2018

By: Bishop, Richard C.
In the contingent valuation (CV) literature, confusion exists about warm glow and embedding effects. I show that i) some writers follow Andreoni’s (1989) definition of warm glow, but others think that subjects answering CV questions load up, free of charge, on “good feelings” from supporting the environment; ii) Andreoni’s warm glow would lead to embedding effects only in extreme circumstances; iii) Andreoni’s warm glow should be counted in valuation studies; and iv) there is scant evidence for good feelings being the source of embedding effects. In fact, embedding effects may not be limited to CV studies.
By: Galinato, Gregmar; Hong, Yeon A.
This article measures the effect of tobacco education program spending on adolescent tobacco use. We model how corruption influences the policy maker’s decision on subsidies that benefit firms to the detriment of education spending and its differential effect by gender. We estimate the effect of tobacco education program spending, instrumented by our corruption proxy, on adolescent tobacco use. More tobacco education program spending significantly increases the probability of never smoking among all adolescents but reduces the frequency of smoking only among adolescent females. One plausible explanation is that females have a more inelastic marginal utility of health than males.
By: Melstrom, Richard T.; Lee, Kangil; Byl, Jacob P.
The U.S. Endangered Species Act is often criticized as “pitting people against wildlife" by conserving habitat at the cost of jobs, but relatively little is known about the labor market effects of listing a species under the Endangered Species Act. We examine changes in employment associated with the lesser prairie chicken, which was listed as threatened in May 2014. Using county-level employment data and variation in suitable prairie chicken habitat, we apply a difference-in-differences strategy to measure the employment effects of the listing decision. We find evidence that employment declined about 1.5% in affected counties. The effect is proportional to habitat, which means counties with relatively more habitat experienced a larger share of employment losses.
By: Kim, Seon-Woong; Lusk, Jayson L.; Brorsen, B. Wade
We investigate whether consumers purchase organic foods to demonstrate social status to others. Subjects were asked to choose among organic and nonorganic milk and apples in a control group and treatments in which: i) an image of another person’s eyes was displayed, ii) responses appeared to not be anonymous, or iii) a vignette placed the choice in the presence of an acquaintance. The vignette treatment increased the willingness-to-pay (WTP) premium for organic by about 90%. The other treatments did not have significant overall effects. When exposed to another person’s eyes, more educated respondents increased their WTP for organic.
By: Chen, Kuan-Ju; McCluskey, Jill J.
When purchasing experience goods, consumers often rely on information from expert evaluations. In this article, we quantify how expert information impacts prices across product segments. For higher-end products, consumers have the incentive to invest more time in research prior to purchase. Thus, expert evaluations should have a greater impact on the price of higher-end segments. We analyze the effects of tasting notes on wine prices across price categories and find that certain keywords used in tasting notes to describe wine characteristics exert a significant influence on wine prices. These effects vary across different segments, with the greatest impact on the premium segment.
By: Stone, Janine; Costanigro, Marco; Goemans, Christopher
We evaluate Coloradans’ preferences for policies decreasing the need for agricultural water transfers using two choice experiments with different frames—one highlighting policy choices and one emphasizing ex post impacts on prices, urban landscaping, and base charges. We find that a majority of users state a willingness to face private costs to reduce agricultural water transfers. Latent-class analysis is used to describe heterogeneity in opinion groups, showing that a minority of urban, lower-income participants would prefer to fallow agricultural land than to pay for alternative policies. This opinion group increases in size in the impact-framed survey.
By: Skevas, Ioannis; Zhu, Xueqin; Shestalova, Victoria; Emvalomatis, Grigorios
This study examines the impact of policies and intensification on the environmental performance of Dutch dairy farms in the period 2001–2010 using a hyperbolic distance function. The results indicate that the change from the Mineral Accounting System to the combination of the Application Standards Policy with decoupled payments has not significantly changed farms’ hyperbolic efficiency. Farms receiving agri-environmental and animal welfare payments are less hyperbolically efficient than those that do not, highlighting greater decreases in desirable outputs than decreases in undesirable outputs. Finally, intensification increases hyperbolic efficiency, suggesting that intensive practices may increase production without harming the environment.
By: Costa, Geraldo Jr.; Trujillo-Barrera, Andres; Pennings, Joost M.E.
We analyze the relationships among liquidity costs, volume, and volatility in the Brazilian agricultural futures market, along with the role of market concentration. We estimate a structural three-equation IV–GMM model using data from Bolsa, Brasil, Balcão corn and live cattle contracts from March 2014 to February 2016. Results show a negative association between liquidity costs and volume and a positive association between liquidity costs and volatility. Market concentration impacts corn and live cattle differently. Concentration contributes to volume reduction for live cattle and to liquidity costs reduction for corn. Our findings shed light on the microstructure of emerging markets.
By: Kuethe, Todd H.; Hubbs, Todd; Sanders, Dwight R.
