Volume 21, Issue 1, July 1996

July, 1996

EXPLORING THE ROLE OF MENTORING IN AGRICULTURAL ECONOMICS PH.D. TRAINING

By: Perry, Gregory M.
Mentoring is used in many fields to prepare graduate students for a professional career. This study focuses on mentoring of Ph.D. students in agricultural economics, including the effects of mentoring on expected research output and students' satisfaction with time spent with their major professor. The sink-or-swim mentoring method seems to create the most discord among students and also negatively influences expected research output. The students' gender and citizenship seem to also impact expected output.
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July, 1996

EVIDENCE ON THE ACCURACY OF EXPENDITURES REPORTED IN RECREATIONAL SURVEYS

By: Champ, Patricia A.; Bishop, Richard C.
This article discusses the results of four experiments to test the accuracy of recreational expenditures reported in survey relative to expenditures reported in dairies. We found few situations in which the reported expenditures in the surveys and diaries differ significantly. In general, we conclude that individuals are able to accurately report recreational expenditures in ex post mail surveys. Given the wide usage of survey expenditure data by economists, we find this results encouraging.
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July, 1996

RELAXING THE ASSUMPTIONS OF MINIMUM-VARIANCE HEDGING

By: Lence, Sergio H.
The most important minimum-variance hedging ration assumptions are (a) that production is deterministic and (b) that all of the agent's wealth is invested in the cash position. Stochastic production greatly reduces optimal hedge ratios. An alternative investment greatly reduces opportunity costs of not hedging by "diluting" the cash position. Stochastic production and/or alternative investments render the costs associated with hedging relatively more important, yielding almost negligible net benefits of hedging. Hence, hedging costs typically dismiss in hedging models for being seemingly negligible are important determinants of hedging behavior.
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July, 1996

EVOLVING ENTITLEMENTS: INTERVENING TO PREVENT A COLLECTIVE HARM

By: Brookshire, David S.; Ganderton, Philip T.; McKee, Michael
When market transactions generate negative externalities, the injured party may initiate court action to prevent harm or to obtain compensation. The political response, in some cases, has been to broaden the set of agents who can intervene through the court, often by admitting entirely new categories of potential intervenors. We employ an experimental market setting to investigate the effect of an increase in the number of potential intervenors (introduced as admitting an additional class of persons having the necessary standing in law). The results suggest that there will be a substantial increase in the number of actual interventions. The increase means that social resources expended on interventions will increase and there may be a consequent reduction in trading activity in the affected markets.
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July, 1996

THE INFLUENCE OF WETLAND TYPE AND WETLAND PROXIMITY ON RESIDENTIAL PROPERTY VALUES

By: Doss, Cheryl R.; Taff, Steven J.
Using detailed residential housing and wetland location data, we determine relative preferences for proximity to four broad classes of wetlands, as expressed through housing values. Implicit prices for proximity to open-water and scrub-shrub wetlands are relatively higher than those for emergent-vegetation and forested wetlands.
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July, 1996

GENERATION OF RECYCLABLES BY RURAL HOUSEHOLDS

By: Jakus, Paul M.; Tiller, Kelly; Park, William M.
Rising landfill costs have forced solid waste managers to consider ways to reduce the waste stream. Using survey data, models explaining the weight of recyclables generated by households are estimated for paper and glass. Results indicate that households respond to the time cost of recycling paper but not glass. The waste generation models imply total monthly willingness to pay for recycling is $5.78 per household. Waste managers may increase the weight of recycled waste stream with programs which lower perceived time costs of nonrecyclers and improve the efficiency of recyclers.
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July, 1996

IMPLICATIONS OF ALTERNATIVE POLICIES ON NITRATE CONTAMINATION OF GROUNDWATER

By: Chowdhury, Manzoor E.; Lacewell, Ronald D.
This study estimates the cost effectiveness of alternative environmental policies for controlling nitrate contamination of groundwater in the Seymour aquifer region of Texas. Results from biophysical simulation model are integrated with a farm-level optimization model. The study also compares the cost of bottled water, used as the lower-bound estimate of benefits of groundwater protection, with the least costly environmental policy. Results indicate that the least-cost policy alternative for the region is about $1 million either to farmers or to the local government and it is approximately three times the cost of bottled water.
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July, 1996

