Scholarly Work - Agricultural Economics & Economics

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    Don't Judge a Wine by Its Closure: Price Premiums for Corks in the U.S. Wine Market
    (2019-02-19) Bekkerman, Anton; Brester, Gary W.
    For many purchases, consumers often possess only limited information about product quality. Thus, observable product characteristics are used to determine expected quality levels when making purchase decisions. We use more than 1 million weekly scanner-level observations from grocery stores across ten U.S. markets between September 2009 and August 2012 to examine how consumers value a wine bottle\'s closure type (i.e., cork or screw cap). We focus on lower-priced wines—those with sale prices less than $30 per 750 milliliter bottle—to more accurately evaluate decisions of consumers for whom seeking additional information about wine quality is likely more costly than the benefits derived from that information. Using both pooled ordinary least squares and quantile regressions to estimate price premiums for bottles with corks or screw caps, we find that U.S. consumers are willing to pay, on average, approximately 8% more (about $1.00) for a bottle of wine that has a cork closure. In addition, we show that the size of this premium increases as wine prices decline. (JEL Classifications: D81, M31, Q11)
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    Employer-Sponsored Education Assistance and Graduate Program Choice, Cost, and Finance
    (2019-06) Gilpin, Gregory A.; Kofoed, Michael
    This paper studies the impact of the Economic Growth and Tax Relief Reconciliation Act of 2001 that amended employer-sponsored education assistance (ESEA) fringe benefits from taxable to nontaxable for graduate studies. ESEA is an integral part of graduate education finance and is the dominant non-loan source of student aid. Using difference-in-difference and triple-difference specifications, we empirically evaluate educational outcomes related to graduate education choice, cost, and finance. The empirical results suggest that post-law reform, non-degree graduate students who exercise ESEA benefits are 12.3% more likely to attend open-admission institutions, 12.5% less likely to attend in-state, 10.3% more likely to attend for-profit colleges, and no changes are identified on cost or education debt loads, relative to their pre-law reform peers. As a whole, no differences in program choice are observed for degree-seeking graduate students. Additionally, the estimates suggest that while degree-seeking graduate students applying ESEA attend programs that cost, on average, $1170 more, no changes are identified post-law reform (2008 dollars). Furthermore, degree-seeking graduate students that apply ESEA benefits take out, on average, $1530 less in student loans, and this declines by an additional $1474 post-law reform (2008 dollars). Analysis by graduate program and also by gender and age suggest substantial heterogeneity from graduate program educational outcomes, especially for MBA students.
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    From biology to behavior: a cross-disciplinary seminar series surrounding added sugar and low-calorie sweetener consumption
    (2019-06) Sylvetsky, A. C.; Hiedacavage, A.; Shah, H.; Pokorney, P.; Baldauf, S.; Merrigan, K.; Smith, Vincent H.; Long, M. W.; Black, R.; Robien, K.; Avena, N.; Gaine, C.; Greeberg, D.; Wootan, M. G.; Talegawkar, S.; Colon-Ramos, U.; Leahy, M.; Ohmes, A.; Mannella, J. A.; Sachek, J.; Dietz, W. H.
    Introduction This report presents a synopsis of a three‐part, cross‐sector, seminar series held at the George Washington University (GWU) in Washington, DC from February–April, 2018. The overarching goal of the seminar series was to provide a neutral forum for diverse stakeholders to discuss and critically evaluate approaches to address added sugar intake, with a key focus on the role of low‐calorie sweeteners (LCS). Methods During three seminars, twelve speakers from academic institutions, federal agencies, non‐profit organizations, and the food and beverage industries participated in six interactive panel discussions to address: 1) Do Farm Bill Policies Impact Population Sugar Intake? 2) What is the Impact of Sugar‐sweetened Beverage (SSB) Taxes on Health and Business? 3) Is Sugar Addictive? 4) Product Reformulation Efforts: Progress, Challenges, and Concerns? 5) Low‐calorie Sweeteners: Helpful or Harmful, and 6) Are Novel Sweeteners a Plausible Solution? Discussion of each topic involved brief 15‐minute presentations from the speakers, which were followed by a 25‐minute panel discussion moderated by GWU faculty members and addressed questions generated by the audience. Sessions were designed to represent opposing views and stimulate meaningful debate. Given the provocative nature of the seminar series, attendee questions were gathered anonymously using Pigeonhole™, an interactive, online, question and answer platform. Results This report summarizes each presentation and recapitulates key perspectives offered by the speakers and moderators. Conclusions The seminar series set the foundation for robust cross‐sector dialogue necessary to inform meaningful future research, and ultimately, effective policies for lowering added sugar intakes.
