ATTACHMENT VALUE AND FARMLANDPRICES: AN '
EMPIRICAL INVESTIGATION - ‘

Plan 8 Paper for the Degree of M, Sc   ' .
MICHIGAN STATE UNIVERSITY '
AMY L. DAMON »  
‘ 2001 ' '

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Attachment Value and Farmland Prices: An
Empirical Investigation

By

Amy L. Damon

A Plan B Paper

Submitted to
Michigan State University
Department of Agricultural Economics
in partial fulfillment of the requirements
for the degree of '

Master of Science

2001

 

Abstract

Attachment Value and Farmland Prices: An Empirical Investigation
By

Amy L. Damon

This study examines the‘role that attachment value plays in the formation of a
willingness to accept price (WTA) for farmland. Attachment value is defined as the
estimated or assigned worth of a socio.emotional good that binds one person or group to
a physical object. The objective of this study is to determine if a differential exists
between the market or assessed farmland price and the price a farmland owner would
accept from a strange. Further this study aims to determine if attachment value has an
affect on this differential. Qualitative evidence strongly supports the hypothesis that
attachment value to farmland afl‘ects the WTA and that variables such as length of
ownership tenure, family closeness, and community closeness afl‘ect the level of
attachment value. The quantitative results provide evidence that there is a significant
differential'between the WTA and the assessed price and further that family closeness
and education levels are significant in explaining the differential. An alternative survey
instrument to more effectively explore the issue of farmland values and attachment values

is presented in appendix 1.

 

 

Table of Contents

Abstract
List of Tables
Acknowledgements

1.0 Introduction

2.0 Social Capital and Attachment Value:

Definitions and Concepts

2.1 Attachment Value
2.1.1 Attachment Value Definition
2.1.2 Attachment Value Production
2.1.3 Communication of
Attachment Value
2.1.4 Determinants of the level of

attachment value
2.2 Qualitative evidence of
attachment value

3.0 A Theoretical Model of Farmland
Valuation with Attachment Value
3.1 Utility Model
3.2 Production of Attachment Value
3.3 Willingness to Accept Price
Model

4.0 Methodology
4.1 Description of the Survey
Instrument
4.2 Relevant attachment value
production variables and
justification

5.0 Empirical Models and Results
5.1 Testing for Significant
Differentials
5.2 Empirical Results for the
Production of Attachment Value
5.3 Discussion of Results
5.4 Limitations of the Findings

6.0 Conclusion
References

Appendix 1

ii

15
15

l7
19

21
21

23

25
25

28

30
31

32
34
36

 

Table 1
Table 2

 

List of Tables

Report of t-tests and paired t-tests
OLS Results

27
29

Dedicated to Lisa and Brad

iv

Acknowledgements

This paper came to fi'uition through the efforts and support of many. The many
hours of thought and study that have enveloped me in the past two years have been made
enjoyable, firlfilling, and soulful as a result of the sustaining friendships I have been
blessed with here at MSU.

I would importantly like to thank my major professor, Dr. Lindon Robison, for his
kind support, careful thought, and insightfirl guidance. His creative thinking about the
world around us has opened new doors to my understanding of economics and social
constructions. His patience, accessibility, and intellect allowed this idea to become a
reality. I would also like to thank the support of both Dr. Jack Meyer, and Dr. Robert
Myers for their helpful comments throughout the writing of this paper. Their guidance is
greedy appreciated. ’

I would also like to thank my fellow graduate students here in the Agricultural
Economics department at MSU. Specifically, I would like to acknowledge the strong
group of women who came together as friends in Fall of 1999 and continue to add
richness and beauty to my life. Kelley Cormier, Denise Mainville, Melody McNeil,
Corey Risch, Meeta Punjabi, Lorie Srivastava, and Chun Zhang and all of the other
inspiring women I have met here at MSU, you all deserve your dreams.

Several other people have played an integral role in helping me to this point.
Without the mentoring of Dr. J.R. Deep Ford, I would never have even thought about
graduate school. My deepest thanks to my supportive second family in New York City,
Kristen Holt, Greg Glassman, Josh Weisbrot, Casimir Nozkowski, Aram Gillis, and Tashi
Kaiser.

Lastly, I dedicate this paper to my family, who taught me the real meaning of
attachment value and how much a farm can be the heart of a family. Growing up in a
farm family has bequeathed invaluable lessons. Thank you for encouraging me to reach
beyond my limits. Your love and support has shaped me. I hope to carry on the tradition
of agriculture and farming as proudly as you all have.

1.0 Introduction

Farmers and farmland owners have played an integral role in the process of economic
development in the Unites States. Widely considered the stewards of our open spaces
and rural landscapes, farmland owners play an important part in rural communities across
the country. Similarly, is arguable the most important productive asset owned by
farmers. Anecdotal evidence suggests that farmers often have a strong attachment to
their farmland. Levak discusses Centennial Farmer’s attachment to their farmland:

Because of the long family connection with the land, there is often intense emotional

involvement on the part of Centennial Farmers. Ihey tend to view their land as

something more than a capital investment. (Levak, 1 95 6).

Analogous to sentimental value, attachment value allows an object to take on an
emotional value in addition to its existing economic or physical value. Attachment value
is embedded in the concept of social capital, defined as a person or group’s sympathy or
sense of obligation for another person or group (Robison, Schmid, and Siles, 1999).
Farmland is a physical asset with potential for significant attachment value. Attachment
value for one’s farmland may increase or decrease the price a farmer is willing to accept
(WTA) for their farmland. This paper attempts to assess attachment value’s effect on the
WA to: farmland. Further, the production function of attachment value will be
investigated.

Social capital is emerging in economics and agricultural economics literatures, and
attempting to provide a more holistic, multi-disciplinary perspective on social constructs
and economic phenomenon. Many works in this area have focused on the outcomes of
social capital. Putnam (1995), in his book Bowling Alone, empirically argues that social

change in the American human landscape has been fueled by a decrease in social capital

over the past several decades. Robison et a]. (forthcoming) show that social capital
between buyers and sellers of farmland alters the terms of trade. Other authors have
concentrated on the important role that social capital plays in international development
(Staatz, 1998; Woolcock, 1997). The economic valuation of social capital relationships is
just beginning to appear in the literature, with the study by Robison et a1. (forthcoming)
being a prime example of this.

Currently, methods of asset valuation, specifically contingent valuation, hedonic price
methods, and willingness to pay studies (Shabman and Stephenson (1996); Loomis, A
Brown, Lucero, Peterson (1996); Neill et a1 (1994)), do not account for the value of
socio-emotional goods attached to an asset. The debate in the literature surrounding asset

Valuation has virtually been limited to determining if capital assets should be valued at
what they cost, minus depreciation, or at market value as determined by the discounted
flow of income (Timmer, 1999).

