Measuring Producers' Risk Preferences: A Global Risk‐Attitude Construct

17 Pages Posted: 24 Mar 2020

See all articles by Joost M. E. Pennings

Joost M. E. Pennings

Maastricht University; Wageningen UR; University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Philip Garcia

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Date Written: November 2001

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 the 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.

Keywords: expected utility, futures usage, global risk‐attitude construct, multi‐item scale, second‐order factor analysis, validity, D810, Q120

Suggested Citation

Pennings, Joost M. E. and Garcia, Philip, Measuring Producers' Risk Preferences: A Global Risk‐Attitude Construct (November 2001). American Journal of Agricultural Economics, Vol. 83, Issue 4, pp. 993-1009, 2001, Available at SSRN: https://ssrn.com/abstract=3558626 or http://dx.doi.org/10.1111/0002-9092.00225

Joost M. E. Pennings (Contact Author)

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

HOME PAGE: http://marketing-finance.nl/cv/cvpennings.pdf

Wageningen UR ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

HOME PAGE: http://marketing-finance.nl/cv/cvpennings.pdf

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

1301 W. Gregory Drive
326 Mumford Hall MC-710
Urbana, IL 61801
United States
217-244-1284 (Phone)
217-333-5538 (Fax)

HOME PAGE: http://marketing-finance.nl/cv/cvpennings.pdf

Philip Garcia

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

1301 W. Gregory Drive
427 Mumford Hall
Urbana, IL 61801
United States
217-333-0644 (Phone)
217-333-5538 (Fax)

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