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Risk Costs And The Choice Of Market Return Index

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  • Amegbeto, Koffi N.
  • Featherstone, Allen M.

Abstract

Six measures of returns are used to estimate the most "appropriate" market index for southeast Kansas farms. Results suggest that localized indices are more appropriate than state indices for use as the market index. The appropriate index was used to estimate systematic and nonsystematic risk and risk costs for farm planning. Estimated risks depend on the choice of market index, whereas risk costs depend on the index choice and the risk aversion are considered. More risk-averse specialized farmers are not completely compensated for risk.

Suggested Citation

  • Amegbeto, Koffi N. & Featherstone, Allen M., 1992. "Risk Costs And The Choice Of Market Return Index," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(01), pages 1-8, July.
    • Handle: RePEc:ags:jlaare:30732
    DOI: 10.22004/ag.econ.30732
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    References listed on IDEAS

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    Cited by:

    1. T Heikkinen & K Pietola, 2006. "Rural Investment and the Cost of Income Uncertainty," ERSA conference papers ersa06p51, European Regional Science Association.
    2. Heikkinen, T. & Pietola, K., 2009. "Investment and the dynamic cost of income uncertainty: The case of diminishing expectations in agriculture," European Journal of Operational Research, Elsevier, vol. 192(2), pages 634-646, January.
    3. M J López-Baldovin & C Gutiérrez-Martin & J Berbel, 2006. "Multicriteria and multiperiod programming for scenario analysis in Guadalquivir river irrigated farming," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(5), pages 499-509, May.
    4. Blank, Steven C., 1993. "The Robustness Of Single Index Models In Crop Markets: A Multiple Index Model Test: Reply," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), pages 1-6, July.
    5. Xu, Feng & Prato, Tony & Lin, Cho-Min, "undated". "Evaluation of Risk for Alternative Farming Systems in Missouri," Miscellaneous Reports 257807, University of Missouri Columbia, Department of Agricultural Economics.

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