## Measuring Scholarship

In 2005 Jorge Hirsch proposed, “An Index To Quantify an Individual’s Scientific Research Output,” commonly known as the Hirsch Index, denoted by h. The Hirsch Index measures the largest number h for which a researcher has a least h papers with at least h citations each.

In 2013, Glenn Ellison developed a modified Hirsch Index for the field of economics because, “economists write fewer papers than do physicists, and individual papers get many citations. As a result, the h index is uncomfortably like a publication count.” To illustrate, Ellison notes that Roger Myerson, who received the 2007 Nobel Prize in Economics, has an h-index of 44 based on Google Scholar citations, which is smaller than the h-index for most AAEA Fellows. Ellison illustrates the weakness of the h-index for economics: “the profession cares much more about the several tremendously important papers Myerson has written than it does about whether his forty-fourth most-cited paper has as many citations as someone else’s 44th most-cited paper.”

To address the weakness of the h-index for economics, Ellison suggests “raising the standard for what ‘good’ means, so that the index focuses on a smaller number of papers.” He proposes a variant of the Hirsch index, $h_{(a,b)}$, that is the largest h for which a researcher has at least h papers with at least $ah^b$ citations each. I refer to this index as the Hirsh-Ellison Index, he-index.

To determine the right values for a and b, Ellison estimates the parameters that best explain job market outcomes. He provides two sets of parameters. One set, a=15 and b=3, is optimal when each coauthor on a paper receives credit for 1/n of the paper, where n is the number of coauthors. The optimal parameter values are a=10 and b=3 when the co-author weighting is estimated jointly with a and b; the market appears to give coauthors credit for $1/n^{0.25}$ papers.

To facilitate comparison of scholars of different “vintage,” Ellison estimates an optimal age adjustment.

The following table reports the he-index for tenured and near-tenured faculty in the department of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign, my department.

### References

Ellison, Glenn. 2013. “How Does the Market Use Citation Data? The Hirsch Index in Economics.” American Economic Journal: Applied Economics 5 (3): 63–90.

Hirsch, Jorge E. 2005. “An Index To Quantify an Individual’s Scientific Research Output.” Proceedings of the National academy of Sciences of the United States of America 102 (46): 16569–16572.

Posted in Uncategorized | 1 Comment

## The Historical Basis of Farm Support

Save wheat

World War I, as much as anything, is responsible for modern U.S. farm policy. America’s response to the Great War altered farmers’ behavior and set them on a course that would eventually lead to price supports and production controls. Specifically, to ensure enough wheat to feed an army of men and a starving European civilian population, Herbert Hoover, appointed as Food Administrator by President Woodrow Wilson in 1917—when the U.S. entered the war—fixed the price of wheat at $2.20 per bushel, nearly twice the price it had been the year before. U.S. farmers responded to the price signal, and in January 1919, the New York Times reported, “the winter wheat acreage is the largest that ever went into the ground and it is expected the same will be true of the Spring planting” (Moore 1919). Production rose from 636 million bushels of wheat in 1917, to 932 million bushels in 1918 and 1.2 billion bushels in 1919. The war transformed the world wheat market. Before the war, Europe was a major market for U.S. wheat. The war, however, left Europe relatively impoverished. After the war ended, Russian wheat production was rejuvenated. Wheat producers in other foreign countries had also responded to the high wheat prices and expanded wheat acreage. By 1921 wheat prices had fallen back to pre-war levels, and, with the exception of a brief spike in 1925, stayed there. Throughout the 1920’s, attempted legislative support for agriculture came in many forms, but the only successful farmer-focused legislation was due to Herbert Hoover. Hoover, having dealt closely with the heavily concentrated wheat export industry as U.S. Food Administrator during World War I, approached the issue from the perspective of the exporters, who saw the problem as one of price instability and access to credit, not low prices per se. From this perspective, the problem boiled down to uncoordinated marketing by the farmers. If farmers could agree to slowly release the harvested commodity into the market, they all would receive a higher price. The farmer who can sell his crop first, however, avoids paying storage costs and repays his annual operating loan from the bank, avoiding extra interest charges. In this way, the sooner the crop is sold, the higher the effective price the farmer receives. Since everyone faces these incentives, the coordination game breaks down and everyone rushes to sell their newly harvested crop. So, despite attempts to pass legislation that would raise the price level by reducing overall production, the legislation signed into law by Hoover in 1929—the Agricultural Marketing Act— set up the Federal Farm Board to assist with year-to-year marketing and allotted$500 million to farmers’ cooperatives to cover the storage and interest costs of delayed marketing. This effectively extended cheap credit to farmers at a time when most of the credit was tied up in the booming stock market of the late 1920s (Ahamed 2009).  Relics of this approach to supporting farmers are still present in modern U.S. agricultural policy.