This paper investigates the role of socio-emotional goods in explaining a difi‘erential
between the market price and the willingness to accept (WTA) price. When considering
data that includes a WTA price variable, there are several considerations to be made.
Firstly, the actual collection of WTA data can be problematic. Loomis, et a1. point out
that determining a consistent WTA, through asking people what respondents would
accept is plagued with several problems. Loomis addresses this problem in terms of a
willingness to pay, however similar problems exist when asking people their WTA
(Loomis et al., 1996), as was done in the data used for this study. It is possible that when
stating their WTA in a hypothetical market, some individuals may be stating what they

guess they could get on the market, not the lowest price they would accept On the other '

hand, if some respondents perceive their duty in answering the question as guessing the
fair market price, insights into the attachment value in these experiments is reduced.
Another problem may arise since respondents are stating their WTA in a hypothetical
market. Therefore, their WTA may actually be different if the respondents were faced
with an actual opportunity to sell their land (Loomis et al., 1996).

Secondly, the differential between the market price and the WTA price can have
multiple causalities. The observation of a differential between WTA and willingness to
pay (WTP) is not a new phenomenon. Shrogen et a1. examine the mounting empirical
evidence that suggests there is a significant divergence of willingness to pay values and
willingness to accept values. They find this pattern troubling since standard theory would
suggest that with small income effects WTP and WTA should be equivalent or at least
within a tight bound (Shrodgen et a1, 1994). Shrogen’s paper tests Michael Hanemann’s
(1991) explanation of this divergence. Hanemann suggests that a divergence can range
from zero to infinity depending on the degree of substitution between goods and positive
income elasticity. He suggests that WTP and WTA only converges when the good in
question has a close substitute. Findings by Shrogen et al. support this hypothesis.
Shorgen claims that the WTA and WTP divergence can be explained by substitutability
as well as income and substitution effects.

Kahneman, Knetsch, and Thaler (1990) also examine the divergence between WTA
and WTP. The authors explain this divergence, positing that the “endowment efl'ect"
persists in the market. They provide several explanations for the differential. They
further test the hypothesis that the discrepancy between WTA and WTP reflects a

genuine efl‘ect of reference positions on preferences. This asymmetry between WTA and

WTP is rooted in the generalization that losses are weighted more substantially than gains
in the evaluation of prospects and trades. Given this, if a good is evaluated as a loss
when it is given up and as a gain when it is acquire, loss aversion will on average, induce
a higher dollar value for owners than for potential buyers (Kahneman, Knetsch, Thaler,
1990).

In the case of farmland prices, the discrepancy between WTA and WTP or the
estimated assessed value could be attributed to several competing explanations. Standard
bargaining habits may contribute to the seller over stating the reservation price or the
differential may reflect a strategic mistake by inexperienced sellers (Kahneman, Knetsch,
Thaler, 1990). It is also possible that this differential reflects asymmetric informatiOn in
the marketplace.

The hypothesis investigated in this paper is that the differential between WTA and

WTP is not a mistake, or bargaining tool, but a genuine reflection of the attachment value
held by farmers for their farmland. While several important studies have focused on this
difl‘erential in other contexts and offered numerous explanations towards its existence,
none have considered the impact of emotional attachment rooted in social capital
relationship on the formation of a differential between WTA the market price. It is
difficult to control for all of the possible factors that could contribute to the formation of
a differential. However, in this study the production of this differential will be
investigated by determining if there is a relationship between the difl‘erential and
variables that theoretically contribute to the formation of attachment value.

Ifsocial capital is to be successfully implemented in an economic framework the

source of social capital, or the production filnction, must be addressed (Schmid, 2000;

Woolcock, 1997). It is argued that without knowing the source of social capital, there is
no way to know what form of social capital is present or how to reproduce it (Schmid,
2000). By considering the effect of community association, education, number of years
on the farmland, and other potential social capital production components, this study also
aims to explore the production of attachment value using both qualitative and quantitative
data.

The identification and analysis of attachment value is important for two primary
reasons. First, if attachment value influences WTA it may be an important component in
explaining observed patterns of farm exits. Second, if owners do have a strong
attachment value to land this may imply that supply of farmland in areas with high social
capital is inelastic, since attachment value theoretically affects farmland owners
responsiveness to market prices. Therefore changes in demand will lead to large changes
in price.

The structure of the paper is as follows. Section _2 provides a review of relevant
social capital concepts. Section 3 develops a conceptual model of farmland valuation and
attachment value including the seller’s utility function, a preliminary form of a
production function for attachment value, and a derivation ofa minimum sell price.
Section 4 presents an empirical methodology, including a description of the survey
' instrument, relevant variables, and justification and limitations ofthese variables. In
section 5 empirical methods and results are presented. The sixth and final section

discusses conclusions and limitations of the study.

2.0 Social Capital and Attachment Value: Definitions and Concepts

Social capital is defined and used in various ways across disciplines. Robison,
Schmid, and Siles, (1999) surveyed a group of professional researchers interested in
social capital and found that their definitions of social capital varied widely. Social
capital is an important concept in the analysis of any repeated human interaction. The
discipline of economics concentrates on physical interdependencies between agents.
Social capital aims to expand on the study of interdependencies to include socio-
emotional interdependencies between agents. Some definitions of social capital address
where social capital resides, what social capital can be used to achieve, or what social
capital is. Using results from the survey of social capital professionals a working
definition of social capital was developed. Social capital isdefined as:

A person ’s or group ’s annpatlw or sense of obligation toward another person or

group that may produce a potential benefit, advantage, and preferential treatment to

another person or group of persons beyond that which might be expected in a selfish
exchange relationship.

Concepts presented and discussed in this analysis rely heavily on this definition,
however to efl’ectively capture some of the social capital issues related to farmland
valuation this definition needs to be expanded to include the potential for negative social
capital relationships. The above definition captures relationships in which agent A’s
utility is linked directly to agent B’s utility, based on a positive relationship. Emotions
associated with this relationship may include trust, caring, sympathy, or a sense of
obligation. However, if agent A’s utility is linked inversely to agent B’s utility, this

relationship can be characterized as a negative relationship. Emotions associated with

this relationship may include guilt, blame, distrust, or dislike (Robison, not published).
Positive and negative social capital can be conceptualized on a continuum with polar
extremes of hate and love, and including varying degrees of emotion along the
continuum.

Social capital begins with a kernel of commonality. A kernel of commonality is a
shared trait between two agents. In general, kernels can be earned through shared
activities such as school, work, and recreation, or they can be inherited through
unalterable traits such as genealogy, gender, ethnicity, or age. The kernels of
commonality involved in a relationship are ofien important determinants of the kind of
social capital in question.

Social capital can be broken into three primary categories: bonding, linking, and
bridging. Bonding social capital is typically based on inherited kernels. For example
family members are ofien said to share bonding social capital. Linking social capital is
associated with earned kernels of commonality. Linking social capital is often found
between peers or schoolmates with equal levels of resources. Finally bridging social
capital can reside within relationships built on either inherited or earned kernels of . ’
commonality. This type of relationship is commonly found between agents who have
different levels of resources or status. Common examples would be a teacher and
student, or an employee and employer (Robison, not published).

While it is important to characterize relationships, it is also important to
characterize flows between agents. A filndamental concept in social capital theory is that
exchange or interaction involves both a transfer of physical goods as well as socio-

emotional goods.

