The Effects of EU Agricultural Policy Changes on Farmers' Risk Attitudes

Posted: 28 Apr 2009

See all articles by Phoebe Koundouri

Phoebe Koundouri

Athens University of Economics and Business - Department of International and European Economic Studies; University of Reading - Department of Economics

Marita Laukkanen

VATT Institute for Economic Research, Finland; University of Helsinki - Department of Political and Economic Studies

Sami Myyrä

Independent

Céline Nauges

National Institute for Agricultural Research (INRA) - Laboratoire d'Economie des Ressources Naturelles (LERNA)

Abstract

This analysis utilises a model of production under risk estimated on Finnish farm-level data to measure farmers' risk attitudes in a changing policy environment. We find evidence of heterogeneous risk preferences among farmers, as well as notable changes over time in farmers' degree of risk aversion. This result is due to the increase in the non-random part of farm income generated by the policy change after Finland's European Union accession. The analysis confirms the assertion that agricultural policies that are decoupled from production do affect input use and crop mix through their effect on farmers' risk attitudes.

Keywords: Common Agricultural Policy, risk preferences, decoupled payments, Finland

JEL Classification: C33, D81, Q12, Q18

Suggested Citation

Koundouri, Phoebe and Laukkanen, Marita and Myyrä, Sami and Nauges, Céline, The Effects of EU Agricultural Policy Changes on Farmers' Risk Attitudes. European Review of Agricultural Economics, Vol. 36, No. 1, pp. 53-77, 2009, Available at SSRN: https://ssrn.com/abstract=1394128 or http://dx.doi.org/jbp003

Phoebe Koundouri (Contact Author)

Athens University of Economics and Business - Department of International and European Economic Studies ( email )

GR-10434 Athens
Greece
+0030 210 8203147 (Phone)
+0030 210 8214122 (Fax)

HOME PAGE: http://www.econ.ucl.ac.uk/downloads/koundouri/cv.pdf

University of Reading - Department of Economics ( email )

Reading, RG6 6AA
United Kingdom
+44 - (0)118 - 9875123 (Phone)
+44 - (0)118 - 9750236 (Fax)

HOME PAGE: http://www.rdg.ac.uk/economics/koundouri.html

Marita Laukkanen

VATT Institute for Economic Research, Finland ( email )

Arkadiankatu 7
Helsinki, FIN-00531
Finland

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

Sami Myyrä

Independent

Céline Nauges

National Institute for Agricultural Research (INRA) - Laboratoire d'Economie des Ressources Naturelles (LERNA) ( email )

21, Allee de Brienne
31000 Toulouse
France

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