Agricultural Economics: Harvesting Prosperity, A Journey Through Agricultural Economics

By Fouad Sabry

What is Agricultural Economics

Agricultural economics is a subfield of applied economics that focuses on applying economic theory to optimize the production and distribution of food and fiber products. It is considered to be an applied discipline of economics. Agricultural economics started out as a subfield of economics that focused exclusively on issues related to land consumption. The goal was to increase the agricultural output while minimizing the negative impact on the ecosystem of the soil. The field of study grew over the 20th century, and its current scope encompasses a far wider range of topics than it did in the past. The modern study of agricultural economics encompasses a wide range of application areas, many of which overlap significantly with those of traditional economics. Research in the fields of economics, econometrics, development economics, and environmental economics have all benefited significantly from the contributions made by agricultural economists. The economics of agriculture has an impact not only on food policy but also on agricultural policy and environmental policy.

How you will benefit

(I) Insights, and validations about the following topics:

Chapter 1: Agricultural economics

Chapter 2: Applied economics

Chapter 3: Gordon Rausser

Chapter 4: Marc Nerlove

Chapter 5: Association of Environmental and Resource Economists

Chapter 6: Siegfried von Ciriacy-Wantrup

Chapter 7: Colin Carter

Chapter 8: Daniel Bromley

Chapter 9: Rural economics

Chapter 10: David Zilberman (economist)

Chapter 11: Jayson Lusk

Chapter 12: George S. Tolley

Chapter 13: Yoav Kislev

Chapter 14: Gerald Shively

Chapter 15: Scott H. Irwin

Chapter 16: Elisabeth Sadoulet

Chapter 17: William A. Masters

Chapter 18: Awudu Abdulai

Chapter 19: Jill McCluskey

Chapter 20: Matin Qaim

Chapter 21: Uma Lele

(II) Answering the public top questions about agricultural economics.

(III) Real world examples for the usage of agricultural economics in many fields.

(IV) Rich glossary featuring over 1200 terms to unlock a comprehensive understanding of agricultural economics

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of agricultural economics.

• Language: English
• Publisher: One Billion Knowledgeable
• Release date: Nov 9, 2023

Book preview

Chapter 1: Agricultural economics

Agricultural economics is an applied field of economics concerned with optimizing the production and distribution of food and fiber products through the application of economic theory. Agricultural economics began as a subfield of economics concerned specifically with land utilization. It aimed to maximize crop yield while preserving a healthy soil ecosystem. The discipline expanded throughout the 20th century, and its current scope is significantly broader. Agricultural economics encompasses a variety of applied fields that overlap substantially with conventional economics. The contributions of agricultural economists to research in economics, econometrics, development economics, and environmental economics have been substantial. Food policy, agricultural policy, and environmental policy are influenced by agricultural economics.

Cartoon showing U.S.

President Calvin Coolidge transporting the McNary–Haugen Farm Relief Bill in a dustpan to a VETO-marked trash can.

Economics is the study of resource allocation under conditions of scarcity. At the turn of the 20th century, agricultural economics, or the application of economic principles to optimize agricultural producers' decisions, rose to prominence. The origins of agricultural economics can be traced to land economics works. With the establishment of the Department of Agricultural Economics at the University of Wisconsin in 1909, Henry Charles Taylor was the period's most important contributor.

Ford Runge, an expert in the field, describes the evolution of agricultural economics as follows::

Agricultural economics emerged in the late 19th century, combined the theory of the firm with marketing and organization theory, and developed primarily as an empirical subfield of general economics throughout the 20th century. The discipline was intimately associated with empirical applications of mathematical statistics and made early and significant contributions to econometric techniques. As agricultural sectors in OECD countries shrank in the 1960s and afterward, agricultural economists were drawn to the development problems of poor countries, the trade and macroeconomic policy implications of agriculture in rich countries, and a variety of production, consumption, environmental, and resource issues.

Agricultural economists have made notable contributions to the field of economics with models such as the cobweb model. The farm sector is frequently cited as a prime illustration of the perfect competition economic paradigm.

In Asia, the Faculty of Agricultural Economics was founded in September 1919 at Hokkaido Imperial University, Japan, while Tokyo Imperial University's School of Agriculture inaugurated a faculty on agricultural economics within its second department of agricultural science.

