Bayesian Herders: Optimistic Updating of Rainfall Beliefs in Response to External Forecasts

31 Pages Posted: 9 May 2005

See all articles by Travis J. Lybbert

Travis J. Lybbert

University of California, Davis - Department of Agricultural and Resource Economics

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management

John G. McPeak

Syracuse University - Department of Economics

Winnie Luseno

RTI International

Date Written: July 2004

Abstract

Temporal climate risk weighs heavily on many of the world's poor. Model based climate forecasts could benefit such populations, provided recipients use forecast information to update climate expectations. We test whether pastoralists in southern Ethiopia and northern Kenya update their expectations in response to forecast information and find that they indeed do, albeit with a systematic bias towards optimism. In their systematic optimism, these pastoralists are remarkably like Wall Street's financial analysts and stockbrokers. If climate forecasts have limited value to these pastoralists, it is due to the flexibility of their livelihood rather than an inability to process forecast information.

Keywords: expectations, risk, uncertainty, weather, early warning systems

JEL Classification: D84, O12, O13, Q16

Suggested Citation

Lybbert, Travis J. and Barrett, Christopher B. and McPeak, John G. and Luseno, Winnie, Bayesian Herders: Optimistic Updating of Rainfall Beliefs in Response to External Forecasts (July 2004). Available at SSRN: https://ssrn.com/abstract=717587 or http://dx.doi.org/10.2139/ssrn.717587

Travis J. Lybbert (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management ( email )

315 Warren Hall
Ithaca, NY 14853-7801
United States
607-255-4489 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://aem.cornell.edu/faculty_sites/cbb2/

John G. McPeak

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States

Winnie Luseno

RTI International ( email )

3040 Cornwallis Road
PO Box 12194
RTP, NC 27709-2194
United States
9195416000 (Phone)
9194855555 (Fax)

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