Application of Discrete Choice Experiment in Agricultural Risk Management: A Review

Abstract

The study of human behaviour has been cementing its place within economics for decades. The complexity of decisions in family farming, challenging agricultural markets, and climate change have drawn attention to human behaviour, namely risk perceptions and the decision-making process, with a focus on agricultural economics. This paper reviews current knowledge on risk management in agriculture from the behavioral perspective, and from the perspective experimental economics in particular, emphasizing a discrete choice experiment approach. A discrete choice experiment (DCE) elicits stated preferences through hypothetical choices and have been extensively applied in research on risk preferences and farmers’ willingness to apply different risk management strategies. The objective of this paper was to determine the frequency at which papers are published and their use in discrete choice experiments in general and in agriculture and emphasizes risk management in agriculture using bibliometric analysis. The PRISMA framework was used for a systematic literature review of the agricultural risk management publications that apply a DCE. The main steps to achieve the aforementioned goals are to define how many publications are primary research versus theoretical publications in the research area of agricultural risk management, which part of risk management in agriculture it covers, and how many attributes were used in each study. The authors reviewed 20 papers based on the following keyword criteria: discrete choice experiment, agriculture, risk management, and the period 2001–2021, using the Web of Science database. The results show an increase in DCE publications over the past 20 years. A comprehensive literature review of risk management in agriculture concluded that publications are primarily research focused, mainly consider on-farm strategies and smaller-scale risk-transfer strategies, and are predominantly conducted among farmers. The average number of attributes per publication is four to five. Limitations and directions for future research are discussed in the paper.