other findings that were perhaps less commonly expected include the result that subsidies on variable inputs are the most production and tradedistorting among all measures analysed and that areabased payments can induce significant cross commodity effects where a policy instrument reduces the variability of farm income it acts like an insurance at the same time a policy that increases expected farm income and hence raises implicit farm wealth may lead the farmer to adopt riskier behaviour both the insurance and the wealth effect can result in an expansion of production if farmers are risk averse an attitude that is found in many empirical studies