policy relevant treatment effects accounting for individual level heterogeneity in the response to treatment is a major development in the econometric literature on program evaluation a substantial body of empirical evidence demonstrates that econometric models fit on individual level data manifest heterogeneity in treatment effects that is present even after conditioning on observables an important distinction is the one between evaluation models where participation in the program being evaluated is based at least in part on unobserved idiosyncratic responses to treatment and models where participation is not based on unobserved idiosyncratic responses this is the distinction between selection on unobservables and selection on observables the validity of entire classes of evaluation estimators hinges on whether or not they allow agents to act on unobserved idiosyncratic responses in a wide variety of applications the available evidence suggests that not only are ex post postenrollment responses heterogeneous but that ex ante decisions to participate in programs are based in part on these heterogeneous responses heckman and vytlacil 2000b 2001

food insecurity poverty and the malawian starter pack fresh start or false start abstract chronic food insecurity and chronic poverty are closely related in malawi since independence in 1964 national food security has been a key policy objective however until the 1990s less emphasis was placed on the household dimensions of food security and its links with chronic poverty in the last decade a number of initiatives have been used in malawi to tackle the issue of household food insecurity one of the most controversial has been the starter pack programme launched in 1998 initially consisting of a free handout of packs of improved maize seed legumes and fertiliser to every small holder farm household in malawi the scheme under donor pressure was subsequently scaled down to become a form of targeted social safety net programme this paper analyses the strengths and weakness of both the original programme and its scaled down version and assesses the reason for the considerable opposition to the programme from malawi s donor community although starter pack is no longer operative in malawi the malawian experience is used to derive lessons for other countries where household food insecurity is an important dimension of chronic poverty

micro data heterogeneity and the evaluation of public policy nobel lecture this paper summarizes the contributions of microeconometrics to economic knowledge four main themes are developed 1 microeconometricians developed new tools to respond to econometric problems raised by the analysis of the new sources of micro data produced after the second world war 2 microeconometrics improved on aggregate time series methods by building models that linked economic models for individuals to data on individual behavior 3 an important empirical regularity detected by the field is the diversity and heterogeneity of behavior this heterogeneity has profound consequences for economic theory and for econometric practice 4 microeconometrics has contributed substantially to the scientific evaluation of public policy

empirical research on discrete choice game theory models of entry an illustration abstract we discuss the empirical implementation of discrete game theoretic models of firm entry after presenting a simple model of entry that underlies much of existing empirical analysis we discuss the major problems that must be tackled when empirically implementing theoretical models and econometric methods used in the literature finally we present results from a reduced form estimation of a sequential move entry game using data from the uk hamburger market

bargaining in environmental regulation and the ideal regulator abstract we present a model of environmental regulation in which the stringency of a firm s emissions standard is determined by cooperative bargaining between the firm and a regulator we show that bargaining can be socially beneficial because it can achieve the first best outcome this outcome is never an equilibrium of the noncooperative stackelberg game we also show that the social cost function is not the preferred objective function for a regulator when regulations are determined by bargaining social costs are lower with a regulator that attaches more importance to damages and enforcement costs than to the firm s compliance costs

the economics of coupled farm subsidies under costly and imperfect enforcement this study relaxes the assumption of perfect and costless policy enforcement found in traditional agricultural policy analysis and introduces enforcement costs and cheating into the economic analysis of output subsidies policy design and implementation is modeled in this paper as a sequential game between the regulator who decides on the level of intervention an enforcement agency that determines the level of policy enforcement and the farmer who makes the production and cheating decisions analytical results show that farmer compliance is not the natural outcome of self interest and complete deterrence of cheating is not economically efficient the analysis also shows that enforcement costs and cheating change the welfare effects of output subsidies the efficiency of the policy instrument in redistributing income the level of government intervention that transfers a given surplus to agricultural producers the socially optimal income redistribution and the social welfare from intervention

on using linear regressions in welfare economics this article consists of two parts the first part shows that the ordinary least squares regression coefficient is a weighted average of slopes between adjacent sample points when applied to a linear regression with income as the independent variable the regression coefficient depends heavily on the slopes of high income groups the weight of the highest income decile may well exceed that of the other nine deciles this may be undesirable especially if the regression is used for welfare analysis because the marginal propensities to consume attributed to the commodities are determined by the high income groups the second part of the article proposes alternative estimators the extended gini estimators that enable investigators to control the weighting scheme and to incorporate their social views into the weighting scheme of the estimators

