Are Commercial Fishers Risk-Lovers?

Abstract

Empirical studies of fishers' preferences have found that most fishers are risk-averse, while expected-utility theory predicts risk neutrality even for sizable stakes. We test this prediction using data from a stated choice experiment with Swedish commercial fishers. Our results show that almost 90% of the respondents do not behave as expected-utility maximizers. 48% of the fishers can be broadly characterized as risk-neutral, 26% as modestly risk-averse, while 26% are strongly risk-averse. Fishers are more risk-neutral the higher the fraction of their household's income comes from fishing, while fishers with a positive attitude to individual quotas are more risk-averse. Sensitivity testing implies that decisions with modest stakes like a few days of fishing are not influenced by wealth level.

Price Volatility in Seafood Markets: Farmed vs. Wild Fish

“…However, there is also substantial short-run variation in prices, thereby allowing for systematic differences in price volatility also in integrated markets. 2 Earlier works have considered the incentives for fishermen to respond to variations in both price and production, e.g., how fishermen may increase the revenue stability (Bockstael & Opaluch, 1983;Holland and Sutinen, 2000;Mistiaen & Strand, 2000;Eggert & Martinsson, 2004;Eggert and Tveteras, 2004;Smith & Wilen, 2005;Holland, 2008). For fishermen, variations in landings affect their price directly as large (small) quantity or production will reduce (increase) price.…”

Perceptions of occupational risk by US commercial fishermen

“…Risk averse fishermen have been shown to earn significantly less than their less risk averse counterparts [9], and there is some disagreement in the literature over whether fishermen as a whole tend to be risk-loving or risk averse [10]. However, what is clear is that fishermen are constantly faced with making decisions where the financial gain or loss is highly uncertain, such as the choice of species to fish, gear type to use, and optimal fishing location [9]. Also, the rate of selfemployment in the fishing industry is among the highest in the US workforce [11]; as independent operators, commercial fishing vessel captains are economically vulnerable to the fluctuating price of their catch as well as the cost of inputs such as bait and fuel.…”

The lay system in commercial fisheries: Origin and implications

“…2 Recent evidence weakens the notion that vessel owners are risk averse (e.g. [15,16]). Without risk averse owners, the pure risksharing argument for the lay system is not valid.…”

“…For example, approximately 2.2% of fishing trips (9 out of 414) for a sample of nine vessels operating in the Atlantic sea-scallop fishery during the period 1996-2000 resulted in ex post payments being made by the crew to the vessel owner to cover cost liabilities in excess of their revenue share. 15 Keeping in mind thatb 1 À b;ĝ 1 À g: where i ¼ 1; . .…”