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An Analysis Of The Risk Aversion Of Farm Operators: An Asset Portfolio Approach

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  • Lins, David A.
  • Gabriel, Stephen C.
  • Sonka, Steven T.
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    Abstract

    The absolute and relative risk aversion characteristics of a large sample of farm operators were estimated from the observed portfolio responses to changes in wealth. Regression estimates suggest that farm operators display decreasing absolute risk aversion. Relative risk aversion varies by type of farm. However, the definition of risky assets has an important bearing on relative risk aversion characteristics. Non-wealth variables are also important in explaining the holding of risky assets by farm operators.

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    File URL: http://purl.umn.edu/32078
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    Bibliographic Info

    Article provided by Western Agricultural Economics Association in its journal Western Journal of Agricultural Economics.

    Volume (Year): 06 (1981)
    Issue (Month): 01 (July)
    Pages:

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    Handle: RePEc:ags:wjagec:32078

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    Web page: http://waeaonline.org/
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    Related research

    Keywords: Farm Management; Risk and Uncertainty;

    References

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    1. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
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    Cited by:
    1. Claire Mosnier & Arnaud Reynaud & Alban Thomas & Michel Lherm & Jacques Agabriel, 2009. "Estimating a production function under production and output price risks: An application to beef cattle in France," LERNA Working Papers 09.10.286, LERNA, University of Toulouse.
    2. Havlik, Petr & Jacquet, Florence & Boisson, Jean-Marie & Veysset, Patrick & Lherm, Michel, 2005. "Environmental Good Production in the Optimum Activities Portfolio of a Risk Averse Farmer," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24594, European Association of Agricultural Economists.
    3. Escalante, Cesar L. & Barry, Peter J. & Park, Timothy A. & Demir, Ebru, 2004. "Farm-Level And Macroeconomic Determinants Of Farm Credit Migration Rates," 2004 Annual meeting, August 1-4, Denver, CO 20227, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Arriaza Balmon, Manuel & Gomez-Limon, Jose Antonio, 2003. "Modelling Farmers' Response To A Decoupled Subsidy Via Multi-Attribute Utility Theory And E-V Analysis," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25925, International Association of Agricultural Economists.
    5. Just, David R., 2011. "Calibrating the wealth effects of decoupled payments: Does decreasing absolute risk aversion matter?," Journal of Econometrics, Elsevier, vol. 162(1), pages 25-34, May.
    6. Perry, Janet E. & Johnson, James D., 2000. "Influences Of Human Capital And Farm Characteristics On Farmers' Risk Attitudes," 2000 Producer marketing and Risk Management Conference, January 13-14, Orlando, FL 19581, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Li, Chenguang & Sexton, Richard J., 2009. "Impacts of Retailers’ Pricing Strategies for Produce Commodities on Farmer Welfare," 2009 Conference, August 16-22, 2009, Beijing, China 51720, International Association of Agricultural Economists.
    8. McCarl, Bruce A., 1984. "Model Validation: An Overview with some Emphasis on Risk Models," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 52(03), December.
    9. Gomez-Limon, Jose Antonio & Riesgo, Laura & Arriaza Balmon, Manuel, 2002. "Agricultural Risk Aversion Revisited: A Multicriteria Decision-Making Approach," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24827, European Association of Agricultural Economists.
    10. Bardsley, Peter & Harris, Michael, 1987. "An Approach To The Econometric Estimation Of Attitudes To Risk In Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(02), August.
    11. Rejesus, Roderick M. & Nelson, Carl H., 2000. "Determinants Of The Value Of Site-Specific Information (Ssi) In Agriculture: A Unifying Theory To Analyze Its Relative Impacts," 2000 Annual meeting, July 30-August 2, Tampa, FL 21779, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Gomez-Limon, Jose A. & Arriaza, Manuel & Riesgo, Laura, 2003. "An MCDM analysis of agricultural risk aversion," European Journal of Operational Research, Elsevier, vol. 151(3), pages 569-585, December.

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