Have GMOs Benefited Us?

by Levi Russell

A recent NY Times article claimed that GMO crops are not delivering the originally-promised benefits of higher yields and lower pesticide application rates. The article is short, so I recommend reading all of it, but here's how it starts:

About 20 years ago, the United States and Canada began introducing genetic modifications in agriculture. Europe did not embrace the technology, yet it achieved increases in yield and decreases in pesticide use on a par with, or even better than, the United States, where genetically modified crops are widely grown.

I later read a couple of articles that provided very detailed responses to the original. One is written by Andrew Kniss, a weed scientist, and the other by Jayson Lusk, an economist. Kniss uses more detailed versions of the data used in the NYT article and discusses the role of toxicity in pesticides. Lusk makes some great points about revealed preference. Both certainly worth a read.

Potpourri

Ag Econ Research & Extension
Jayson Lusk discusses an article on returns to publicly-funded agricultural research and extension. He also tackles the question: "Is ag econ academic research cited?" and answers in the affirmative.

Is Econ 101 Worthless?

David Henderson and Don Boudreaux respond to Noah Smith's contention that most of what we teach in Econ 101 is wrong.

Healthcare Reform
Two perspectives on recent developments related to Obamacare: one from Shikha Dalmia and another from Paul Krugman.

I, Pencil Revisited?
George Leef responds to a criticism of the famous essay "I, Pencil."

Regulatory Announcements
The Obama administration picks some interesting dates to announce new regulations.

A student gives a creative example of an externality.
David Henderson's student has a good understanding of Public Choice.

A new edition of Alchian and Allen's textbook.
Don Boudreaux lists some myths busted in a forthcoming edition of Alchian and Allen.

Crop Insurance Spending Myopia

In the last couple of weeks there's been a lot of focus inside the beltway on crop insurance. First, a 2-year budget deal between Republicans and Democrats planned to cut $3 billion from the crop insurance program. The deal would boost total spending by $80 billion (not including off-budget items) over 2 years. The $3 billion has since been restored to crop insurance in this bill.

More recently another bill called the "Assisting Family Farmers through Insurance Reform (AFFIRM) Act," has been proposed in both the Senate and House. The bill would cut $24.4 billion over 10 years from the crop insurance program by 1) capping RMA's premium share at $40,000, 2) eliminating RMA's share of the premium for all farmers with adjusted gross income over $250,000, 3) retaining the $3 billion cut to insurance providers, 4) reducing the commission paid to insurance salespeople, and 5) eliminating the Harvest Price Option.

The AFFIRM Act is, of course, being sold as a fiscally-conservative measure, but numbers can be deceiving. "Billion" is a big word, but context is important. 

I want to be clear here that I'm not advocating any cuts to or expansions of federal spending, I just want to bring some data to bear on the conversation.

Potpourri

Ag Regulation

Pointing to recent studies, Jayson Lusk discusses the cost of animal welfare regulation.

In a classic Independence Institute article, ag economist E.C. Pasour Jr. looks at the history of meat inspection regulation.

Meat & Cancer Risk Studies

Matt Bogard and Jayson Lusk both discuss a recent study of the relationship between red meat consumption and cancer risk. There's a great lesson on statistical inference in this episode!

The Importance of (Good) Economics

Don Boudreaux discusses the value of Econ 101.

Alex Teytelboym reports on an unlikely collaboration between Chicago economists and the country's largest food bank.

Arnold Kling brings some realism to the theory of financial markets.

Parisomony in Academic Writing

Victoria Clayton discusses "The Needless Complexity of Academic Writing."

The PR Cost of Pro-Ag Policy

Last week, Jayson Lusk commented on a recent strike down of an ag-gag law in Idaho. Such laws are designed to keep anti-ag activists from recording footage on farms and using it to make the industry look bad.

Lusk points out the potential for unintended consequences:

From the farmer's perspective, it isn't hard to see understand the motivation for such laws.  But, what kind of PR does such a law create for the agricultural sector?

... in trying to protect themselves from undercover activists, proponents of the law now created bad publicity for the entire industry (even for producers who weren't video taped and who did no wrong) in one of the largest newspapers in the country.  It is not as if there is no legal recourse for activists who break the law.

In an era where consumers demand greater transparency, the industry probably isn't doing itself any favors by engaging in public actions that make it appear as if there is something to hide.

 So, the industry pushes for ag gag laws, they pass, and those who love to bash the industry have more ammo. As the article Lusk refers to points out, we already have laws against "trespass, fraud, and defamation." Does the ag industry need enhanced versions of those laws? What are the public relations costs?

Over the last few weeks, I've had similar questions about all pro-ag laws. There are plenty of laws and regulations that impose heavy costs on the industry. I'd wager that most anti-ag activists are happy about them and wish they were more plentiful. However, there are a lot of pro-ag laws on the books that very likely impose a PR cost on the industry.

Consider the passage of the farm bill last year and the media frenzy it created. For example: here, here, and here. (I defended it here.) What does it cost the industry to deal with the objections made by anti-ag activists? I don't think that cost, whatever it is, comes to mind often enough in policy discussions. Ag is organized very well at the state and national levels with the many breed associations, crop producers' boards, Farm Bureau, and other organizations out there. I see no reason that these groups should ignore the PR costs of pro-ag policy.

