TY - JOUR AU - Duflo,Esther AU - Kremer,Michael AU - Robinson,Jonathan TI - Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya JF - National Bureau of Economic Research Working Paper Series VL - No. 15131 PY - 2009 Y2 - July 2009 UR - http://www.nber.org/papers/w15131 L1 - http://www.nber.org/papers/w15131.pdf N1 - Author contact info: Esther Duflo Department of Economics MIT, E52-252G 50 Memorial Drive Cambridge, MA 02142 Tel: 617/258-7013 Fax: 617/253-6915 E-Mail: eduflo@mit.edu Michael Kremer Harvard University Department of Economics Littauer Center M20 Cambridge, MA 02138 Tel: 617/495-9145 Fax: 617/495-7730 E-Mail: mkremer@fas.harvard.edu Jonathan Robinson Department of Economics University of California, Santa Cruz 457 Engineering 2 Santa Cruz, CA 95064 E-Mail: jmrtwo@ucsc.edu AB - While many developing-country policymakers see heavy fertilizer subsidies as critical to raising agricultural productivity, most economists see them as distortionary, regressive, environmentally unsound, and argue that they result in politicized, inefficient distribution of fertilizer supply. 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. Even when relatively patient, 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. Later discounts have a smaller impact, and when given a choice of price schedules, many farmers choose schedules that induce advance purchase. Calibration suggests such small, time-limited discounts yield higher welfare than either laissez faire or heavy subsidies by helping present-biased farmers commit to fertilizer use without inducing those with standard preferences to substantially overuse fertilizer. ER -