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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The 2007 Farm Bill: Montana Producer Preferences for Agricultural, Food, and Public Policy
(2007-02) Johnson, James B.; Haynes, George W.; Brester, Gary W.
The Farm Security and Rural Investment Act of 2002 provides the direction for federal agricultural, food, and public policy through September of 2007. The 2002 Act is the most recent in a series of comprehensive farm bills that have authorized federal farm programs. When the 2002 Act expires, new legislation will guide future programs. In the absence of new legislation, federal farm programs could revert to permanent legislation dating from 1949. The presence of permanent legislation helps provide the impetus needed to insure that agriculture, food, and rural policy issues will be addressed by Congress and by United States Department of Agriculture (USDA) programs.
Adjusted Gross Revenue-Lite: A Whole Farm Revenue Insurance Available in Wyoming
(2008-02) Johnson, James B.; Hewlett, John P.; Griffith, Duane
Adjusted Gross Revenue-Lite (AGR-Lite) is a federally-subsidized whole-farm revenue protection insurance plan. The plan is a whole farm (ranch) revenue insurance that covers revenue losses from most farm-raised crop commodities, animal commodities and unprocessed (unaltered) animal products such as milk and wool. The plan protects against low revenue due to losses in production and declines in product quality and market price. Specifically, the plan provides protection against low revenue due to production losses attributable to unavoidable natural disasters and market fluctuations that impact farm revenue in the insurance year.
Agricultural Chemical Prices in Canada and the United States: A Case Study of Alberta and Montana
(MSU Extension, 2004-12) Smith, Vincent H.; Johnson, James B.
Differences in retail prices for similar or identical agricultural chemicals have been a source of controversy in the Prairie Provinces of Canada and the Northern Great Plains States of the United States since the mid-1990s. Such differences may exist because of differing pesticide regulations between the United States and Canada. Different regulations may inhibit trade between the two regions and isolate markets from one another. If this is the case, then regulatory harmonization that allows Canadian and U.S. agricultural producers to purchase agricultural chemicals in Canada or the United States would generally lead to harmonization of agricultural chemical prices.
Agricultural Leasing Study
(2015-07) Haynes, George W.; Smith, Vincent H.
This study describes crop-share and cash leasing arrangements in Montana for calendar year 2013 by surveying land owners, who own dry and irrigated cropland and grazing land. A dataset containing names and address of all land owners in Montana was provided by the Department of Revenue’s Property Assessment Division. A sample of 880 land owners selected from this population completed the telephone implemented by the Bureau of Business and Economic Research at the University of Montana. Faculty members in the Department of Agricultural Economics and Economics at Montana State University were responsible for developing the questionnaire; conducting personal interviews with landlords, tenants, and real estate agents; and, analyzing these data.
Agriculture in the Tongue River Basin, Output, Water Quality, and Implications
(2013-05) Fitzgerald, Timothy; Zimmerman, Grant
Natural resources have long been important to economic activity in Montana. From wildlife populations to mineral deposits, different residents have recognized the natural potential of the state and worked to create wealth from different resources. Agriculture has been and remains a important means of creating economic value from natural resources—gross revenues from agriculture are larger than any other sector in Montana, though it ranks lower in terms of contribution to gross domestic product.1 This study considers the value of a specific natural resource in Montana—water quality in the Tongue River in the southeastern part of the state. The study has three main sections: the first documents the agricultural production of the region; the second evaluates the importance of water quality to that production; and the third considers the distributional implications including contribution to public finances.
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 Canadian Wheat Board: Government Guarantees and Hidden Subsidies
(MSU Extension, 2004-07) Goodloe, Carol
The operations of the Canadian Wheat Board (CWB), a state trading enterprise, have generated controversy over the years, partly because of an alleged lack of transparency in its operations. This study examines one aspect of operations that is not well understood – the government guarantee of CWB borrowing and export credit sales. The CWB is able to take advantage of this special privilege to generate a “financial cushion,” or non-market based revenue, that it can use to enhance returns to producers, discount export prices, or pay administrative expenses. Current WTO negotiations should build on U.S. and EU proposals on STEs and export credit guarantees to address potential trade-distorting practices of STEs such as the CWB.
Child access prevention laws and juvenile firearm-related homicides
(2021-11) Anderson, D. Mark; Sabia, Joseph J.; Tekin, Erdal
Debate over safe-storage gun regulations has captured public attention in the aftermath of several high-profile shootings committed by minors. To date, the existing literature provides no evidence that these laws are effective at deterring gun crime, a conclusion that has prompted the National Rifle Association to assert that such regulations are “unnecessary” and “ineffective.” Using data from the FBI's Supplementary Homicide Reports for the period 1985–2013, we find that child access prevention (CAP) laws are associated with a 17 percent reduction in firearm-related homicides committed by juveniles. The estimated effect is stronger among whites than nonwhites and is driven by states enforcing the strictest safe-storage standard. We find no evidence that CAP laws are associated with firearm-related homicides committed by adults or with non-firearm-related homicides committed by juveniles, suggesting that the observed relationship between CAP laws and juvenile firearm-related homicides is causal.
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.
The Common Crop (COMBO) Policy
(2012-08) Johnson, James B.; Smith, Vincent H.; Hewlett, John P.
