This paper presents a two-season model of a household’s production, consumption, labor supply, and storage decisions in an environment of output and price risk. The analytical results in this study are markedly different from those of models prevalent in the mainstream of the agricultural household literature. The empirical analysis, that uses panel data from a village in India, provides support for the theoretical results and underscores the seasonal dimension of the farmers’ choice problems. The results also show that ignoring risk or risk-averse preferences may introduce substantial downward bias in optimal response estimates.
“A Two-Season Agricultural Household Model of Storage and Savings Under Uncertainty,” A. Saha, Journal of Development Economics, 45 (1994), 245–269