Attitude towards Risk and Production Decision: An Empirical analysis on French private forest owners
This paper deals with the forest owner's attitude towards risk and the harvesting decision in several ways. First, we propose to characterize and quantify the forest owner's attitude towards risk. Second, we analyze the determinants of the forest owner's risk attitude. Finally, we determine the impact of the forest owner's risk attitude on the harvesting decision. The French forest owner's risk attitude is tackled by implementing a questionnaire, including a context-free measure borrowed from experimental economics. The determinants of the forest owner's risk attitude and harvesting decision are estimated through a recursive bivariate ordered probit model. We show that French forest owners are characterized by a relative risk aversion coefficient close to 1. In addition, we found that the forest owner's risk aversion is influenced positively and significantly by gender (female), age, and willingness to protect the environment, while the percentage of forest income in the total patrimony of the forest owner has a negative effect. Finally, we obtain that the forest owner's risk aversion positively and significantly impacts the harvesting decision.
|Date of creation:||14 Apr 2014|
|Date of revision:|
|Note:||View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00981350|
|Contact details of provider:|| Web page: http://hal.archives-ouvertes.fr/|
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.:
- Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
- Lien, G. & Stordal, S. & Hardaker, J.B. & Asheim, L.J., 2007. "Risk aversion and optimal forest replanting: A stochastic efficiency study," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1584-1592, September.
- Nancy Ammon Jianakoplos & Alexandra Bernasek, 2006. "Financial Risk Taking by Age and Birth Cohort," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 981–1001, April.
- Clarke, Harry R. & Reed, William J., 1989.
"The tree-cutting problem in a stochastic environment : The case of age-dependent growth,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 13(4), pages 569-595, October.
- Harry R Clarke & William J. Reed, 1989. "The Tree-Cutting Problem in a Stochastic Environment: The case of Age Dependent Growth," Working Papers 1989.01, School of Economics, La Trobe University.
- Harry R Clarke & William J. Reed, 1989. "The Tree-Cutting Problem in a Stochastic Environment: The case of Age Dependent Growth," Working Papers 1989.01 EDIRC Provider-In, School of Economics, La Trobe University.
- Serge Garcia & Eric N. Kéré & Anne Stenger, 2011. "Econometric analysis of social interactions in the production decisions of private forest owners," Working Papers - Cahiers du LEF 2011-04, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
- Conway, M.Christine & Amacher, Gregory S. & Sullivan, Jay & Wear, David, 2003. "Decisions nonindustrial forest landowners make: an empirical examination," Journal of Forest Economics, Elsevier, vol. 9(3), pages 181-203.
- Størdal, Ståle & Lien, Gudbrand & Baardsen, Sjur, 2008. "Analyzing determinants of forest owners' decision-making using a sample selection framework," Journal of Forest Economics, Elsevier, vol. 14(3), pages 159-176, June.
- Morin, Roger A & Fernandez Suarez, Antonio, 1983. " Risk Aversion Revisited," Journal of Finance, American Finance Association, vol. 38(4), pages 1201-16, September.
- Luis H. R. Alvarez & Erkki Koskela, 2004.
"Does Risk Aversion Accelerate Optimal Forest Rotation under Uncertainty?,"
CESifo Working Paper Series
1285, CESifo Group Munich.
- Alvarez, Luis H.R. & Koskela, Erkki, 2006. "Does risk aversion accelerate optimal forest rotation under uncertainty?," Journal of Forest Economics, Elsevier, vol. 12(3), pages 171-184, December.
- Hunter, Katrina & Kemp, Simon, 2004. "The personality of e-commerce investors," Journal of Economic Psychology, Elsevier, vol. 25(4), pages 529-537, August.
- Max, Wendy & Lehman, Dale E., 1988. "A behavioral model of timber supply," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 71-86, March.
- Catherine C. Eckel & Philip J. Grossman, 2008. "Forecasting Risk Attitudes: An Experimental Study Using Actual and Forecast Gamble Choices," Monash Economics Working Papers archive-01, Monash University, Department of Economics.
- Camerer, Colin F & Hogarth, Robin M, 1999.
"The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework,"
Journal of Risk and Uncertainty,
Springer, vol. 19(1-3), pages 7-42, December.
- Camerer, Colin F. & Hogarth, Robin M., 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Working Papers 1059, California Institute of Technology, Division of the Humanities and Social Sciences.
- Bill Provencher, 1997. "Structural Versus Reduced-Form Estimation of Optimal Stopping Problems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 357-368.
- Dennis, Donald F., 1990. "A probit analysis of the harvest decision using pooled time-series and cross-sectional data," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 176-187, March.
When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00981350. 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: (CCSD)
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.