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    Was the First Public Health Campaign Successful?
    (2019-04) Anderson, D. Mark; Charles, Kerwin Kofi; Olivares, Claudio Las Heras; Rees, Daniel I.
    The US tuberculosis (TB) movement pioneered many of the strategies of modern public health campaigns. Using newly transcribed mortality data at the municipal level for the period 1900-1917, we explore the effectiveness of public health measures championed by the TB movement, including the establishment of sanatoriums and open-air camps, prohibitions on public spitting and common cups, and requirements that local health officials be notified about TB cases. Our results suggest that these and other anti-TB measures can explain, at most, only a small portion of the overall decline in pulmonary TB mortality observed during the period under study. (JEL, H51, I12, I18, N31, N32)
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    Are Booster Seats More Effective than Child Safety Seats or Seat Belts at Reducing Traffic Fatalities among Children?
    (2019-01) Anderson, D. Mark; Sandholt, Sina
    In an effort to increase booster seat use among children, the National Highway Traffic Safety Administration is encouraging state legislators to promote stricter booster seat laws, yet there is a paucity of information on booster seat efficacy relative to other forms of restraint. Using data from the Fatality Analysis Reporting System for the period 2008-16, the current study examines the effectiveness of booster seats relative to child safety seats and adult seat belts. For children two to five years of age, we find some evidence to suggest that booster seats are the least effective form of restraint. For children six to nine years of age, all three forms of restraint appear equally effective.
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    The Basel accords, capital reserves, and agricultural lending
    (2018-05) Brester, Gary W.; Watts, Myles J.
    Purpose The safety and soundness of financial institutions has become a leading worldwide issue because of the recent global financial crisis. Historically, financial crises have occurred approximately every 20 years. The worst financial crisis in the last 75 years occurred in 2008–2009. US regulatory efforts with respect to capital reserve requirements are likely to have several unintended consequences for the agricultural lending sector—especially for smaller, less-diversified (and often, rural agricultural) lenders. The paper discusses these issues. Design/methodology/approach Simulation models and value-at-risk (VaR) criteria are used to evaluate the impact of capital reserve requirements on lending return on equity. In addition, simulations are used to calculate the effects of loan numbers and portfolio diversification on capital reserve requirements. Findings This paper illustrates that increasing capital reserve requirements reduces lending return on equity. Furthermore, increases in the number of loans and portfolio diversification reduce capital reserve requirements. Research limitations/implications The simulation methods are a simplification of complex lending practices and VaR calculations. Lenders use these and other procedures for managing capital reserves than those modeled in this paper. Practical implications Smaller lending institutions will be pressured to increase loan sector diversification. In addition, traditional agricultural lenders will likely be under increased pressure to diversify portfolios. Because agricultural loan losses have relatively low correlations with other sectors, traditional agricultural lenders can expect increased competition for agricultural loans from non-traditional agricultural lenders. Originality/value This paper is novel in that the authors illustrate how lender capital requirements change in response to loan payment correlations both within and across lending sectors.
