Does heterogeneity in goals and preferences affect efficiency? A case study of farm households in northern Nigeria

Abstract

Abstract Household characteristics are commonly used to explain variation in smallholder efficiency levels. The underlying assumption is that differences in intended behavior are well described by such variables, while there is no a priori reason that this is the case. Moreover, heterogeneity in farmer goals and preferences, in relation to the role of the farm enterprise, are not well documented in developing countries. This article makes a contribution to fill this gap, by empirically determining heterogeneity in farmer goals and attitudes in Nigeria through a pair‐wise ranking, supplemented with Likert scales. Factor analysis is used to reduce these data into behavioral factors. We estimate technical and allocative efficiency levels and analyze how these are related to farm characteristics and the identified behavioral factors. The models in which both intended behavior and farmer characteristics are included give a significantly better fit over models in which only household characteristics are included. These regression results suggest that the socioeconomic environment affects efficiency levels both directly and indirectly, through changes in goals and attitudes.