Social Interactions in Growing Bananas: Evidence from a Tanzanian Village

This paper analyses whether agricultural information flows give rise to social learning effects in banana cultivation in Nyakatoke, a small Tanzanian village. Based on a village census, full information is available on socio-economic characteristics and banana production of farmer kinship members, neighbours and informal insurance group members. This allows a test for social learning within these groups and the identification of different types of social effects. Controlling for exogenous group characteristics, the effect of group behaviour on individual farmer output is studied. The results show that social effects are strongly dependent on the definition of the reference group. It emerges that no social effects are found in distance based groups, exogenous social effects linked to group education exist in informal insurance groups, and only kinship related groups generate the endogenous social effects that produce positive externalities in banana output. JEL Classification: O12; O13; O55; Q12