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Income risk and farm consumption behavior
Author(s) -
Chen Kevin Z.,
Meilke Karl D.,
Turvey Calum
Publication year - 1999
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.1999.tb00562.x
Subject(s) - consumption (sociology) , permanent income hypothesis , economics , estimation , agricultural economics , life cycle hypothesis , econometrics , macroeconomics , social science , sociology , management
Using panel data from Illinois grain farmers, a direct test of the relationship between income risk and farm consumption behavior is conducted. The estimation results indicate that income risk significantly affects farm consumption and the results are robust using alternative risk measures. This finding casts doubt on the relevance of the conventional life‐cycle permanent income hypothesis, which implies that risk has no effect on consumption.