The role of farmers' behavioral attitudes and heterogeneity in futures contracts usage

JME Pennings*, RM Leuthold

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

73 Citations (Web of Science)

Abstract

The relationship between farmers' behavioral attitudes and use of futures contracts is examined, taking into account non-directly observable variables and the heterogeneity of farmers. The relationships are tested on a stratified data sample of 440 farmers. Cluster analysis and covariance structure equation models are used to validate the relationships. Farmers are found not to be homogenous regarding the factors influencing their use of futures. Heterogeneity at the segment level masked important effects at the aggregate level, notably risk attitude. Furthermore, several psychological constructs for farmers related to market orientation, risk exposure, market performance and entrepreneurial behavior play important roles in their use of futures contracts.
Original languageEnglish
Pages (from-to)908-919
Number of pages12
JournalAmerican Journal of Agricultural Economics
Volume82
Issue number4
DOIs
Publication statusPublished - Nov 2000
Externally publishedYes

Keywords

  • covariance structure model
  • measurement error
  • segments futures usage
  • RISK-TAKING
  • MARKETS
  • MODELS
  • DETERMINANTS
  • DERIVATIVES
  • PARADIGM
  • PROGRAMS
  • INDUSTRY

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