2012

December, 2012

By: Brooks, Kathleen R.; Lusk, Jayson L.
Data on individuals’ private shopping choices are often used to draw conclusions about their desires for food policies. The purpose of this paper is to test this often-implicit assumption using data from a nationwide survey about animal cloning. We find that although individuals’ private choices indicate a strong desire to avoid meat and milk from cloned cattle, public choices predict that only 40.29% have a positive WTP for such a ban. The results suggest caution is necessary when inferring public preferences from private choices.

August, 2012

By: Richards, Timothy J.; Hamilton, Stephen F.
Models of rational addiction suggest that obesity is consistent with time-consistent preferences. Behavioral economists maintain that addictions such as alcoholism, smoking and over-eating represent examples of present-bias in decision making that is fundamentally irrational. In this article, conduct an experiment to test whether individual discount schedules are time-consistent and whether discount rates are higher for subjects who exhibit patterns of risky behavior. Our results show that discount functions are quasi-hyperbolic in shape, and that obesity and drinking are positively related to the discount rate. Anti-obesity policy, therefore, would be best directed to informing individuals as to the long-term implications of short-term gratification, rather than taxing foods directly

August, 2012

By: Vyn, Richard J.; Haq, Zahoor Ul; Weerahewa, Jeevika; Meilke, Karl D.
This study estimates the impact of changes in market returns and government payments on farmland values across Canada using data from 1959 to 2009. A recursive simultaneous equation model is estimated to account for the counter-cyclical relationship between market returns and government payments. The results indicate that farmland values are more responsive to changes in market returns than in government payments, but both are important drivers of land values. The elasticity of land values with respect to government payments is lower than has been observed in the United States. In addition, the partial decoupling of government payments has not reduced their impact on farmland values.

August, 2012

By: Schnake, Kristin N.; Karali, Berna; Dorfman, Jeffrey H.
Futures markets have two main goals: price discovery and risk management. Because management decisions often have to be made on a time horizon longer than the time until expiration of the nearby futures contract, it is important to determine how well distant-delivery futures contracts are able to assist in price discovery. We focus on soybean and live cattle distant-delivery futures contracts and test for the informational value added to nearby contracts. Two tests for information value provide partially conflicting results due to the different information measures employed. If being able to predict the price trend is sufficient, then we find some information value in distantdelivery futures contracts, while if accurate point estimates of future spot prices are desired the results are negative. Surprisingly, we do not find the expected dichotomy between the storable (soybeans) and non-storable (cattle) commodities.