The Philippine Islands, agricultural economics was offered first by the University of the Philippines Los Baños Department of Agricultural Economics in 1919.

Today, Agricultural economics has evolved into a more interdisciplinary field that encompasses farm management and production economics, finance and institutions in rural areas, Agricultural pricing and marketing, Agriculture policy and progress, economics of nutrition and food, economics of the environment and natural resources.

According to Ford Runge, since the 1970s, agricultural economics has primarily focused on seven topics: agricultural environment and resources, risk and uncertainty, food and consumer economics, prices and incomes, market structures, trade and development, and technical change and human capital.

In the field of environmental economics, agricultural economists have made significant contributions in three main areas: designing incentives to control environmental externalities (such as water pollution from agricultural production), estimating the value of non-market benefits from natural resources and environmental amenities (such as a beautiful rural landscape), and the complex interrelationship between economic activities and environmental consequences.

Historically, the field of agricultural economics was primarily concerned with farm-level issues; however, in recent years agricultural economists have studied a variety of topics pertaining to the economics of food consumption. In addition to the traditional emphasis economists have placed on the effects of prices and incomes, researchers in this field have examined how information and quality attributes influence consumer behavior. Agricultural economists have contributed to the understanding of how households decide between purchasing food and preparing it at home, how food prices are determined, poverty threshold definitions, how consumers respond consistently to price and income changes, and survey and experimental tools for determining consumer preferences.

Agricultural economics research has examined agricultural production's diminishing returns, as well as farmers' costs and supply responses. Numerous studies have applied economic theory to agricultural decisions. Risk and decision-making under uncertainty research has real-world applications for crop insurance policies and for gaining an understanding of how farmers in developing nations choose to adopt new technologies. These topics are essential for comprehending the prospects for producing enough food for a growing global population in the face of new resource and environmental challenges like water scarcity and global climate change.

The field of development economics focuses on the improvement of living conditions and economic performance in low-income countries. Agricultural economists have been at the forefront of empirical research on development economics, contributing to our understanding of the role of agriculture in economic development, economic growth, and structural transformation, as agriculture is a significant component of most developing economies, both in terms of employment and GDP share. Numerous agricultural economists are concerned with the food systems of developing economies, the connections between agriculture and nutrition, and the ways in which agriculture interacts with other domains, such as the natural environment.

Every three years, the International Association of Agricultural Economists (IAAE) hosts its largest conference. The association publishes Agricultural Economics journal. There are also the European Association of Agricultural Economists, the African Association of Agricultural Economists, and the Australian Agricultural and Resource Economics Society. The International Food Policy Research Institute engages in substantial agricultural economics research on a global scale.

The primary professional organization in the United States is the Agricultural & Applied Economics Association (AAEA), which hosts its own annual conference and co-sponsors the annual meetings of the Allied Social Sciences Association (ASSA). The American Agricultural Economics Association publishes the American Journal of Agricultural Economics and Applied Economic Perspectives and Policy.

Agricultural management, agribusiness, commodities markets, education, the financial sector, the government, natural resource and environmental management, real estate, and public relations are just some of the industries where graduates of agricultural and applied economics departments can find employment. A bachelor's degree is required for careers in agricultural economics, and a master's degree is required for research careers in the field; see Master of Agricultural Economics. The Georgetown Center for Education and the Workforce ranked agricultural economics eighth out of 171 fields in terms of employability in a 2011 report.

Robert E. Evenson and Prabhu Pingali (eds) (2007). Agricultural Economics Handbook. Amsterdam, Netherlands: Elsevier.

{End Chapter 1}

Chapter 2: Applied economics

Applied economics is the study of how economic theory and econometrics are applied in specific contexts. As one of the two subfields of economics, microeconomics (the other set being the core), The origins and significance of applied economics date back to the writings of Say and Mill. Say referred to applying the general principles of political economy to determine the rule of action for any given set of circumstances Mill's (1848) book is titled Principles of Political Economy with Some of Its Applications to Social Philosophy.

