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PR - Risk Adjusted Cost Efficiency Indices

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  • Yeager, Elizabeth
  • Langemeier, Michael

Abstract

This paper examines the impact of downside risk on cost efficiency for a sample of farms. Cost efficiency was estimated using traditional input and output measures, and then re-estimated including each farm’s downside risk score. Comparisons were made with and without a change in efficiency when each farm’s downside risk score was included in the analysis. As expected, downside risk plays an important role in explaining farm inefficiency. Failure to account for downside risk overstates inefficiency, particularly for farms with low downside risk scores.

Suggested Citation

  • Yeager, Elizabeth & Langemeier, Michael, 2013. "PR - Risk Adjusted Cost Efficiency Indices," 19th Congress, Warsaw, Poland, 2013 345706, International Farm Management Association.
    • Handle: RePEc:ags:ifma13:345706
    DOI: 10.22004/ag.econ.345706
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    1. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, June.
    2. Rolf Fare & Shawna Grosskopf & William Weber, 2004. "The effect of risk-based capital requirements on profit efficiency in banking," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1731-1743.
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    Cited by:

    1. Shadbolt, Nicola M. & Olubode-Awosola, Femi, 2016. "Resilience, Risk and Entrepreneurship," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(2), pages 1-20, May.

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    Keywords

    Agricultural Finance; Risk and Uncertainty;

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