Farm Producers' Household Consumption and Individual Risk Behavior after Natural Disasters

Abstract

Understanding how farm household consumption responds to adverse income shocks can provide insight into household well-being and appropriate agricultural policy. Using a split-sample survey of Indiana specialty producers, where we randomly assign respondents to treatments that vary the size of a hypothetical income shock, we estimate the relationship between income loss and household consumption. Given that postdisaster producers' risk preferences are important for business decisions, we elicit producers' risk preferences. We find that food and miscellaneous expenses are the most sensitive to income losses. We also find evidence for decreasing absolute risk aversion among producers after the income loss shock.

Covid-19 Outbreak in Europe and Its Impact Across Four Different Sectors: Analytical Research

“…The Agricultural and Resource Economics Review, with H-index of 27, concentrates again on carrying out empirical studies on the agricultural sector, not looking at crops and consumers' reactions, although such studies are mainly related to US, where economic losses are estimated for given areas of the country (as in Wahdat et al, 2021).…”

The impact of natural disasters on rural household wealth: Micro evidence from China

“…Existing research found that natural disasters affect individuals' well-being (Rehdanz et al, 2015), investor sentiment (Hirshleifer and Shumway, 2003;Kamstra et al, 2003;Kaplanski and Levy, 2010), migration (Saldaña-Zorrilla and Sandberg, 2009;Warner and Afifi, 2014;Cattaneo and Peri, 2016;Pajaron and Vasquez, 2020), risk preferences (Bourdeau-Brien and Kryzanowski, 2020), mental health (Shultz, 2014;Graham et al, 2019;Zhang et al, 2022), and children's development (Rabassa et al, 2012;Deuchert and Felfe, 2015). Furthermore, studies have examined the impact of natural disasters on household income inequality (Yamamura, 2015;Abdullah et al, 2016;Keerthiratne and Tol, 2017), household savings (Filipski et al, 2019), household debt (Gallagher and Hartley, 2017), household consumption (Arndt et al, 2004;Wahdat, et al, 2021), and other household behaviors. Natural disasters cause direct or indirect economic losses to households.…”