Possibly the first person to use the phrase applied economics was John Neville Keynes. He mentioned the English School (John Stuart Mill, John Elliott Cairnes, and Nassau William Senior)

according to the sense suggested by the text [in relation to the craft of political economy]; to designate the application of economic theory to the interpretation and explanation of specific economic phenomena, without reference to the solution of practical problems; To distinguish between the more concrete and specialized portions of economic doctrine and the more abstract doctrines that are believed to permeate all economic reasoning. (1917, 58–59) And applying economic theories to what we have in reality in order to have a healthy business and business prosperity.

Léon Walras, for example, The author intended to divide his major work into volumes on pure, applied, and social economics.

Jaffé (1983) describes Walras's plan as involving making a distinction between that which is true, is useful, and is only.

Using the term genuine, Walras referred to propositions that followed logically from the nature of things.

Consequently, pure economics involves pure logic.

Applied economics requires evaluating whether the logic of pure economics is applicable to the real world and examining methods for achieving practical objectives.

Social economics assumed pure economics as well, However, it addressed a different range of issues than applied economics.

Those that are typically considered to be a part of economics but are also studied separately to allow for greater attention to detail, such as money and banking, trade, cycles, and location.

Those that are independent of economics but are necessary for its study. These include accounting, actuarial science, and insurance, among others.

Agriculture, labor, transportation, utility industries, industry control, and public finances are areas of public policy.

comparative economic systems

demography

area studies

Modern mainstream economics holds that there is a body of abstract economic theory – the core – and that applied economics requires the practitioner to reduce certain aspects of this abstraction in order to examine specific problems. This lowering of abstraction level may involve:

renaming variables with more specific and concrete terms; providing structure to permit the drawing of more specific conclusions; generating numerical estimates for a number of parameters; Using analysis to interpret real-world phenomena that are interpreted as examples of a more general class of occurrences that the fundamental theory could be used to examine.

Pesaran and Harcourt (2000) describe Stone's attempt to make economics a science by integrating theory and measurement within a cohesive framework. They describe Stone's proposal to establish Cambridge's now-famous Department of Applied Economics. Stone contended that:

The ultimate goal of applied economics is to improve human welfare through the investigation and analysis of real-world economic problems. The Department believes this can be accomplished most effectively by combining three types of research that are typically pursued in isolation. The Department will simultaneously concentrate on the work of observations, i.e. the discovery and preparation of data, the theoretical appraisal of problems, i.e. the formulation of hypotheses in a form suitable for quantitative testing, and the development of statistical methods suited to the particular problems of economic information. This attempt at systematic synthesis will be the distinguishing feature of the Department's approach to problems in the real world. (Stone in Pesaran and Harcourt (2000), p.

The foundation of competing approaches is typically the denial that sound theory can be developed without a concrete connection to its field of application. This argument is shared by the Historical School of the 19th century and the Institutionalists of the 20th century. Mitchell (1936) observed that those in specialized fields had little use for the type of qualitative theory proposed by Marshall and Jevons. Mitchell (1937, 26–27) proposed that knowledge of real markets would affect the form and content of economic theory. Friedman concurred that theoretical concepts may or should emerge from the analysis of real-world data. For Mitchell and Friedman, economics should involve a dialogue between data analysis and hypothesis formulation, theoretical models; axioms of common sense, as well as, theoretical concepts.

The Journal of Applied Economics publishes original articles on micro and macroeconomic issues with an applied focus. The primary selection criteria for papers are their quality and significance to the field. Especially encouraged are papers based on a well-motivated research problem that makes a concrete contribution to empirical economics or applied theory.

Applied Economics is a leading peer-reviewed journal in economics and its practical applications. It defines its subject area as the application of economic analysis to specific problems in both the public and private sectors and seeks to publish quantitative studies, the results of which are of use in the practical field that may help bring economic theory closer to reality..

This quarterly journal has been published by the American Economic Association since 2009. It publishes articles on a variety of applied economics topics, particularly empirical microeconomic issues, such as labor economics, development microeconomics, health, education, demography, empirical corporate finance, empirical studies of trade, and empirical behavioral economics.

The Agricultural & Applied Economics Association is the publisher of these journals. Since 1919, the American Journal of Agricultural Economics has published research on the economics of agriculture and food, natural resources and the environment, and rural and community development throughout the world..

