Why farmers don’t make ‘rational’ decisions

Published 20171214

I discovered the presence of human life in a place where economists thought it did not exist: the economy”. This is how Richard H. Thaler amusingly described the behavioural economics research for which he was recently awarded the Nobel prize for economics.

Thaler has been working for decades in a field of research that assumes people do not behave in the predictable, rational way that most economic models rely on. In his speech to the Nobel Banquet Thaler went on to gently mock his ‘inhuman’ colleagues. “Economists do engage with other humans on a regular basis, and often find their behaviour to be deeply flawed. At economist dinner parties one can often hear them ridiculing the flawed economic choices made by their spouses, Deans, students, political leaders… but these decision-making flaws did not make their way into economic theories.

Like economists, agricultural scientists have long grappled with the flawed choices people sometimes make. For them, the question is: “Why isn’t there faster adoption of agricultural innovation that has obvious benefits?”

The answer may be simply that farmers are humans – and as Thaler said in his speech, “we humans are absent-minded, a bit overweight, we procrastinate about saving for retirement, and – crucially – we are influenced by many supposedly irrelevant factors: how questions are phrased, what happened yesterday, what’s the default.” We just don’t make objectively ‘good’ choices. Indeed, our emotions constitute “powerful, pervasive, and predictable drivers of decision making”, according to this Harvard study.

So, if humans are in fact not as rational as economic and extension models might like them to be, how should agricultural research and development (R&D) be extended more effectively to achieve better uptake? Perhaps by starting with some prevalent themes of behavioural finances: that humans make 95% of their decisions using mental shortcuts or rules of thumb; by recognising the collection of anecdotes and stereotypes which make up the emotional filters individuals rely on to understand and respond to events, and by accepting that responses will include irrational decision making.

Accounting for these factors is unlikely to be first nature to an engineer who is wondering why their labour-saving invention is not being embraced, or by the team of agronomists mystified why their superior crop production package is being dismissed. These responses, however, may be patently obvious to a social scientist or psychologist who specialises in understanding decision-making processes.

Research of all types is becoming increasingly cross-disciplinary as creative solutions are sought for complex problems. Agricultural science thankfully is not immune from this trend, and we are seeing more initiatives in the sector – such as the Australian Government-funded Rural Research and Development for Profit program – that encourage this cross-disciplinary and cross-sectoral research.

The lesson from Thaler’s work in behavioural economics that could lead to increased R&D adoption rates on-farm is that cross-disciplinary agricultural research needs to extend beyond the hard sciences to include social science and psychology. After all, farmers are just as irrational as anyone else.


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