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    The Influence of Genetic Modification Technologies on U.S. and EU Crop Yields
    (2019-01) Brester, Gary W.; Atwood, Joseph; Watts, Myles J.; Kawalski, Anita
    Over 90% of U.S. corn and soybeans are planted with genetically modified (GM) seed varieties. We use a flexible, nonlinear functional form to investigate yield differences for corn, soybeans, and wheat between the United States and the European Union (which bans the use of GM technologies). U.S. corn and soybean yields increased relative to EU yields since the introduction of GM technologies. EU wheat yields (for which GM technologies are not commercially available in either region) continue to increase relative to the United States. Thus, the EU ban on GM technologies has likely increased the difference between corn and soybean yields between the two regions.
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    Medical marijuana laws and workplace fatalities in the United States
    (2018-10) Anderson, D. Mark; Rees, Daniel I.; Tekin, Erdal
    AIMS The aim of this research was to determine the association between legalizing medical marijuana and workplace fatalities. DESIGN Repeated cross-sectional data on workplace fatalities at the state-year level were analyzed using a multivariate Poisson regression. SETTING To date, 29 states and the District of Columbia have legalized the use of marijuana for medicinal purposes. Although there is increasing concern that legalizing medical marijuana will make workplaces more dangerous, little is known about the relationship between medical marijuana laws (MMLs) and workplace fatalities. PARTICIPANTS All 50 states and the District of Columbia for the period 1992-2015. MEASUREMENTS Workplace fatalities by state and year were obtained from the Bureau of Labor Statistics. Regression models were adjusted for state demographics, the unemployment rate, state fixed effects, and year fixed effects. FINDINGS Legalizing medical marijuana was associated with a 19.5% reduction in the expected number of workplace fatalities among workers aged 25-44 (incident rate ratio [IRR], 0.805; 95% CI, .662-.979). The association between legalizing medical marijuana and workplace fatalities among workers aged 16-24, although negative, was not statistically significant at conventional levels. The association between legalizing medical marijuana and workplace fatalities among workers aged 25-44 grew stronger over time. Five years after coming into effect, MMLs were associated with a 33.7% reduction in the expected number of workplace fatalities (IRR, 0.663; 95% CI, .482-.912). MMLs that listed pain as a qualifying condition or allowed collective cultivation were associated with larger reductions in fatalities among workers aged 25-44 than those that did not. CONCLUSIONS The results provide evidence that legalizing medical marijuana improved workplace safety for workers aged 25-44. Further investigation is required to determine whether this result is attributable to reductions in the consumption of alcohol and other substances that impair cognitive function, memory, and motor skills.
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    Vulnerability of dryland agricultural regimes to economic and climatic change
    (2018) Lawrence, Patrick G.; Maxwell, Bruce D.; Rew, Lisa J.; Ellis, Colter; Bekkerman, Anton
    Large-scale agricultural systems are central to food production in North America, but their ubiquity could be threatened by vulnerability to economic and climatic stressors during the 21st century. Prior research has focused on understanding the influence of climatic changes on physiological processes in these systems and has increasingly recognized that other factors such as social, economic, and ecological variation and the interaction among these factors may cause unexpected outcomes. We assess the vulnerability of large-scale agricultural systems to variation in multiple stressors and investigate alternative adaptation strategies under novel conditions. We examine dryland farms in Montana’s northern Great Plains (NGP), which represent large-scale semiarid agricultural systems that are likely to be affected by climate change. Farmers in the NGP have experienced three distinct periods of economic- and drought-related stressors since the 1970s, primarily driven by uncertainty in soil moisture, but at times amplified by uncertainty in nitrogen fertilizer and wheat prices. We seek to better understand how farmers evaluate and respond to these conditions. The results indicate that although farmers perceived few alternative agronomic options for adapting to drought, strategies for adapting to high input prices were more plentiful. Furthermore, we find that increasing the overall resilience of dryland agricultural systems to economic and climatic uncertainty requires intrinsic valuation of crop rotations and their field-specific response to inputs.
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    Genetic Engineering and Risk in the Varietal Selection of Potatoes
    (2018-02) Fuller, Kate B.; Brester, Gary W.; Boland, Michael A.
