Farming and risk attitude

Abstract

Data from a survey among Norwegian farmers (n=514), combined with tax register data and data on farming area and production, are used to explore various questions related to future farming, general attitudes to farming and risk attitude. To complement the raw data, several new variables were constructed in order to compare how variables such as investment, consumption and intensity of farm production in the farmers' opinion would be affected by sudden, unexpected monetary losses and gains. These new variables say something about how various types of behavior are asymmetrically exhibited when facing unexpected gains and losses. In general, and as expected, farmers claim that a sudden gain would affecttheir behavior less than a sudden loss. The main exception is farm investment, which would be more affected by a sudden gain than a sudden loss would affect divestment. This is interesting, as it captures some important aspects of farming lifestyle: A sudden gain is likely to be invested in the farm, but a sudden loss would, if possible, be financed without farm divestment, as this often would lead to giving up farming, or at least some important aspects of the farming lifestyle. Overall, these results are not surprising. Nevertheless, it is argued that the results could have some interesting policy implications, both with regards to design of hedging schemes, general agricultural support schemes, and rural policy.