Home > International agricultural research, Miscellaneous > What is (agricultural) economics worth?

What is (agricultural) economics worth?

The philosophers Alex Rosenberg and Tyler Curtain inquire in the New York Times about the possible contributions of economics, in spite of it’s poor track record of making reliable predictions:

[…] economics has never been able to show the record of improvement in predictive successes that physical science has shown through its use of harmless idealizations. In fact, when it comes to economic theory’s track record, there isn’t much predictive success to speak of at all. [..]

The point they make is that economic theory can make a big contribution to

[…] the design and management of institutions that will protect us from […] those parts of our selves tempted to opportunism, free riding and generally avoiding the costs of civil life while securing its benefits. […] Fixing bad economic and political institutions (concentrations of power, collusions and monopolies), improving good ones (like the Fed’s open-market operations), designing new ones (like electromagnetic bandwidth auctions), in the private and public sectors, are all attainable tasks of economic theory.

A good point, indeed.

From the perspective of an agricultural economist working on the impact assessment of agricultural research, there is another example for the worth of economics:

Even when applying only simple and stylized models, the exchange with scientists from other disciplines (i.e., those who typically develop new agricultural technologies) and decision makers (research managers and donors) about the assumptions made in these models and the results they generate adds an important — the economic — dimension to the work of these colleagues. Thereby, they become informed about aspects of their work they otherwise would neglect. This enables them to better judge the value of their work and make better decisions about the design and future directions of their research programs.

As an example, economists would apply a simple model to estimate the economic surplus effects of a given new agricultural technology. A crucial parameter in such a model is the expected adoption rate of the new technologies. In order to arrive at an estimate about this parameter, economists would discuss with crop scientists the expected magnitude of adoption. Being the suppliers and “owners” of the technology, crop scientists would tend to be rather optimistic. Economists, in contrast, would seek to factor in aspects like cost changes associated with the technology or market demand that may act as drivers or impediments to technology diffusion, and possibly arrive at more cautious estimates.

Such a discussion process will provide crop scientists with a clearer picture about the likelihood of success of their research outputs and, in particular if done for several alternative options for research and technology development, lead to better decisions about the design of a research portfolio.

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