Kansas State University Department of Agricultural Economics - 2/8/18

An Analysis of Family Living in Kansas

Gregory Ibendahl (ibendahl@ksu.edu)
Kansas State University Department of Agricultural Economics - February 2018
http://www.agmanager.info

Introduction income led to higher family living. However,

Because of lower net farm income from the as shown in Figure 2, the increase in family
last several years, family living has started to living lagged the increase in net farm income.
drop (see Figure 1). However, the drop in fam- Family living is starting to decline but the de-
ily living has not matched the drop in net farm crease is lagging behind the drop in NFI. One
income. This article examines some of the rea- interesting research question is whether the lag
sons why family living may be slow to decline. in family living when net farm income increas-
Family living increased (in real dollar terms) es is the same as the lag when net farm income
from 2008 until 2012. This rise is family living decreases. With 2017 net farm income project-
expenses match those years when net farm in- ed to again be below historical averages, we
come was well above average for most farms will get more information about the rate of de-
(see Figure 2). However, while net farm in- cline in family living.
come has since fallen to levels below historical Factors affecting family living
averages, family living has been slower to Figure 3 shows the specific expense categories
drop. that make up family living. This list is not in-
Based on inflation adjusted family living, the clusive as some categories were left off since
average family living amount was closer to they showed little change and would have only
$50,000 before the boom years that started in made the graph more complicated. The majori-
2007. As might be expected, higher net farm ty of expense categories are shown though and

$80,000
Family living (real $)
$70,000
$60,000
Family living (nominal $)
Family living

$50,000
$40,000
$30,000
$20,000
$10,000
$0
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015

Year

Figure 1. Total family living expenses in nominal and real dollars

Gregg Ibendahl AgManager.info

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 Kansas State University Department of Agricultural Economics - 2/8/18

NFI vs family living (real $) Avg NFI

200,000 80,000
Family living

150,000 70,000

Family Living
NFI

100,000 60,000

50,000 50,000

0 40,000
1995 2000 2005 2010 2015
Year
Figure 2. Net farm income vs family living expense items from 1993 through 2016 (real $)

these represent the largest and most interestingThe one expense item that has shown almost a
categories. constant increase in spending since 1993 is
Entertainment and recreation is the largest ex- health insurance. In 1993, health insurance was
pense category and amounts to $11,000 per less than $3,500 per year (in 2016 dollars).
year on average. This category of spending in- Now however, health insurance amounts to
creased during 2010 and 2011 and has re- nearly $10,000 per year and is the second
mained at this higher level ever since. Enter- largest spending category. This is a 300% in-
tainment and recreation spending used to be crease since 1993. Unfortunately, this is an ex-
below food, but starting in 2000, entertainment pense category that may be impossible to
reduce if farm families want to maintain health
and recreation became the largest expense
insurance. The one tradeoff is that while health
category.
insurance has increased greatly, medical ex-
Farm families have adjusted many of their ex- penses have remained flat since 1993.
pense categories downward to reflect the drop
in net farm income. Household operations,
home repairs gifts, and auto expenses all show Can family living approach pre-2007
drops in spending. Some of these expense levels
items are near the levels they were before
It appears that farm families are making efforts
2007. Home repairs, auto expenses and gifts fit
to lower their family living. It could be argued
this characterization. Household operations,
that entertainment and recreation is still too
which declined by over $1,000 in 2016, is still
high relative to other expenses. Most people
well above 2007 levels.
would probably agree that it is easier to in-
crease spending than it is to decrease spending
and that entertainment and recreation is just

Gregg Ibendahl AgManager.info

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 Kansas State University Department of Agricultural Economics - 2/8/18

Family living (real $)

$13,000
Health insurance
$12,000
Medical
$11,000
Contributions
$10,000

$9,000 Food

$8,000 Household operations

$7,000
Auto
$6,000
Gifts
$5,000
Recreation
$4,000

$3,000 Home repairs

$2,000

$1,000

$0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

Year
Figure 3. Family living expense items from 1993 through 2016 (real $)
slower to adjust. 2017 data, which should be
available in late spring, should give a clearer
picture for how family living is adjusting.
The one big problem area is health insurance.
Here, spending is beyond the control of many
families. Given that health insurance has
shown no sign of decreasing, it is doubtful that
farm families can ever get their family living
back to pre-2007 levels.

Gregg Ibendahl AgManager.info

Page -3- Publication: GI-2018.2