Vol. 11 No. 4 (2022)
Full Research Articles

Dealing with endogeneity in risk analysis within the stochastic frontier approach in agricultural economics: A scoping review

Simone Russo
Department of Agriculture, Food, Natural Resources and Engineering (DAFNE), University of Foggia, 71122 Foggia
Lerato Phali
Discipline of Agricultural Economics, School of Agriculture, Environment, and Earth Sciences, University of KwaZulu-Natal, 3201 Pietermaritzburg
Maurizio Prosperi
Department of Agriculture, Food, Natural Resources and Engineering (DAFNE), University of Foggia, 71122 Foggia

Published 2023-05-03

Keywords

  • risk,
  • endogeneity,
  • stochastic frontier analysis,
  • agricultural economics

How to Cite

Russo, S., Phali, L., & Prosperi, M. (2023). Dealing with endogeneity in risk analysis within the stochastic frontier approach in agricultural economics: A scoping review. Bio-Based and Applied Economics, 11(4), 339–350. https://doi.org/10.36253/bae-13516

Abstract

Literature on farm productivity and efficiency was reviewed using a scoping review methodology, focusing on studies that have included risk and risk management tools within the stochastic frontier analysis in agricultural economics. This study contributes to investigating the methods used to account for endogeneity by using a risk-accommodating stochastic frontier approach when analysing farmers’ performance. Despite the increasing methodologies proposed in the literature, only a few studies have treated endogeneity in farm risk-performance evaluations. According to our findings, it can be concluded that there is a literature gap regarding the adoption of a comprehensive approach capable of dealing with endogeneity when assessing farm performances. Endogeneity and risk issues need to be concurrently addressed to make strides in achieving economic and environmental sustainability. Neglecting endogeneity in these analyses may lead to biased estimates and thus inappropriate policy recommendations failing to boost the productivity and technical efficiency of farmers.

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