Financial well-being of farmers: a theoretical framework and application

Abstract

The complexity of people’s subjective consciousness has led some economists to rethink how to measure financial well-being (FWB). Building upon historically well-developed objective financial measures, recent work increasingly incorporates subjective well-being measures to take individual perceptions and sentiments into account. This paper proposes an innovative framework for studying farmers’ FWB and applies it to U.S. beef producers. The conceptual framework consists of two sections: the determinants and measurements of farmers’ FWB. In the determinants section, the framework analyzes the determinants of farmers’ FWB through micro, meso, and macro levels, as well as their impacts on households or farms. For the measurement section, besides financial ratios to measure objective FWB, we construct a survey to measure subjective FWB. Furthermore, a visualization evaluation figure is provided to present the measurement results. We then apply our framework to ranchers in the U.S. This application illustrates our framework, shows its advantages, and examines the effects of some determinants on FWB.