovation Lab at the University of Chicago, University of Washington, University of California Davis, IPA/Global Poverty Research Lab Annual Researcher Gathering, Advances in Field Experiments, MeasureDev Conference at the World Bank
Abstract: This paper studies experimental designs for estimation and inference on policies with spillover effects. Units are organized into a finite number of large clusters and interact in unknown ways within each cluster. First, we introduce a single-wave experiment that, by varying the randomization across cluster pairs, estimates the marginal effect of a change in treatment probabilities, taking spillover effects into account. Using the marginal effect, we propose a test for policy optimality. Second, we design a multiple-wave experiment to estimate welfare-maximizing treatment rules. We provide strong theoretical guarantees and an implementation in a large-scale field experiment.
In collaboration with Precision Development and CERP. Funding support from IFAD, Chae Family Economics Research Fund, NBER Social Learning Fund. [AEA Social Science Registry]
Abstract: We experimentally investigate the link between search costs and relational contracts for rural firms in Tanzania. Our analysis takes advantage of random assignment to a digital telephone directory that lowers the cost of finding contact information. One group of treated firms was made especially visible upstream---to suppliers in nearby cities---and another group of treated firms was made especially visible downstream---to customers. Relative to a control group, firms in both treatment groups increase relational contracting with their suppliers and decrease it with their customers. Yet, there is no strong evidence that the number of new customers or suppliers increases. This pattern suggests that the increased exposure causes firms to update their valuation of relational contracts and respond by negotiating better terms with suppliers and customers.
Funding support from the Cornell Institute for Social Science and UC Davis Jastro-Shields. [AEA Social Science Registry]
Presentations: PEDL Conference on Firms in Low-Income Countries, NEUDC, AAEA, UC Davis, Centre for the Study of African Economics (CSAE) Annual Conference, Toulouse School of Economics, workshop on the economics of digitization.
Abstract: In the absence of insurance and credit markets, the effect of adverse environmental shocks on rural firms is ambiguous because drought shifts both demand and supply curves. I use spatial and temporal variation in the 2016-2017 drought in Kenya to characterize the direct and indirect effects of drought-induced food insecurity on local firm outcomes. Firms in areas directly affected by drought have lower sales, profits, and hire fewer workers than firms in non-drought areas. Firm entry also increases in drought areas compared to non-drought areas, consistent with prior evidence that farming households form new businesses as a coping strategy following shocks. Sub-sector analysis reveals substantial heterogeneity. Service firms fare better than retail firms. But examining retail sub-sectors shows that firms selling higher-value food products (meat/fish and fruits/vegetables) experience greater declines than staple grain sellers in markets directly affected by drought, while firms selling high-value foods increase sales in non-drought areas. This is consistent with consumers in drought regions decreasing consumption of non-necessities.
Presentations: IPA's Small and Medium Enterprise Working Group Meeting, Development Day at the University of Notre Dame, APPAM Research Conference.
Agricultural Input Markets in Sub-Saharan Africa: Theory and Evidence from the (underappreciated) Supply-Side, with Andrew Dillon, Travis Lybbert, and Hope Michelson.
Invited submission to Annual Reviews of Resource Economics.
Economists have long studied the diffusion of improved agricultural technologies, often aiming to understand and relax the constraints that discourage their adoption among smallholder farmers. While this effort has documented and explored a long list of on-farm and downstream output market constraints, the role of upstream agricultural input markets has received far less attention, a critical blind spot. We review the empirical literature on input markets in low income countries with a focus on Sub-Saharan Africa. We argue that the relative sparsity of this literature reflects limitations in our workhorse models of the household and the firm and our tendency to rely on household survey data. These tendencies jointly provide limited insight and conceptual framing of the diverse input supply chains that culminate with agrodealers -- large and small -- marketing key inputs to farmers. We synthesize current findings and articulate a research agenda centered on agricultural input markets, including implications for research methods.
Supply and Demand Subsidies to Support Biofortified Crop Adoption in Guatemala, with Karen Macours and Paola Mallia.
