ESSAYS ON THE RISK AND VARIABILITY OF FARM HOUSEHOLD CONSUMPTION

This dissertation consists of three essays that attempt to fill a gap in the agricultural economics literature. Most academic research on the topic of agricultural finance focuses on the farm business and ignores the household itself. This dissertation is an acknowledgement that the men and women who raise livestock and cultivate crops do not participate in their profession to maximize some abstract measure of risk adjusted rate of return, but ultimately to earn a living and provide for their household. By examining consumption, the dollars spent on goods and services, food and shelter, and all other non-business-related expenses that define someone’s lifestyle, this dissertation attempts to directly study the well-being of U.S. farm households. The first essay quantifies the dollar-for-dollar effect of fluctuations in incomes on consumption, with a specific emphasis on the tariff relief payments of the U.S. – China trade war. The second essay offers an in-depth study on the variability of farm household consumption and aims to put the magnitude of that variability into context. The third essay measures the riskiness of the farm household’s income sources from the perspective of their consumption, and analyzes characteristics associated with higher or lower levels of risk.