Measuring producers' risk preferences: A global risk-attitude construct

Measuring producers' risk preferences: A global risk-attitude construct

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Article ID: iaor20023618
Country: United States
Volume: 83
Issue: 4
Start Page Number: 993
End Page Number: 1009
Publication Date: Nov 2001
Journal: American Journal of Agricultural Economics
Authors: ,
Keywords: risk
Abstract:

In applied agricultural economic research various risk-attitude elicitation techniques are used. Here, we investigate whether risk-attitude measures rooted in the expected utility framework are related to measures rooted in the multi-item scale framework. Using a second-order factor analytical model, and data obtained from personal computer-guided interviews with 373 farmers, we investigate whether the common variance among the (latent) risk-attitude measures can be accounted for by a global risk-attitude construct. We find that different risk-attitude measures are related, and that the global risk-attitude construct is significantly related to farmers' intention to use futures contracts. Our research suggests that farmers' risk attitude is a higher-order characteristic that cannot be effectively extracted by a single measure.

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