Socio-emotional goods are gestures of validation, caring, or sympathy that are.
often associated with physical goods. However, and exchange of socio-emotional goods
can exist independently from the exchange of physical goods. A compliment shared
between colleagues or friends is an example of a socio-emotional exchange in absence of
a physical good exchange. Exchanges of physical goods can be independent of socio—
emotional goods as well. For example, a person checking out at the grocery store with a
cashier they have never seen before is likely to only exchange physical goods with the
cashier.

Similar to social capital socio-emotional goods can also be negative or positive.
When an insult is traded between colleagues the flow creates a negative emotion in both
agents thus deteriorating social capital between them. However, when a compliment is
shared this is an example of an exchange of positive socio-emotional goods and an
investment in social capital.

2.1 Attachment Value

Before proceeding with a conceptual and empirical investigation of attachment
value, a formal definition and discussion about the function and formation of attachment
value must be explored. In this section the following questions will be addressed:

0 What is attachment value?

0 What'produces attachment value?

0 How do people communicate their attachment value?

0 What afi‘ects the level of attachment value?

2. 1. 1 Attachment Value Definition

Attachment value is a multi-faceted phenomenon that is rooted in a complex web
of social capital and economic concepts. Directly answering the above questions will
allow an investigation into some of the various aspects of attachment value.

A formal definition of attachment value specifically related to the concept of
social capital has yet to be concretely defined in the literature. It may be useful to first
consider the definition of the individual parts of the phrase, attachment value.
Attachment is defined by the Random House Dictionary of the English Language as, a
feeling that binds one to a person thing, cause, ideal, or the like; devotion; regard.
Further, value is defined as, relative worth, merit, or importance; equivalent worth or
return in money, material, services; estimated or assigned worth. Building on these two
definitions a definition of attachment value can be formed. Attachment value is defined
for the purposes of this paper as:

The estimated or assigned worth of the socio-emotional good embedded in an

object as a result of human relationships.

This definition can be supported intuitively by the example of farmland. In this paper
attachment value to farmland will be measured. In other words, a measurement is
developed to capture the relative worth of the feeling that binds the owner to the
farmland. This relative worth is reflected in the differential between the estimated
assessed price and the WTA to a stranger.

2. 1.2 Attachment Value Production

To provide a thorough discussion of attachment value we must also consider how

attachment value is produced. The question of attachment value production is an

important one because presumably the origin of attachment value will greatly influence
its longevity, flexibility, and durability.

Attachment value originates from reciprocal social capital relationships that agent
A has with other agents. In this case, attachment value is derived from associations made
between agent A’s friends and family and object X which has a resulting stock of
attachment value.

Consider the example of an engagement ring. An engagement ring has
significant attachment value because it is associated with a strong relationship between
the owner and the other person associated with the ring, the owner’s fiance. This ring is
worth more to the owner than the market value because it has a strong attachment value.
However, the attachment value is highly dependent on the level of sympathy, love, or
social capital present in the relationships surrounding it. If this relationship deteriorates,
so does the value of the attachment. Ifthe couple breaks up, for example, the social
capital relationships surrounding the engagement ring will be altered thus altering the
attachment value associated with the ring. In the case of negative attachment value,
attachment value may even decrease the WTA to a stranger to a level below market
value. In this case production of social capital is dependent on interactions and
exchanges of socio-emotional goods with another agent associated with the common
physical object.

2. 1.3 Communication of A ttachment Value

The communication of attachment value must also be understood before it is
operationalized. The communication of attachment value depends on the property rights

assigned to object Y. Consider Y that holds an attachment value for agent A. Ifagent A

10

is assigned the property rights to Y, attachment value is likely to be communicated in the
WTA price for the object Y. Conversely, if the property rights are assigned to agent B
for Y, the price that A is willing to pay B will likely be higher than the market price.

We must also consider the case where property rights for object Y are assigned to
neither A nor B, because Y is a high exclusion cost good. Ifthis is the case, A’s
attachment value can be communicated through protest or lobbying efforts directed at the
governing body for the high exclusion cost good. For example, many people feel that
natural areas around the United States have a value higher than market value. This may
be a result of attachment value to natural areas. When these areas come under threat,
lobbying campaigns and protest efforts are often implemented. In this case, the value of
the attachment is equal to the opportunity cost of the lobbyists or protestors for their
efforts to preserve the land.

2. 1.4 Determinants of the level of attachment value

The strength of attachment value depends on the origin and type of the attachment
value. The strength of attachment value, is directly correlated with the strength of the
relationship surrounding it. Intensity of the attachment value determines the resulting
economic outcomes, such as the WTA for farmland.

Robison et a1 (1999) provide an analogy between social capital and physical
capital in an article entitled “Is Social Capital Really Capital”. The authors point out that
social capital can depreciate over time just as does physical capital. Depreciation of
physical capital results in a decreased physical value of the asset. Similarly, depreciating
social capital has a direct efi’ect on attachment values associated with the social capital.

When social capital depreciates the associated attachment value will decrease also.

11

Attachment value is an important component of the social capital theoretical
framework. In this study, attachment value to farmland is specifically investigated. The
owner is considered the primary agent in this context and is assumed to own the property
rights to the farmland. Therefore, it is assumed that attachment value is communicated
through an increase or decrease in WTA relative to the market price.

2.2 Qualitative evidence of attachment value

There is overwhelming anecdotal and qualitative evidence suggesting that farmland
owners have a strong personal attachment to their farmland. Through numerous
discussions and articles farmland owners state that farming traditions and the farmland
are a part of their family and a focal point in both their personal and professional lives.
The Centennial Farm Associationl in Michigan has done a significant amount of work
documenting the formation of farmers‘ attachment to their land.

Many of Michigan’s Centennial Farms have kept carefill history of their farms,
including anecdotes, family histories, and community events over time. Centennial
Farms provide an interesting case study of the formation of attachment values. It is clear
that the formation of attachment values can be attributed to a wide variety of factors.
Several excerpts from interviews with Centennial Farmers are provided below. These
excerpts help to identify some key factors in attachment value production and further
provide insight into how attachment value is paSsed through generations.

The history of the farm and the family clearly play an important role in the formation
of attachment value. For example, one centennial farmer recounts:

lhe hayingseasm andridingthe bighaywagon back to the house tmdbarnsafler it
was filled to overflowing... . After threshing, it was my job to pull the ropes out of the

 

'TheCaImnthamAmodafionisayoupoffamhMWnaswhosehmhndhmbeenmmdrMIy
formorethanIOOyears.

l2

straw stack that tied up the shock of grain... eating the wonderful bacon that my

uncle used to smoke in the smoke house... going into the woods to pick the succulent

blackberries... memories that keep centennial farms going in Michigan (Wermuth,

1986, as cited by Shqfl'er 199 7).

