EconPapers    
Economics at your fingertips  
 

Lump Sum versus Annuity: Choices of Kentucky Farmers during the Tobacco Buyout Program

Helen Pushkarskaya and Maria Marshall

Journal of Agricultural and Applied Economics, 2009, vol. 41, issue 3, 613-624

Abstract: Our study uses the data collected during the implementation of the tobacco buyout program in Kentucky to evaluate how rural households, diverse in income, age, family structure, location, education level, and other characteristics, made a choice between annuities and a lump-sum payment. Subjects in our field experiment did not have to retire or change their employment, as did subjects in many field studies of the choice between annuities and lump-sum payments, which allowed us to evaluate the relationship between the option choice and a decision whether to exit the tobacco market. Our results suggest that while discounted utility theory gives acceptable predictions of the farmers' behavior, other factors have to be taken into consideration. First, there are consistent biases that describe individual intertemporal behavior, such as availability bias or acquiescence bias. Second, there is a certain degree of heterogeneity in individual intertemporal preferences that correlates with their personal characteristics, such as education and production status. Third, our analysis revealed that the decision to exit the tobacco market positively correlated with the decision to take a lump-sum payment.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
Journal Article: Lump Sum versus Annuity: Choices of Kentucky Farmers during the Tobacco Buyout Program (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:jagaec:v:41:y:2009:i:03:p:613-624_00

Access Statistics for this article

More articles in Journal of Agricultural and Applied Economics from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Keith Waters ().

 
Page updated 2019-11-08
Handle: RePEc:cup:jagaec:v:41:y:2009:i:03:p:613-624_00