Applied Economic Perspectives and Policy (AEPP) is the premier journal of applied economics and policy that is peer-reviewed. It is one of two journals published by the Agricultural & Applied Economics Association (AAEA), along with the American Journal of Agricultural Economics, and is published quarterly by Oxford University Press (AJAE). With a 2011 impact factor of 1.552, Today is the leading journal in applied economics. AEPP's purpose is to analyze areas of current applied economic research in an effort to inform policymakers and decision makers; and to generate connections between sub-fields of agricultural and applied economics in order to focus future research and increase field members' understanding of the impact of public policy.

Backhouse and Biddle argue that the prevailing view, that there is an accepted theoretical core that can be applied to a variety of fields, relies on this core possessing particular characteristics, namely that it has a broad scope and can be developed independently of individual applications. As with the definition of applied economics itself, there are differing opinions within the economics profession as to what belongs in the core – where the line is drawn between research that contributes to the core and research that applies the core, as well as the relative importance or significance of research on core topics versus applied economics research.

Examples of applied economics problems from various fields and issues:

Examples of applied economics problems: macroeconomics

This is illustrated by macroeconomics. In the 1960s and 1970s, macroeconomics was an integral component of the core curriculum. Why? Because macroeconomics was not only sufficiently important to be a part of every economist's training, but also embodied a set of concepts and principles that were absent from microeconomic theory. With the replacement of the Keynesian approach to macroeconomics by new classical macroeconomics and its successors, macroeconomics may now be viewed as merely an application of microeconomic theory by the mainstream.

Examples of applied economics problems: Development Economics

Another illustration is the circumstance in Development Economics. In the 1950s and 1960s, the majority of development economists viewed the application of core microeconomic theory to their field as wholly inappropriate. A different set of models served as their foundation. This is perhaps best characterized as the structuralist approach. Recently, development economics texts have offered applications of mainstream fundamental theory.

Examples of applied economics problems: Economic Growth Theory

Comim illustrates the historical nature of the concept of applied economics by referencing the history of growth economics. Initially, he examines the theorists' perspectives on the applied aspect of their work from the perspective of the work conducted at the Department of Applied Economics (DAE) at Cambridge University. He emphasizes the divergences in economists' understanding of the proper application of economic theory, divergences that may reveal the influence of distinct practices in applied economics and the significance of institutional environments.

Examples of applied economics problems: the Minimum-wage debate

Leonard identifies a famous area of disagreement among applied economists in the United States. This was the minimum wage debate. He observes that the ferocity of this controversy was peculiar, given that its effects were likely to be minimal and that other seemingly more significant policy issues, such as (entitlement reform, health insurance, and CPI calculation), did not generate a comparable storm. His explanation was that, although this controversy was not particularly significant to the economy, it was extremely significant to economics and economics as a policy science. His explanation is that minimum wage research became a test of the applicability of neoclassical price theory to wages and employment. In other words, it was not merely a dispute over the sign and magnitude of wage-elasticity, but rather a continuation of a long-running methodological dispute over whether neoclassical price theory is actually useful.

A critique of econometrics' predominance

Swann (2006) questions the dominance of such econometric techniques in Applied Economics and proposes that what he calls the vernacular of the everyday practice of economics be taken seriously. Swann argues that econometrics' privileged position is not supported by its disappointing results, and suggests that other applied techniques, the vernacular, should also be considered. Simulation, engineering economics, case studies, and common sense are among these applied economics approaches.

{End Chapter 2}

Chapter 3: Gordon Rausser

Gordon Rausser is an economist from America. He is currently the Robert Gordon Sproul Distinguished Professor Emeritus and Dean Emeritus at the Rausser College of Natural Resources and, more recently, a graduate school professor at the University of California, Berkeley. Chief Economist at the United States Agency for International Development and President of the Institute for Policy Reform.