This quote clearly depicts a sense of place felt by the farmland owner based on memories

of the past. This may indicate that the formation of attachment value depends partially on

whether the farmland owner grew up on the farmland. The farmer clearly indicates at the

end of the quote that it is these memories that help to keep centennial farmers “going”.
Another farm family recounts:

We have so many memories of the farm- the Atwater Kent battery radio, getting

electricity fiom the REA in 193 7, the round had-coal burner with isinglass in the

doors, the furnace being installed in 1933, doing school homework by Aladdin lamp
light, and everyone helping with the Saturday night chores so we could play Pedro.

We are surrounded by reminders of all those who came before us on the farm who

have shaped and touched out lives with their own here on this Centennial Farm

(Wermuth, 1986, as cited by Shafl'er 199 7).

This quote suggests that family history and family closeness may be important
determinants of attachment value. It further implies thatthe length of time the farm has
been in the family is an important consideration.

Community size and closeness are also indicated to be important aspects of
attachment to the land. Case studies on Centennial Farms conducted by Levak
investigate the community relationships between Centennial Farms and their community.
It was concluded that recognition of Centennial Farms in communities depended on the
size of the community, and the contribution of the owners of the farm to the community.
In addition, communities, especially small communities, felt that having Centennial

Farms in their community were important to the community values of stability and

permanence of the population (Levak, 1956). Perception of the community towards

13

farmland owners could potentially play an important role in the formation of attachment
values.

Other comments from Centennial Farmers indicate the wide range of non-economic
benefits gained fi'om farming Centennial farmland. Farmland owners' attitudes about
agriculture and an agricultural lifestyle undoubtedly contribute to the formation of
attachment value to farmland. The following comments from Centennial Farmers
indicate some of the most important factors that contribute the formation of attachment
value.

It is indeed hard work — but there are immediate rewards to what you do. The
other guy doesn ’t see it way down on the assembly line. You see the outcome of
your own efl'orts or mistakes, either way. You immediately see what you have
done. The reward of agriculture is the challenges and self satisfaction of what
you ’ve done (Van sickle, 1999)

My grandparents purchased the farm in August of 1998. I still own the original
farm. Kenny my grandson does the fieldwork and Charlie puts up the hay. My
grandson is buying it and hopefully he ’1] keep it for another hundred years
(Laing, 1999).

The farm means family to us. We all grew up here. Even the cousins consider
this THE farm, everybody does. This is the central place. Every family needs a
heart, well for us, not only is the heart an emotional place by a physical place. I
think that ’s what the farm means to most of us (Parker, 1999)

This farm means... it ’s part of my history. It ’s neat that I 'm apart of something
that has gone back so far and is continuing (Hill, 1999).

(4-H Folk Patterns Project, 1999)
In the above quotes it is clear‘that many Centennial Farmers feel a deep
connection with the land that they live on. The value of their land comes not just from
the income earning potential but also the history and emotional connection to the
farmland. The Centennial Farms project provides a strong example of the formation of

attachment value to farmland. This non-scientific inquiry does not provide any evidence

14

that can be generalized with confidence. However, it does point to possible contributors
to the formation of attachment values that warrant more formal investigation. Given the
obvious importance that non-monetary factors play in the decision frameworks of these
farm families, one must consider the role that socio-emotional goods in the formation of a
WTA price. A more formal inquiry into the formation and effect of attachment value on

WTA is warranted.

3.0 A Theoretical Model of Farmland Valuation with Attachment Value

In this section, three components of a theoretical model built to analyze attachment
values affect on farmland valuation are presented. In section 3.1 a utility model for the
farmland owner is presented hypothesizing that utility is derived fi’om economic gains as
well as socio-emotional gains from owning farmland. In section 3.2 a production
function for attachment value is presented and discussed. In section 3.3 an indifference
equation for selling the land and not selling the land is developed and the relationship
between price to a stranger, estimated assessed price, and price to the seller is derived.

3.1 Utility Model '

Utility is the level of satisfaction that an agent obtains from consuming a good or
undertaking an activity. A utility function is measured by attaching a number to each
component of the utility function, such that if A is preferred to B then the number
associated with A is higher than B. The decision to sell farmland depends on an agent’s
utility from selling farmland, U; versus an agent’s utility from not selling farmland, Ug.

In this conceptual model the decision to sell farmland will be considered in a

static context. It is assumed that if U} > (1an at time t, the agent will sell their farmland.

15

Further, if Uf' < Uni“ at time t, then the agent will not sell their farmland. Typically, we
consider utility to be a filnction of income or some other physical gain. However, one
might assert that utility is a function of more than physical variables. Consider the utility
a farmland owner receives from owning farmland. Anecdotal evidence presented in
section 2 indicates that farmers are receiving utility from more than just their monetary
gains from farmland. In addition to income received from the land, evidence suggests
that farmers receive socio-emotional goods from owning farmland. The following utility
function is based on this suggestive evidence.

(1) urhtrflr) + Arflr) + A) I) + Kr (Ir/W)!

where mm) is the economic and/or physical gains, Arm) is i’s attachment value to the
land, A141) is the attachment value i retains from selling farmland to j, and K0 (19(1)) is the
satisfaction that i gains vicariously fi'om an increase in j’s income, weighted by the
strength of their relationship Kr]. This utility function suggests that farmers receive utility
from economic gains from the land, and their own attachment to the land. In addition,
this model assumes that agent i has internalized the well being of agent j and therefore
receives utility from j’s attachment to j’s land and j’s income fi'om their land.

In a nee-classical framework we assume that an agent receives utility only from
the income or other physical gains received fiom the farmland. Therefore, if the value of
the farmland, based on the conventional land valuation methods, decreases, WTA should
decrease accordingly. The neo-classical model holds fixed the role of sociooemotional
goods and other non-monetary factors in the determination of the WTA However, in the

case of farmland, preliminary evidence suggests that emotional attachment to farmland

l6

may play an important role in the formulation of utility from the land and hence the
determination of WTA.

3.2 Production of A ttachment Value

A conceptual model for the production of attachment value is presented in this
section. This model is based on several conversations with farmland owners as well as
qualitative evidence provided in section 2.2. Consider the utility of the owner u, [ ”1(1) +
Arflr) + Afly) + Ky (It/(11))I. It is clear how 717(k), the net present value of the land is
produced. The production of may) comes from revenue gained by the owner fi'om the
farmland. It is less clear however, how a,-(l() is produced. It is hypOthesized that
attachment value is embedded in a system of social capital relationships. As discussed in
- section 2.1.2, attachment value is based on reciprocal social capital. Based on this, the
function representing the production of attachment value must incorporate variables
associated with reciprocal relationships associated with the farmland. A production
function for arm) is presented in (2).
(2) Oral) =f0’h hr. Ch rlrrfl.)

where yr is the number of years the agent has owned the land, h, represents how
many generations the farmland has been in the family, or indicates the number of
children the agent has, rr, is the relationship of the agent to the community, and j} is a
measure of family closeness.

Years on the farm (yr) may be the most important variable in the formation of
attachment value. As the length of ownership time increases it is likely that the number

of social capital relationships associated with the farmland also increases. As the number

17

of social capital relationships associated with the farmland increases the strength of the
attachment value is also likely to increase.

