This paper presents the first empirical evidence on household risk balancing behavior, i.e., strategic off-farm decisions in response to changes in expected business risk. Using Swiss FADN data, we estimate a fixed effects seemingly unrelated regression model to analyze how farm households jointly alter their levels of debt, off-farm income and consumption. Evidence suggests that in response to changes in expected business risk, farm households make strategic off-farm decisions. Our study demonstrates that part of the behavioral risk response of farm households is ignored when focusing solely on farm-level analyses and illustrates the relevance of the household risk balancing framework.
|Publication status||Published - 31 Mar 2016|
|Event||The Annual Conference of the Swiss Society for Agricultural Economics and Rural Sociology 2016 - Posieux, Switzerland|
Duration: 31 Mar 2016 → 1 Apr 2016
|Conference||The Annual Conference of the Swiss Society for Agricultural Economics and Rural Sociology 2016|
|Period||31/03/16 → 1/04/16|
- Farm risk; off-farm risk; financial risk; off-farm income; consumption; Farm Management; Risk and Uncertainty