remediation and self reporting in optimal law enforcement abstract many environmental laws encourage firms to self report their violations to government regulators rather than subject themselves to probabilistic enforcement this paper studies self reporting enforcement regimes when there are ex post benefits of remediation or clean up remediation benefits are shown to impart two advantages to the use of self reporting beyond those identified elsewhere firstly whereas non reporting firms only engage in costly clean up when they are caught by an enforcement authority self reporting firms always engage in efficient remediation secondly with self reporting the government can costlessly impose stiffer non reporter penalties that reduce the government enforcement effort required to achieve a given level of violation deterrence

incomplete enforcement with endogenous regulatory choice abstract this paper extends the economic literature on the incomplete enforcement of social regulation by incorporating regulatory choice in an institutional environment of limited regulatory resources and powers we show how regulatory decisions determine the structure of incentives faced by regulated firms our results indicate that the expense of monitoring relative to the regulator s power to levy penalties helps to explain the differences between compliance and deterrence enforcement styles we find that in most circumstances firms with higher abatement costs will receive a larger share of regulatory resources and thus face higher penalties than firms with lower costs

rural income and poverty in a time of radical change in malawi abstract malawi is one of the poorest countries in africa there is widespread though not universal agreement about the shape of poverty in the country and the policy challenge this sets agriculture continues to be the most obvious means to stimulate broad based rural growth and to provide levels of food security and income needed for the majority rural population a longitudinal study over a decade during which radical policy and political changes occurred provides the data and basis for discussing the appropriate policy directions for reducing poverty

the effectiveness of structural adjustment lending initial evidence from malawi abstract the world bank s new programs of structural adjustment lending are likely to prove most effective with those governments which demonstrate shared ideals in their approach to economic adjustment and policy reform malawi has long been regarded as a country placing great reliance on the market in resource allocation showing restraint in public sector expansion and retaining a strong export orientation the balance of payments difficulties and the deterioration in economic circumstances which began in 1980 did not arise solely from external shocks but the structural adjustment lending programs introduced in 1981 as a means of easing the painful reform process found root in a fertile and responsive policy environment this paper chronicles the first two sals to malawi reviewing in particular the specific policy reforms advocated and required by the bank the extent of their implementation and the provisional effects on the malawi economy

distributional effects of maize price increases in malawi abstractin the wake of highly volatile world prices of staple commodities we examine the impacts of increases in maize prices on various categories of households in malawi using household level data changes in household income are calculated taking into account the net maize production status of the household and food price elasticities estimated from a censored demand system while maize price increases have unequivocal deleterious effects on the incomes of urban households rural households experience differential impacts net producing households in rural areas benefit from price increases with households above the poverty line obtaining proportionally higher incomes

the impact of agricultural liberalisation on food security in malawi abstract the donor supported structural adjustment programmes have not impacted favourably on livelihoods food security and the general welfare of the poor in malawi this resulted from the prescription of wrong policy packages and limited attention to poverty alleviation policies policies have tended to concentrate on promoting market and price mechanisms less on addressing production constraints and non economic barriers to broad based economic growth there are losers and winners as a result of policy reforms in agricultural produce marketing the losers are mainly the smallholder farmers in the category of net food buyers low income or wage earners in urban and semi urban areas and smallholder farmers in remote areas the winners are smallholder farmers in the category of net food sellers private traders institutional traders and the state marketing agency the paper analyses the impact of pricing policy and market deregulation on the state marketing organisation and on the private marketing system highlighting the lessons to be learned and making recommendations on how to improve the food security situation at the household level

how is the liberalization of food markets progressing market integration and transaction costs in subsistence economies we propose a modification of baulch s parity bounds model to measure the market integration of food markets in developing countries instead of extrapolating a single observation of transaction costs we estimate transaction costs predicted transaction costs compare well with survey data of traders probabilities of market regimes computed on the basis of predicted transaction costs fluctuate significantly and do not support fixed regime probabilities over time the probability of market integration with trade decreases consistently during food shortages increasing either the probability of no trade or loss making trade or the probability of profitable but unexploited trade opportunities the data further support a negative trend in market integration with trade

