Trading risk for ambiguity: Production versus health under pesticide application
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Date
2022-08
Open Access Location
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Wiley Periodicals LLC on behalf of Agricultural and Applied Economics Association
Rights
(c) The author/s
CC BY-NC-ND
CC BY-NC-ND
Abstract
Pesticide use reduces the variation in crop yields at the expense of potentially negative consequences to farmers and their family members. This article examines the trade-off between decreasing production risk and increasing health ambiguity because of pesticide use. We find that under ambiguity, pesticide application decreases the variation in health outcomes, whereas under risk, it decreases the expected value of health outcomes. Health insurance protects health from the pesticide damage but not from the ambiguity effect of pesticide application, and the optimal choice of pesticide application does not depend on the farmer's health preferences over risk or ambiguity. However, in the absence of health insurance, ambiguity can increase or decrease the optimal choice of pesticide compared to the risk case. This suggests that public policies around pesticide usage should be designed to reflect and account for the multitude of behavioral responses in the presence of ambiguity and risk.
Description
Keywords
ambiguity, chlorpyrifos, glyphosate, health, pesticide, producers, roundup, uncertainty
Citation
Voica DC, Schmitz TG. (2022). Trading risk for ambiguity: Production versus health under pesticide application. American Journal of Agricultural Economics. 104. 4. (pp. 1327-1342).