Citrus siam adoption in a South Sumatran rubber smallholding village : an interdependence approach

Abstract

In investigating the adoption process of a crop called “citrus siam” in a South Sumatran rubber-smallholding village, Belatung, the importance of externality of other villagers in a villager’s decision making was noticed. Neo-classical economics generally uses a model in which individuals are treated as atomistic, self-interested and independent beings, and attempts have rarely been made to incorporate an individual’s relative socioeconomic position into a utility function framework. Previous attempts, which may be placed under the broad haeding of ” interdependence approach” , are so far simplistic, and still in their infancy. On the other hand, the sociological and anthropological literature has paid greater attention to these aspects. Approaches developed for analysis of a person’s socio-economic position can provide useful concepts for economists to develop realistic economic models of human behaviour. Techniques of sociological network analysis appear to be particularly useful for economists to utilise in their work. In this thesis, firstly, the interdependence approach literature and basic literature of adoption process are reviewed. Secondly, villagers’ interactions with each other are carefully described with sociological network analysis techniques. On this basis, thirdly, a model of expected utility which explicitly incorporates both a person’s absolute and relative income levels is developed for the analysis of the “Cancian Dip” or “upper-middle class conservatism” hypothesis. Finally, with d ata collected from the village, Belatung, hypotheses and propositions of the model are statistically tested. The interdependence approach, though theoretically a little more complicated, is empirically proved to be significantly more powerful in explaining the citrus siam adoption process in Belatung.