Posted in Agricultural Policy, History | Tagged , | 1 Comment

## Who Benefits from Agricultural Subsidies?

Check out my post on my department’s blog about some of the research I have been doing lately: Who Benefits from Agricultural Subsidies?

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## The Effect of U.S. Agricultural Subsidies on Equality

Perhaps the most fundamental question about U.S. agricultural subsidies is how have they affected the structure of U.S. agriculture. Recently the question has become more germane as food policy has become intertwined with public health policy (obesity), with energy policy (biofuels), and with third-world economic development and population growth (food demand and sustainability). As with all important questions, this one is very difficult to answer. Agricultural subsidies have been a part of agriculture for so long and through so many policy and economic changes, it is difficult to isolate causal relationships.

Distribution of Agricultural Subsidy Payments by Sales Class (2010)

By subsidizing agricultural production, large farms inevitably receive large subsidies. The table above reports the distribution of subsidy payments by sales class in 2010. From the table, the consequences of subsidizing agricultural production and farmland are clear; only about 2 percent of farms receive $1 million or more in sales revenue, but they receive over 20 percent of all farm subsidies. About 55 percent of all farms had sales less than$10,000 in 2010, and only 18 percent of these farms received agricultural subsidies. These low-sales farms received only 6 percent of the subsidies paid out.

The concentration of subsidies among the largest farms has long been the case. James Bonnen made this point in 1969, pointing out that just 20 percent of farms received a majority of 1964 agricultural subsidies, and the top 5 percent of farms, by sales, received about 30 percent of subsidies.  Schultze further demonstrated that the farms receiving the lion’s share of the subsidies had the highest revenue.  The 2006 Economic Report of the President (EROP) revealed little change in the intervening 37 years when it reported, “The largest of the commercial family farms received 27 percent of payments even though they account for 5.5 percent of farms receiving payments.”

Lorenz curves illustrating the concentration of agricultural subsidies in 1968 and 2007

The stability of the concentration of subsidies can be seen in two Lorenz curves, illustrated above, which illustrate cumulative subsidy payments from the poorest to the richest farms. The dashed curve is from Paulsen, illustrating the concentration of producer payments in 1968. The solid blue line is constructed from the 2007 Census of Agriculture. Visual inspection reveals very little change over the 39-year period. Despite increasing concern by voters about the distribution of farm subsidies, the distribution remains stable; agricultural subsidies are neither increasing nor decreasing equality. (See this post for insight into why agriculture is not become less equal despite the concentration of subsidy payments.)

(Excerpted from Barrett Kirwan. 2014. “Economic Support for Agriculture,” in Public Economics: The Government’s Role in American Economics, edited by Steven Payson. Oxford UP: New York.)

Posted in Agricultural Policy, economics, farm subsidies |

## The Effect of U.S. Agricultural Subsidies on Farm Efficiency

Large farms receive large subsidy payments. This relationship is largely mechanical. Since the policy subsidizes production and land, farms with greater production and land will, consequently, receive more government payments. But the question arises whether subsidies enhance efficiency in agriculture.

An important way that subsidies enhance efficiency in agriculture is by providing farmers with greater access to capital. Numerous studies have concluded that U.S. farmers behave as though they have limited access to credit. Several empirical papers demonstrate a relationship between farm investment and the availability of internal funds. The findings all indicate credit constrained behavior among U.S. farmers. In other words, farmers face capital market imperfections. By solving such a market failure, government plays a key role in substantially increasing efficiency in the agricultural sector.

