Advanced Search
MyIDEAS: Login to save this article or follow this journal

Factors affecting precautionary savings of self-employed farm households

Contents:

Author Info

  • Ashok K. Mishra
  • Hung-Hao Chang

Abstract

Purpose – The purpose of this paper is to empirically investigate the effects of farm income variability, farm size, and other socio-demographic characteristics on the precautionary saving behavior of farm households and to estimate the influences of the identified factors on the amount of savings by self-employed farm households. Design/methodology/approach – Using 2003 Agricultural Resource Management Survey (ARMS) data and a Double-Hurdle procedure, the likelihood and the amount of savings by farm households are estimated. Findings – An important empirical finding of this study is that variability in income plays an important role in explaining precautionary savings of US farm households. Findings suggest that farm households facing higher income risk save more and accumulate more wealth. It is indicated that several farm, operator, household, and demographic attributes contribute to the precautionary savings of farm households. In particular, results show that educational attainment by operator and spouses have positive impact on the decision to save. In addition, results from this study show that farms that specialize in cash grain are likely to have precautionary savings. Practical implications – Farm households today are virtually indistinguishable from non-farm households in their levels of income and diversity of employment. As a result, government policies that influence general economic conditions have much more profound impacts on farm families. Federal support of farm income warrants continued scrutiny. This paper shows that greater income uncertainty increases savings and wealth of farm households. Therefore, farm policies that reduce income variability or uncertainty will have an impact on precautionary savings and wealth of farm households. Originality/value – Several studies have investigated savings of households; however, these studies are limited to entire US population, older Americans, or non-self-employed individuals in the USA. Little is known about the savings behavior of self-employed US farm households owing to a lack of household survey data and because of the complex relationship between the farm household and farm business in terms of resource allocation (both capital and labor).

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=E87BE0007C9CF743186ED5E5EBAC304C?contentType=Article&contentId=1822316
Download Restriction: Cannot be freely downloaded

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Emerald Group Publishing in its journal Agricultural Finance Review.

Volume (Year): 69 (2009)
Issue (Month): 3 (November)
Pages: 300-313

as in new window
Handle: RePEc:eme:afrpps:v:69:y:2009:i:3:p:300-313

Contact details of provider:
Web page: http://www.emeraldinsight.com

Order Information:
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Email:
Web: http://www.emeraldinsight.com/afr.htm

Related research

Keywords: Agriculture; Income; Savings; United States of America;

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Ashok Mishra & Hiroki Uematsu & J. Matthew Fannin, 2013. "Measuring precautionary wealth using cross-sectional data: the case of farm households," Review of Economics of the Household, Springer, vol. 11(1), pages 131-141, March.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eme:afrpps:v:69:y:2009:i:3:p:300-313. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Lister).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.