The number of generations the farmland has been in the family (hr) may also be
an important component of the production function. It is reasonable to assume that
agents feel social capital with their family members. If the farmland has been passed
down from generation to generation evidence suggests that the farmland in essence
becomes a symbol of the farm family and thus embedded with attachment value. The
farmland is a symbol of relationships or identity that the owner shares with past
generations. One would expect that the longer a farm has been in a family the more
attachment value it has for the farmland owners and their family members.

Children (cr) is a variable that reports how many children the farmland owner has.
This may be a component of the production of attachment value if the owner wishes to
save the farmland for the next generation. Ifthe owner has children that (s)he wishes to
inherit the farmland attachment value to the farmland may increase.

Community involvement (r) adds another level of social capital relationships 1
associated with farmland. Reciprocal bridging and linking social capital relationships
may provide a sense of belonging and identity to the farmland owner and thus add to the
attachment value connected with the farmland.

Family closeness (fl) is likely an important component of attachment value
production. Ifa family is close the strength of their social capital relationships are likely
to be greater and thus may contribute to greater attachment value. Conversely, if a family
is not close attachment to the farmland is likely to be weaker. Family closeness is a

measure of the strength of reciprocal bonding social capital relationships.

18

3. 3 Willingness to Accept Price Model

Social capital has been examined in the context of farmland sales by Robison, Myers,
and Siles (forthcoming). The authors characterize the effect of relationships between
buyers and sellers of farmland on the minimum sale price. The model presented in this
section differs because it considers how the seller’s attachment value to the land can
potentially alter the terms of trade. Attachment value is measured as the differential
between the perceived value of the land (WT A) and the market value of the land. .

Suppose potential seller i is considering selling parcel of land 6 to a potential buyer,
j. The WTA, Pg‘, can be defined as 10,; = P,” + P,” + altruism efi'ect. The total price i is
willing to accept from j is a sum of the market price, plus a premium (discount) equal to
the value of the positive (negative) socio-emotional goods received from the attachment
value of the land, plus the altruism effect. The altruism effect is the discount (premium)
the agent charges based on a previous relationship with the buyer. The WTA, Pg that'i
would accept for the parcel of the land would be the pric_e that makes the agent indifi‘erent
between selling and keeping the land, characterized by (3):

mar)+40.)+A,(I,)+Kglflj(’,)l=m(’. 43+?” +40: -5)+A,(1, +5)+Ky[fl,(’, “Vi-(Ty

Combining terms yields (4):
Art, +AA, =6?” +AA, +K,[A7tj #571,]
where Am= mm) - mflp Q is the positive reduction in -i’s net present value due to selling

the parcel and Ad, = a.(ld - a, (l. - Q is the positive reduction in i’s attachment value due to

selling the parcel, Azq= 19(1) - 19(1, + Q is the positive gain in j’ 3 net present value due to

19

buying the parcel and Ad, = afl) — 01(1) + Q is the positive gain in j’s attachment value
due to buying the parcel. If there is no attachment Value to the land the WTA will be
equivalent to Am, Further if there is no relationship between i and j the price will be
equal to the market price plus the attachment value premium. Substituting prices into

equation (3) yields (5):

(90" +50%" -P.-‘>=<9’. +2609” —P.-,-)+KVI6<P‘ -Pv>-&°v1

where

A”: :5”

M1=5(Pis ‘8‘)
Air] =5(P" -Pti)
AA, =115(P‘ -P,.’.)

where P,‘ is the estimated assessed price and Pig is the WTA price that i would accept
fi'om a stranger. By including prices in this model an empirical model can be derived

from the conceptual indifference model. Solving for Pig yields (6)

P," =P,(1-.t-2K,)+P‘(1+K,)

Using this model it is possible to obtain coefficients for both P‘ and PU and then solve for

both lamda and Kg,

4.0 Methodology
This section provides an overview and description of the quantitative data and survey
instrument and procedures used to collected the data. Quantitative data is used from a the

Farmland Values and Relationships Survey, previously implemented survey by Michigan

20

State University. A description and justification of relevant variables contained in the
data set is also presented.
4.] Description of the Survey Instrument
Data fiom an 1997 MSU survey entitled, “Farmland Values and Relationships
Survey” is used for the empirical analysis. This survey was intended to measure the
importance of social capital in terms of trade for farmland. In this survey, 1,500 farm
owner-operators in Illinois, Michigan, and Nebraska were selected by random sampling
across the geographic distribution of farmland in three states. The survey included a pre-
survey card describing the survey and its purpose, followed by a mailed survey, and then
a follow up post card. A second mailing took place for non-respondents. From these
surveys 40% or 604 surveys were completed and returned, 39% for Illinois, 49% for
Michigan, and 33% for Nebraska (Robison, Myers, Siles, forthcoming).
The questionnaire began by describing a plot of land for sale specified by the
following characteristics: _ i
l. The farmland is average quality non-irrigated cropland and is being offered
for sale in either 20, 40, or 80 acre plots. There are no buildings or other
improvements on the land.

2. The farmland is located in the buyer’s area near serviceable roads and within
5 miles of a town of nearly 5,000 persons. The land does not have residential
value.

3. The buyer intends to use the land for farming and will provide his/her own

financing.

421

4. The seller will pay five percent of the farmland sale price for commissions

and other legal fees associated with the sale.

5. Payment for the sale of the land will be provided by the buyer to the seller in

the form of a cashier’s check.

6. The land being sold is not adjacent to where the seller lives.

The survey then aims to establish a market price by asking the respondent to
determine the estimated assessed value and the appraised value of the land. They were
then asked to state the WTA price from a stranger. The survey also collected data on
WTA prices fiom buyers of varying social capital relationships. In addition the survey
asked questions to gather general respondent characteristics including age, education,
community participation, if the person has ever bought farmland, if the respondent has
dependents, and income level.

Since this data was not originally intended to measure attachment value there are
several key variables and several potential problems using the data to measure attachment
value. First, many of the key production variables for attachment value discussed in
section 3.2 were not collected. This means that key variables were either excluded in the
following empirical analysis or proxies were used where appropriate.

Secondly, the survey is framed in a way that asks respondents about a specifically
defined piece of farmland and does not explicitly indicate that the farmland in question is
that of the farmland owner. Ifthe farmland owner does not associate the land with their
own, this may cause a problem in the measurement of attachment value. However, there
is some justification in using this data to measure attachment value. Since the farmland

owner was asked to indicate different selling prices they would accept it is reasonable to

22

assume that the farmland owner is associating the land described in the survey with the
land (s)he owns.

Given the problems with the data set it is necessary to discuss the variables used
specifically in the empirical model to explain the differential between the estimated
assessed price and the WTA from a stranger.

4.2 Relevant attachment value production variables used in the empirical model

and justification

This section defines and justifies the relevant variables used in this analysis and
the potential limitations in their measurement.

Professional (mpraiser price will be used as an approximation of the market
price. It will be used to determine if there is a significant difference between the
appraised price and the WTA fiom a stranger. The limitations of this variable are that the
appraised price may not be an exact estimation of the market given that the appraised
price is a static price and the market price is dynamic. Also, social capital relationships
between farmland owners and town assessing committees may also influence the
estimated assessed price of land.

