Supply Response of West African Agricultural Households: Implications of Intrahousehold Preference Heterogeneity

Traditional models of household economic behavior have portrayed households as unified entities. They assume that household members agree about decisions and share resources in the most equitable way possible.

The Nature of Household Decisionmaking
More recently, however, economists have come to view households as domains of difference, where multiple decisionmakers may have different preferences and, in many cases, control separate sets of resources. This new approach has greatly improved understanding of household resource allocation behavior. It has demonstrated that heterogeneity among members affects a variety of individual, household, and economy-wide outcomes. Recent research on West African households, in particular, has shown that differences in resource allocation behavior by gender result in inefficiencies that reduce overall household production and income.

This paper seeks to deepen understanding of the implications of gender-based intrahousehold heterogeneity by asking what role it plays in agricultural price policy impacts. In particular, the paper analyzes the way differences in women's and men's pref- erences in rural Burkina Faso affect the production response of semisubsistence agricultural households to increased cash crop prices. Price policies that are meant to give households incentive to increase cash crop production are con- sidered important instruments for accelerating agricultural and economy-wide growth, reducing poverty, and improving rural people's well-being. Policymakers and researchers, there- fore, have great interest in better understanding how households will react to price incentives.

Explaining Household Supply Response to Price Changes
Conventional wisdom holds that semisubsistence developing-country households have a positive but weak supply response to price changes. Sitting on the market-nonmarket divide, these households have shown low levels of responsiveness to price incentives and opportunities to adopt productivity-enhancing technologies for cash crop production.

The simulation analysis predicts that intrahousehold preference heterogeneity acts as a structural constraint. Cash crop supply response will be 25% lower for households in which members have different preferences.

Considerable debate surrounds the underlying causes of this sluggish supply response. One school of economic anthropology attributes it to the "peasant"-specific desire to satisfy only survival needs or ensure "simple reproduction" rather than maximize income. A countering, structuralist explanation says that labor and food market failures make households dependent on their own labor and home-produced food, constraining their ability to respond to price incentives. The structuralist explanation also sees poor infrastructure and technological development, unavailability of irrigation and productive inputs, missing credit markets, seasonal labor shortages, and lack of industrial consumer products that might motivate efforts to earn cash income as constraints that stifle supply response. Furthermore, risk- averse agricultural households may be unwilling to rely exclusively on purchases of food in volatile markets to meet their food needs. The exposure to food price risk may also weaken supply response.

Insights gained from studies of household behavior that take an intrahousehold approach further deepen the supply response debate. These studies reveal that increases in cash crop prices can alter the opportunity sets of female and male household members in different ways. Price changes bring with them conflict-laden negotiation over who gains the (income) benefits and who bears the (labor) costs of increased cash crop pro- duction. That conflict may play a role in stifling a household's supply response. The studies suggest further that (1) decisionmaking in households is not necessarily a joint effort and members value individual control over resources; and (2) preference heterogeneity between spouses can have real consequences for the changes in household production, income, and welfare that accompany changes in the economic environment.

This study brings to bear these new insights from the intrahousehold literature to the supply response debate. It presents an overview of household decision models in current usage, then describes rural West African household decisionmaking in detail in order to identify a model that captures Burkinabé reality. The paper uses a two-stage game theoretic model that reflects the "semicooperative" nature of Burkinabé household decisionmaking. The model is used to conduct a simulation analysis of the supply response to increased cotton prices resulting from agricultural liberalization in Burkina Faso.

Simulation of Agricultural Price Liberalization in Burkina Faso
The simulation analyzes the production impact of a 60 percent increase in the price of cotton and a 120 percent increase in the price of fertilizer that took place over 1982–85. The data employed come from a survey conducted by the International Corps Research Institute for the Semi-Arid Tropics and from secondary sources.

The analysis focuses only on the monogamous households in the survey, assuming a two-decisionmaker household made up of a woman and her husband. Allowance is made for variation in both the degree of preference heterogeneity between the members and differences in their bargaining powers. In this way, the independent influence of preference heterogeneity on the response to price changes can be determined. The simulations are undertaken using the nonlinear mathematical programming solver MINOS in GAMS.

Simulation Results and Conclusion
The principal conclusion of the study is that the difference in preferences between women and men in nonresource- pooling West African households mutes supply response. The simulation analysis predicts that semicooperative monogamous Burkinabé households will have a cotton supply response 25 percent lower than households whose members have identical preferences. This suggests that the effects of intrahousehold preference heterogeneity may be quite significant quantitatively. It can thus be added to the list—along with market failures, poor infrastructure, and risk aversion—of potential structural constraints to agricultural supply response in West Africa.

This study shows how an intrahousehold approach can contribute to a better understanding of the effects of microeconomic allocation decisions and price policies. Such effects depend on the manner in which individuals in households—rather than households as a whole—respond to price changes. The response to prices, in turn, depends on how the price changes are likely to affect the control of resources within households. Furthermore, resource control is influenced by the individual's ability to bargain with other household members over the benefits (and costs) flowing from the price changes. By taking these realities into account, policies designed to improve supply response can be both more effective at reaching their goal and more beneficial to households and all the individuals in them. Hopefully, this research will stimulate further exploration of intrahousehold behavior and its implications for empirical analysis and policy prescriptions.

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