estimating the economic return to educational levels using data on twins this paper relaxes some restrictions of previous twin based estimates of the effects of education on earnings first it estimates the earnings premiums associated with different educational levels second it estimates a piecewise linear relationship between the natural logarithm of annual earnings and years of schooling third the measurement error corrections are based on a less restrictive non classical measurement error model the estimation strategy implies that ability bias can be investigated separately in different parts of the educational distribution the linear relationship between the logarithm of annual earnings and years of schooling is rejected furthermore the results in the sample of identical mz twins indicated both that the ability bias could be of different signs and of different magnitudes in different parts of the educational distribution the twin based estimates in the sample of fraternal dz twins did not display any marked differences as compared to the cross sectional estimates finally the results indicated that the error corrected twin based estimates of the average return to years of schooling that rely on a classical measurement error model are upwards biased by approximately 30 copyright 2004 john wiley sons ltd

u turns and full circles two decades of agricultural reform in malawi 1981 2000 abstract this paper traces the evolution of malawi s agricultural policy over the past two decades during this period the world bank has played a key role in shaping policy reform through its adjustment loans three distinct reform phases can be identified 1981 87 when policy was dominated by the dogmatism of the world bank s pricist and state minimalist policies 1988 94 when a more flexible position was taken by both the bank and the malawi government both of whom acknowledged the structuralist critique of earlier policies and 1994 to the present when the reform process in agriculture became more politicized and a schism developed between the bank and the government this latter period is used to illustrate some of the unresolved policy issues pertaining to similar low income agrarian economies

estimating the value of an in kind transfer the case of food stamps the value of one in kind transfer food stamps is estimated by evaluating the experience of an actual conversion from stamps to cash in puerto rico in 1982 the evidence indicates that the cashout of the stamps had no detectable influence on food expenditures the explanation partly lies in the distribution of expenditures for the stamps were inframarginal for most recipients however some evidence indicates that trafficking in stamps was widespread as well including indirect evidence from estimation of the piecewise linear constraint model copyright 1989 by the econometric society

walk in my shoes nudging for empathy conservation abstract the traditional policy approaches to encourage conservation including offering monetary incentives and direct regulation may lead to unintended consequences which may undermine their effectiveness in this paper we experimentally test the effectiveness of complementing financial nudging incentives with nudging for empathy our framed experiment models a situation in which an upstream farmer influences the water quality downstream by choosing the level of conservation financial nudging is represented by a crop insurance subsidy conditional on conservation compliance consistent with the 2014 farm bill policy empathy nudging is represented by a downstream water user sending a message to the upstream farmer encouraging the latter to walk in the shoes take the perspective of the former we found that empathy nudging can counteract the elimination of financial incentives however it is less effective than financial nudging empathy nudging coupled with financial incentives has a synergic effect and conservation increased significantly compared to using one of the nudges alone furthermore the combination of empathy and financial nudging was particularly effective in low initial conservation cases we argue that policy makers and the public should encourage empathy conservation and that the environmental policy narrative should appeal to empathy and call for farmers to join the cause for conservation and environmental protection

structural change in malawi since independence consequences of a development strategy based on large scale agriculture abstract this paper investigates the nature of the structural change which has occured in the malawian economy since independence and identifies key policies pursued by the government which it is argued have been decisive in shaping this development the salient feature of structural change is shown to be the rapid growth of large scale agriculture associated with an equally rapid transfer of labour into wage employment and a decline in the importance of peasant production the implications of these changes for living standards and future development and policy are considered

the privatization of agricultural trading in malawi abstract this paper examines the privatization of smallholder agricultural output marketing in malawi despite problems with implementing the privatization program including serious disruptions in the supply of maize the staple food the move toward greater private sector involvement in agricultural marketing has been successful nonetheless several medium term development issues e g food security and buyer and seller of last resort functions need to be addressed in the context of relations between the marketing parastatal admarc and the private sector before the policy change can be regarded as fully successful

