Therefore, the results confirm that ethnic minority farmers in northern Thailand
are well-integrated into input and output markets, and that improvements in infrastructure such as roads and the reduction in time required to reach output markets,
have contributed to increasing farm output market integration, which in turn has
had a significant and positive impact on farm efficiency and per capita incomes.
There are, however, challenges for those farmers seeking to integrate their farm
production activities into the market. For instance, much knowledge is needed to
manage new crops and inputs in a sustainable way, and Chaps. 4 and 7 of this book
have shown that during the process of agricultural commercialization, farmers are
increasingly exposed to risks from pesticide use and soil loss, while the previous
section of this chapter (see 12.2) has revealed the importance of price volatility.
12.4 The Relationship of Risk Preferences and Discount Rates
with Credit Access and Demand
This section discusses our analysis of risk preferences and discount rates, as
described in Chap. 5. Risk preferences were assessed using a multiple price list
technique and involving actual payouts, as well as through a self-assessment
questionnaire in which respondents identified the level of risk they were willing
to take on a scale of 0–10. Discount rates provide information on how much future
consumption one is willing to forego for immediate consumption purposes, and
here were assessed using a multiple price list technique, though payouts were
hypothetical. Both risk preferences and discount rates were assessed for the household heads and their spouses – if applicable, and therefore represent individuallevel data. Please refer to Chap. 5 for more details on the methodology used.
Before presenting the results on how risk aversion and discount rates relate to
credit access and demand, we will briefly describe the relationship between risk
aversion and discount rates. In this study, we found a statistically significant
negative correlation between individual discount rates and risk aversion, as
obtained using the self-assessment method (Pearson coefficient ¼ À0.219,
p < 0.01). In other words, lower individual discount rates (i.e., more patience)
were associated with higher levels of risk aversion (i.e., less willingness to take
risks). Two other studies have also found a similar relationship between risk
aversion and discount rates (Anderhub et al. 2001; Gu ¨th et al. 2008).
It is important to understand the relationship between credit access/demand and
risk preferences/discount rates, so that the underlying reasons as to why credit is
demanded can be better understood. For example, are risk averse people more or
less likely to demand credit? Are people who have higher discount rates and are
therefore less patient more or less likely to demand credit? Table 12.5 shows mean
474
M. Zeller et al.
are well-integrated into input and output markets, and that improvements in infrastructure such as roads and the reduction in time required to reach output markets,
have contributed to increasing farm output market integration, which in turn has
had a significant and positive impact on farm efficiency and per capita incomes.
There are, however, challenges for those farmers seeking to integrate their farm
production activities into the market. For instance, much knowledge is needed to
manage new crops and inputs in a sustainable way, and Chaps. 4 and 7 of this book
have shown that during the process of agricultural commercialization, farmers are
increasingly exposed to risks from pesticide use and soil loss, while the previous
section of this chapter (see 12.2) has revealed the importance of price volatility.
12.4 The Relationship of Risk Preferences and Discount Rates
with Credit Access and Demand
This section discusses our analysis of risk preferences and discount rates, as
described in Chap. 5. Risk preferences were assessed using a multiple price list
technique and involving actual payouts, as well as through a self-assessment
questionnaire in which respondents identified the level of risk they were willing
to take on a scale of 0–10. Discount rates provide information on how much future
consumption one is willing to forego for immediate consumption purposes, and
here were assessed using a multiple price list technique, though payouts were
hypothetical. Both risk preferences and discount rates were assessed for the household heads and their spouses – if applicable, and therefore represent individuallevel data. Please refer to Chap. 5 for more details on the methodology used.
Before presenting the results on how risk aversion and discount rates relate to
credit access and demand, we will briefly describe the relationship between risk
aversion and discount rates. In this study, we found a statistically significant
negative correlation between individual discount rates and risk aversion, as
obtained using the self-assessment method (Pearson coefficient ¼ À0.219,
p < 0.01). In other words, lower individual discount rates (i.e., more patience)
were associated with higher levels of risk aversion (i.e., less willingness to take
risks). Two other studies have also found a similar relationship between risk
aversion and discount rates (Anderhub et al. 2001; Gu ¨th et al. 2008).
It is important to understand the relationship between credit access/demand and
risk preferences/discount rates, so that the underlying reasons as to why credit is
demanded can be better understood. For example, are risk averse people more or
less likely to demand credit? Are people who have higher discount rates and are
therefore less patient more or less likely to demand credit? Table 12.5 shows mean
474
M. Zeller et al.