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Peasant Risk Aversion and Allocative Behavior: A Quadratic Programming Experiment

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  • Thomas B. Wiens

Abstract

A quadratic risk programming model is used to examine the impact of yield uncertainty on peasant allocation of land among crops and use of hired factor services. The assumption of an exponential utility of income function permits sample estimation of the extent of risk aversion and interpretation of the dual solutions as shadow prices. Historical survey data on a Chinese village are used to show that optimization qualified by risk aversion proves superior to risk neutrality or credit constraints in explaining peasant allocative behavior.

Suggested Citation

  • Thomas B. Wiens, 1976. "Peasant Risk Aversion and Allocative Behavior: A Quadratic Programming Experiment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(4_Part_1), pages 629-635.
    • Handle: RePEc:oup:ajagec:v:58:y:1976:i:4_part_1:p:629-635.
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    File URL: http://hdl.handle.net/10.2307/1238805
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    Cited by:

    1. Paris, Quirino, 1978. "Revenue And Cost Uncertainty, Generalized Mean-Variance And The Linear Complementarity Problem," Working Papers 225635, University of California, Davis, Department of Agricultural and Resource Economics.
    2. Young, Douglas & Lin, William & Pope, Rulon & Robison, Lindon & Selley, Roger, 1979. "Risk Preferences Of Agricultual Producers:Their Measurement And Use," Risk Management in Agriculture: Behavioral, Managerial, and Policy Issues, January 25-26, 1979, San Francisco, California 271459, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    3. Yassour, Joseph & Zilberman, David D & Rausser, Gordon C., 1980. "Option choices among alternative technologies with stochastic yield," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt8xq1b77m, Department of Agricultural & Resource Economics, UC Berkeley.
    4. Petsakos, Athanasios & Rozakis, Stelios, 2015. "Calibration of agricultural risk programming models," European Journal of Operational Research, Elsevier, vol. 242(2), pages 536-545.
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    10. Andrew J. Collins & Kasi Bharath Vegesana & Michael J. Seiler & Patrick O’Shea & Prasanna Hettiarachchi & Frederic McKenzie, 2013. "Simulation and mathematical programming decision-making support for smallholder farming," Environment Systems and Decisions, Springer, vol. 33(3), pages 427-439, September.
    11. Joseph Yassour & David Zilberman & Gordon C. Rausser, 1981. "Optimal Choices among Alternative Technologies with Stochastic Yield," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(4), pages 718-723.
    12. Lins, David A. & Gabriel, Stephen C. & Sonka, Steven T., 1981. "An Analysis Of The Risk Aversion Of Farm Operators: An Asset Portfolio Approach," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(01), pages 1-16, July.
    13. Peterson, Jeffrey M. & Boisvert, Richard N., 1998. "Optimal Voluntary "Green" Payment Programs To Limit Nitrate Contamination Under Price and Yield Risk," Research Bulletins 122687, Cornell University, Department of Applied Economics and Management.
    14. McCarl, Bruce A. & Musser, Wesley N., 1985. "Modeling Long Run Risk In Production And Investment Decisions," Regional Research Projects > 1985: S-180 Annual Meeting, March 24-27, 1985, Charleston, South Carolina 271799, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    15. Boisvert, Richard N., 1985. "The Role Of Alternative Risk Programming Models In Empirical Research," Regional Research Projects > 1985: S-180 Annual Meeting, March 24-27, 1985, Charleston, South Carolina 271793, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    16. Buccola, Steven T. & French, Ben C., 1978. "Long-Term Contracting Strategies for Agricultural Processing Firms With Particular Reference To Farmer Cooperatives," Research Reports 251945, University of California, Davis, Giannini Foundation.
    17. Greif, Avner & Iyigun, Murat & Sasson, Diego, 2011. "Risk, Institutions and Growth: Why England and Not China?," IZA Discussion Papers 5598, Institute of Labor Economics (IZA).
    18. William T. Smith, 2022. "The optimal hedge ratio: A solution, a conjecture, and a challenge," Economics Bulletin, AccessEcon, vol. 42(2), pages 877-888.
    19. Gomez-Limon, Jose A. & Arriaza, Manuel & Riesgo, Laura, 2003. "An MCDM analysis of agricultural risk aversion," European Journal of Operational Research, Elsevier, vol. 151(3), pages 569-585, December.
    20. William T. Smith, 2023. "The optimal hedge ratio: A closed-form solution, a conjecture, and a challenge," Economics Bulletin, AccessEcon, vol. 43(2), pages 748-758.
    21. K. C. Schaefer, 1992. "A Portfolio Model For Evaluating Risk In Economic Development Projects, With An Application To Agriculture In Niger," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(3), pages 412-423, September.
    22. Inmaculada Rodríguez-Puerta & Alberto A. Álvarez-López, 2016. "Optimal allocation of a fixed production under price uncertainty," Annals of Operations Research, Springer, vol. 237(1), pages 121-142, February.
    23. Hassan, Rashid M. & Hallam, Arne & D'Silva, B., 1988. "Stochastic Technology in a Programming Framework: A Generalized E. V. Model," 1988 Annual Meeting, August 1-3, Knoxville, Tennessee 270212, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    24. Fang Su & Udoy SAIKIA & Iain HAY, 2019. "Impact of Perceived Livelihood Risk on Livelihood Strategies: A Case Study in Shiyang River Basin, China," Sustainability, MDPI, vol. 11(12), pages 1-16, June.
    25. Daniel E. May & Jaime Rodríguez, 2014. "Farmers’ Economic Behaviour: Current Research and Research Gaps," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 3(6), pages 362-369.

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