COMPARATIVE ECONOMIC APPRAISAL OF PERFORMANCE: TEST OF HYPOTHESES

Posted by Kathryn Schwartz on November 08, 2013
Economy

TEST OF HYPOTHESESTest of Hypotheses that Rice Farmers are Operating In Stage II of the Production Surface

The null hypothesis states that rice farmers are operating in the efficient region (stage II) of the production surface where RTS should be between zero and unity that is, O< RTS<1. H01: RTS = Stage II

The null hypothesis was rejected for farmers in Osun State because for Osun State RTS = 1.40 and accepted for farmers in Oyo State, where RTS = 0.83.

Test of Hypothesis of Absence of Inefficiency Effects

The test used was the generalized likelihood ratio test and the test statistic computed    was the Chi-square( С2) distribution and the results are as presented in Table 7. The results showed that the null hypothesis, g = 0, was rejected for farmers in Osun state. This implied that the traditional average response function was not an adequate representation of the rain-fed upland rice production in the state and there were inefficiency effects in the production processes of the farmers. However, in Oyo state, the null hypothesis was accepted. This implied that the technical inefficiency effects were not strong in the production of rain-fed upland rice in the state and that variation in their production processes was only due to random effects.

Table 7: Test of Hypothesis on Technical Efficiency

H02: Rice farmers are fully technically efficient (g= 0)
State L (H0) L (Ha) 2СComputed d.f 2С7,0.05 Decision
Osun 199.2 217.4 36.4 7 14.07 Reject H0
Oyo 90.16 93.65 6.98 7 14.07 Accept H0

Source: Results obtained from Data Analysis.

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