Volume 37, Issue 3, December 2012

December, 2012

WAEA Presidential Address Deciding Where to Publish: Some Observations on Journal Impact Factor and Article Influence Score

By: Perry, Gregory M.
This article provides the history underlying the journal impact factor and weaknesses of this measure to evaluate journal quality. The Eigenfactor and Article Influence Scores are suggested as an improved way to compare research quality and impact across disciplines. The network analysis underlying the Eigenfactor approach suggests the agricultural and natural resource economics profession can have a larger impact on the scientific community by directing more research effort towards interdisciplinary work. The Article Influence approach is used to develop a seven-tier system to evaluate research quality, to be used either to guide individual faculty about where to publish their research or to evaluate the research portfolio of a department.
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December, 2012

WAEA Keynote Address Behavioral Environmental Economics: Money Pumps & Nudges

By: Shogren, Jason F.
Herein we explore how money pumps from rational choice theory and nudges from behavioral economics work toward helping create better environmental policy. We examine the role of money pumps in environmental policy, and whether policymakers can use nudges to "supercharge" incentives. We summarize insight that has emerged from both camps in the areas of conflict/cooperation and mechanism design.
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December, 2012

Subsidy Incidence and Inertia in Farmland Rental Markets: Estimates from a Dynamic Panel

By: Hendricks, Nathan P.; Janzen, Joseph P.; Dhuyvetter, Kevin C.
Recent econometric studies indicate that the effect of government farm subsidies on farmland rental rates may be smaller than once thought. This literature has corrected for bias due to expectation error in measured subsidy payments. We suggest two additional sources of bias—inertia and tenancy arrangements—that may explain the discrepancy between theoretical predictions and empirical estimates of subsidy incidence. We identify a model that accounts for these issues, employ panel data from Kansas to estimate it, and find that an additional dollar per acre of government subsidy increases rental rates by $0.12 per acre in the short run and $0.37 per acre in the long run.
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December, 2012

Location, School Characteristics, and the Cost of School Meals

By: Ollinger, Michael; Ralston, Katherine L.; Guthrie, Joanne F.
The U.S. Department of Agriculture reimburses schools for meals provided to students participating in the National School Lunch and School Breakfast Programs. Reimbursement amounts are based on national average estimated costs of meal production. Food prices, however, vary across the United States, suggesting regional cost differences. This paper uses a qualityadjusted translog variable-cost function to show how costs per meal vary across twenty-one U.S. locations. The average deviation from national average cost is about $0.38 per meal; the average cost deviation attributed to input prices is $0.17 and the scale effect is $0.135.
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December, 2012

Acreage Response under Varying Risk Preferences

By: Arnade, Carlos Anthony; Cooper, Joseph C.
The assumption in standard expected utility model formulations that the coefficient of risk aversion is a constant is potentially unrealistic. This study takes the standard linear expected meanvariance problem and replaces the coefficient of risk aversion with a function of risk aversion, allowing risk to be depicted as a constraint that farmers face. Treating output prices as stochastic, the theoretical formulation measures the impact price variability itself has on risk preferences. Acreage response elasticities are also estimated as a function of prices and price variances using U.S. county-level data for corn, soybean, and wheat producers.
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December, 2012

Revenue Protection for Organic Producers: Too Much or Too Little?

By: Singerman, Ariel; Hart, Chad E.; Lence, Sergio H.
A framework is developed to examine organic crop insurance established by the Risk Management Agency (RMA). Given that the RMA links organic and conventional crop prices, the model is calibrated to reflect both markets to illustrate the impacts that pricing has on insurance coverage. Findings indicate that at the 75% coverage level, the RMA’s fixed-price factor implies an effective coverage ranging from 43% to 105% depending on the ratio of planting-time organic to conventional market prices. Results suggest the RMA’s program is likely to induce adverse selection because the nominal coverage level is likely to deviate substantially from the effective coverage.
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December, 2012

Is Generational Change Contributing to the Decline in Fluid Milk Consumption?

By: Stewart, Hayden; Dong, Diansheng; Carlson, Andrea
U.S. per capita fluid milk consumption has decreased since the 1940s. This study uses data collected between 1977 and 2008 from USDA surveys to investigate whether generational change is a contributing factor. More recent generations are found to consume less whole milk and less lower-fat milk, controlling for their age at the time of the survey and other consumption determinants. These findings underscore the importance of checkoff programs, the National School Lunch Program, and other initiatives that encourage children to consume milk. Our methodology may also be adapted to analyze long-run trends in the consumption of other foods.
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December, 2012

Effective Bid-Ask Spreads in Futures versus Futures Options

By: Shah, Samarth; Brorsen, B. Wade; Anderson, Kim B.
While considerable research has estimated liquidity costs of futures trading, little comparable research is available about options markets. This study determines effective bid-ask spreads in options and futures markets for Kansas City Board of Trade (KCBT) wheat. Effective bid-ask spreads are estimates of the actual liquidity cost of a round-trip order. Option liquidity costs are estimated using a new measure of effective spreads developed for options markets. Futures effective spreads are estimated using eight different measures developed in previous studies. Estimated effective bid-ask spreads of options contracts are at least double the effective bid-ask spreads of open-outcry futures contracts.
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December, 2012

Marketing Contracts, Overconfidence, and Timing in the Canadian Wheat Market

By: Mattos, Fabio; Fryza, Stefanie A.
This paper investigates factors that impact marketing performance in the Canadian wheat market. Using data provided by the Canadian Wheat Board (CWB) for six crop years, results indicate that producers were not able to profitably use all marketing contracts offered by the CWB, earlier pricing tended to generate better performance, there was a negative relationship between activeness and performance (suggesting overconfidence in marketing skills), and performance was generally worse in volatile crop years. Further analysis reveals some of these findings differ when outperforming and underperforming producers are investigated separately, particularly with respect to activeness and volatility.
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December, 2012

Public and Private Preferences for Animal Cloning Policies

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.
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