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The Decision to Double Crop: An Application of Expected Utility Theory Using Stein's Theorem

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  • Michele C. Marra
  • Gerald A. Carlson

Abstract

A nonlinear, single-equation acreage allocation model derived from expected utility theory using Stein's theorem for covariance decomposition is developed. This decomposition allows the covariance of utility parameters and revenues to be expressed in terms of measurable variables. The model is applied to state-level data to estimate the relative importance of various economic factors in determining the pattern of double cropping wheat and soybeans in the southeastern United States. The hypothesis that the riskiness of returns is important in the aggregate is rejected for some of the states, although the constrained expected utility model without the effect of risk performs better than a standard wheat acreage response model.

Suggested Citation

  • Michele C. Marra & Gerald A. Carlson, 1990. "The Decision to Double Crop: An Application of Expected Utility Theory Using Stein's Theorem," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 337-345.
    • Handle: RePEc:oup:ajagec:v:72:y:1990:i:2:p:337-345.
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    File URL: http://hdl.handle.net/10.2307/1242337
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    Cited by:

    1. Arriaza Balmón, Manuel & Gomez-Limon, Jose Antonio, 2002. "Comparative Performance of Selected Mathematical Programming Models," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24792, European Association of Agricultural Economists.
    2. Shapiro, B.I. & Brorsen, B.Wade & Doster, D. Howard, 1992. "Adoption of Double-Cropping Soybeans and Wheat," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 24(2), pages 33-40, December.
    3. Ford, Beth Pride & Musser, Wesley N. & Yonkers, Robert D., 1993. "Measuring Historical Risk in Quarterly Milk Prices," Agricultural and Resource Economics Review, Cambridge University Press, vol. 22(1), pages 20-26, April.
    4. Jeanne Y. Coulibaly & John H. Sanders & Paul V. Preckel & Timothy G. Baker, 2015. "Will cotton make a comeback in Mali?," Agricultural Economics, International Association of Agricultural Economists, vol. 46(1), pages 53-67, January.
    5. Sara Savastano & Pasquale Lucio Scandizzo, 2010. "The Adoption and Diffusion of GM Crops in USA: A Real Option Approach," CEIS Research Paper 169, Tor Vergata University, CEIS, revised 20 Jul 2010.
    6. Canales, Elizabeth & Bergtold, Jason S. & Williams, Jeffery & Peterson, Jeffrey, 2015. "Estimating farmers’ risk attitudes and risk premiums for the adoption of conservation practices under different contractual arrangements: A stated choice experiment," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205640, Agricultural and Applied Economics Association.
    7. Teresa Serra & David Zilberman & José M. Gil, 2008. "Differential uncertainties and risk attitudes between conventional and organic producers: the case of Spanish arable crop farmers," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 219-229, September.
    8. Rodgers, Aaron D. & Harri, Ardian & Morgan, Kimberly & Tack, Jesse & Hood, Ken & Coble, Keith, 2014. "Determining Willingness to Adopt Mechanical Harvesters among Southeastern Blueberry Producers," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162529, Southern Agricultural Economics Association.
    9. Detre, Joshua D. & Foster, Kenneth A., 2004. "Indirect Utility Functions And Testable Conditions," 2004 Annual meeting, August 1-4, Denver, CO 20087, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Kisaka-Lwayo, Maggie, 2008. "A Discriminant Analysis of Factors Associated with The Adoption Of Certified Organic Farming By Smallholder Farmers in Kwazulu-Natal, South Africa," 2007 Second International Conference, August 20-22, 2007, Accra, Ghana 52155, African Association of Agricultural Economists (AAAE).
    11. Marra, Michele & Pannell, David J. & Abadi Ghadim, Amir, 2003. "The economics of risk, uncertainty and learning in the adoption of new agricultural technologies: where are we on the learning curve?," Agricultural Systems, Elsevier, vol. 75(2-3), pages 215-234.

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