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The (in)stability of farmers’ risk preferences

Robert Finger, David Wüpper and Chloe McCallum
Authors registered in the RePEc Author Service: David Johannes Wuepper

No 321196, 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium from Agricultural Economics Society - AES

Abstract: We test and quantify the (in)stability of farmer risk preferences, accounting for both the instability across elicitation methods and the instability over time. We used repeated measurements (N=1530) with Swiss fruit and grapevine producers over 3 years, where different risk preference elicitation methods (domain-specific self-assessment and incentivized lotteries) were used. We find that farmers’ risk preferences change considerably when measured using different methods. For example, self-reported risk preference and findings from a Holt and Laury lottery correlate only weakly (correlation coefficients range from 0.06 to 0.23). Moreover, we find that risk preferences vary considerable over time too, i.e. applying the same elicitation method to the same farmer in a different point in time results in different risk preference estimates. Our results show self-reported risk preferences are moderately correlated (correlation coefficients range from 0.42 to 0.55) from one year to another. Finally, we find experiencing climate and pest related crop damages is associated with farmers becoming more risk loving.

Keywords: Research Methods/ Statistical Methods; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 49
Date: 2022-04
New Economics Papers: this item is included in nep-agr, nep-cbe, nep-exp, nep-neu, nep-rmg and nep-upt
References: View references in EconPapers View complete reference list from CitEc

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DOI: 10.22004/ag.econ.321196

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