Volume 30, Issue 2, August 2005

August, 2005

Pastoralist Economic Behavior: Empirical Results from Reindeer Herders in Northern Sweden

By: Bostedt, Goran
This paper presents a model of pastoralists, as illustrated by reindeer herders, together with an analysis based on a cross-sectional data set on Swedish reindeer-herding Saami. The intrinsic utility of being an active reindeer herder plays an important role in determining supply. Results show this can lead to unconventional supply responses among pastoralists, and suggest that the probability of a backward-bending supply response increases with stock size. Further analyses confirm that reindeer herders with backward-bending supply curves have significantly larger herds than herders with conventional supply responses. Relaxed externalities from forestry would cause most herders to increase their slaughter.
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August, 2005

Estimating the Potential Value of Variable Rate Nitrogen Applications: A Comparison of Spatial Econometric and Geostatistical Models

By: Hurley, Terrance M.; Oishi, Kikuo; Malzer, Gary L.
Site-specific crop response functions (SSCRFs) are useful for estimating the value of variable rate nitrogen applications (VRA), but appropriate statistical models are necessary. Problems estimating SSCRFs using experimental field data include region, spatial, treatment, and strip dependent heteroskedasticity and correlation. We develop a spatial autoregressive error (SARE) model for dealing with these problems and compare results with previous analysis based on a geostatistical (GEO) model. VRA value estimates for the two models differ notably for 1995 data from Southern Minnesota. Furthermore, findings show that the results of a comparison of model performance are location specific.
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August, 2005

Perceived Health Benefits and Soy Consumption Behavior: Two-Stage Decision Model Approach

By: Moon, Wanki; Balasubramanian, Siva K.; Rimal, Arbindra
A two-stage decision model is developed to assess the effect of perceived soy health benefits on consumers' decisions with respect to soy food. The first stage captures whether or not to consume soy food, while the second stage reflects how often to consume. A conceptual/analytical framework is also employed, combining Lancaster's characteristics model and Fishbein's multi-attribute model. Results show that perceived soy health benefits significantly influence both decision stages. Further, consumers' negative perceptions regarding soy (unappetizing taste and inconvenience) have a substantially greater impact on soy consumption behavior than their perceptions about soy health benefits. This finding carries significant implications for the soy industry. Additionally, this health benefit perception mediates the effect of general health-related factors such as knowledge, motivation, and awareness on soy consumption behavior. Our results also underscore the importance of current FDA-regulated health claims in stimulating consumer demand for soy foods.
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August, 2005

Profit Patterns Across American Agriculture

By: Blank, Steven C.; Erickson, Kenneth W.; Moss, Charles B.
To remain viable, agriculture in each location must offer returns that are competitive with those from alternative investments and sufficient to cover producers' financial obligations. Economic theory says that rates of return converge over time as resources flow into more-profitable industries and out of less-profitable industries, causing factor price changes. Both traditional growth and trade theories say factor markets will adjust to equalize commodity returns over time. This study examines spatial relationships in agriculture's profitability over time. Results show temporal and spatial convergence of returns consistent with trade and development theories. However, there are profit patterns unique to state/regional agriculture, raising policy implications.
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August, 2005

European Preferences for Beef Steak Attributes

By: Tonsor, Glynn T.; Schroeder, Ted C.; Fox, John A.; Biere, Arlo W.
A choice experiment is used to evaluate how consumers in London, Frankfurt, and Paris value beef steaks with attributes such as: "hormone-free," "GM-free," farm-specific source verification, and domestic origin. The effect of various consumer characteristics on steak selection is also evaluated. Results suggest that European consumers are significantly heterogeneous in their preferences for beef steak attributes. French and German consumers have a higher willingness to pay to avoid genetically modified feed use than British consumers, while German and British consumers would pay more for growth hormone-free beef. French and German consumers are willing to pay for farm-specific source verification.
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August, 2005

Does It Matter Who Scouts?

By: Lichtenberg, Erik; Berlind, Ayesha Velderman
Scouting is the most widely used integrated pest management technique adopted by U.S. growers. This study applies an implicit demand formulation of the Lichtenberg-Zilberman damage abatement model to data from a survey of Maryland field crop growers to examine differences in pesticide demand between growers using scouts trained and supervised by extension and those using chemical dealer employees or scouting themselves. The results give partial support to those skeptical of the quality of scouting by farmers themselves and by consultants working for chemical dealers. Soybean growers using extension-trained scouts had significantly lower pesticide demand than those using chemical dealer employees or scouting themselves. However, no significant differences were found in the pesticide demands for alfalfa, corn, and small grains.
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August, 2005

Testing for Budget Constraint Effects in a National Advisory Referendum Survey on the Kyoto Protocol

