Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, Chile
Decisions are strongly influenced by risk and risk preferences of decision makers; however, in Chile there are few studies in the agricultural sector focused on this topic. The present paper analyzes the risk preferences of small producers of raspberries (Rubus idaeus L.) and the production function...
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Instituto de Investigaciones Agropecuarias, INIA
2008
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oai:scielo:S0718-583920080002000072018-10-01Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, ChileToledo T,RogerEngler P,Alejandra risk aversion mean-variance utility function production function Decisions are strongly influenced by risk and risk preferences of decision makers; however, in Chile there are few studies in the agricultural sector focused on this topic. The present paper analyzes the risk preferences of small producers of raspberries (Rubus idaeus L.) and the production function associated with their production system in the Bio-Bio Region of Chile. Under a mean-variance approach, the estimation procedure uses a flexible utility function to incorporate a variety of risk preference alternatives. Three different estimation procedures were used: Least Squares Estimation, Seemingly Unrelated Regression and Full Information Maximum Likelihood, which revealed the same conclusions. Results showed that small farmers are risk averse (γ = 0.104) and present increasing relative and absolute aversion to risk (θ = 0.099 < 1 and θ < γ, respectively). The hypotheses of risk neutrality (γ = 0) and constant absolute risk aversion (θ = 1) were rejected with 94% and 99% confidence, respectively. The chosen function of production is the Cobb Douglas type, because it presents a better adjustment, and the relevant factors are fertilizer quantity per hectare, the experience of the producer and the planted area. This function presents decreasing returns to scale, then β2 + β3 + β4 is equal to 0.18. The hypothesis of constant returns to scale is rejected with 99% confidence.info:eu-repo/semantics/openAccessInstituto de Investigaciones Agropecuarias, INIAChilean journal of agricultural research v.68 n.2 20082008-06-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-58392008000200007en10.4067/S0718-58392008000200007 |
| institution |
Scielo Chile |
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Scielo Chile |
| language |
English |
| topic |
risk aversion mean-variance utility function production function |
| spellingShingle |
risk aversion mean-variance utility function production function Toledo T,Roger Engler P,Alejandra Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, Chile |
| description |
Decisions are strongly influenced by risk and risk preferences of decision makers; however, in Chile there are few studies in the agricultural sector focused on this topic. The present paper analyzes the risk preferences of small producers of raspberries (Rubus idaeus L.) and the production function associated with their production system in the Bio-Bio Region of Chile. Under a mean-variance approach, the estimation procedure uses a flexible utility function to incorporate a variety of risk preference alternatives. Three different estimation procedures were used: Least Squares Estimation, Seemingly Unrelated Regression and Full Information Maximum Likelihood, which revealed the same conclusions. Results showed that small farmers are risk averse (γ = 0.104) and present increasing relative and absolute aversion to risk (θ = 0.099 < 1 and θ < γ, respectively). The hypotheses of risk neutrality (γ = 0) and constant absolute risk aversion (θ = 1) were rejected with 94% and 99% confidence, respectively. The chosen function of production is the Cobb Douglas type, because it presents a better adjustment, and the relevant factors are fertilizer quantity per hectare, the experience of the producer and the planted area. This function presents decreasing returns to scale, then β2 + β3 + β4 is equal to 0.18. The hypothesis of constant returns to scale is rejected with 99% confidence. |
| author |
Toledo T,Roger Engler P,Alejandra |
| author_facet |
Toledo T,Roger Engler P,Alejandra |
| author_sort |
Toledo T,Roger |
| title |
Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, Chile |
| title_short |
Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, Chile |
| title_full |
Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, Chile |
| title_fullStr |
Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, Chile |
| title_full_unstemmed |
Risk Preferences Estimation for Small Raspberry Producers in the Bío-Bío Region, Chile |
| title_sort |
risk preferences estimation for small raspberry producers in the bío-bío region, chile |
| publisher |
Instituto de Investigaciones Agropecuarias, INIA |
| publishDate |
2008 |
| url |
http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-58392008000200007 |
| work_keys_str_mv |
AT toledotroger riskpreferencesestimationforsmallraspberryproducersinthebiobioregionchile AT englerpalejandra riskpreferencesestimationforsmallraspberryproducersinthebiobioregionchile |
| _version_ |
1714205260424151040 |