Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya

TLDR

Farmers often delay fertilizer purchases, postponing until later periods when impatience may prevent buying. The authors model farmers as facing small fixed costs of fertilizer purchase and assume some are stochastically present‑biased and not fully sophisticated about this bias. Empirical evidence shows many farmers in Western Kenya forgo profitable fertilizer use, yet respond to short‑term discounts such as free delivery after harvest, and calibrated simulations indicate such targeted incentives can improve welfare more than laissez‑faire or heavy subsidies. JEL classification: Q13, Q12, Q16, Q18.

Abstract

We model farmers as facing small fixed costs of purchasing fertilizer and assume some are stochastically present biased and not fully sophisticated about this bias. Such farmers may procrastinate, postponing fertilizer purchases until later periods, when they may be too impatient to purchase fertilizer. Consistent with the model, many farmers in Western Kenya fail to take advantage of apparently profitable fertilizer investments, but they do invest in response to small, time-limited discounts on the cost of acquiring fertilizer (free delivery) just after harvest. Calibration suggests that this policy can yield higher welfare than either laissez-faire policies or heavy subsidies. (JEL Q13, Q12, Q16, Q18)