By: Li, Hui; Berrens, Robert P.; Bohara, Alok K.; Jenkins-Smith, Hank C.; Silva, Carol L.; Weimer, David L.
In contrast to providing standard reminders about remembering household budgets, does asking survey respondents about their discretionary income and its use affect their voting responses in a national advisory referendum survey? We explore this question using U.S. household data from a unique set of multi-mode random samples (telephone and Internet surveys), and an advisory referendum concerning the Kyoto Protocol. The contingent valuation method is applied to estimate household willingness to pay (WTP) for a split-sample treatment: respondents who only received a standard reminder of household budgets (control group) versus respondents who received two mental accounting-type questions on discretionary income and its uses (treatment group). Results indicate that the treatment significantly influences voting responses and lowers estimated household WTP.
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August, 2005

Is Area Yield Insurance Competitive with Farm Yield Insurance?

By: Barnett, Barry J.; Black, J. Roy; Hu, Yingyao; Skees, Jerry R.
This article compares risk reduction from MPCI and GRP crop insurance contracts. The analysis extends and improves on the existing area-yield insurance literature in four important respects. First, the geographical scope greatly exceeds that of previous work. Second, unlike previous efforts, the area is not assumed to consist only of those farms included in the analysis. Third, the analysis is based on the actual GRP indemnity function rather than the area-yield indemnity function commonly used in the literature. Fourth, the analysis avoids the questionable assumption that GRP scale can be optimized at the individual farm level. Even with a number of conservative assumptions favoring MPCI relative to GRP, results indicate that at least for some crops and regions GRP is aviable alternative to MPCI.
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August, 2005

A Bilateral Comparison of Fruit and Vegetable Consumption: United States and Canada

By: Richards, Timothy J.; Patterson, Paul M.
Many public programs promote diets rich in fruits and vegetables based on evidence of the derived health benefits. Still, produce consumption in the United States lags behind other nations, even its most culturally similar neighbor--Canada. This study uses a structural latent variable model to test the role played by quality and health information in explaining observed differences in produce consumption. The Alchian-Allen effect predicts that higher quality, higher absolute margin produce will be exported, suggesting quality may be an important demand factor in importing nations such as Canada. The results show that dietary health information is significant in expanding demands. Quality also promotes fruit consumption in Canada.
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August, 2005

Household Fast Food Expenditures and Children’s Television Viewing: Can They Really Significantly Influence Children’s Dietary Quality?

By: You, Wen; Nayga, Rodolfo M., Jr.
Previous studies have found a strong relationship between food-away-from-home expenditures and television viewing, and children's diet. This study revisits this issue by examining the impact of household fast food expenditures and children's television viewing on children's dietary quality. Results indicate that both factors have statistically significant and negative effects. However, the elasticities of children's diet quality with respect to both factors are quite inelastic. Results also suggest that the effects of these two factors differ between children younger than 11 years old and children at least 11 years old. Relevant policy implications are discussed.
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August, 2005

On the Empirical Finding of a Higher Risk of Poverty in Rural Areas: Is Rural Residence Endogenous to Poverty?

By: Fisher, Monica G.
This section includes: On the Empirical Finding of a Higher Risk of Poverty in Rural Areas: Is Rural Residence Endogenous to Poverty?:COMMENT, by Thomas A. Hirschl; On the Empirical Finding of a Higher Risk of Poverty in Rural Areas: Is Rural Residence Endogenous to Poverty?: REPLY, by Monica Fisher. Research shows people are more likely to be poor in rural versus urban America. Does this phenomenon partly reflect that people who choose rural residence have unmeasured attributes related to human impoverishment? To address this question, two models are estimated using Panel Study of Income Dynamics data. A single equation Probit model of individual poverty replicates the well-documented finding of higher poverty risk in rural places. However, an instrumental variables approach, accounting for correlation between rural residence and the poverty equation error term, finds no measured effect of rural location on poverty. Results suggest failure to correct for endogeneity or omitted variable bias may overestimate the "rural effect."
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August, 2005

The Economics of Testing for Biotech Grain: Application to StarLink Corn

By: Johnson, D. Demcey; Lin, William W.
StarLink corn, a variety not approved for human use, disrupted the marketing system in 2000 because of inadvertent commingling. This paper provides an overview of the economics of testing grain for biotech content. What are the risks facing buyers and sellers, and how are these influenced by testing protocols? How do market premiums and discounts, testing costs, and prior beliefs affect the incentives to test? A conceptual model is developed in which sellers choose whether to pre-test grain prior to shipment. Through simulation analysis, we illustrate the impact of market premiums and other variables on testing incentives and buyer risk.
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