The USDA produces four forecasts of net farm income for each year; these forecasts are closely monitored by decision makers across the agricultural sector. However, little is known about the performance of these forecasts. Traditional forecast evaluation tests suggest that between 1975 and 2016, the long-horizon forecasts systematically under-predicted realized values. In addition, the shorter-horizon forecast revisions overreact to new information. The findings suggest that forecast users should adjust their expectations and that the USDA may want to consider other forecast approaches to supplement current procedures.
By: Muller, Malte; Rommel, Jens
Most communist economies were dominated by large collective farms. Today, smaller family farms often coexist with larger corporate and collective farms in these countries. The roles of other-regarding preferences and social norms have been largely neglected in the debate on farmers’ organizational choices. We conducted lab-in-the-field ultimatum game experiments with 397 cotton farmers from collective and family farms. Large and statistically significant differences existed in the rejection behavior among the two farm types. Punishment of unfair behavior explained organizational choice, both with and without controlling for other factors. We conclude that the continuation of dual farm structures requires tailored policy support.
By: Rosburg, Alicia; Menapace, Luisa
Fungal disease management in U.S. corn production has undergone a major shift in the last 2 decades. The decision to apply fungicide, a management practice that was once rarely considered, is now contemplated annually by many U.S. corn producers. We investigate potential factors underlying the fungicide treatment decision. We use economics, agronomy, and plant pathology literature to develop a conceptual model of the fungicide treatment decision and test the model using a survey of Midwest corn producers. We find the treatment decision is positively related to perceived economic gains, but heuristic factors also have a strong influence.
By: Bekkerman, Anton; Weaver, David K.
Many invasive and opportunistic pests cause multiple, interdependent adverse outcomes on agricultural production. Often, however, these impacts are modeled independently, which can bias empirical inferences and contribute to inaccurate recommendations. We use a copula function to more accurately model the joint behavior and provide an empirical example of its application to assess the impacts of the wheat stem sawfly (WSS). We use a unique farm-level dataset to estimate the expected losses associated with WSS and then evaluate two popular WSS management strategies. We find that strategies minimizing long-run infestation levels are preferred to those that seek to maximize yield potential in exchange for higher risk of intertemporal infestation.
By: Ifft, Jennifer; Bigelow, Daniel P.; Savage, Jeffrey
Given the expansive water consumption of the agricultural sector in the western United States, irrigation practices have increasingly been restricted as a way to combat water scarcity. Using segment-level panel data on land values and irrigation status, we measure the extent to which irrigation restrictions are capitalized into irrigated and nonirrigated cropland values in Nebraska. On average, irrigation restrictions did not have a measurable impact on farmland values across 1999–2012. However, our results show that the effects of the restrictions vary considerably over time and that basins that were more dependent on irrigation were disproportionately impacted by the restrictions.
By: Green, Gareth P.; Richards, Timothy J.
Understanding individual discounting behavior of future costs and benefits is critical for designing environmental policy. Although there is some empirical evidence of hyperbolic discounting, others have found that exponential discounting is more accurate when behavioral factors are properly considered. Further, there is little research on how environmental discount rates differ from monetary rates. We use experimental methods to determine how individuals discount monetary and environmental goods. Our findings suggest that individual discounting behavior is approximately exponential, environmental goods are discounted at lower rates than monetary goods, and discount rates vary widely across environmental goods when accounting for appropriate behavioral factors.
By: Dennis, Elliott J.; Schroeder, Ted C.; Renter, David G.; Pendell, Dustin L.
Although several studies have estimated economic impacts of antimicrobials for growth promotion, little is known about economic impacts of the common animal health management strategy known as metaphylaxis: administering antimicrobials to groups of animals to prevent disease. This article develops a new framework to map animal disease to producer profitability and determine societal economic impacts surrounding metaphylactic use of antimicrobials in beef cattle production. Results indicate the direct net return value of metaphylaxis to the U.S. fed cattle industry is at least $532 million. Beef producer surplus losses of $1.8 billion would be associated with eliminating metaphylaxis.
By: Smed, Sinne; Hansen, Lars Garn
We estimate a model that allows consumers’ food demand to depend on both the health effects and the consumption experience generated by the consumption of nutrients contained in food. We use home scan data of food purchases from approximately 2,500 Danish consumers enriched with nutrient content information. More-educated consumers have healthier diets than those with less education, and we find that this is explained by differences in how these groups value the consumption experience associated with nutrients, not by differences in their health valuation of nutrients.
By: Russell, Levi A.
This paper examines the effects of interest group Political Action Committee (PAC) spending on the passage of the Agricultural Act of 2014. I use a mixed-process model to examine correlations between ideology, constituent characteristics, and PAC contributions by agricultural and environmental interests and the probability that a legislator voted in favor of the act. I find a positive association between agricultural and environmental PAC contributions and the probability that a legislator voted in favor of the act. Further, I find that legislators representing relatively large rural populations were more likely to vote in favor of the act.