Does the US Have a "Cheap Food" Policy?

It's often said, in defense of payments to ag producers, that these subsidies constitute a "cheap food" policy. Advocates of the policy contend that the subsidies incentivize increased production such that food prices fall. It's a win-win: producers benefit directly from the subsidy and consumers (especially the poor) benefit from reduced prices at the grocery store.

Leaving aside the question of whether or not these types of policies should exist, it's interesting to see whether the subsidies actually result in lower food prices. It's important to note that direct payments to producers have been reduced as of the 2014 Farm Bill and that the USDA spends an increasingly greater percentage of its budget on direct food assistance. That said, the article's findings are still interesting today.

With all that out of the way, I want to summarize the findings of a paper by Corey Miller and Keith Coble of Mississippi State University. The paper is relatively old; it was published in 2007 in Food Policy, but it nevertheless provides some interesting insights. The gated, full version is here and an un-gated but incomplete version can be found here.

Potpourri

I haven't done one of these in awhile, so I thought I'd put some stuff I've read recently that caught my eye.

Jayson Lusk recently blogged about my article currently in review at the Journal of Regulatory Economics on the effects of USDA and EPA regulation on ag productivity.

Don Boudreaux, spurred by a back and forth between Russ Roberts and Paul Krugman, has a couple of great posts (here and here) on economics as a science and its ability to generate falsifiable predictions. Very thought provoking.

Marc Bellemare documents the top 5 journals in ag economics based on recently-calculated impact factors. The ordering is interesting, but it's important to remember that there are many measures of journal quality. This paper, sent to me today by a colleague, puts ag and applied economics journals into groups (A+, A, B, C, D). All of this is good information which, as an assistant professor, I find very useful.

Matt Bogard has some interesting thoughts on the abilities required for working as a data scientist outside the academic world.

Intervention Breeds Intervention: The Case of the Trans Fat Ban

The recent decision to eliminate trans fats by regulatory fiat is an interesting example of intervention breeding intervention. It's safe to say everyone in my generation (I was born in the mid 1980s) was brought up on the Food Guide Pyramid. Unlike the vaunted Swanson Pyramid of Greatness we now know that the advice given in the Food Guide Pyramid isn't great. (Even South Park jumped in on the conversation.) The Pyramid taught that grains were the foundation of sound nutrition and that fats, particularly saturated animal fats, were bad. These fats were thought to cause heart disease and a whole host of issues.

The reality is that the sugar found in grain products like bread and pasta are the heart disease culprit. The Pyramid, designed by well-intentioned folks at the USDA and backed up by the CDC incentivized the use of partially-hydrogenated oils as a substitute to saturated animal fats. These partially-hydrogenated oils are a major source of trans fats. It turns out that the Food Guide Pyramid was wrong and your grandma was right: excessive carbohydrate consumption is bad for you, butter is better than margarine (often containing partially-hydrogenated vegetable oil), and animal products build healthy bodies.

So, it seems to me, if it weren't for the demonization of saturated fats and animal products in general, we wouldn't have been eating so many trans fats from partially-hydrogenated oils over the past 30 years. We'd have been following the same rules our grandmas taught us. There wouldn't be any need to ban trans fats because the crusade against the healthier alternative wouldn't have happened. This is, it seems, a negative outcome of government domination of the health conversation. The fitness community has been on the low-carb-is-best bandwagon for a long time. The rest of us are finally catching up.

I hope in the future school lunches are more in line with the "carbs aren't so great and animal products are" view. I suspect this will not only make them healthier for the growing bodies and minds of our children, but kids will actually want to eat the food.

Does Farm Policy Respond to Farm Performance?

Previously I discussed some findings from my recent working paper on ag regulation since 1997. In addition to regulation, we also looked at the effects of farm stabilization spending on profitability and productivity growth. Farm stabilization spending is a "function" category in the White House's Office of Management and Budget historical tables and refers to crop insurance indemnities, direct payments, and other program payments.

The results indicate that there's a statistically significant, negative relationship  between farm stabilization spending and both measures of farm performance. Specifically, profitability declined by -0.027% and productivity growth declined by -0.138% for every 1% increase in farm stabilization spending. Though these effects are statistically significant, they're small. However, the signs of the effects are more interesting than the magnitudes.

Political Power and the Farm Bill

I first ran across a working version of a recent paper by Marc Bellemare of the University of Minnesota and Nick Carnes of Duke University entitled "Why Do Members of Congress Support Agricultural Protection" a few months ago while doing some research for my paper on regulation in ag. The article does a good job of explaining how a relatively small constituency obtains such tremendous benefit through the national-level political process. The article is certainly worth a read, so I thought I'd give just a short summary (mostly from the abstract) and give some brief thoughts on it.

The authors examine three possible explanations for congressional support for US ag: lobbying, legislator preferences, and electoral incentives. They use data on votes by legislators for the 2002 and 2008 farm bills to examine the degree to which these possible sources of support for ag explain ag protection legislation in the US.