FARMERS^ EARNINGS IN SOUTHEASTERN PENNSYLVANIA 57 
71 per cent of the variation in earnings which could be accounted for 
on the basis of size, efficiency, and combination of enterprises, in this 
last solution 53 per cent could be accounted for on the basis of com- 
bination of enterprises and size alone (size being implicit in the solu- 
tion, since the income from the different enterprises was stated in 
terms of total dollars instead of in percentages, and therefore varied 
with the size of farm) . 
It was evident from this study that dairying was the dominant 
enterprise in the area, and that the most profitable organization for 
farms of the typical size and equipment (barring mushrooms) would 
be one centered around the dairy enterprise. For that reason no 
further attempt was made to study the most satisfactory combina- 
tion of enterprises on this group of farms, including everything from 
straight crop or beef farms to intensive poultry farms, but instead 
the further work was concentrated upon the dairy farms. 
FACTORS AFFECTING EARNINGS ON DAIRY FARMS 
Only the 270 farms representing the characteristic dairy farms of 
the region were included in this analysis. The following factors were 
taken into account: 
A. Number of cows. 
B. Acreage in crops. 
C. Acreage in pasture. 
D. Crop index. 
E. Dairy index. 
F. Labor index. 
These six factors gave a multiple correlation with operator's earn- 
ings of R = 0.80. The coefficients of determination for each factor 
were as follows: 
Relative impor- 
Factor : tance, per cent 
Number of cows 16. 2 
Crop acreage 3. 4 
Pasture acreage ( — ) 2. 7 
Crop index 7. 3 
Dairy index 38. 9 
Labor index . 5 
Total 63. 6 
This shows once more the striking importance of the dairy enter- 
prise in getting profitable returns on these farms. The efficiency 
with which the dairy is operated, even more than the number of 
cows, determines farm profits. In fact, the single factor, the dairy 
index, has a correlation of r = 0.64 with operator's earnings merely 
by itself, while the two factors of number of cows and dairy index 
have a multiple correlation of R . ae . = 0.73. In other words, merely 
the size and efficiency of the dairy enterprise alone account for over 
half of all the variation in operators' earnings on the dairy farms, 
without taking any other factors into consideration. 
Further study by the method of curvilinear correlation showed 
that differences in efficiency of operation were not nearly so im- 
portant on farms with small herds as with large herds. Holding 
other factors constant, on farms with 5 cows a change in dairy index 
from $25 to 8100 increased operators earnings $510, on the average. 
although the same increase on farms with 15 cows increased earn- 
ings 8850. Similarly, an increase from 5 to 20 cows increased earn- 
ings only $340 with a dairv index of $25, but increased earnings 
$700 with an index of SI 00, and SI, 130 with an index of $150. These 