WTA from a stranger will be used as the arms-length sale price. The usefulness -
of this variable may be hindered by respondents’ perception of the question as discussed
in the introduction.

Age will be used as an explanatory variable. Age of the respondents will be used
as a proxy for years on the farm. By using this variable as a proxy for length of time on

the farm, it is assumed that most farmland owners have been on their farmland since their

23

early adult life and therefore relative age will also give us relative length of time on the
farmland.

Previous purchase of farmland will be used in as a proxy for the question of
inheritance. Theoretically, we assume that if the farmland is passed down from
generation to generation, attachment value will be greater. Ifthe farmland owner
inherited the land, the land could possibly be a symbol of relationships or identity that the
owner shares with past generations. It is reasonable to assume that if the farm owner has
never purchased land then the farmland was inherited. A priori expectation is that this
variable will have a positive effect on the attachment value.

Dependents is a variable determining if the respondent has dependents in their
household. This may be a component of the production of attachment value if the owner
wishes to save the farmland for the next generation. It is expected that this variable will
have a positive effect on attachment value.

Income level (INC) is an explanatory variable included in empirical model two.
Income was reported as a range. The justification of including income is that it is
possible that income levels affect the price a farmer is willing to accept. Ifa farmer has a
high income, they might have the luxury of holding onto land with attachment value for a
higher MSP than that of a lower income owner. Given this, a priori expectations indicate
that higher income would have a positive effect on the differential. It is important to note
that the income variable may not be a measure of attachment value.

PTA, Church, Service Club, Local Government, Environmental Organizations,
will be used to assess the level of community involvement by the farmland owners. The

survey asked if the respondent was involved in any community activities and listed,

24

parent-teacher association or school board, church organization, service club, local
government organization, environmental organization or other as possible community
organizations. A priori expectation is that each of these variables will have a positive

effect on the attachment value.

5.0 Empirical Models and Results
The empirical section is divided into two primary sections. The first section aims to

determine if a significant differential exists between PA and P1,. The second section tests
the hypothesis that these differentials, at least partially, represent some kind of
attachment value. Both empirical investigations use variables from the farmland values
and relationship data set. Variables were chosen based on the theoretical models
presented in section 3. Specifically, in the second empirical section, which attempts to
explain the differential, variables consistent with the formation of attachment value are
chosen. Theflrird component of the flcethLImndclJNill not be dealt with empirically.
Given the weakness of the data set for estimating attachment value, robust results for
lamda and Kg included in section 3.3 were not able to be derived.

5. 1 Testing for Significant Difi’erentials

The differential between Pg- P‘ is formally tested in this section, where j is
1,2,3,4,5 representing differing social capital relationships such as a stranger, fiiendly
relative, influential person, unfriendly neighbor, and friendly neighbor respectively. On
average, respondents indicated a 6.1% premium to a stranger from the estimated assessed
value, a 1.1% discount from the estimated assessed price to a, friendly relative, a 10.9%

premium to an influential person from the estimated assessed value, and a 25.6%

25

premium to an unfriendly neighbor. These preliminary results support findings by
Robison, Myers, and Siles (forthcoming) that relationships do effect farmland prices.
While the altruism effect was investigated in the formation of a minimum sale price, the
previous study did not include the potential effect of attachment value. Thus, further
investigation into the formation of land prices, including attachment value is warranted.
Formal statistical analysis is provided in this section to test if a significant
differential exists between P”- P4 . Both t-tests and paired t—tests are conducted for the
means and the differences in means under differing social capital relationships. The
sample size is sufficiently large (n = 514) such that the asymptotic distribution of the t-
statistics (standard normal) are used. A 10% significance level is chosen with a critical
value of +/- 1.65. The standard t-statistics tests the null hypothesis that that Pa = P‘,

against the alternative that P,-,- :P‘. Results are reported in Table 2. Both t-tests and

 

 

 

 

 

 

paired t-tests are reported.
Table 1. Report of t-tests and paired t-tests
Variable Description Differential t-score Paired t-test
score
Pu-P" 103.83 1.81* 4.74*
stranger- “unrated assessed (496. 04) .
Pg- P‘l ~19.54 0.35 .94
P,,-P‘ 186.41 294* 6.24“
[MOIW - estimated assessed (677. 69)
Pu-P‘ 434.19 433* 6.18“
Mudghbor- “Mdm (1592.84)
, . P.5- P‘l 2.91 .052 .14
fluidly neighbar- MW assessed (466.3 1)

 

 

 

 

 

 

* means significant at the 10% significance level
standard errors are reported in parentheses.

Table 1 indicates that there is a significant difference, at the 10 percent level,

between the WTA from a stranger and the estimated assessed price. This differential

26

indicates that farmland sellers would consistently charge a higher than estimated assessed
price to a stranger in the market. This differential may point to several things. The
differential could represent a difference in information across the market. Another
possibility is that the estimated assessed price is consistently valued below the market
price. A third possibility is that this differential measures an attachment value that the
farmland owner has for the land.

The tests indicate that there is not a significant difference between the estimated
assessed price and the price charged to a fiiendly relative at the 10 percent level. This
result is consistent with our a priori expectations because the estimated assessed value
does not account for attachment value. However, when a sale takes place between
friendly relatives there is presumably an altruism effect and at least part of the pre-
existing attachment value is retained. It is reasonable to assume that not all of the
attachment value is retained. If we consider the price charged to a stranger the complete
price, including both the market value and the attachment value, a friendly relative is
receiving a discount from this complete price. This discount may be comprised of both
retained attachment value and altruism. The owner retains attachment value since the
land is remaining in the family and they are likely practicing altruism by discounting the
price even further than their retained attachment value.

There is also a significant difference at the 10 percent level between the WTA for
an influential person in the community and the‘estimated assessed price. This differential
may be a result again of mistakes in estimating the estimated assessed price or the WTA
from an influential person. It may also indicate that linking social capital between buyer

and seller results in a mark-up in WTA price. One explanation for the differential is that

27

the seller feels like (s)he is loosing all of the attachment value and further charges a
premium above the level of this attachment value. This is supported by the factithat
sellers consistently report higher WTA prices from influential pe0ple than strangers.

The differential between the estimated assessed price and the price charged to an
unfiiendly neighbor is also significant at the 10 percent level. The analysis of this
differential is similar to that of the influential person. When farmland is sold to an
unfriendly neighbor the seller looses the attachment value and charges a premium to
compensate for that loss. In addition they gain negative socio-emotional goods fi'om
seeing their farmland in the hands of an unfriendly neighbor, thus charging an additional
premium for the incurred socio-emotional cost of that sale.

The differential between the estimated assessed value and the price to a friendly
neighbor is not significant. This is consistent with our a priori expectations as well, for
similar reasons given to explain the non significant differential between a family member
and the estimated assessed price. Ifan agent sells to a friendly neighbor it is likely that
they will retain some attachment value and thus charge less of a premium above the
estimated assessed value.

