Using Consumption and Asset Return Data to Estimate Farmers' Time Preferences and Risk Attitudes

Posted: 1 Oct 2001

See all articles by Sergio H. Lence

Sergio H. Lence

Iowa State University - Department of Economics

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Abstract

The generalized expected utility model is fitted to U.S. farm data to estimate farm operator's time preferences and risk attitudes. The estimated farmer's utility parameters are quite 'reasonable' and exhibit high accuracy. The forward-looking expected utility model is soundly rejected in favor of the generalized expected utility paradigm. Importantly, the generalized expected utility model is also found to fit the data better than the myopic model typically used to study agricultural production under risk. Finally, U.S. farmers' relative aversion to risk appears to have diminished significantly over time.

Suggested Citation

Lence, Sergio H., Using Consumption and Asset Return Data to Estimate Farmers' Time Preferences and Risk Attitudes. Available at SSRN: https://ssrn.com/abstract=246774

Sergio H. Lence (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

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