    The objective of this case study is to examine the farm management decision of whether to adopt a new, genetically engineered potato variety. We describe the potato supply chain from seed production to final consumer products and explore how price and production risk interact to influence decision making at each link in that chain. We provide extensive supplemental material as well, including a teaching note with assignment and/or discussion questions, an introduction to and application of stakeholder theory, and a tool that assists students in calculating expected and simulated actual returns from their choice of potato variety.
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    The Spatial-Dynamic Benefits from Cooperative Disease Control in a Perennial Crop
    (2017-06) Fuller, Kate Binzen; Sanchirico, James N.; Alston, Julian M.
    Introduction Diseases that damage productive agricultural crops impose significant costs both through foregone revenue from losses in yield, quality, and production and through expenditures undertaken to mitigate those losses. Grapes produced in the Napa Valley are strikingly valuable; although Napa County produced roughly 4% of the total volume of grapes crushed for wine in California in 2014, the winegrape crush in Napa County that year was valued at nearly $720 million, or approximately 24% of the total winegrape crush revenue in the state (U.S. Department of Agriculture, National Agricultural Statistics Service and California Department of Food and Agriculture, 2015).1 Since no effective pesticide or other control protocol currently exists for the BGSS and PD in the Napa Valley, growers and policymakers have been concerned about the current and potential economic losses caused by the BGSS, and they are keenly interested in developing effective control strategies. While many important examples of models of pests and diseases of perennial crops have been published (e.g., Regev, Gutierrez, and Feder, 1976; Alston et al., 2013; Fenichel, Richards, and Shanafelt, 2014; Fuller, Alston, and Sambucci, 2014; Atallah et al., 2015; Grogan and Mosquera, 2015), these have not addressed the potential benefits from cooperation between management units (e.g., vineyard operations, farms) in disease control. The role of cooperation in optimal pest control using a spatial-dynamic model was addressed by Bhat and Huffaker (2007) in the...
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    Aspirations Failure and Formation in Rural Nepal
    (2017-04) Janzen, Sarah A.; Magnan, Nicholas; Sharma, Sudhindra; Thompson, William M.
    Aspirations, or a lack thereof, have recently gained the attention of economists as a behavioral constraint to future-oriented behavior and investment. In this paper we empirically test the theories of aspirations failure and formation articulated in Appadurai (2004), Ray (2006), and Genicot and Ray (2015) using a unique dataset from rural Nepal. We ask two questions: (1) What is the relationship between aspirations and future-oriented behavior? and (2) To what extent are an individual\'s aspirations associated with the observable characteristics of those around her? We find that aspirations correspond with future-oriented economic behavior as predicted by theory: investment in the future increases with aspirations up to a certain point, but if the gap between one\'s current status and aspirations becomes too large, investment subsequently declines. We also find that one\'s aspirations are associated with outcomes of those in her social network of higher, but not lower, status. Together these findings provide empirical evidence that aspirations, which may be a social phenomenon, can either stimulate development or reinforce poverty.
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    Revisiting the determinants of futures contracts success: the role of market participants
    (2017-03) Bekkerman, Anton; Tejeda, Hernan A.
    The Chicago Mercantile Exchange introduced a futures contract for distillers' dried grains (DDGs) in early 2010, but the market became inactive only four months after its inception. While many new futures contracts do not develop into high-volume traders, interest from DDG cash market participants indicated that this contract could be successful. Prompted by the unexpected lack of trading activity in this new futures market, we empirically revisit the question of what factors contribute to a futures contract's success and extend the literature by investigating the roles of market participants and the significance of supporting futures markets. Estimation results indicate that the market participant type-hedger or speculator-affects futures contract trade volume. More importantly, we find that the viability of new futures contracts for commodities that are jointly produced with other commodities is impacted by hedgers' trade volume of the related futures contract. These results provide important additions into the portfolio of indicators used by commodity exchanges to more cost-effectively evaluate new futures contract products.
