Anton Bekkerman

The SURE program and incentives for crop insurance participation: A theoretical and empirical analysis

Purpose - The aim of this paper is to show how provisions of the Supplemental Revenue Assistance Payments (SURE) program impacts production practices, and empirically examine changes in crop insurance participation rates as a means of measuring producer responses to the program. Design/methodology/approach - The structure of the SURE program is described and a stylized theoretical model is used to show the SURE programs effects on farm-level crop insurance and production decisions. A county-level cross-sectional empirical specification with regional fixed effects is used to test the hypothesis that producers who are most likely to benefit from production practice re-optimization are more likely to participate in crop insurance. Findings - Results from empirical analyses of corn, soybean, and wheat production areas show that the SURE program has had substantial impacts on crop insurance participation by producers who are more likely to receive SURE indemnities and exploit moral hazard opportunities. Research limitations/implications - Because the program has only recently been introduced, empirical estimates of the programs long-run impacts are not estimable. Practical implications - Results indicate that the program can have unexpected market consequences, with increased frequency and size of SURE indemnity claims than the Congressional Budget Office anticipated and increases in aggregate tax payer subsidies for both the crop insurance and SURE program. These outcomes can have important implications on motivating a restructuring of the program in the next farm bill. Social implications - Increased tax payer expenditures on the SURE and crop insurance programs in the form of subsidies can lead to non-trivial reductions in social welfare. Originality/value - This research is the first to develop a rigorous model of the SURE programs impacts on producer responses and associated effects on crop insurance participation. The study also provides empirical evidence of these effects.

A variable threshold band approach to measuring market linkages

Uncertain and changing economic conditions can have substantial effects on price relationships in spatially separated, linked markets. Although numerous studies have analysed price relationships to characterize market linkage structures, most assume that the relationships and associated linkages are time invariant. This study extends the literature by modelling and estimating time-dependent market linkages that are conditional on changes in exogenous factors. The methodology is used to investigate price relationships in North Carolina (NC) corn and soya bean markets. Empirical results indicate that generalized market-linkage models provide a better representation of price relationships over time, improving the understanding of price discovery dynamics and marketing strategies.

Crime and punishment: the role of student body characteristics in schools’ disciplinary behaviours

ABSTRACT Discretion in schools’ discipline choices can provide an efficient and effective misconduct management structure, but could lead to discipline based on unrelated factors. Consequently, schools’ disciplinary decisions can significantly limit students’ access to education by removing students from familiar learning environments. We investigate schools’ disciplinary decisions for serious misconducts and show that punishments are more severe in schools that do not report misconducts to local law enforcement agencies. Moreover, we show that schools that report fewer misconducts to law enforcement impose more severe punishments when the student body is characterized as having a higher proportion of minority students, lower socioeconomic status students and a higher proportion of students who are below the 15th percentile of standardized test scores. These results suggest that between-school punishment differentials are associated with student body traits.

A Semiparametric Approach to Analyzing Differentiated Agricultural Products

When consumers have heterogeneous perceptions about product quality, traditional parametric methods may not provide accurate marginal valuation estimates of a product’s characteristics. A quantile regression framework can be used to estimate valuations of product characteristics when quality perceptions are not homogeneous. Semiparametric quantile regressions provide identification and quantification of heterogeneous marginal valuation effects across a conditional price distribution. Using purchase price data from a bull auction, we show that there are nonconstant marginal valuations of bull carcass and growth traits. Improved understanding of product characteristic valuations across differentiated market segments can help producers develop more cost-effective management strategies.

High-speed Internet Growth and the Demand for Locally Accessible Information Content

Proximity to information resources has repeatedly been shown to affect urban development. However, individuals’ increased abilities to access information content electronically may have dampened urban areas’ comparative advantage of proximity-driven knowledge flows. We investigate the effects of increased high-speed Internet access on the role of information proximity by modeling changes in the demands for locally-based information resources, exploiting variation in the use of US public libraries—the most common low-cost providers of locally accessible information content. Data describing a nearly comprehensive set of US public libraries during 2000–2008 provide empirical evidence of complementary growth in Internet access and the use of public library resources, suggesting that Internet access increases the value of locally accessible information content and overall information demand. Moreover, the complementarity is found to be largest in metropolitan areas, indicating that improved Internet access in locations with greatest proximity and information spillover effects are likely to experience more substantial economic impacts.

