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Alternative Parameter Specification In E, V Analysis: Implications For Farm Level Decision Making

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  • Adams, Richard M.
  • Menkhaus, Dale J.
  • Woolery, Bruce A.

Abstract

This study compares the structure of E, V frontiers under several specifications of expected income and variance parameters with emphasis on fundamental differences in efficient crop mixes. The results are generated using data from a specific production region and a selected set of cropping activities for Wyoming. The risk-efficient frontiers and underlying crop mixes display sensitivity to alternative parameter definitions and suggest that if researchers intend to use the E, V approach in providing decision information to producers, care should be exercised in the choice of income and risk measures.

Suggested Citation

  • Adams, Richard M. & Menkhaus, Dale J. & Woolery, Bruce A., 1980. "Alternative Parameter Specification In E, V Analysis: Implications For Farm Level Decision Making," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 5(1), pages 1-8, July.
    • Handle: RePEc:ags:wjagec:32530
    DOI: 10.22004/ag.econ.32530
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    References listed on IDEAS

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    7. Lars Brink & Bruce McCarl, 1978. "The Tradeoff between Expected Return and Risk Among Cornbelt Farmers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(2), pages 259-263.
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    Cited by:

    1. Musshoff, Oliver & Hirschauer, Norbert, 2007. "What benefits are to be derived from improved farm program planning approaches? - The role of time series models and stochastic optimization," Agricultural Systems, Elsevier, vol. 95(1-3), pages 11-27, December.
    2. Musser, Wesley N. & McCarl, Bruce A. & Smith, G. Scott, 1986. "An Investigation of the Relationship Between Constraint Omission and Risk Aversion in Firm Risk Programming Models," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 18(2), pages 147-154, December.
    3. Musser, Wesley N., 1992. "A Historical Overview of Estimation of Historical Risk Coefficients," 1992 Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk Meeting, March 22-25, 1992, Orlando, Florida 307862, Regional Research Projects > S-232: Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk.
    4. Ford, Beth Pride & Musser, Wesley N. & Yonkers, Robert D., 1992. "Inflation and Measurement of Historical Risk," Staff Paper Series 256844, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    5. Oliver Mußhoff & Norbert Hirschauer, 2007. "Improved program planning with formal models? The case of high risk crop farming in Northeast Germany," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 15(2), pages 127-141, June.
    6. Young, Douglas L., 1984. "Risk Aspects of Irrigation Decisions: Discussion," Regional Research Projects >1984: S-180 Annual Meeting, March 25-28, 1984, New Orleans, Louisiana 307238, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    7. Featherstone, Allen M. & Moss, Charles B., 1990. "Quantifying Gains To Risk Diversification Using Certainty Equivalence In A Mean-Variance Model: An Application To Florida Citrus," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 22(2), pages 1-7, December.
    8. Lee, John G. & Lacewell, Ronald D., 1989. "Perversion of Risk Aversion: An Application to Farm Planning and Intertemporal Resource Allocation," WAEA/ WFEA Conference Archive (1929-1995) 244977, Western Agricultural Economics Association.
    9. Helmers, Glenn A. & Atwood, Joe, 1983. "Kinds And Sources Of Risks In Livestock Production And Marketing," 1983: S-180 Annual Meeting, March 28-30, 1983, San Antonio, Texas 271709, Regional Research Projects > S-180: Risk Management Strategies for Agricultural Production Firms: Perspectives and Research Issues.
    10. William T. McSweeny & David E. Kenyon & Randall A. Kramer, 1987. "Toward an Appropriate Measure of Uncertainty in a Risk Programming Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(1), pages 87-96.
    11. Ford, Beth Pride & Musser, Wesley N. & Yonkers, Robert D., 1993. "Measuring Historical Risk in Quarterly Milk Prices," Agricultural and Resource Economics Review, Cambridge University Press, vol. 22(1), pages 20-26, April.
    12. Turvey, Calum Greig, 1990. "An Application Of The Single Index Model To Regional And Farm Level Risk Analysis," 1990 Annual meeting, August 5-8, Vancouver, Canada 270859, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Helmers, Glenn A. & Atwood, Joseph & Watts, Myles J. & Held, Larry J., 1986. "Fixity and Capital Costing Assumptions in Agricultural Risk Research With Implications to Livestock," Regional Research Projects > 1986: S-180 Annual Meeting, March 23-26, 1986, Tampa, Florida 271999, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    14. Helmers, Glenn A. & Held, Larry J. & Watts, Myles J., 1982. "Estimating the Impact of Safety First Risk Constraints on Risk-Income Frontiers," 1982 Annual Meeting, August 1-4, Logan, Utah 279474, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Ford, Beth Pride & Musser, Wesley N., 1995. "A Comparison of Nominal and Real Historical Risk Measures," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 27(2), pages 669-685, December.
    16. Ford, Stephen A. & Ford, Beth Pride & Spreen, Thomas H., 1995. "Evaluation of Alternative Risk Specifications in Farm Programming Models," Agricultural and Resource Economics Review, Cambridge University Press, vol. 24(1), pages 25-35, April.
    17. Turvey, Calum Greig, 1990. "An Application of the Single Index Model to Regional and Farm Level Risk Analysis," Department of Agricultural Economics and Business 258662, University of Guelph.
    18. Featherstone, Allen M. & Moss, Charles B., 1989. "The Economic Efficiency Of Diversification: Certainty Equivalence And The Mean-Variance Model," Staff Papers 133739, Kansas State University, Department of Agricultural Economics.
    19. Turvey, Calum G. & Baker, Timothy G., 1990. "A Pedagogic Review of the Efficient Set Mathematics Applied to Farm Operating Risk," Department of Agricultural Economics and Business 258630, University of Guelph.
    20. Musshoff, Oliver & Hirschauer, Norbert, 2008. "Sophisticated Program Planning Approaches Generate Large Benefits in High Risk Crop Farming," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36865, Agricultural Economics Society.
    21. Mumey, G.A. & Bauer, L. & Boyda, A., 1988. "An Estimate of Risk and Returns From Cropping Alternatives," Project Report Series 232065, University of Alberta, Department of Resource Economics and Environmental Sociology.
    22. Turvey, Calum G., 1991. "Regional And Farm-Level Risk Analyses With The Single-Index Model," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 20(2), pages 1-8, October.
    23. Young, Douglas L., 1992. "A Historical Overview of Estimation of Historical Risk Coefficients: Discussion," 1992 Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk Meeting, March 22-25, 1992, Orlando, Florida 307863, Regional Research Projects > S-232: Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk.

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