Agricultural Economics & Economics

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Situated jointly within MSU's College of Agriculture and College of Letters and Sciences, our department offers a unique opportunity for students with diverse interests to learn skills in critical analysis, logical problem solving, data and policy analysis, written and oral communication, business management. We train individuals who will make a big difference in the world by applying solid critical thinking skills. Our award-winning faculty has expertise in a wide variety of fields. We conduct cutting-edge research and teach a myriad of courses.

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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.
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.
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.
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.
The Chronic Kidney Disease Model: A General Purpose Model of Disease Progression and Treatment.
(2011-06) Orlando, L. A.; Belasco, Eric J.; Patel, U. D.; Matcher, D. B.
Background: Chronic kidney disease (CKD) is the focus of recent national policy efforts; however, decision makers must account for multiple therapeutic options, comorbidities and complications. The objective of the Chronic Kidney Disease model is to provide guidance to decision makers. We describe this model and give an example of how it can inform clinical and policy decisions. Methods: Monte Carlo simulation of CKD natural history and treatment. Health states include myocardial infarction, stroke with and without disability, congestive heart failure, CKD stages 1-5, bone disease, dialysis, transplant and death. Each cycle is 1 month. Projections account for race, age, gender, diabetes, proteinuria, hypertension, cardiac disease, and CKD stage. Treatment strategies include hypertension control, diabetes control, use of HMG-CoA reductase inhibitors, use of angiotensin converting enzyme inhibitors, nephrology specialty care, CKD screening, and a combination of these. The model architecture is flexible permitting updates as new data become available. The primary outcome is quality adjusted life years (QALYs). Secondary outcomes include health state events and CKD progression rate. Results: The model was validated for GFR change/year -3.0 ± 1.9 vs. -1.7 ± 3.4 (in the AASK trial), and annual myocardial infarction and mortality rates 3.6 ± 0.9% and 1.6 ± 0.5% vs. 4.4% and 1.6% in the Go study. To illustrate the model's utility we estimated lifetime impact of a hypothetical treatment for primary prevention of vascular disease. As vascular risk declined, QALY improved but risk of dialysis increased. At baseline, 20% and 60% reduction: QALYs = 17.6, 18.2, and 19.0 and dialysis = 7.7%, 8.1%, and 10.4%, respectively. Conclusions: The CKD Model is a valid, general purpose model intended as a resource to inform clinical and policy decisions improving CKD care. Its value as a tool is illustrated in our example which projects a relationship between decreasing cardiac disease and increasing ESRD.
Correlation of the Ratio of Metastatc to Non-Metastatic Cancer Cases With the Degree of Socioeconomic Deprivation Among Texas Counties
(2011-02) Phillips, Billy U. Jr.; Gong, Gordon; Hargrave, Kristopher A.; Belasco, Eric J.; Lyford, Conrad P.
Background: Previous studies have demonstrated that cancer registrations and hospital discharge rate are closely correlated with census data-based socioeconomic deprivation indices. We hypothesized that communities with higher degrees of socioeconomic deprivation tend to have a higher ratio of metastatic to non-metastatic cancer cases (lung, breast, prostate, female genital system, colorectal cancers or all types of cancers combined). In this study, we investigate the potential link between this ratio and the Wellbeing Index (WI) among Texas counties. Results: Cancer data in 2000 were provided by the Texas Cancer Registry, while data on the ten socioeconomic variables among the 254 Texas counties in 2000 for building the WI were obtained from U.S. Census Bureau. The ten socioeconomic status variables were subjected to the principal component analysis, and the first principal component scores were grouped into deciles for the WI (1 to 10) and the 254 Texas counties were classified into 10 corresponding groups. Weighted linear regression analyses and a Cochran-Armitage trend test were performed to determine the relationship between the ratio of age-adjusted metastatic to non-metastatic cancer incidence cases and WI. The ratios of metastatic to non-metastatic cases of female genital system cancer (r2 = 0.84, p = 0.0002), all-type cancers (r2= 0.73, p = 0.0017) and lung cancer (r2= 0.54, p = 0.0156) at diagnosis were positively correlated with WI. Conclusions: The ratios of metastatic to non-metastatic cases of all-type, female genital system and lung cancers at diagnosis were statistically correlated with socioeconomic deprivation. Potential mediators for the correlation warrant further investigation in order to reduce health disparities associated with socioeconomic inequality.
Determinants of delayed detection of cancers in Texas Counties in the United States of America
(2012-05) Gong, Gordon; Belasco, Eric J.; Hargrave, K. A.; Lyford, C. P.; Phillips, B. U. Jr.
Introduction: Previous studies have shown that delayed detection of several cancers is related to socioeconomic deprivation as measured by the Wellbeing Index (WI) in Texas, the United States of America (USA). The current study investigates whether delayed cancer detection is related to lack of health insurance, physician shortage and higher percentages of Hispanics rather than WI per se since these factors are directly related to delayed cancer detection and may confound WI. Methods: Cancer data and potential determinants of delayed cancer detection are derived from Texas Cancer Registry, Texas State Data Center, and Texas Department of State Health Services and U.S. Census Bureau. Texas cancer data from 1997 to 2003 are aggregated to calculate age-adjusted late- and early-stage cancer detection rates. The WI for each county is computed using data from the USA Census 2000. A weighted Tobit regression model is used to account for population size and censoring. The percentage of late-stage cancer cases is the dependent variable while independent variables include WI and the aforementioned potential confounders. Results: Delayed detection of breast, lung, colorectal and female genital cancers is associated with higher percentage of uninsured residents (p < 0.05). Delayed detection is also associated with physician shortage and lower percentages of Hispanics for certain cancers ceteris paribus ( p < 0.05). The percentage of late-stage cases is positively correlated with WI for lung, and prostate cancers after adjusting for confounders ( p < 0.05). Conclusions: The percentages of uninsured and Hispanic residents as well as physician supply are determinants of delayed detection for several cancers independently of WI, and vice versa. Identification of these determinants provides the evidence-base critical for decision makers to address specific issues for promoting early detection in effective cancer control.