a comparative political economic analysis of maize sector policies in eastern and southern africa abstract maize sector policies in eastern and southern africa are characterized by a large and often growing presence of the state yet the scope scale and modalities of state activities vary substantially across countries drawing on data from malawi zambia kenya and mozambique this article compares the relative degree of state intervention in the maize sector we show that relative preferences for output market subsidies input market subsidies trade restrictions or non interventionist approaches reflect the interplay of interest group lobbying patronage networks and ethnic and regional political affiliations these relationships have deep historical roots and have often been intensified in the context of the emergence of multiparty politics we show that interventionist orientations in output markets and trade do not translate into better performance or welfare outcomes input subsidy preferences produce more ambiguous welfare results when the opportunity costs are not fully accounted for

relative deprivation and economic welfare abstract it is shown that the theory of relative deprivation can be decomposed into two concepts deprivation and its relativity deprivation is interpreted as forgone utility due to lack of commodities thus minimizing deprivation and maximizing utility come to much the same thing the relativity of the concept stems from the existence of reference groups in the society the core of the paper deals with the effect of reference groups on the deprivation felt in the society

initial and continuing compliance and the trade off between monitoring and control cost abstract the trade off between firm abatement costs and regulatory monitoring costs modeled by amacher and malik 1 2 am is reinterpreted extended and critiqued in part the notion of technology is replaced with the quantity of abatement capital and a constant fine per unit is replaced with a lump sum maximum total fine analysis of first and second best regulatory situations indicate that the first best allocation involves a higher capital to labor ratio than that which would minimize the firm s costs of meeting the standard the relationship between initial and continuing compliance is analyzed the curvature of iso abatement curves is related to the extent of net cost saving possible from more capital intensive abatement and the effect of a delayed commitment to the pollution standard by the regulator is considered am s comparison of pollution taxes versus pollution standards fails to hold up under the modified assumption on fines

audit selection and income tax underreporting in the tax compliance game abstract this paper uses a game theoretic model of the tax compliance game to estimate a model of audit selection and income tax underreporting in jamaica the empirical analysis make use of audited tax returns for individual taxpayers and a random sample of tax returns for the population from which the audited returns are selected the estimation results strongly indicate a nonrandom audit strategy and thus provide support for the game theoretic approach the results also indicate that the probability of underreporting and the level of underreporting are positively related to the marginal tax rate and to income and negatively related to marginal payroll tax benefits in general the underreporting elasticities are small

modeling spatial price transmission in the grain markets of ethiopia with an application of ardl approach to white teff following the agricultural market liberalization policy there is an emerging grain market structure in ethiopia in which the central wholesale market exhibits concentration of power and spatial integration with the local markets due to this it is hypothesized that the central wholesale market influences the long run price movements in the local markets the relationship can be modeled as spatial price equilibrium with the aim to guide subsequent policy decisions with regard to public intervention in the post liberalization period in this study we modeled the spatial equilibrium relationship between the producer and the wholesale prices of white teff a major staple in ethiopia using the autoregressive distributed lag modeling approach to cointegration analysis first the existence of a nonspurious long run relationship in levels between the producer prices in the local market and the wholesale prices in the central market is confirmed second the long run relationship and the error correction model for the producer price are estimated the results reveal that the wholesale price of white teff in the central consumer market is a major short and long run determinant of the producer price in the local supply markets therefore the institutional role of the government with the aim of improving producers marketing margin and the overall performance of the grain markets in the post liberalization period can be influenced through targeted interventions at the central wholesale market

false promise or false premise the experience of food and input market reform in eastern and southern africa abstract the literature on the effects of agricultural market reform in africa is sharply divided and inconsistent this article attempts to reconcile opposing viewpoints on the effects of food and input market policy reform in eastern and southern africa drawing from studies of ethiopia kenya malawi zambia and zimbabwe we argue that a major source of the controversy stems from assumptions that countries have actually moved to a liberalized market environment we find that many of the most fundamental elements of the reform programs either remain unimplemented were reversed within several years or were implemented in such a way as to negate private sector investment incentives a framework is developed for explaining why some countries have been able to liberalize their food and fertilizer markets while others have not these findings have implications for how donor assistance and policy oriented research can more constructively contribute to an improved policy environment

