Livestock and grain production functions from a new data source

Abstract

This study is concerned with the anlaysis and evaluation of a new source of data, namely income tax data, for analyzing the problems of Montana agriculture. The study is intended to determine whether statistically significant coefficients of production can be derived from the tax data and whether the results make reasonable economic sense. The motivation for doing the study was an interest in exploring the possibility of income tax data serving as a less expensive and more convenient source of data than has been previously available. Heretofore, most farm production economic studies have relied on data from survey schedules. Obtaining data through specifically designed surveys is expensive and time consuming, and all too often the information is of questionable accuracy. In approaching the income tax data, two production functions were statistically derived; one for grain farms and another for livestock farms. These functions were then compared to those derived from previous studies that used other types of Montana data and similar variables. The similarity of the compared results was used to determine whether reasonable estimates could be derived from the tax data. Statistical criteria were used in evaluating the reliability of the data. The thesis yields the conclusion that income tax returns represent an acceptable data source, and that the production functions derived were reasonably descriptive of Montana grain and livestock farming.