Does heterogeneity in goals and preferences affect allocative and technical efficiency? A case study in Northern Nigeria

Household characteristics are commonly used to explain variation in smallholderefficiency levels. The underlying assumption is that differences in intended behaviorare well described by such variables, while there is no a priori reason that this is thecase. Moreover, heterogeneity in farmer goals and preferences, in relation to the roleof the farm enterprise, are not well documented in developing countries. This papermakes a contribution to fill this gap, by empirically determining heterogeneity infarmer goals and attitudes in Nigeria through a pair-wise ranking, supplemented withLikert scales. Factor analysis is used to reduce these data into behavioral factors. Weestimate technical and allocative efficiency levels and analyze how these are related tofarm characteristics and the identified behavioral factors. The models in which bothintended behavior and farmer characteristics are included give a significantly better fitover models in which only household characteristics are included. These regressionresults suggest that the socio-economic environment affects efficiency levels bothdirectly and indirectly, through changes in goals and attitudes. Additional research inrural areas of developing countries should establish how agricultural policies shouldaccount for this heterogeneity.