Financial Well-being of Rural Households: A Theoretical Framework and Application

The complexity of people's subjective consciousness has led some economists to rethink how to measure financial well-being (FWB). Historically, only financial measures were considered, however, now subjective well-being measures, which take individuals' feelings and perceptions into account, are being incorporated. This paper proposes an innovative framework for studying farmers’ FWB and applies it to U.S. beef producers. The conceptual framework we build consists of two sections: the determinants and measurements of rural households’ FWB. In the determinants section, our framework analyzes the determinants on rural households through micro, meso, and macro levels, as well as their impacts on household or farm aspects. For the measurement section, besides financial ratios to measure objective FWB, we construct a survey to measure subjective FWB. Furthermore, a visualization evaluation figure is provided to present the measurement results. We then apply our framework to cattle grazing households in the U.S. This application illustrates our framework, shows its advantages, and examines the effects of some determinants on FWB. JEL Codes : I31, Q12, G50