IDEAS home Printed from https://ideas.repec.org/p/ags/aaea83/279113.html
   My bibliography  Save this paper

Selecting Among Alternative Depreciation Methods: A Stochastic Dominance Approach

Author

Listed:
  • Richardson, James W.
  • Nixon, Clair J.

Abstract

A whole-firm simulation model (FLIPSIM V) was used to simulate the net present value probability distributions for sixteen alternative tax strategies on equipment depreciation for a rice farm in Texas. Stochastic dominance was used to determine the utility maximizing tax strategy for decision makers in alternative risk preference classes. The most preferred income tax strategy for both risk loving and averse decision makers utilized straight-line cost recovery, Section 179 expensing, maximum I.T.C. with resulting basis reduction, and trade rather than sell on disposition of old equipment.

Suggested Citation

  • Richardson, James W. & Nixon, Clair J., 1983. "Selecting Among Alternative Depreciation Methods: A Stochastic Dominance Approach," 1983 Annual Meeting, July 31-August 3, West Lafayette, Indiana 279113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea83:279113
    DOI: 10.22004/ag.econ.279113
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/279113/files/aaea-1983-010.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.279113?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lemieux, Catharine M. & Richardson, James W. & Nixon, Clair J., 1982. "Federal Crop Insurance Vs. Ascs Disaster Assistance For Texas High Plains Cotton Producers: An Application Of Whole-Farm Simulation," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(2), pages 1-14, December.
    2. Hadar, Josef & Russell, William R, 1969. "Rules for Ordering Uncertain Prospects," American Economic Review, American Economic Association, vol. 59(1), pages 25-34, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lowenberg-DeBoer, James & Boehlje, Michael, 1987. "The Distributional Impact Of 1981 And 1982 Federal Income Tax Legislation: Which Farmers Benefit?," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 16(1), pages 1-10, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. N. Becker, 1999. "A comparative analysis of water price support versus drought compensation scheme," Agricultural Economics, International Association of Agricultural Economists, vol. 21(1), pages 81-92, August.
    2. Oliver Linton & Esfandiar Maasoumi & Yoon-Jae Wang, 2002. "Consistent testing for stochastic dominance: a subsampling approach," CeMMAP working papers 03/02, Institute for Fiscal Studies.
    3. Hooi Hooi Lean & Michael McAleer & Wing-Keung Wong, 2013. "Risk-averse and Risk-seeking Investor Preferences for Oil Spot and Futures," Documentos de Trabajo del ICAE 2013-31, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico, revised Aug 2013.
    4. Brent A. Gloy & Timothy G. Baker, 2002. "The Importance of Financial Leverage and Risk Aversion in Risk-Management Strategy Selection," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1130-1143.
    5. Kocourek, Pavel & Steiner, Jakub & Stewart, Colin, 0. "Boundedly rational demand," Theoretical Economics, Econometric Society.
    6. Skees, Jerry R., 1987. "Future Research Needs On Federal Multiple Peril Crop Insurance," Regional Research Projects > 1987: S-180 Annual Meeting, March 22-25, 1987, San Antonio, Texas 272346, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    7. Moshe Levy & Haim Levy, 2013. "Prospect Theory: Much Ado About Nothing?," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 7, pages 129-144, World Scientific Publishing Co. Pte. Ltd..
    8. Heller, Yuval & Schreiber, Amnon, 2020. "Short-term investments and indices of risk," Theoretical Economics, Econometric Society, vol. 15(3), July.
    9. Michel M. Denuit & Louis Eeckhoudt, 2010. "A General Index of Absolute Risk Attitude," Management Science, INFORMS, vol. 56(4), pages 712-715, April.
    10. David J. Pannell, 1991. "Pests and pesticides, risk and risk aversion," Agricultural Economics, International Association of Agricultural Economists, vol. 5(4), pages 361-383, August.
    11. Joseph Aharony & Sasson Bar†Yosef, 1987. "Tests of the impact of LIFO adoption on stockholders: A stochastic dominance approach," Contemporary Accounting Research, John Wiley & Sons, vol. 3(2), pages 430-444, March.
    12. Brown, David P., 2017. "New characterizations of increasing risk," Journal of Mathematical Economics, Elsevier, vol. 69(C), pages 7-11.
    13. Chateauneuf, Alain & Cohen, Michele & Meilijson, Isaac, 2004. "Four notions of mean-preserving increase in risk, risk attitudes and applications to the rank-dependent expected utility model," Journal of Mathematical Economics, Elsevier, vol. 40(5), pages 547-571, August.
    14. Lean, Hooi Hooi & McAleer, Michael & Wong, Wing-Keung, 2015. "Preferences of risk-averse and risk-seeking investors for oil spot and futures before, during and after the Global Financial Crisis," International Review of Economics & Finance, Elsevier, vol. 40(C), pages 204-216.
    15. Branda, Martin, 2013. "Diversification-consistent data envelopment analysis with general deviation measures," European Journal of Operational Research, Elsevier, vol. 226(3), pages 626-635.
    16. Tsang, Chun-Kei & Wong, Wing-Keung & Horowitz, Ira, 2016. "A stochastic-dominance approach to determining the optimal home-size purchase: The case of Hong Kong," MPRA Paper 69175, University Library of Munich, Germany.
    17. Lizyayev, Andrey & Ruszczyński, Andrzej, 2012. "Tractable Almost Stochastic Dominance," European Journal of Operational Research, Elsevier, vol. 218(2), pages 448-455.
    18. Cristiano Arbex Valle & John E Beasley, 2024. "Subset SSD for enhanced indexation with sector constraints," Papers 2404.16777, arXiv.org.
    19. Yang Yang & Xuezheng Chen & Jing Gu & Hamido Fujita, 2019. "Alleviating Financing Constraints of SMEs through Supply Chain," Sustainability, MDPI, vol. 11(3), pages 1-19, January.
    20. Arvanitis, Stelios & Scaillet, Olivier & Topaloglou, Nikolas, 2020. "Spanning tests for Markowitz stochastic dominance," Journal of Econometrics, Elsevier, vol. 217(2), pages 291-311.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea83:279113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://www.aaea.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.