An Approach To The Econometric Estimation Of Attitudes To Risk In Agriculture
AbstractA simple model is developed relating the debt and asset portfolio of the farm to the production decision, which leads to a small non-linear system of equations. The system is estimated with time-series cross-sectional data from Australian broadacre agriculture using non-linear three-stage least squares. This gives a new method of estimating risk aversion coefficients by using actual behaviour of farmers in a realistic economic environment, rather than games played in artificial situations. Australian farmers are found to be risk averse, and the partial coefficient of risk aversion decreases with wealth and increases with income. The results are consistent with the results of studies by Binswanger in India and elsewhere using a completely different method. This consistency suggests that the partial risk aversion coefficient is a relatively robust measure of attitudes to risk.
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Bibliographic InfoArticle provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural Economics.
Volume (Year): 31 (1987)
Issue (Month): 02 (August)
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Research Methods/ Statistical Methods; Risk and Uncertainty;
Other versions of this item:
- Peter Bardsley & M. Harris, 1987. "An Approach To The Econometric Estimation Of Attitudes To Risk In Agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 31(2), pages 112-126, 08.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- A.P. Ockwell & Robert L. Batterham, 1980. "Nonprice Rationing Of Agricultural Credit By Two Trading Banks," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 24(3), pages 183-195, December.
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- Bond, Gary E. & Wonder, Bernard, 1980. "Risk Attitudes Amongst Australian Farmers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(01), April.
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