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Measuring farmers' preferences for risk: a domain-specific risk preference scale

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  • Helena Hansson
  • Carl Johan Lagerkvist

Abstract

A behavioral framework and psychometric theory were used to develop a domain-specific scale to measure farmers' preferences (attitudes) for risk, when the expected benefits and perceived risks of each domain were explicitly modeled. Exploratory factor analyses based on a sample of 237 Swedish farmers highlighted three risk domains, which we termed 'Up-to-date and in deliberate control of production,' 'Carefulness and planning in general' and 'Progressive farming.' The results suggested that farmers are risk-averse in all domains. External validation of the domain-specific measurement scale suggested that it could significantly predict the observed five-year volatility in farm income. The suggested domain-specific measurement scale is of practical importance for the farmers themselves, the agribusiness, and for policy-makers.

Suggested Citation

  • Helena Hansson & Carl Johan Lagerkvist, 2012. "Measuring farmers' preferences for risk: a domain-specific risk preference scale," Journal of Risk Research, Taylor & Francis Journals, vol. 15(7), pages 737-753, August.
    • Handle: RePEc:taf:jriskr:v:15:y:2012:i:7:p:737-753
    DOI: 10.1080/13669877.2012.657217
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    Cited by:

    1. Feyisa, Ashenafi Duguma & Maertens, Miet & de Mey, Yann, 2023. "Relating risk preferences and risk perceptions over different agricultural risk domains: Insights from Ethiopia," World Development, Elsevier, vol. 162(C).
    2. de Mey, Yann & Wauters, Erwin & Lips, Markus & Schmid, Dirk & Vancauteren, Mark & Van Passel, Steven, 2014. "Farm household risk balancing in Switzerland and Belgium: an econometric and survey approach," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 186678, European Association of Agricultural Economists.
    3. Doan Nainggolan & Faizal Rahmanto Moeis & Mette Termansen, 2023. "Does risk preference influence farm level adaptation strategies? – Survey evidence from Denmark," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(7), pages 1-23, October.
    4. Yanyan Ma & Xueyan Zhao, 2022. "What Affects the Livelihood Risk Coping Preferences of Smallholder Farmers? A Case Study from the Eastern Margin of the Qinghai-Tibet Plateau, China," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    5. Tao Ye & Ming Wang, 2013. "Exploring risk attitude by a comparative experimental approach and its implication to disaster insurance practice in China," Journal of Risk Research, Taylor & Francis Journals, vol. 16(7), pages 861-878, August.
    6. Hakelius, Karin & Hansson, Helena, 2016. "Members’ attitudes towards cooperatives and their perception of agency problems," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(4), October.
    7. Erwin WAUTERS & Frankwin van WINSEN & Yann de MEY & Ludwig LAUWERS, 2014. "Risk perception, attitudes towards risk and risk management: evidence and implications," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 60(9), pages 389-405.
    8. Tao Ye & Yangbin Liu & Jiwei Wang & Ming Wang & Peijun Shi, 2017. "Farmers’ crop insurance perception and participation decisions: empirical evidence from Hunan, China," Journal of Risk Research, Taylor & Francis Journals, vol. 20(5), pages 664-677, May.
    9. Dragos, Cristian Mihai & Dragos, Simona Laura & Mare, Codruta & Muresan, Gabriela Mihaela & Purcel, Alexandra-Anca, 2023. "Does risk assessment and specific knowledge impact crop insurance underwriting? Evidence from Romanian farmers," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 343-358.
    10. Waithira, Waweru Caroline, 2017. "An Analysis Of Risk Attitudes And Risk Management Strategies Among Dairy Farmers In Murang’A County, Kenya," Research Theses 276428, Collaborative Masters Program in Agricultural and Applied Economics.
    11. Waweru, Caroline Waithira & Nyikal, Rose & Busienei, John R, 2017. "An Analysis Of Risk Attitudes And Risk Management Strategies Among Dairy Farmers In Murang’A County, Kenya," Dissertations and Theses 271063, University of Nairobi, Department of Agricultural Economics.
    12. Helena Hansson & Carl Johan Lagerkvist, 2014. "Decision Making for Animal Health and Welfare: Integrating Risk‐Benefit Analysis with Prospect Theory," Risk Analysis, John Wiley & Sons, vol. 34(6), pages 1149-1159, June.
    13. Marianne Lefebvre & Kim De Cuyper & Ellen Loix & Davide Viaggi & Sergio Gomez y Paloma, 2014. "European Farmers intentions to invest in 2014-2020: survey results," JRC Research Reports JRC90441, Joint Research Centre.
    14. Tesfamicheal Wossen & Thomas Berger & Salvatore Di Falco, 2015. "Social capital, risk preference and adoption of improved farm land management practices in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 46(1), pages 81-97, January.

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