Editor of the American Journal of Agricultural Economics, associate editor of the Journal of the American Statistical Association, associate editor of the Journal of Economic Dynamics and Control, editor of the series Agricultural Management and Economics, and co-editor of four volumes of the Handbook of Agricultural Economics are among Rausser's contributions to the field of editing, Rausser, Gordon; Swinnen, Johan; Zusman, Pinhas (2011), Political Power and Economic Policy, vol. 1, Cambridge University Press

The College of Natural Resources at UC Berkeley was renamed the Rausser College of Natural Resources in 2020.

{End Chapter 3}

Chapter 4: Marc Nerlove

Marc Leon Nerlove (born 12 October 1933) is an American agricultural economist and econometrician and a distinguished university professor emeritus at the University of Maryland in agricultural and resource economics.

Marc Leon Nerlove was born in Chicago, Illinois on October 12, 1933 to Dr. Samuel Henry (1902–1972) and Evelyn (1907–1987) Nerlove. S. H. Nerlove was born in Vitebsk, Russia (now Belarus), and his parents brought him to the United States in 1904. He became a professor of business economics at the University of Chicago (approximately 1922 to 1965) and the University of California, Los Angeles (1962 to 1964). Since the family in Hyde Park did not have a farm of their own, S. H. would recount his visits to these farms at the dinner table.

In the 1950s, Nerlove wed Mary Ellen Lieberman (d. 2011); they had two daughters, Susan Nerlove (born around 1958) and Miriam Nerlove (born c. 1960). In the 1970s, Marc Nerlove and Mary Ellen Nerlove divorced, and he later married Dr. Anke Meyer (born 1955), a German environmental economist who spent 23 years at the World Bank (1991–2014) and collaborated with him on some of his writings during this time.

From 1939 to 1949, Nerlove attended the University of Chicago Laboratory Schools, 1952 Bachelor of Arts with honors in mathematics and general honors, In 1953, he worked as a research assistant for the Cowles Commission for Research in Economics.

Johns Hopkins University awarded him an MA in 1955 and a PhD in economics with distinction in 1956. (JHU), where Carl Christ supervised his dissertation.

Nerlove’s other teachers included Milton Friedman, Theodore Schultz, The phrase Ta-Chung Liu, Fritz Machlup, in addition to Jacob Marschak.

The Predictive Test as a Research Instrument: The Demand for Meat in the United States is Nerlove's MA thesis.

Nerlove’s teaching career began in 1958 as a visiting lecturer then lecturer at JHU before being appointed to his first professorship in 1959 at the University of Minnesota.

From there, He visited Stanford University from 1960 to 1964, Yale College (1965–1969), Chicago's University (1969–1975), University of Northwestern (1974–1982), prior to his retirement from the University of Maryland (1993-2016), British Columbia's University (1971), Fundação Getulio Vargas in Brazil (1974–1978), along with Australian National University (1982).

Nerlove’s employment history also includes federal service.

First, as an Analytical Statistician with the United States Department of Agriculture's Agricultural Marketing Service (1956–1957), then, as a Lieutenant in the United States Army between 1957 and 1959; Chairman Estes Kefauver requested that he be loaned from the Chemical Corps to the (US) Senate Subcommittee on Antitrust and Monopoly in 1958 as an economist.

World Bank (from 1979 to 1985), International Food Policy Research Institute and International Food Policy Research Institute (1981–1986).

Nerlove's service history includes the Econometric Society (President, 1981), the National Science Foundation (proposal reviewer, 1960–1974), and the Social Sciences Research Council (Director, Mathematical Social Science Board Summer Workshop on Lags in Economic Behavior, 1970).

Nerlove’s awards include the John Bates Clark Medal (1969), Grant for Fulbright Research (1962–1963), together with American Economic Association (2012).

Nerlove, Marc (May 1956). Estimates of the Elasticities of Supply of Selected Agricultural Commodities. American Journal of Agricultural Economics. 38 (2): 496–509. doi:10.2307/1234389. JSTOR 1234389. Retrieved February 8, 2022.

Nerlove, Marc (May 1958). Adaptive Expectations and Cobweb Phenomena. The Quarterly Journal of Economics. 72 (2): 227–240. doi:10.2307/1880597. JSTOR 1880597. Retrieved February 8, 2022.