Researchers at the Department of Agriculture have closely investigated the impact of government payments on the structure of agriculture in the U.S. Their findings indicate that “government payments are strongly associated with subsequent concentration growth.” In other words, farms that receive large subsidies per acre grow faster. In similar work, Roberts and Key use quasi-experimental methods to examine the effect of government payments on farm concentration growth. Using farm-level data from the 1987-2002 quinquennial Census of Agriculture, they explore the relationship between per-acre subsidies and the growth in the size of the median farm in each zip code in the U.S. They find that per-acre government payments explain about half of the growth in farmland concentration. A plausible explanation of their findings is that government payments help farmers overcome liquidity constraints to exploit increasing returns to scale. In other words, government payments address capital market imperfections and in doing so they allow farmers to become increasingly efficient.

One way to measure the efficiency of U.S. agriculture is by the returns to investing in agriculture. Economists at the USDA’s Economic Research Service have shown that as farm-size increases, so does the return on equity. White and Hoppe show that, in 2009, farms with more than \$1 million in sales achieved a 4.6 percent return on equity. In contrast, the average return on Treasury Inflation-Protected Securities was about 2.3 percent in 2009. The long-run average return on equity for the largest farms is about 6.5, which is comparable to the long-run return to the stock market.

When considering the justification for economic support for agriculture, one must carefully consider the economic benefits. Evidence suggests that farmers face capital market imperfections, which could lead to under investment in agriculture. Government payments overcome capital-market failings, and the economic returns appear to be quite high.

(Excerpted from Barrett Kirwan. 2014. “Economic Support for Agriculture,” in Public Economics: The Government’s Role in American Economics, edited by Steven Payson. Oxford UP: New York.)

Posted in economics, farm policy, ideas |

## Do Agricultural Subsidies Contribute to Productivity Growth?

How does government-provided economic support affect U.S. agriculture? Agricultural economists have for decades deemed farm programs as wasteful and inequitable. In his 1995 book Plowing Ground in Washington, Delworth Gardner asks, “Given that farm price support programs are both wasteful and inequitable, why do these policies exist and, perhaps even more of a puzzle, why do they persist?”  At the same time, agriculture is the sixth most productive industry in the U.S., behind computer manufacturing and ahead of both telecommunications and software publishing.

Farm-sector contribution to U.S. productivity growth is among the highest.

U.S. agriculture accounted for fifteen percent of U.S. productivity growth between 1960-2007. How do we reconcile such productivity growth with “wasteful” farm programs? Could it be possible that farm programs somehow have contributed to the productivity growth and are not as “wasteful and inequitable” as supposed?

Posted in food policy, Productivity |

## The Clean Water Act

Red rivers are impaired, and blue ones meet their water quality standard.

I’ve been thinking a little about the Clean Water Act lately. Jonathan Coppess and I have written a few things about it on the ACE Policy Matters blog. We introduced the topic back in July.And a last week we looked at the weather as the great unknown that hampers effective regulation.

Posted in Agricultural Policy, Environment | Tagged , , ,

## I’m on the web

Check out my new site on the world-wide web: barrettkirwan.com

Posted in economics, Miscellania

## Will Ethylene Displace Corn-based Ethanol?

When we think about ethanol, most of us in the U.S. think about corn. If we were in Brazil we would think about sugar cane. Essentially we think about ethanol produced from a fermentation process. But ethanol can also be made from hydrocarbons found in fossil fuels. In particular ethanol can be made from ethane. Ethane is the second-most common compound in natural gas–after methane. Ethane can be converted to ethylene by steam cracking. And ethylene can be catalyzed to become ethanol.

This is (potentially) relevant because a few weeks ago the U.S. Energy Information Administration reported that “Proved reserves of U.S. oil and natural gas in 2010 rose by the highest amounts ever recorded since the U.S. Energy Information Administration (EIA) began publishing proved reserves estimates in 1977.” The following graphic illustrates the dramatic change in U.S. natural gas reserves.

U.S. natural gas reserves expanded dramatically in 2009 and 2010.

Consider the following scenario: 1) A drought in the Midwest causes corn prices to rise to unprecedented levels. 2) Technological advances (horizontal drilling and hydraulic fracturing) lead to a surging supply of natural gas. Event 1) reduces the profitability of corn-based ethanol production while event 2) increases the profitability of fossil fuel-based ethanol. Considering the wide-ranging cries to suspend the RFS ethanol mandate, one could imagine Big Oil supporting a looser biofuel mandate in order to take advantage of the changing economic picture.

I think a dramatic policy change is unlikely, but the surging natural gas supply adds an interesting wrinkle in the whole ‘food vs. fuel’ debate.

Posted in economics, food policy