Beginning with the 2011 crop year, the United States Department of Agriculture’s (USDA) Risk Management Agency (RMA) introduced an initiative to combine and simplify crop insurance. RMA released the Common Crop Insurance Policy Basic Provisions and related Crop Provisions as the insurance policy basis for crop insurance coverage. The new policy is widely described as the COMBO Policy because it explicitly combines APH revenue and APH yield insurance in one general policy and creates a single APH revenue program for each of the commodities that are eligible for APH-based revenue coverage.
Constructing an Organic Price Series: Not as Easy as Expected
(2008-11) Buschena, David
The growth of organic farm production and consumer demand has raised questions regarding the profitability of organic systems. A primary component of this profitability is the size and sustainability of organic price premiums. Additionally, there have been recent large increases in the prices for conventionally-produced commodities due to increases in input costs (particularly fertilizer and fuel), changes in export demand (including the value of the dollar), and also perhaps the ethanol market. We explore the relationships between organic and conventional grain prices over the period 1998 to 2008 using monthly price series. This relatively long period allows us to assess the nature of the price relationships between organic and conventional prices for periods prior to and after the recent run-up in conventional prices. Our focus is on the three key crops for Montana: corn (as a feed barley substitute), hard red spring wheat, and hard red winter wheat.
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.
Criminal Deterrence when There Are Offsetting Risks: Traffic Cameras, Vehicular Accidents, and Public Safety
(2020-08) Gallagher, Justin; Fisher, Paul J.
Numerous cities have enacted electronic monitoring programs at traffic intersections in an effort to reduce the high number of vehicle accidents. The rationale is that the higher expected fines for running a red light will induce drivers to stop and lead to fewer cross-road collisions. However, the cameras also incentivize drivers to accept a greater accident risk from stopping. We evaluate the termination of a monitoring program via a voter referendum using 12 years of geocoded police accident data. We find that the cameras changed the composition of accidents but no evidence of a reduction in total accidents or injuries.
Crop Insurance for Alfalfa Seed Production: A Pilot Program Available in Select Wyoming Counties
(MSU Extension, 2006-07) Johnson, James B.; Hewlett, John P.
In several western states including Wyoming a federally-subsidized multiple peril crop insurance product approved by the Risk Management Agency is offered on a pilot basis for forage seed production. In Big Horn and Park counties (Figure1) irrigated alfalfa seed production grown under certification standards or grown under an alfalfa seed contract is insurable.
Crop Subsidy and Crop Insurance for Wyoming Farmers in a New 2013/14 Farm Bill
(2013-07) Smith, Vincent H.; Johnson, James B,; Hewlett, John P.
Farm policy is in flux and the future of many farm subsidy programs is in question. In Congress, the Senate Agriculture Committee (and the entire Senate) and the House Agriculture Committee have recently developed alternative farm bill proposals. While the two bills include some very similar or identical proposals, they also contain some very different initiatives. Those differences would normally be resolved through a conference process within a joint House and Senate Agricultural Committee conference committee.
Culture and gender allocation of tasks: source country characteristics and the division of non-market work among US immigrants
(2020) Blau, Francine D.; Kahn, Lawrence M.; Comey, Matthew; Eng, Amanda; Meyerhofer, Pamela; Willen, Alexander
There is a well-known gender difference in time allocation within the household, which has important implications for gender differences in labor market outcomes. We ask how malleable this gender difference in time allocation is to culture. In particular, we ask if US immigrants allocate tasks differently depending upon the characteristics of the source countries from which they emigrated. Using data from the 2003–2017 waves of the American Time Use Survey (ATUS), we find that first-generation immigrants, both women and men, from source countries with more gender equality (as measured by the World Economic Forum’s Global Gender Gap Index) allocate tasks more equally, while those from less gender equal source countries allocate tasks more traditionally. These results are robust to controls for immigration cohort, years since migration, and other own and spouse characteristics. There is also some indication of an effect of parent source country gender equality for second-generation immigrants, particularly for second-generation men with children. Our findings suggest that broader cultural factors do influence the gender division of labor in the household.
Determinants of crop diversification and its impact on farmers' income: A case study in Rangpur District, Bangladesh
(Wiley, 2024-09) Islam, Md Sayemul; Jahan, Hasneen; Sultana Ema, Nishat; Ahmed, Md. Rubel
Background. In the face of rising global food demand, climate change, and economic uncertainties, crop diversification has emerged as a crucial tool for achieving both economic and environmental sustainability. In Bangladesh, where the economy heavily relies on agriculture, crop diversification can play a vital role in enhancing farmers' livelihoods and domestic food production. Results. This study focuses on Rangpur district, an agricultural hub in Bangladesh, analyzing data from 122 farmers to assess the status, determinants, and effects of crop diversification. The Simpson Diversification Index (SDI) analysis revealed that 29% and 68% of the farmers exhibit very high and high degrees of crop diversification, respectively. The Tobit model identified significant drivers of crop diversification, including education, household size, farming experience, non-farm income, mobile phone information access, experience with climatic shocks, and land type. Additionally, the Log-Linear model indicated that each unit increase in the SDI score corresponds to a 2.41% increase in farmers' income. Conclusion. The study demonstrates that crop diversification is a key strategy for enhancing economic sustainability and increasing income among farmers in Bangladesh. By improving both economic outcomes and resilience, crop diversification supports sustainable agricultural practices in the region.