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The Relationship of Income and Human Capital to Debt/Asset Ratio of Farm Families

Cooperative Extension Service, University of Georgia, Athens, GA 30602

Deborah Godwin

Dept. of Housing, Management, and Consumer Economics, University of Georgia, Athens, GA 30602

Financial well-being of farm families is often defined in terms of their debt-asset ratio. This study utilized the human capital theory to determine variables which predict debt/asset ratio by analyzing 489 farm families in seven states in the South and Midwest. Respondents answered a mailed questionnaire in 1985. The human capital approach was supported with key human capital variables, number of years farming, and husbands' education as predictors of debt/asset ratio. Total family income was found to have a curvilinear relationship with debt/asset ratio. Total income and region of country were also significant predictors. Discriminant analysis correctly classified almost 60 percent of the sample into three financial categories: safe, moderately risky, and risky.

Family and Consumer Sciences Research Journal, Vol. 17, No. 1, 95-109 (1988)
DOI: 10.1177/1077727X8801700110


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