5. 2 Empirical Results for the Production of Attachment Value

This section provides the second step in the empirical analysis by investigating
the production of attachment value. The differential between Pu - P4 is used as the
dependent variable. Using ordinary least squares (OLS) a linear model is estimated in the

form:

(7) YU=GSI+XIBJ+911

28

Where Y1, is the differential between estimated assessed price and WTA price fi'om a
stranger and )6, is a vector. of individual respondent characteristics. It is assumed that eg
is constant across individuals. The inclusion of the variables reported in Table 2 were
determined using a test for joint significance of variables using a standard F-test,
inspection of the squared residuals, and standard t-tests on individual variables. The
model is efficiently estimated by applying OLS. Results from these OLS estimations are
reported in Table 2.

Table 2. OLS Results
Coefficient t-statistic standard

 

Estimate error
constant 94.47 0.66 142.54
age 0.61 0.32 1.88
previously purchased farmland -69.14 1.07 64.08
dependents 14.86“ 0.86 17.27
income 19.3] 1.61 11.99
PTA 1.89 0.03 62.88
Church 7 -10.43 0.23 45.12
Service Club 8.45 0.17 49.48
Local Government -4.66 0.09 49.44

 

R’ = .0111
Standard Error = 469.5190
* indicates significant at the 10% level or less

Using the above results we can test the hypothesis that the coefficient ,6, is equal to

zero.
11.: ,5, = 0
HA: fl; #9 0

By implementing these hypotheses we can assess which respondent characteristics are
important in the formation or destruction of a differential. A positive sign on a slope
coefficient indicates that there is a positive marginal expected change in the differential

for a one unit change in the explanatory variable in question, holding the value of all

29

other variables constant. A negative sign on a coefficient indicates that there is a
negative marginal expected change in attachment value for a one unit change in the
explanatory variable in question, holding the value of all other variables constant.

5. 3 Discussion of Results

The results reported in 5.2 do not provide conclusive evidence with regard to the role
of attachment value in the formation of a differential between Pu -P". This section
provides a discussion of these results.

The weak OLS results contribute minimally to the question of attachment values role
in the formation of a differential. The only significant variable is income out of the eight
' explanatory variables included in the model. The significance and sign of the income
variable are consistent with a priori expectations. OLS results indicate that there is a
19.3001 positive marginal expected change in the differential, Pu - P‘, for a one unit
change in the price charged to a family member, holding all other explanatory variables
constant. However, as discussed earlier income does not theoretically explain attachment
value and thus does not support the hypothesis that attachment value contributes to the
differential, Pu — P‘. Income likely has a positive effect on the differential for various
reasons. It is possible that higher income levels indicate that the farmland owner has off-
farm income and thus can afford to retain the farmland.

None of the other Variables included in the OLS were significant. However, these
results do not necessarily imply that these variables are not theoretically consistent.
Inconclusive OLS results attempting to explain attachment value are reasonable given
that the data set was not intended to measure or explain attachment value. Further, the

variables used in the above OLS are not the ideal variables for measuring what they were

30

intended to measure. For example, age is used as a proxy for how long the owner has
owned the land, and it is very possible that length of land ownership may not be
consistent with a farmland owner’s age. Number of dependents was used in place of the
number of children, thus eliminating any children that are out of the house. The
community involvement variables also ‘did not come out to be significant. Given that
some of these variables are theoretically consistent, their non-significance may point to a
problem of using the differential, Pu — P‘, as a measurement of attachment value.

Given the low R2 and the high standard error there is evidence that this model
could be better specified with more theoretically relevant variables. Thus, it is difficult to
confidently conclude that attachment value plays a significant role in the formation of the
differential between the WTA from a stranger and the estimated assessed price. Perhaps
with an empirical model using data that was collected specifically with the intent of
attachment value measurement in mind would yield more theoretically consistent results.

5. 4 Limitations of the Findings ' _

The results of this study should be considered as a preliminary step. The survey
used to collect this data was not intended to collect data on attachment value and assuch
did not collect all of the variables that would theoretically explain attachment value. For
instance, variables such as the number of years the farmland has been in the family and
the number of years the farmland has been owned by the current owner would likely be
very informative in explaining attachment value. Similarly, this study used proxies for
several important variables. It may be more effective to try to measure these variables
more directly by using a other mechanisms to measure variables such as community and

family closeness.

31

With the ideal data set one might be able to examine the differentials between all
Pg’s and decompose the attachment value, altruism effect, and other effects. With the
current information it is nearly impossible to control for all of the effects that may be
causing the differential however.

Recognizing that a better survey instrument may facilitate more conclusive
information about the effects and production of attachment value a more appropriate
survey example is provided in appendix 1. This survey instrument builds on the previous
farmland and relationships survey but specifically targets attachment value as the unit of
analysis. Literature on framing and contingent valuation is used to inform the survey. In
the development of a new survey it is Crucial to gather data not only on attachment value
variables, but also on other variables that might explain this differential. prrovided with
. a wide range of explanatory variables for the differential one might be better equipped to

understand the different factors contributing to the formation of a differential.

6.0 Conclusion

Anecdotal and qualitative evidence suggest that many farmland owners have a strong
connection with their farmland which may translate into a greater differential between PU
- P‘. However, given the inadequacy of this data set in the measurement and explanation
of attachment value, conclusive quantitative evidence was not provided to explain the ~
formation of attachment value or if the differential contains an attachment value.

This paper provides a brief review of current literature specifically focusing on
articles that discuss social capital and others that discuss varying asset valuation methods.

In this review it is recognized that a gaps between WTA and WTP have various

32

explanations provided in previous literature- However, researchers have not considered
the role of social capital in the formation of the differential between WTA and WTP. A
conceptual framework, including a utility function, an attachment value production
filnction, and a price model are all developed to provide a framework for analysis.
Empirical analysis supports the hypothesis that there is a significant differential between
WTA and estimated assessed price exists however does not support the hypothesis that

social capital plays a role in the formation of this differential.

33

References

4-H, C. C. (1999) A Century of Giving. Calhoun County.

Kahneman, D., Jack L. Knetsch, Richard H Thaler. “Experimental Tests of the
Endowment Effect and the Coase Theorem.” The Journal of Political Economy
98, no. 6(1990): 1325-1348.

Levak, A. E. “Michigan Centennial Farms and Farmers.” The Quarterly Bulletin 38,
no. 3(1956): 338-344.

Loomis, J., Thomas Brown, Beatrice Lucero, and George Peterson. “Improving
Validity Experiments of Contingent Valuation Methods: Results of Efforts to
Reduce the Disparity of Hypothetical and Actual Willingness to Pay.” Land
Economics 72, no. 4(1996): 450-461.

Neill, H., Ronald Cummings, Philip Ganderton, Glenn Harrison, and Thomas
McGuckin. “Hypothetical Surveys and Real Economic Commitments.” Land
Economics 70, no. 2(1994): 145-154.

Putnam, R. “Bowling Alone.” Journal of Democracy 6, no. 1(1995): 65-78.