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 winesâ€”those with sale prices less than $30 per 750 milliliter bottleâ€”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)
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.
Estimates of U.S. Private Oil and Natural Gas Royalties
(2014-02) Fitzgerald, Timothy; Rucker, Randal R.
The United States is the only country in the world with widespread private ownership of minerals. This private ownership has helped make many citizens rich throughout the country’s history from strikes of precious metals and other minerals, as well as hydrocarbon resources. As the United States enjoys a Renaissance of oil production amidst the current high price environment, the ownership of oil and natural gas resources has reemerged as a critical economic force. Although private oil and gas ownership is acknowledged as an important contributor to innovation in development of unconventional resources and the technologies used to produce them (Yergin 2011), little is known about the aggregate value of private mineral interests. Usually private minerals are leased to developers in exchange for a royalty paid on the basis of gross production revenue as oil and natural gas are extracted. In this paper we estimate aggregate private oil and gas royalty incomes in recent years.
Evaluation of Crop Insurance Yield Guarantees and Producer Welfare with Upward Trending Yields
(2012-12) Adhikari, Subodh; Knight, T. O.; Belasco, Eric J.
Actual Production History (APH) yields play a critical role in determining the coverage offered to producers by the Risk Management Agency’s yield-based crop insurance products. Using both county and individual insured unit data, we examine the impact of APH yield trends for Texas cotton and Illinois corn. Our findings indicate that biases due to using simple average APH yields when yields are trending upward reduce the expected indemnity and actuarially fair premium rate. The estimated welfare effect also varies significantly with different commonly used detrending approaches. This study demonstrates that producer welfare can be enhanced through proper treatment of yield trends in crop insurance programs.
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.
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.
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.
High Tunnels Are My Crop Insurance: An Assessment of Risk Management Tools for Small-Scale Specialty Crop Producers
(2013-08) Belasco, Eric J.; Miles, C.; Wszelaki, Annette L.; Ponnaluru, S.; Galinato, S.; March, T.
High tunnels are being used by specialty crop producers to enhance production yields and quality, extend growing seasons, and protect crops from extreme weather. The tunnels are unheated, plastic-covered structures under which crops are planted directly in the soil, and they provide greater environmental protection and control than open-field production. This study uses field-level experiments to evaluate high-tunnel production. The results suggest that investments in high tunnels can provide increased profits and superior protection against adverse risks relative to crop insurance.
The impact of rural health care accessibility on cancer-related behaviors and outcomes
(Springer, 2014) Belasco, Eric J.; Gong, Gordon; Pence, Barbara; Wilkes, Ethan C.
Background: This research seeks to identify the relationship between economic factors related to the ability to receive and pay for health services and adverse cancer outcomes, as well as preventative screening and behavioral factors that inﬂuence the risk of cancer. We focus on the Northern High Plains region, where we are able to compare regions with extremely low access to health services with those with relatively high levels of access.  Objective: This study aims to identify health disparities in rural communities, particularly among Native American populations, and, thereby, begin to determine the most effective means by which to deliver health services to areas where geography, economics, and culture might prevent traditional models of health delivery from providing sufﬁcient incentives for the prevention of adverse cancer-related outcomes.  Methods: The Health Care Accessibility Index (HCAI) is computed through the use of principal component analysis and includes economic variables as well as variables concerning institutional and geographic access to health care. Index values are then regressed onto cancer outcomes, cancer-prevention outcomes, and cancer-related risk, using weighted least squares and quantile regressions.   Results: Counties with relatively poor access to health care (low HCAI) also have statistically (1) lower breast cancer screening rates, (2) higher smoking prevalence, and (4) higher cancer-related mortality rates. Breast cancer screening is found to be especially sensitive to areas of low health accessibility.   Conclusions: Empirical results provide support for policy efforts to increase the accessibility of health care services that are targeted to areas with mammography screening rates, high obesity rates, high smoking prevalence, as well as areas near Native American reservation territories.
The Impacts of the Canadian Wheat Board Ruling on the North American Malt Barley Markets
(2014-07) Bekkerman, Anton; Schweizer, Heidi; Smith, Vincent H.
The 2011 Marketing Freedom for Grain Farmers Act deregulated Canadian grain markets and removed the Canadian Wheat Board (CWB) as the sole buyer and seller of Canadian grain. We develop a rational expectations contract decision model that serves as the basis for an empirically informed simulation analysis of malt barley contracting opportunities between Canadian farmers and U.S. maltsters in the deregulated environment. Comparative statics and simulation results indicate that some new opportunities for contracting are possible, but the likelihood of favorable conditions for U.S. maltsters to contract with Canadian rather than U.S. farmers is low—between 9% and 35% over a range of possible selection rates. The effects on contracting of the termination of the Canadian grain transportation revenue cap policy and of the relaxation of criteria for the release of new spring wheat varieties are also investigated. While changes to grain transportation policies are not likely to significantly affect favorable conditions for contracting, reducing constraints on Canadian farmers’ access to higher yielding wheat varieties could increase the returns from growing spring wheat but decrease the likelihood of contracting for malt barley with U.S. maltsters by an average of 5.3 percentage points.
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.
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.
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.