Consumption seasonality is prevalent across many poor countries, particularly those with large agricultural sectors. Farmers in these countries typically have abundant food after harvest, but struggle to make it last to the next harvest, resulting in three major implications:
- Reduction in the number of meals consumed and caloric intake at certain times of the year;
- Seasonal fluctuation in children’s diets, with those being more exposed, becoming shorter as adults and attaining less education; and
- Reduction in farm output as households resort to various coping strategies such as selling wage labour at the expense of working on their farm and selling assets like livestock.
Predictable, recurrent fluctuations in consumption present a puzzle. Economic theory predicts that households should smooth the marginal utility of consumption according to the Euler equation, which appears to be potentially violated by this recurrent seasonality. The standard framework assumes that agents can think through and forecast all future expected expenditure needs over a long horizon and compute optimal consumption plans accurately. However, the reality of limited human cognition renders this impossible. If individuals have cognitive limitations, this could make solving such savings problems challenging and lead to ‘mis-optimisation’.
This project aims to introduce an intervention designed to lower the cognitive burden of the planning problem. By leveraging work in social psychology, the researchers introduce planning exercises that induce individuals to plan for the upcoming lean season and creates a visual representation of this plan as a reminder to themselves over the year.
The researchers will randomly assign a sample of 900 farmers located in Eastern Province, Zambia to either receive these planning exercises or not, and then track the effectiveness of these planning exercises on consumption, savings and health outcomes. They will also collect experimental evidence on farmers willingness to pay for different kinds of goods to understand whether these activities change individual’s valuations of different goods.