USING ACTUAL AND CONTINGENT BEHAVIOR DATA WITH DIFFERING LEVELS OF TIME AGGREGATION TO MODEL RECREATION DEMAND

By: Cameron, Trudy Ann; Shaw, W. Douglass; Ragland, Shannon E.; Callaway, J. Mac; Keefe, Sally
A model of recreation demand is developed to determine the role of water levels in determining participation at and frequency of trips taken to various federal reservoirs and rivers in the Columbia River Basin. Contingent behavior data are required to break the near-perfect multicollinearities among water levels at some waters. We combine demand data for each survey respondent at different levels of time aggregation (summer months, rest of year, and annual), and our empirical models accommodate the natural heteroskedasticity that results. Our empirical results show it to be quite important to control carefully for survey nonresponse bias.
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July, 1996

THE EXPORT ENHANCEMENT PROGRAM’S INFLUENCE ON FIRM-LEVEL COMPETITION IN INTERNATIONAL MARKETS

By: Patterson, Paul M.; Abbott, Philip C.; Stiegert, Kyle W.
The U.S. government awarded export subsidies to agribusiness firms through the Export Enhancement Program (EEP). This study analyzes (a) whether the subsidies promoted new firm market entry and (b) whether firm characteristics influenced program participation. Trade in three commodities, poultry, wheat, and wheat flour, was analyzed using firm level data. It was found that new firm market entry was not significantly higher among subsidy recipients and that past program participation strongly influenced current program participation. Although the EEP is believed to have been administered fairly, perceived or real barriers prevented some firms from using it.
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July, 1996

FACTORS AFFECTING U.S. DEMAND FOR REDUCED-FAT FLUID MILK

By: Gould, Brian W.
U.S. fluid milk consumption has changed dramatically since the early 1970s. Whole milk accounted for over 81% of commercial fluid milk disappearance in 1970. By 1993, this percentage was less than 39%. A three-equation fluid milk demand system is estimated for fluid milks that vary by fat content. The household panel data set used includes over 4,300 households that recorded fluid milk purchased for at-home consumption over a 12-month period. Given that many of these households did not consume one or more of the three milk types, the econometric model explicitly incorporates the censored nature of these commodity demands. Own- and cross-price and substitution estimated along with effects of household demographic characteristics.
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July, 1996

ECONOMIC HYSTERESIS AND THE EFFECTS OF OUTPUT REGULATION

By: Richards, Timothy J.
Economic hysteresis, the continuation of a phenomenon after its initial cause has disappeared, represents an alternative theoretical explanation for the fixed-asset problem. When a set of fixed assets includes quota licenses, hysteresis in license investment leads to distortions that have not been measured in the policy analysis literature. A model of economic "friction" tests the effect of hysteresis in Alberta dairy investment. Estimates of investment functions show that desired investment (disinvestment) must be significantly greater (less) than zero before any action is taken. Because cattle and quota are often purchased together, the relatively long periods of no change in quota holdings that result from hysteresis cause similar periods in which herds neither grow nor contract.
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July, 1996

RISK MANAGEMENT PROGRAMS IN EXTENSION

By: Anderson, Kim B.; Mapp, Harry P., Jr.
The evolution of Cooperative Extension Service techniques used to teach decision making in a risk environment is examined. Interviews of selected Cooperative Extension economists indicate that research methods used to evaluate and describe risk are more complex than those used in extension programs. Research is an essential component of the development and implementation of extension programs. Because most producers have some understanding of risk, and many use financial strategies to manage risk, and important product of risk research has been educating extension economists and researchers. When developing risk management programs, it is stressed that "simplicity is powerful."
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July, 1996

VALUING RISK-REDUCING INTERVENTIONS WITH HEDONIC MODELS: THE CASE OF EROSION PROTECTION

By: Dorfman, Jeffrey H.; Keeler, Andrew G.; Kriesel, Warren
This article extends the literature on economic valuation of public interventions that reduce environmental risk. We consider the case where risk-reducing interventions have different characteristics than the risk proxies used in hedonic regressions. We then demonstrate the importance of these considerations by reexamining an existing analysis of shoreline protection where we estimate risk using a latent variables model. The results show substantially different and arguably more plausible results.
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July, 1996

THE DISTINCT IMPACT OF FOOD STAMPS ON FOOD SPENDING

By: Wilde, Parke E.; Ranney, Christine K.
The Southworth hypothesis predicts that inframarginal food stamp recipients should choose the same bundle of goods, whether they receive coupons or cash. Empirical research has contradicted this prediction. Here, we present a model that retains some attractive features of the Southworth hypothesis, while relaxing the key assumption that appears to be incorrect. In particular, we allow different forms of benefits to have distinct effects on desired, or unrestricted food spending. Two categories of previously commonly used empirical models are evaluated as special cases of our more general model. We estimate this model using data from two cash-out experiments.
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