The Future of Smallholder Farming in Eastern Africa - Uganda ...

5.2 Econometric Analysis
The econometric analysis focused on the household level determinants of wetland diversity, food
security and the productivity of the different crop enterprises. For the Wetland Diversity and
Food security econometric regressions each had an ordinal dependent variable created as
described above.
We used a maximum likelihood ordered probit regression for the Wetland Diversity and Food
Security analysis, as the use of least square estimation procedures would give inconsistent and
biased estimates. The use of ordered probit or ordered logit maximum models is the most
appropriate statistical methods for such ordered response data (Amemiya 1985).
The econometric models for the Wetland Diversity and Food Security regressions were specified as:
a). WDI h = a i + ∑ b i dist i h + ∑ c i bev i
h
+ u i , u i~ N (0, σu 2 )
b). FSI h = e i + ∑ p i dist i h + ∑ f i bev i
h
+ ∑ g i hc i
h
+v i, v i ~ √N(0, σu 2 )
Where;
variance
WDI h = Wetland Diversity Index of household h
FSI h = Food Security Index of household h
dist i
h
= a vector of the district dummies
bev i
h
= a vector of Incomes derived from the wetland
hc i = a vector of household characteristics.
u i v i =error terms assumed to be normally distributed with mean 0 and constant
a i b i c i d i p i f i g i = Parameters estimated using maximum likelihood estimate method.
In addition, in order to improve our understanding of the determinants of productivity,
generalized least square regressions were run to estimate the determinants of the value of crop
production per acre for each of the major crops produced in the study area including; cassava,
sweet potatoes, groundnuts, millet, sorghum, maize, beans and simsim. The least square
regression for each crop was specified as.
Inc h ci = K ci + ∑ M ic dirt i h + ∑ L c i ss i
h
+ n c iLab +Zci Invest + ui~N (0, σu 2 )
Where;
Inc h ci = Income per acre derived from crop type ii for household h
∑ dirt i h = Vector of district dummies
∑ ss i
h
= Vector of Seasons
Lab = availability of family labour for production
Invest = the investment in productive inputs for that crop
K c i m c i h c i n c i r c i z c i are parameters to be estimated using least squares estimation method for the different
crops.
5.2.1 Econometric Diagnostic Tests and Specifications
All the regressions had potential estimation problems. This being cross-sectional data, it was
highly suspect with respect to hetero-skedasticity. We tested for hetero-skedasticity using the
Cooks and Weisberg (1983) test which showed its presence in all the regressions. This problem