Risk programming and sparse data: how to get more reliable results
Because relevant historical data for farms are inevitably sparse, most risk programming studies rely on few observations of uncertain crop and livestock returns. We show the instability of model solutions with few observations and discuss how to use available information to derive an appropriate multivariate distribution function that can be sampled for a more complete representation of the possible risks in risk-based models. For the particular example of a Norwegian mixed livestock and crop farm, the solution is shown to be unstable with few states of nature producing a risky solution that may be appreciably sub-optimal. However, the risk of picking a sub-optimal plan declines with increases in number of states of nature generated by Latin hypercube sampling.
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.
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.
References listed on IDEAS
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.:
- Flaten, O. & Lien, G., 2007. "Stochastic utility-efficient programming of organic dairy farms," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1574-1583, September.
- Torkamani, Javad, 2005. "Using a whole-farm modelling approach to assess prospective technologies under uncertainty," Agricultural Systems, Elsevier, vol. 85(2), pages 138-154, August.
- J. Brian Hardaker & Louise H. Patten & David J. Pannell, 1988.
"Utility‐Efficient Programming For Whole‐Farm Planning,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 32(2-3), pages 88-97, 08-12.
- Hardaker, J. Brian & Patten, Louise H. & Pannell, David J., 1988. "Utility-Efficient Programming For Whole-Farm Planning," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 32(02-03).
- Pannell, David J. & Nordblom, Thomas L., 1998. "Impacts of risk aversion on whole-farm management in Syria," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(3), September.
- Nanseki, Teruaki & Morooka, Yoshinori, 1991. "Risk preference and optimal crop combinations in upland Java, Indonesia: An application of stochastic programming," Agricultural Economics, Blackwell, vol. 5(1), pages 39-58, January.
- G Lien & JB Hardaker, 2001. "Whole-farm planning under uncertainty: impacts of subsidy scheme and utility function on portfolio choice in Norwegian agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 28(1), pages 17-36, March.
- Nanseki, Teruaki & Morooka, Yoshinori, 1991. "Risk preference and optimal crop combinations in upland java, Indonesia: an application of stochastic programming," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 5(1), January.
- Lence, Sergio H. & Hayes, Dermot J., 1995.
"Land Allocation in the Presence of Estimation Risk,"
Staff General Research Papers
995, Iowa State University, Department of Economics.
- Lence, Sergio H. & Hayes, Dermot J., 1995. "Land Allocation In The Presence Of Estimation Risk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(01), July.
- Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, 03.
- David J. Pannell, 2006. "Flat Earth Economics: The Far-reaching Consequences of Flat Payoff Functions in Economic Decision Making," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(4), pages 553-566.
- Adonis Yatchew, 1998. "Nonparametric Regression Techniques in Economics," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 669-721, June.
- Dorward, Andrew, 1999. "A Risk Programming Approach for Analysing Contractual Choice in the Presence of Transaction Costs," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(4), pages 479-92, December.
- Richardson, James W. & Klose, Steven L. & Gray, Allan W., 2000. "An Applied Procedure For Estimating And Simulating Multivariate Empirical (Mve) Probability Distributions In Farm-Level Risk Assessment And Policy Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(02), August.
- Lien, Gudbrand D. & Hardaker, J. Brian & Richardson, James W., 2006. "Simulating Multivariate Distributions with Sparse Data: A Kernal Density Smoothing Procedure," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25449, International Association of Agricultural Economists.
When requesting a correction, please mention this item's handle: RePEc:eee:agisys:v:101:y:2009:i:1-2:p:42-48. 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: (Zhang, Lei)
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.