Income Source Matters in Farm Household Spending by ProQuest


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                                                                                                                                                             SEPTEMBER 2009
Income Source Matters in Farm
Household Spending

                                                                                                                                                             A M B E R WAV E S
    Many U.S. farm households have several        to year because of weather effects, crop fail-    may be that because countercyclical payments
income sources, including farm production, off-   ures, animal losses, and/or commodity price       are not tied to current production, but rather
farm employment, and government payments.         fluctuations.                                      to historic (base) acreage like fixed direct pay-
ERS research suggests that farm households            Government payments also include both         ments, farm households consider them in the
may employ “mental accounting” to decide          stable and variable types of income, and as       same mental account as fixed direct payments
which income sources, including different         with other income sources, farm households        and therefore available for household uses. By
types of government payments, are most ap-        do not consider all government payments to        contrast, farm households may consider income
propriate for household expenses.                 be the same. Increases in variable government     from source
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