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    Booster Seat Effectiveness Among Older Children: Evidence From Washington State
    (2017-08) Anderson, D. Mark; Carlson, Lindsay L.; Rees, Daniel I.
    Introduction The American Academy of Pediatrics has recommended that children as old as 12 years use a booster seat when riding in motor vehicles, yet little is known about booster seat effectiveness when used by older children. This study estimated the association between booster use and injuries among children aged 8–12 years who were involved in motor vehicle crashes. Methods Researchers analyzed data on all motor vehicle crashes involving children aged 8–12 years reported to the Washington State Department of Transportation from 2002 to 2015. Data were collected in 2015 and analyzed in 2016. Children who were in a booster seat were compared with children restrained by a seat belt alone. Logistic regression was used to adjust for potential confounders. Results In unadjusted models, booster use was associated with a 29% reduction in the odds of experiencing any injury versus riding in a seat belt alone (OR=0.709, 95% CI=0.675, 0.745). In models adjusted for potential confounders, booster use was associated with a 19% reduction in the odds of any injury relative to riding in a seat belt alone (OR=0.814, 95% CI=0.749, 0.884). The risk of experiencing an incapacitating/fatal injury was not associated with booster use. Conclusions Children aged 8–12 years involved in a motor vehicle crash are less likely to be injured if in a booster than if restrained by a seat belt alone. Because only 10% of U.S. children aged 8–12 years use booster seats, policies encouraging their use could lead to fewer injuries.
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    Targeted social protection in a pastoralist economy: case study from Kenya
    (2016-08) Janzen, Sarah A.; Jensen, N. D.; Mude, A. G.
    "Social protection programmes are designed to help vulnerable populations-including pastoralists maintain a basic level of well-being, manage risk, and cope with negative shocks. Theory suggests that differential targeting according to poverty status can increase the reach and effectiveness of budgeted social protection programmes. Chronically poor households benefit most from social protection designed to help them meet their basic needs and make vital investments necessary to graduate from poverty. Vulnerable non-destitute households benefit from protection against costly temporary shocks, but do not necessarily need regular assistance. Welfare gains occur when a comprehensive social protection programme considers the needs of both types of households. The authors use evidence-based understanding of poverty dynamics in the pastoralist-based economy of northern Kenya\'s arid and semi-arid lands as a case study to discuss and compare the observed impacts of two different social protection schemes on heterogeneous pastoralist households: a targeted, unconditional, cash-transfer programme designed to support the poorest, and an index-based livestock insurance programme, which acts as a productive 'safety net' to help stem a descent into poverty and increase resilience. Both types of social protection scheme have been shown to decrease poverty, improve food security and protect child health. However, the behavioural response for asset accumulation varies with the type of protection and the household's unique situation. Poor households that receive cash transfers retain and accumulate assets quickly. Insured households, who are typically vulnerable yet not destitute, protect existing herds and invest more in the livestock they already own. The authors argue that differential targeting increases programme efficiency, and discuss Kenya's current approach to implementing differentially targeted social protection."
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    Measuring the Effects of Natural Gas Pipeline Constraints on Regional Pricing and Market Integration
    (2016-11) Avalos, Roger; Fitzgerald, Timothy; Rucker, Randal R.
    Natural gas pipeline capacity sets physical limits on the quantity of gas that can be moved between regions, with attendant price effects. We find support for the hypothesis of integrated regional markets. Using data on daily pipeline flows and capacities in Florida and Southern California, we estimate reduced-form price effects of capacity constraints. We find that pipeline congestion increased realized citygate prices by at least 11 percent over the mean in Florida and by 6 percent over the mean in Southern California. We attribute the difference in price effects to more binding capacity constraints in the Florida pipeline network. Our estimates provide guidance for interstate pipeline investments.
