Attitudes towards risk and optimal use of inputs in maize production in the Mekong Delta, Vietnam

The paper is aimed at measuring the risk attitude of maize farmers and testing the relationship between farmers' risk attitudes and optimal use of inputs in production. The experimental method of Eckel and Grossman (2002) associated with the constant partial risk utility function was employed to measure the farmers’ risk attitude. Then, allocative efficiency coefficients were calculated from the output elasticities of inputs estimated from the Cobb-Douglas production function associated with the profit-maximizing condition in using inputs. The data was collected from a survey of 130 farm households located in large and concentrated maize production areas in the Mekong Delta. It is found that the majority of farmers are found to be risk-averse, accounting for 69.05%. Generally, the more risk averse the farmers are, the less purchased inputs are used in production. Then, most of farmers are not able to maximize profits.