The Varying Impacts of Agricultural Support Programs on U.S. Farm Household Consumption

Abstract Farm households are economic agents whose income is derived from farm, off‐farm, and government sources. This article uses farm‐level data from the Agricultural Resource Management Survey (ARMS) and recent advances in the econometric theory of dynamic pseudo‐panels to show that farm households consume various sources of income differently at the margin. Particular attention is given to a specific type of lump‐sum government transfer payment intended to be decoupled from (independent of) farm production decisions. The results suggest that relatively decoupled government subsidies have a greater marginal effect on farm household consumption than subsidies that are tied to market conditions.