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    You Can't Drag Them Away: An Economic Analysis of the Wild Horse and Burro Program
    (2016-01) Elizondo, Vanessa; Fitzgerald, Timothy; Rucker, Randal R.
    Since 1971 wild horses and burros living on federal land have been legally protected, limiting removal from the range and stipulating restrictive conditions for transfer to private ownership. Periodic gathers prevent overpopulation, though we find both political and biological influences on the probability and size of gathers. Attempts to convey removed horses to private owners are often unsuccessful because of the relatively low quality of some animals and contractual restrictions. We consider alternative policy regimes promoting the transfer of additional animals; such reforms could have reduced program costs by as much as $452 million over the past twenty-five years
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    Forecasting a Moving Target: The Roles of Quality and Timing for Determining Northern US Wheat Basis
    (2016-01) Bekkerman, Anton; Brester, Gary W.; Taylor, Mykel
    While nearly instantaneous commodity futures price information provides price forecasts for national markets, many market participants are interested in forecasts of local cash prices. Expected basis estimates are often used to convert futures prices into local price forecasts. This study considers basis patterns in the northern U.S. hard red spring and hard red winter wheat markets. Using data on basis values across 215 grain-handling facilities, we empirically test the forecasting capabilities of numerous basis models. Contrary to basis models developed for other U.S. regions, we show that recent futures prices, protein content, and harvest information are more important for accurate basis forecasts than historical basis averages. The preferred basis models are used to develop an automated web-based basis forecasting tool, available at http://wheatbasis.montana.edu.
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    On understanding inconsistent disciplinary behaviour in schools
    (2015) Bekkerman, Anton; Gilpin, Gregory A.
    Inconsistent disciplinary administration across schools can inequitably impact students' education access opportunities by separating certain students from familiar learning environments, especially in misconduct cases that result in longer-term removal. We empirically estimate whether such inconsistencies are attributable to heterogeneity in student body demographic characteristics. The results indicate that a greater number of disciplines that remove students from school for an extended period of time are observed in schools with a higher proportion of black students, but no significant differential punishment effects are observed in schools with a higher Hispanic student population. Furthermore, results of decomposing the marginal effects into conditional and unconditional elasticities indicate that it is not the case that schools with predominantly white student bodies have the least severe punishments and schools with more minority students have the most severe punishments. Rather, schools with inconsistent disciplinary behaviour have a proportion of the inconsistency attributable to the race of the student body.
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    Net Returns from Terrain-Based Variable-Rate Nitrogen Management on Dryland Spring Wheat in Northern Montana
    (2015-04) Long, Dan S.; Whitmus, Jeffrey D.; Engel, Richard E.; Brester, Gary W.
    Agricultural producers can use variable‐rate application technology to vary N fertilizer within fields. This study was conducted to estimate changes in net returns from implementation of variable‐rate N management (VNM) on hard red spring wheat (Triticum aestivum L.) in a summer‐fallow region in northern Montana. Net return from uniform N management (UNM) traditionally used by producers was compared with that from VNM in eight dryland fields between 1994 and 2004. Field experiments consisted of a replicated series of four to six N rates applied within strips oriented with the length of each field. Management zones (MZs) were created by dividing the fields into upper slopes, south‐facing middle slopes, north‐facing middle slopes, and lower slopes. Nitrogen recommendations for MZs were based on soil N testing and expected yields. Grain yield data were obtained using a production‐size combine equipped with a yield monitor. Mean grain protein and yield were similar between VNM and UNM. Yield differences were <223 kg ha−1 and averaged only 18 kg ha−1. Grain yield did not differ significantly among N rates within MZs. In seven of the eight sites, net returns from VNM were up to US$27.97 ha−1 less than from UNM and were not profitable if Environmental Quality Incentive Program payments of US$6.36 ha−1 were considered as part of net income. Little evidence existed that VNM based on constructed MZs and predetermined N recommendations improves grain yields and profits or reduces N use in water‐limited, summer‐fallow systems of northern Montana.
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