Forecasting when it matters: Evidence from Semi-Arid India

In regions of India where cultivation is rainfed, the optimal time to plant coincides with the onset of the monsoon. In this paper, we elicit from farmers their prior beliefs about the timing of the monsoon and assess their accuracy by comparing them to historical data. We find substantial heterogeneity in beliefs and ∗Financial support from CRMG, GARP and World Bank is gratefully acknowledged. We want to thank Kumar Acharya, the survey team at ICRISAT and specially Dr. K.P.C Rao for many discussions about agricultural practices in semi-arid India and for their efforts in collecting the survey data. Dr. Piara Singh from ICRISAT provided valuable help in the computation rainfall absorption of different soil types. We also thank Jean Marie Baland, Shawn Cole, Adelaine Delavande, Quy-Toan Do, Pascaline Dupas, Michael Kremer, Lance Lochner, Hanan Jacoby, David Mckenzie and participants in several conferences and seminars for valuable comments. Paola de Baldomero Zazo, Helene Bie Lilleor, Francesca de Nicola and Joan Pina Mart́ı provided outstanding research assistance. The views expressed in this paper are the authors’ and should not be attributed to the World Bank, Federal Reserve Bank of New York or the Federal Reserve System. Email addresses: [email protected], [email protected], and [email protected].