The Farmers Home Administration's Social Discount Rate

Posted: 29 Oct 2018

Date Written: 1989

Abstract

The aim was to estimate the SDR revealed by past decisions by the Farmers Home Administration (FmHA) concerning their farm-ownership programme in New York State. These decisions involved trading off a current loan against a long stream of future farm profits. The ratio of the coefficients to these two variables in a logit equation produced the estimate of the SDR. The main finding was that a very high rate of discount was uncovered, in the range 70–73%. These high rates may be explained by ‘individual risk’ and the life-cycle context in which the estimates were made.

Suggested Citation

Brent, Robert J, The Farmers Home Administration's Social Discount Rate (1989). Applied Economics, Volume 21, 1989 - Issue 9, Available at SSRN: https://ssrn.com/abstract=3274998

Robert J Brent (Contact Author)

Fordham University ( email )

Department of Economics
441 E Fordham Road
Bronx, NY 10458
United States
718 817 4058 (Phone)

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