Decomposition of Variability in Farm Household Assets and Debt

Farm families often hold large quantities of wealth and, like any other family, assess their financial progress by reviewing their net worth (or wealth) position periodically. Wealth has an impact on many decisions such as production, retirement, and succession of the farm. Households, in general, seek stability growth in wealth and, ideally, income as well. In the case of wealth, farm households will be better equipped to handle variability once the contributing sources are identified. This study measures how much of the variability in farm household assets and debt is attributed to the variability in farm and nonfarm sources of assets and farm and nonfarm sources of debt. Using a normalized variance decomposition approach and data from the Agricultural Resource Management Survey (ARMS), results show that origin of asset and debt variability differs with farm size and location of the farm household.

Issue Date:
Publication Type:
Journal Article
DOI and Other Identifiers:
0738-8950 (Other)
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Published in:
Journal of Agribusiness, Volume 23, Number 2
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 Record created 2017-04-01, last modified 2017-08-25

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