A Market-based Mitigation Program for Wind-borne Diseases

Wind-borne diseases can spread rapidly and cause large losses. Producers may have little incentive to prevent disease spread because prevention may not be welfare-maximizing. This study proposes a market-based mitigation program that indemnifies producers against disease-related losses and provides an incentive to neighboring producers to take preventive action, which can substantially mitigate infestations, reduce the likelihood of catastrophic losses, and increase social welfare. An equilibrium displacement model simulates introduction of the program for U.S. soybeans. Simulations reveal that the market-based solution contributes to minor market distortions but also reduces social welfare losses and could succeed for other at-risk commodities.

On understanding inconsistent disciplinary behaviour in schools

Inconsistent disciplinary administration across schools can inequitably impact students’ education access opportunities by separating certain students from familiar learning environments, especially in misconduct cases that result in longer-term removal. We empirically estimate whether such inconsistencies are attributable to heterogeneity in student body demographic characteristics. The results indicate that a greater number of disciplines that remove students from school for an extended period of time are observed in schools with a higher proportion of black students, but no significant differential punishment effects are observed in schools with a higher Hispanic student population. Furthermore, results of decomposing the marginal effects into conditional and unconditional elasticities indicate that it is not the case that schools with predominantly white student bodies have the least severe punishments and schools with more minority students have the most severe punishments. Rather, schools with inconsistent disciplinary behaviour have a proportion of the inconsistency attributable to the race of the student body.

Cost-effective hiring in US high schools: estimating optimal teacher quantity and quality decisions

Extensive literature has shown that student attainment outcomes are affected by student-to-teacher ratios and overall teacher aptitude levels, but offers little information about which method offers the greatest student attainment return relative to associated costs. This study provides empirical evidence that staffing policies should consider the cost-effectiveness of teacher-hiring decisions when multiple education policies are effective.

CASE STUDY: Searching for the Ultimate Cow: The Economic Value of Residual Feed Intake at Bull Sales

Cow-calf producers seek to reduce costs and increase profits by selecting bulls that produce more efficient offspring. Organizers of formal bull auctions usually produce catalogs for potential buyers that advertise bull performance measures

Decoupling direct payments: potential impacts of the 2014 farm bill on farm debt

Purpose - – For over 20 years, decoupled agricultural support programs have played a large role in farm policy. The purpose of this paper is to investigate the effects of decoupled agricultural support payments on farm-level debt. Design/methodology/approach - – A two-stage least squares model is used to estimate the impact of decoupled payments, farm production characteristics, demographics, regional risk factors, as well as cross-sectional and temporal fixed effects on farm debt, along with weather-related instrumental variables. Findings - – Results indicate that a negative and statistically significant relationship exists between decoupled payments and farm debt. This study also provides evidence that research results not accounting for the endogenous relationship between acres operated and farm-level debt should be interpreted with caution. Research limitations/implications - – The constantly changing sets of policy options provide a challenge in identifying the impact of a single policy, Practical implications - – This implies that farmers likely use annual decoupled payments to reduce their debt, potentially influencing their exposure to financial risks, capacity to withstand financial instability, and access to credit. The methodology used may establish a foundation for continued research that seeks to empirically identify and measure the complex interrelationships among agricultural public policies and farm-level financial measures. Social implications - – Decoupled payment programs may indirectly influence debt decisions, which can influence production decisions in the long run. Originality/value - – In order to accurately identify the impact of direct payment programs on farm debt levels, this study is the first of its kind to account for the endogenous relationship between production decisions and debt and use a large unbalanced panel of data available from the Agricultural Resource Management Survey.