A New Mean Standard Deviation Utility Function and the Behaviour Towards Risk of Specialist Irish Agricultural Producers: 1988-1997
AbstractThis paper employs a new mean-standard deviation utility (MSU) function with more general properties than traditionally employed function in the agricultural economics literature to explore the risk preferences of Irish barley producers between 1988 and 1997. During this period EU cereal producers were subject to major policy reforms (MacSharry Reforms) that may have influenced the nature of producers' risk attitudes. Our findings support the proposed function in preference to the Linear Mean Variance (LMV) function. We find that Irish cereal producers are highly risk averse but their degree of risk aversion falls appreciably in the period before and following the MacSharry Reforms. We also find that the majority of Irish producers exhibit increasing absolute risk aversion (IARA) but the proportion displaying DARA increases substantially following the 1992 Reforms. The policy implications of our results are discussed.
Download InfoIf 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.
Bibliographic InfoPaper provided by Central Bank of Ireland in its series Research Technical Papers with number 5/RT/05.
Length: 29 pages
Date of creation: Nov 2005
Date of revision:
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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.:
- Guyomard, Herve & Baudry, Marc & Carpentier, Alain, 1996. "Estimating Crop Supply Response in the Presence of Farm Programmes: Application to the CAP," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(4), pages 401-20.
- Alfons Oude Lansink, 1999. "Area Allocation Under Price Uncertainty on Dutch Arable Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 93-105.
- Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
- Robert W. Ackrill, 2003. "EU Enlargement, the CAP and the Cost of Direct Payments: A Note," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 73-78.
- Holly,Sean & Weale,Martin (ed.), 2000. "Econometric Modelling," Cambridge Books, Cambridge University Press, number 9780521650694, October.
- Maurice J. Roche & Kieran McQuinn, 2003. "Grain price volatility in a small open economy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(1), pages 77-98, March.
- Saha, Atanu, 1997. "Risk Preference Estimation in the Nonlinear Mean Standard Deviation Approach," Economic Inquiry, Western Economic Association International, vol. 35(4), pages 770-82, October.
- Pagan, Adrian & Ullah, Aman, 1988. "The Econometric Analysis of Models with Risk Terms," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 3(2), pages 87-105, April.
- Bollerslev, Tim & Chou, Ray Y. & Kroner, Kenneth F., 1992. "ARCH modeling in finance : A review of the theory and empirical evidence," Journal of Econometrics, Elsevier, vol. 52(1-2), pages 5-59.
- Abdullahi Abdulkadri, 2003. "Estimating risk aversion coefficients for dry land wheat, irrigated corn and dairy producers in Kansas," Applied Economics, Taylor & Francis Journals, vol. 35(7), pages 825-834.
- Carl H. Nelson, 2004. "Toward exploring the location-scale condition: a constant relative risk aversion location-scale objective function," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(3), pages 273-287, September.
- Lansink, Alfons Oude & Peerlings, Jack, 1996. "Modelling the New EU Cereals and Oilseeds Regime in the Netherlands," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(2), pages 161-78.
- Chavas, Jean-Paul, 2000. "On information and market dynamics: The case of the U.S. beef market," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 833-853, June.
- Sckokai, Paolo & Moro, Daniele, 2002. "Modelling The Cap Arable Crop Regime Under Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19860, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Wolf, Charles & Pohlman, Larry, 1983. "The Recovery of Risk Preferences from Actual Choices," Econometrica, Econometric Society, vol. 51(3), pages 843-50, May.
- Peter Reinhard Hansen, 2001. "An Unbiased and Powerful Test for Superior Predictive Ability," Working Papers 2001-06, Brown University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Kavanagh).
If references are entirely missing, you can add them using this form.