Measuring farmers' preferences for risk: a domain-specific risk preference scale

A behavioral framework and psychometric theory were used to develop a domain-specific scale to measure farmers' preferences (attitudes) for risk, when the expected benefits and perceived risks of each domain were explicitly modeled. Exploratory factor analyses based on a sample of 237 Swedish farmers highlighted three risk domains, which we termed 'Up-to-date and in deliberate control of production,' 'Carefulness and planning in general' and 'Progressive farming.' The results suggested that farmers are risk-averse in all domains. External validation of the domain-specific measurement scale suggested that it could significantly predict the observed five-year volatility in farm income. The suggested domain-specific measurement scale is of practical importance for the farmers themselves, the agribusiness, and for policy-makers.