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Magnitude Estimation: An Application to Farmers' Risk-Income Preferences
George F. Patrick, Brian F. Blake and Suzanne H. Whittaker
Western Journal of Agricultural Economics
Vol. 6, No. 2 (December 1981), pp. 239-248
Published by: Western Agricultural Economics Association
Stable URL: http://www.jstor.org/stable/40987546
Page Count: 10
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Magnitude estimation, a technique developed by psychology for obtaining ratio scaled values, was used to derive risk-income preferences of ninety-one central Indiana farmers. Both variability-income and bankruptcy-income measures were developed and related to farmers' socio-economic attributes. Wealth and education had limited effects compared with off-farm employment, percent debt and expected levels of income, percent debt and net worth growth. Magnitude estimation provided reliable estimates of preferences. Farmers gave greater importance to the bankruptcy-income measure of risk-income preferences, but only a small portion of the variation of either measure could be explained.
Western Journal of Agricultural Economics © 1981 Western Agricultural Economics Association