UTILITY MEASUREMENT FOR THOSE WHO NEED TO KNOW

A practical technique for estimating decision-makersÂ’ utility functions by survey or group methods is explained and illustrated. Results from a survey of 44 Oregon farmers are reported. Risk attitudes of respondents are related to farm and decision-maker characteristics. Regression analysis found age, education, and percentage of land ownership, either separately or jointly, to be statistically significant variables related to risk attitude. Risk attitudes measured from the estimated utility functions were found to be uniformly distributed across risk aversion, neutral and preference. Even though further empirical work is needed, it appears that the distribution of risk attitude among the human population cannot be predicted from a single variable.