Robison, L. 1., A Allan Schmid, and Marcelo Siles. “Is Social Capital Really
Capital?” Stafl‘ Paper , no. 99-21(1999).

Robison, L. J. “Outline on Social Capital.” unpublished (2001). _

Robison, M., & Siles,. “Social Capital and the Terms of Trade for Farmland.”
(forthcoming).

Schmid, A. A. “Sources of Social Capital.” Stafl‘ Paper 00-07(2000).

Shabman, L., and Kurt Stephenson. “Searching for the Correct Benefit Estimate:
Empirical Evidence for an Alternative Perspective.” Land Economics 72, no.
4(1996): 433-449.

Shaffer, T. “Thumbs Up to Agriculture!” Michigan Folklife Annual, 5-15.

Shrogren, J. F., Seung Y. Shin, Derrnont J. Haynes, and James B. Kliebenstein.
“Resolving Differences in Willingness to Pay and Willingness to Accept.” The
American Economic Review 84, no. 1(1994): 255-270.

Staatz, J. “The Application of Social Capital in Understanding Economic
Development.” Staflr Paper (1998).

34

Wermuth, M. Michigan's Centennial Family Farm Heritage. Hillsdale, Michigan:
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Woolcock, M. “Social Capital and Economic Development.” Theory and Society
(1997): 1-57.

35

 

Appendix 1

36

Methodology for Survey
A. Use of Focus Groups to test survey instrument
B. Mail survey to Centennial Farmers in Michigan

Survey Instruction

The goal of this survey is to identify prices that you would be willing to accept from different
individuals for YOUR farmland. You will be asked a number of questions about your
farmland, your family, and your farming history and Operation. This survey should take no
longer than 30 minutes to fill out. Your opinion is very important and your input is
appreciated. '

You may be assured that your responses to the survey will be kept strictly confidential. You
indicate your voluntary participation in this survey by completing and returning the enclosed
survey. Your name will never be associated with your answers.

Survey Background
You will be asked about your own farmland in this survey. The prices asked are based on
the assumption that you are selling your entire property including houses, barns, and land.
All prices should be reported on a Price Per Acre basis. The questions in this survey have
to do with your farmland and attitudes and there are no right or wrong answers.
Section 1. Price for Farmland
Q1. What is the market price per acre for your farmland assuming all the farmland is sold
together including houses and buildings for farming purposes? (Please write your
answer in the blank below.)
3 . lac.

Q2. At what price per acre would you expect a professional appraiser to value your land?
(Please write your answer in the blank below.)

3 /ac.

 

Section 2. Background information
Q3. Are you currently actively involved in any farming activity on your farmland?

Yes No

Q4. Do you have any children? (please circle)

37

Yes No

Q4a. If so, how many?

 

Q5. Please check the highest level of formal education you have completed.
Grade School

High School

Community College or Trade School

College

Graduate School

Q6. How many acres do you currently own?

acres

 

Q7. Please indicate how you acquired your land in percentage terms. (For example, Mr.
Smith purchased 50% of his land and acquired 50% of his land fi'om family members).

% acquired from family members
__ % purchased more than 40 years ago
% purchased between 20 and 40 years ago
_ % purchased between 1 and 20 years ago
If you indicated that you acquired land fiom a fmnily member in Q7 proceed to Q8. If you
have never acquired land from a family member proceed to Q10.

Q8. How many years has the farmland you acquired from a family member been in your
family?

years

 

Q9. How many generations has the farmland acquired from a family member been in your
family?

generations

 

38

Family Closeness

The following questions attempt to identify a measure of family closeness for farm
families.

Q10. In general, the following description best describes the relationship between me and
my immediate family members (Please check what you feel is the more appropriate
description below):

_ Extremely Close
Close
Somewhat close
Neutral

Not close

Q11. In general, the following description best describes the relationship between me and
my m family members (Please, check what you feel is the more appropriate
description below):

_ Extremely Close '

_ Close

_ Somewhat close

_ Neutral

__ Not close

Q12. How many times a week on average does your immediate family (the people living in
your household) eat dinner together?

times/week

 

Q13. How many of your family members (both children and adults) live within 20 miles of
your primary residence?

 

Q14. The sense of tradition in farming varies fi'om farm to farm. How important would
say the tradition of farming is to you and your family?

a. very important

b. somewhat important
0. not very important
d. don’t know

39

 

Q15. Do you expect that the next generation of you family will take over your farmland?
Yes No

Community Closeness

Q16. What is the population of the town or community you live in?

people

 

Q17. How many other Centennial Farms are located in your community?

farms

 

Q18. Would you say there is a particular group with common ancestry (ie. German, Dutch
etc.) that dominates your town?

Yes No

Q18a. Ifyou answered YES to Q18, what percentage of your town identifies with the
same common ancestry?

%

Q18b. Do you consider yourself to be affiliated with this group of people with
common ancestry?

Yes No
Q19. Do you belong to any community organizations or groups?

Yes No

Q20. Iers to Q19, which ones? Please Check.

_ PTA or school board

Church organization

Service club ,
Local government organizations
Environmental organizations

Other (please list)

40

In this section of the questionnaire, you are going to be asked how much you and your
family’ s connection to the land is worth to you in real dollars and cents. Since this is not
something we usually think about several measurements will be asked to help determine
this value.

Q21.

Q22.

Q23 .

What is the minimum price that you would accept for your land from a stranger who
will keep the land in farming?

3 /ac.

 

What is the minimum price that you would accept for your land from a stranger who
will NOT keep the land in farming?

3 /ac.

If there is a difference between the market price and the minimum price you would sell
to a stranger which of the following reasons best explains why they are different?
a. The cost of selling the land is higher than it’s market value.
b. I feel that attached to the land and therefore the market value doesn’t
capture its value to me.
e. I want to keep the land for my children, therefore it’s worth more than the
market value.
d. Other? Please Explain.

 

 

Q24. What is the minimum price that you would sell your farmland to a friendly relative?

Q25.

3 lac.

Suppose that you are asked to relocate and told that you would be provided with land
of the same value and rents, in your community, and further all of your costs of
moving will be takenqcare of. What is the maximum price you are willing to pay to
remain on the farmland you are currently on?

3 /ac.

Q26. Ifthere is a difference between the market value and the minimum price you would sell

41

to a family member which of the following best explains this difference? (Rank from
1-4, one being most important and 4 being least important).

I feel affinity for my family and therefore will give them a discount out of
good will.

I Will be able to visit the land and thus maintain some attachment to it.
I know them and it would be less of a hassle to sell to a family member.

Other. Please Explain

 

Q27. Suppose that you were required to pay a yearly fee to keep your land in your family.
What is the maximum price you willing to pay per acre to keep your land in your
family. ‘

$ lac.

Q28. Do you think your emotional attachment to the land affects the price that you are
willing to accept fi'om a stranger?

Yes No

Q28a. Ifyou answered yes to Q28, how much money, above the market price, would
you need to be compensated to account for the emotional attachment per acre?

5 lac.

42

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