People do it (cup their hand over their ear, not put a finger in it) in many other genres of music. It's a perfectly acceptable way of hearing your own voice when singing with instruments or harmony parts, not restricted to folk.

Singing that way solo unaccompanied in a quiet room with good acoustics (e.g. Ewan MacColl, with the added affectation of the backward chair) is a reasonable invitation to being called a prat though.