perspectives and problems of development in sub saharan africa this paper analyzes the initial conditions for development facing post colonial african nations outlines alternative development strategies followed by different groups of countries and assesses the consequences for growth and poverty alleviation on the basis of this diagnosis the paper outlines a number of policy priorities for the future including greater research extension and infrastructure support for smallholder agriculture an improvement in the overall structure of incentives in favor of agriculture a more realistic urban formal sector wage structure to reduce rural urban migration and foster a more internationally competitive manufacturing sector and greater emphasis on surplus generation through government budgets and parastatal enterprises

controlling non additional credits from nutrient management in water quality trading programs through eligibility baseline stringency a concern for programs that offer payment for environmental services is that those services be additional non additional services are those that would have been provided without the payment one source of non additionality is farmer misrepresentation of their pre program management farm management practices are often difficult to observe particularly those that do not involve structural changes such as nutrient management if practices are difficult to observe management oversight lax and enforcement weak the farmer has an incentive to provide biased information that increases the likelihood that he will receive a more favorable baseline for calculating services created and a larger payment this is a moral hazard problem the presence of non additional credits in a water quality trading program can result in the degradation of water quality point source discharges above permitted levels are replaced by equivalent reductions from unregulated nonpoint sources if the abatement that point sources purchase from nonpoint sources is non additional discharges will be higher than if the abatement was truly additional preventing non additional credits from entering a water quality trading market is one of the goals of program design in this paper we assess how program eligibility baseline choice affects the incentive to misrepresent baseline nutrient management practices

the effect of education on crime evidence from prison inmates arrests and self reports we estimate the effect of high school graduation on participation in criminal activity accounting for endogeneity of schooling we begin by analyzing the effect of high school graduation on incarceration using census data instrumental variable estimates using changes in state compulsory attendance laws as an instrument for high school graduation uncover a significant reduction in incarceration for both blacks and whites when estimating the impact of high school graduation only ols and iv estimators estimate different weighted sums of the impact of each schooling progression on the probability of incarceration we clarify the relationship between ols and iv estimates and show that the weights placed on the impact of each schooling progression can explain differences in the estimates overall the estimates suggest that completing high school reduces the probability of incarceration by about 76 percentage points for whites and 3 4 percentage points for blacks we corroborate these findings using fbi data on arrests that distinguish among different types of crimes the biggest impacts of graduation are associated with murder assault and motor vehicle theft we also examine the effect of drop out on self reported crime in the nlsy and find that our estimates for imprisonment and arrest are caused by changes in criminal behavior and not educational differences in the probability of arrest or incarceration conditional on crime we estimate that the externality of education is about 14 26 of the private return to schooling suggesting that a significant part of the social return to education comes in the form of externalities from crime reduction

market emergence and transition arbitrage transaction costs and autarky in china s grain markets using trimonthly chinese provincial grain prices from 1988 to 1995 we estimate a parity bounds model of interregional trade for four subperiods to characterize how multiple aspects of market performance change during the process of economic transition for each period we estimate the extent to which arbitrage opportunities are realized by traders the transaction costs between location pairs and the likelihood that regions do not trade trade restrictions cannot explain the pattern of uneven market development over time infrastructure bottlenecks managerial incentive reforms and production specialization policies all were likely important factors affecting market performance

policy design and conservation compliance on highly erodible lands we develop a game theoretic model of heterogeneous producers in order to identify the economic determinants of producer noncompliance with the conservation provisions of the united states department of agriculture usda policy on highly erodible lands we evaluate the policy effectiveness in inducing compliance and adoption of conservation practices the current policy design creates economic incentives for all noncompliant producers to masquerade as adopters and to claim government payments for which they are not entitled both theoretical and empirical results indicate that the increased income transfers to agriculture enacted under the latest farm bill will increase producer compliance and conservation activity on highly erodible lands

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

transaction costs in payment for environmental service contracts citation jeffrey m peterson craig m smith john c leatherman nathan p hendricks john a fox transaction costs in payment for environmental service contracts american journal of agricultural economics volume 97 issue 1 1 january 2015 pages 219 238 https doi org 10 1093 ajae aau071