Financial knowledge, attitude towards money and investment decisions: new insights for the farmland market

A considerable share of farmland market activity is related to non-agricultural owners. Recent research has shown that those non-agricultural owners are likely to be private persons. However, little is known about potential factors which drive their decision to invest in farmland. This study aims to investigate four groups of factors which could affect the decision of non-agricultural persons to buy farmland: Key investment information, financial knowledge, the attitude towards money, and sociodemographic characteristics. Primary discrete choice data, which is representative for our study region Germany within four categories, has been collected for the purpose of this study. 637 participants were asked to invest in farmland, financial products or save their money in a bank account. A mixed logit approach revealed, that variables from each factor group are related to the decision to invest in farmland. According to the effect sizes, risk (volatility of returns), returns, a university degree and a preference for a secure investment performance are especially important factors for investment decisions. Furthermore, considerable differences exist between people with a high financial literacy score or a high level of self-assessed financial knowledge.