Abstract: As new climate-smart farming technologies become available, it will be necessary to learn which market mechanisms are effective at increasing access for rural farmers. If higher quality seeds are under-adopted due to information, behavioral, and/or financial frictions, it justifies subsidizing their distribution. This research considers two ways to subsidize seed dissemination - using demand-side subsidies to encourage farmers to try new seeds and supply-side subsidies for agrodealers to stock new seeds. Subsidizing agrodealers is a potentially appealing and scalable policy option because they face market incentives. A major concern with subsidizing agrodealers is that they may use the incentive to push hybrid seeds on inappropriate farmers. We study the effect of subsidizing both sides of the market to learn how subsidies affect uptake among inexperienced and experienced hybrid seed farmers.
In collaboration with Semilla Nueva. Funding support from USAID-DIV. Pilot launched in March 2024.
Sample Selection and Climate Resilience after Adopting New Seeds: Evidence from Recruitment at Agrodealers in Guatemala
Abstract: Improved seeds that target smallholder farmers often exhibit considerable variation in yields once farmers adopt them, due to differences in input choices, soil quality, and weather. The extent of heterogeneity has implications for policies that support new seed development because it is important to learn which seeds have robust yields across a variety of circumstances. Further, when promoting new seeds there is a debate about whether to sell them to farmers via market intermediaries such as agricultural input sellers (agrodealers) or to provide them at a discount to encourage experimentation. I compare yield resilience to weather shocks for two samples of farmers that participated in detailed plot-level harvest using crop cuts (a method that improves precision on yield estimates) in Guatemala. One sample of participants was recruited after they opted into purchasing a hybrid, biofortified maize seed at agrodealer shops and the second was recruited after receiving a seed donation from an NGO.
Accepted paper session at the AEA Annual Meeting in January 2025. In collaboration with Semilla Nueva.
Supply chain networks and diffusion of shocks in rural markets, with Parth Chawla and Daniel Putman.
Abstract: Tightly linked firm networks may enable firms to engage in risk-sharing and recover more easily from shocks, particularly idiosyncratic shocks. However, if covariate shocks occur (such as seasonal price and demand shocks), suppliers may reduce the number of benefits provided to downstream firms in their supply chain network and increase the likelihood that firms exit the market. This might occur up and down a supply chain between buyers and sellers linked by transactions or across sectors with firms that are linked as neighbours. Thus this study will address the research question: How do firm networks affect individual firms' ability to cope with shocks and changes in competition? We are collecting a novel dataset by conducting a high-frequency bi-monthly survey to monitor entry, exit, shocks, input and output prices, inventory choices and investment, and credit provision. The survey will involve 900 firms in 30 communities drawn from a firm census of 9,800 firms located throughout Kagera, Tanzania.
Funding support from Private Enterprise Development in Low-Income Countries (PEDL) . Research Summary. Data collection complete.
Willingness-to-Pay to avoid tax exposure among small firms in Tanzania, with Jovin Lasway.
Abstract: Small firms in LMICs do not consolidate or grow as often as economic theory predicts. Many small firms are informal businesses that are not often registered with local governments. If firm owners are provided an opportunity to advertise their business, they may refrain from taking actions to increase their visibility if they want to remain under the radar of tax officials. We study the relationship between tax avoidance and growth by offering small firms an opportunity to advertise their contact information to prospective customers around the region. Respondents will be asked to participate in a incentivized willingness-to-pay elicitation to list their phone number in a digital phonebook service. It will include a randomized component with two different primings - 50% of respondents will randomly hear the standard priming, and 50% of respondents will hear a second priming script that lets people know that anyone will be able to access the digital phonebook, including tax collecting officials. The goal is to learn whether being primed to think about taxes lowers firms' willingness-to-pay to list their contact information.
Funding support from the International Growth Centre (IGC). Data collection complete.
