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  5. Seasonality and Welfare in Low Income Countries
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Seasonality and Welfare in Low Income Countries

Paper Session

Saturday, Jan. 3, 2026 8:00 AM - 10:00 AM (EST)

Philadelphia Convention Center
Hosted By: American Economic Association
  • Chair: Ethan Ligon, University of California-Berkeley

Credit and Welfare Across the Lean Season

Ethan Ligon
,
University of California-Berkeley
Jedediah Silver
,
Hebrew University

Abstract

Consumption in rural areas of low-income countries is often highly variable across seasons. What drives this seasonality, and can the welfare of households across the "lean season" be improved via the provision of credit? We measure prices and consumption for farm-households across seasons in Gombe, Nigeria, and at the same time elicit information about farmers' intertemporal marginal rates of substitution by offering them one-month bonds with different rates of return. Against this background, we also implement a randomized post-harvest loan (PHL) program, which provides credit---up to a generous ceiling---at a subsidized interest rate. Farmers randomly offered the loan almost universally borrow the maximum amount. In this experiment, we find that treated farmers store more grain. This is a risky investment, and in the year of our experiment it did not pay off, as maize prices did not increase following the harvest. Given this, it is unsurprising that we find no significant effects of the loan on consumption, investment or welfare---using the PHL to make a leveraged bet on maize prices going up was bad investment /ex post/. Was it a bad investment /ex ante/? This depends on whether lean seasons are due to poorly functioning financial markets in Gombe, or because markets in Gombe are poorly integrated with the broader market. We adapt tools from the asset pricing literature to our data to test the null of well-functioning local financial markets in Gombe. We fail to reject this null hypothesis, suggesting that promoting spatial integration may improve lean-season welfare more than the local provision of credit would.

Seasonal Employment and Development

Niclas Moneke
,
University of Oxford
Thorsten Figueiredo Walter
,
New York University-Abu Dhabi

Abstract

Traditional agriculture follows natural cycles. Especially low-income
countries experience large seasonality in agricultural activity. A
growing literature studies how the resulting seasonality in consumption
could be smoothed over time and across space, for example by enabling
seasonal changes in sectoral employment. However, how seasonality in
employment may vary with and matter for development is not
well-understood. In this paper, we highlight, first, how seasonality in
employment varies across different income levels: using quarterly,
nationally representative survey data to track employment, we document
that seasonality in sectoral employment increases with income at first,
but decreases (and eventually disappears) at middle income levels.
Second, we show how failing to account for potentially stark seasonality
in employment affects estimates of relevant macroeconomic indicators,
such as the progress of structural change, or the size of sectoral and
spatial productivity gaps. Estimates are particularly sensitive at
income levels where measuring both accurately seem paramount. In a
sample of mostly low- and lower middle-income countries, peak to trough
agricultural season estimates of productivity gaps can vary by a factor
of four. Finally, we develop a model of structural transformation that
can replicate both the variation in seasonal employment across income
levels, but also features a source of heterogeneity in seasonality at
given levels of development.

Retrieval Failures and Consumption Smoothing: A Field Experiment on Seasonal Poverty

Kelsey Jack
,
University of California-Berkeley
Supreet Kaur
,
University of California-Berkeley
Ned Augenblick
,
University of California-Berkeley
Felix Masiye
,
University of Zambia
Nicholas Swanson
,
Cornell University

Abstract

Individuals may fail to recall and use information they already know when making decisions. We empirically investigate whether such "retrieval failures" distort consumption smoothing behavior among Zambian farmers, who derive their income from one annual harvest and then spend it down over the course of the year. We document that individuals underestimate upcoming spending by 50%, creating scope for under-saving. In order to improve recall, we randomize an intervention that prompts individuals to think through their future expenses associatively in categories — without providing any external information or guidance. Treated individuals increase "remembered expenses by 42%; as predicted by the memory literature, effects are concentrated among small, irregular, and stochastic items. Immediate spending drops and, two months after the intervention, treated households hold 15% higher savings. They subsequently enter the "hungry season" — the final months of the year when consumption typically declines sharply — with one additional month of savings, leading to a flatter spending profile over the year. Households use the increased savings to self-finance additional farm investment, resulting in a 9% increase in the next year's crop revenue. We replicate the intervention's impact on beliefs among low-income Americans, suggesting that retrieval failures generalize across settings and populations.

Discussant(s)
Kathleen Beegle
,
World Bank
Paul Christian
,
World Bank
Brian Dillon
,
Cornell University
JEL Classifications
  • D9 - Micro-Based Behavioral Economics
  • O1 - Economic Development