Agricultural Precautionary Wealth

By: Jensen, Farrell E.; Pope, Rulon D.


Jensen, Farrell E.; Pope, Rulon D., Agricultural Precautionary Wealth, Journal of Agricultural and Resource Economics, Volume 29, Issue 1, April 2004, Pages 17-30

Using panel data, the relationship between income uncertainty and the stock of wealth through precautionary saving is examined. Evidence from Kansas data is consistent with the precautionary saving motive in that farm households facing greater uncertainty in income maintain larger stocks of wealth in order to smooth consumption. These results are found by regressing net worth against measures of permanent income (life-cycle income), measures of uncertainty, and demographic variables.