The role of mechanistic explanations in technology adoption across contexts: Evidence from Uganda, with Anirudh Sankar, Robbie Dulin, Vesall Nourani, Abraham Salomon , and Godfrey Taulya.
Abstract: Small-scale farmers are far from the technological production frontier, and face significant informational barriers; even after becoming aware of the price and availability of a technology, farmers face uncertainty about how to profitably apply it in combination with other inputs. The usual research and policy response is to provide demonstrations so that farmers can simply copy fertilizer application 'recipes' developed in controlled agronomic settings. Our study takes the conventional approach and flips it on its head. This project aims to equip farmers to confront this complex learning problem by providing a mechanistic – that is, biophysical – understanding of a technology. To test the importance of mechanistic training, we are running a randomized evaluation with 900 farmers where half of the farmers will receive a placebo training on agronomist-recommended fertilizer recipes without an explanation of how fertilizers work. The other half will participate in a training that includes mechanistic explanations about the macronutrients synthetic fertilizers contain and the functional processes through which they affect plant growth. We hypothesize that mechanistic understanding will increase the frequency of experimentation to hypothesize and test different nutrient combinations to discover optimal input levels.
Funding support from the International Growth Centre (IGC), Stanford King Center. In collaboration with Agriworks NGO and researchers at the International Institute of Tropical Agriculture. Data collection in field.
Search costs, mobile phones, and agricultural investment: a telephone directory intervention in Tanzania, with Jenny Aker, Richard Anderson, Brian Dillon, and Hosea Mpogole. Data collection on-going.
Input Adoption and Supplier Search: The Impact of a Market Information Service for Kenyan Farmers, with Georges Poquillon. In collaboration with Precision Development. Data collection complete.
Murphy, K., Rudder, J., Cappucci, M., Cherian M., Deutschmann, J., Elmera, C., Fundukova, L., Kaiser-Tedesco, A., Ortiz-Riomalo, A., Puri, J., Salas, I., Songsermsawas, T. (2024). Evidence Review for Food Security, Nutrition, and Climate-Resilience Interventions. A product of the Secretariat of the Innovation Commission for Climate Change, Food Security, and Agriculture, in collaboration with the International Fund for Agriculture Development (IFAD), and the German Agency for International Cooperation (GIZ).
Balancing bees and pest management: projected costs of proposed bee-protective neonicotinoid regulation in California. (2022). Mace, K., Rudder, J., Goodhue, R., Tolhurst, T., Tregeagle, D., Wei, H., Grafton-Cardwell, B., Grettenberger, I., Wilson, H., Van Steenwyk, R. and Zalom, F. Journal of Economic Entomology, 115(1), pp.10-25.
Winner of the 2022 AAEA Specialty Crop Economics Section "Outstanding Published Paper which Significantly Contributed to Transdisciplinary Work or Specialty Crops Industries”
Economic and Pest Management Evaluation of the Proposed Regulation of Nitroguanidine-Substituted Neonicotinoid Insecticides: Six Major California Commodities. (2023). Zheng, Yanan, Rachael Goodhue, Kevi Claire Mace-Hill, Jess Rudder, Tor Tolhurst, Daniel Tregeagle, Hanlin Wei, Beth Grafton-Cardwell, Ian Grettenberger, Houston Wilson, Robert Van Steenwyk, Frank Zalom, Monique Rivera and John Steggall. ARE Update 26(6): 9-11. University of California Giannini Foundation of Agricultural Economics. https://giannini.ucop.edu/filer/file/1694637435/20778/
Estimated Cost of the Withdrawal of the Insecticide Chlorpyrifos for Six Major California Crops. (2020). H. Wei, R.E. Goodhue, K. Mace, J. Rudder, T. Tolhurst, D. Tregeagle, B. Grafton-Cardwell, I. Grettenberger, H. Wilson, R. Van Steenwyk, J. Steggall. ARE Update 23(4): 13-15. University of California Giannini Foundation of Agricultural Economics. https://giannini.ucop.edu/filer/file/1587396051/19625