Nerlove, Marc; Arrow, Kenneth J. (May 1962). Optimal Advertising Policy under Dynamic Conditions. Economica. 29 (114): 129–142. doi:10.2307/2551549. hdl:2027/uiug.30112057645332. JSTOR 2551549. Retrieved February 8, 2022.

Balestra, Pietro; Nerlove, Marc (July 1966). Pooling Cross Section and Time Series Data in the Estimation of a Dynamic Model: The Demand for Natural Gas. Econometrica. 34 (3): 585–612. doi:10.2307/1909771. JSTOR 1909771. Retrieved February 8, 2022.

Diebold, Francis X.; Nerlove, Marc (January–March 1989). The dynamics of exchange rate volatility: A multivariate latent factor ARCH model. Journal of Applied Economics. 4 (1): 1–21. doi:10.1002/jae.3950040102. Retrieved February 8, 2022.

Nerlove, Marc; Grether, David M.; Carvalho, Jose L. (1979). Analysis of Economic Time Series: A Synthesis. New York: Academic Press, Inc. ISBN 0-12-515750-9.

Nerlove, Marc; Razin, Assaf; Sadka, Efraim (1987). Household and Economy: Welfare Economics of Endogenous Fertility. Orlando: Academic Press, Inc. ISBN 0-12-515752-5.

Nerlove, Marc (2002). Essays in Panel Data Econometrics. Cambridge: Cambridge University Press. ISBN 978-0-521-81534-5.

{End Chapter 4}

Chapter 5: Association of Environmental and Resource Economists

The Association of Environmental and Resource Economists (AERE) was established in 1979 in the United States to facilitate the exchange of ideas, encourage research, and promote graduate education in environmental and natural resource economics. The majority of its members work for universities, government agencies, nonprofit research organizations, and consulting firms. Many AERE members hold advanced degrees in economics, agricultural economics, or a related field; however, there are also many student members. Additionally, many non-specialist members with an interest in environmental policy are served by the organization. The United States has the largest proportion of AERE members, but the organization welcomes individuals from all nations. Approximately 800 annual individual memberships are currently in existence.

Journal of the Association of Environmental and Resource Economists and Review of Environmental Economics and Policy are AERE's two publications.

In 1981, AERE began sending a digital newsletter to its members twice a year. The newsletter contains policy essays, meeting announcements, calls for papers, new publications, research reports, and position announcements of interest to AERE members and environmental economists in general.

AERE co-sponsors annual summer meetings with the Agricultural & Applied Economics Association (AAEA) and annual winter meetings with the American Statistical Association (ASSA) (Allied Social Sciences Association). Each June, the AERE Workshop is traditionally organized around a single theme with the generous support of a consortium of government agencies. Environmental policy, non-point source pollution, and health risks are among its topics. National Oceanic and Atmospheric Administration, Economic Research Service (US Department of Agriculture), and Fish and Wildlife Service are the current sponsors of the workshop (US Department of the Interior). In some instances, special AERE sessions are held at the meetings of regional economics associations (such as the Southern Economic Association (SEA) and, beginning in 2009, the Western Economic Association International) (WEAI). The next World Congress of Environmental and Resource Economists will be held in 2010 and is co-sponsored by AERE. Its website, aere.org, was established in 1994 at the University of Kentucky as the AERE gopher (AERE-G). Its volunteer AERE e-mail listserv (AERE-L) also began in the same year. AERE's official email listserv is now RESECON.

Annually, AERE recognizes a Publication of Enduring Quality within the field of environmental and natural resource economics. Additionally, the organization designates up to three new AERE Fellows annually. The awards are presented annually at the Annual AERE Luncheon, held in conjunction with the meetings of the Allied Social Sciences Association (ASSA) in January.

AERE maintains a relationship with its European sister organization, the 1990-founded European Association of Environmental and Resource Economists. Numerous environmental economists belong to both AERE and EAERE.

{End Chapter 5}

Chapter 6: Siegfried von Ciriacy-Wantrup

Academician Siegfried von Ciriacy-Wantrup was German. 1906. Born in Langenberg, Germany. After completing his master's degree in Illinois, he returned to Bonn in 1931 to earn his doctorate. In 1938, he arrived at UC Berkeley and the Department of Agricultural and Resource Economics, having fled Nazi Germany in