Agricultural Economic Report No. (AER-812) 77 pp

July 2002

Income, Wealth, and the Economic Well-Being of Farm Households

Agricultural policy is rooted in the 1930's notion that providing transfers of money to the farm sector translates into increased economic well-being of farm families. This report shows that neither change in income for the farm sector nor for any particular group of farm business can be presumed to reflect changes confronting farm households. Farm households draw income from various sources, including off-farm work, other businesses operated and, increasingly, nonfarm investments. Likewise, focus on a single indicator of well-being, such as income, overlooks other indicators such as the wealth held by the household and the level of consumption expenditures for health care, food, housing, and other items. Using an expanded definition of economic well-being, we show that farm households as a whole are better off than the average U.S. household, but that 6 percent remain economically disadvantaged.

Keywords: farming, farm income, farm households, farm household wealth, off-farm work, farm typology, farm resource regions, operator age, operator education, household consumption, farm business, nonfarm income, ARMS, farm policy

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