The role of risk in shaping production decisions: an empirical analysis

This paper uses data on risk preferences and perceptions of risk collected through hypothetical questions in combination with more traditional measures of a households` ability to deal with risk to identify the impact of risk on production decisions. Contextualized hypothetical questions on risk preferences and risk perceptions were collected along with standard socioeconomic survey for 300 coffee-farming households in Uganda. This data is used here to show both that data collected from hypothetical questions can be usefully utilised to understand a household`s behaviour under risk in real settings, and that risk has a significant impact on the production decisions of poor coffee farmers in Uganda.