Applied Economics Teaching Resources

an AAEA Journal

Agricultural and Applied Economics Association

Volume 6, Issue 1, January 2024Download PDF

Special Issue: Fostering Diversity and Inclusion in Agribusiness - Part 4

Equity and Inclusion as Cornerstones for Building Academic Programs in Agricultural and Applied Economics

Kenrett Jefferson-Moore, Lurleen Walters, and Del Ruff

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Posted online: January 2, 2024
DOI: 10.22004/ag.econ.341808

Abstract: In this essay, we discuss the importance of equity and inclusion as necessary conditions for increased diversity in agricultural and applied economics and agribusiness (AAEAB) programs. Intentional commitment of resources and integrated strategic execution at the local (university) levels are essential if diverse outcomes and attendant benefits are to materialize."

Keywords: Academic programs, diversity, equity, inclusion

Research Article

Are We Similar? Differences in Grading Patterns among Departments in the Same College

Anna Yeritsyan and James W. Mjelde

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Posted online: January 27, 2024
DOI: 10.22004/ag.econ.341809

Abstract: Using a unique data set on institutional, instructor, and student characteristics, mixed effect models are estimated to identify factors correlated with class grade point averages (GPAs) over time among different departments in the College of Agriculture and Life Sciences (COALS) at Texas A&M University (TAMU). More departments show more potential grade inflation in the years 2004–2019 than during the years 1989–2003. After controlling for individual instructors, student characteristics appear to be more important than instructor and institutional characteristics, except for class size, in explaining GPAs. The number of students in a class is negatively correlated with grades for all departments and periods. If significant, increase in students’ high school rank is positively correlated with university GPA. Graduate students, non-graduate instructors, visiting faculty, and lecturers tend to grade higher than professors. Out of the eight non-science, technology, engineering, and mathematics (STEM) departments, seven (87.5 percent) potentially encountered grade inflation. In contrast, out of the four STEM departments, only two (50 percent) experienced potential grade inflation."

Keywords: Grade inflation, student characteristics, instructor characteristics, higher education

Teaching and Educational Methods

A Brief History of Giffen Behavior and an Applicable Student Example

Mark Holmgren

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Posted online: January 28, 2024
DOI: 10.22004/ag.econ.341810

Abstract: Giffen behavior is covered in various intermediate microeconomics textbooks, but debates arise over its existence. Given particular assumptions, Giffen behavior arises for students waiting until the end of the term to study. For some students, the available time for studying diminishes, but non-academic pursuits are available after the term (the time constraint becomes steeper). While the total possible time for the course decreases, some students study more. Instructors may demonstrate this type of example to students in hopes that it will be more relatable and gain a greater knowledge of the Giffen good concept."

Keywords: Giffen behavior, intermediate microeconomic theory, procrastination

Benefit-Cost Analysis Decision Criteria: Reconciling Conflicting Advice

David J. Pannell, Hoa-Thi-Minh Nguyen, Hoang Long Chu, Tom Kompas, Abbie Rogers

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Posted online: January 26, 2024
DOI: 10.22004/ag.econ.341811

Abstract: Net present value (NPV), benefit: cost ratio (BCR), and internal rate of return (IRR) are fundamental concepts of benefit-cost analysis (BCA), providing helpful criteria for decision making about investments. However, textbooks on BCA are remarkably inconsistent in the advice they provide about which of these decision criteria should be used, potentially creating confusion among teachers and students. We present an existing conceptual framework that clarifies which of the three criteria should be used in particular decision contexts, depending on whether the projects in question are independent or mutually exclusive, and on whether the projects are resourced from a fixed pool of funds. The framework reveals that some of the advice provided by particular textbooks is incorrect, and some is correct only in certain decision contexts. Some books dismiss the use of BCR in general, but we show that it is the preferred criterion in certain cases and clarify how it should be calculated. The argument that BCRs can be manipulated by moving costs between the denominator and the numerator is fallacious. Recognizing that these decision criteria should not be applied mechanistically, we argue that the framework presented has the potential to improve decision making in many cases."

Keywords: Benefit:cost ratio, cost-benefit analysis, decision making, internal rate of return, net present value, prioritization

Case Studies

Adopting Precision Input Management: A Teaching Case Study

Cheryl Wachenheim, Erik Hanson

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Posted online: January 20, 2024
DOI: 10.22004/ag.econ.341812

Abstract: Students are introduced to a framework for individual-farmer evaluation of the net benefits of adopting precision agricultural technologies (PATs). A young farmer is considering whether to use a PAT bundle. He is advised by a crop consultant. Students adopting the role of the farmer should analyze the basic economics associated with using the PAT. The focus is on identifying what differs from traditional application and that under PAT, finding information necessary to analyze the net effect, conducting sensitivity analysis, and factoring in qualitative considerations. Students should use partial budgeting analysis to calculate net change in profits expected from adopting a single PAT bundle."

Keywords: Case study, exercise, partial budgeting, precision agriculture

Market Power in the U.S. Beef Packing Industry

Yuliya V. Bolotova

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Posted online: January 19, 2024
DOI: 10.22004/ag.econ.341813

Abstract: This case study is motivated by recent developments in the U.S. beef packing industry involving allegations of an illegal exercise of buyer and seller market power by the four largest beef packers in the markets for fed cattle and beef products, respectively. In 2019, fed cattle producers and beef buyers filed class action antitrust lawsuits against these companies alleging that they engaged in an unlawful conspiracy with the purpose of decreasing fed cattle prices and increasing wholesale and retail prices of beef as early as January 2015 and violated Section 1 of the Sherman Act. The case study focuses on applications of economic models that may explain conduct and performance of the beef packing industry using the perspectives of plaintiffs and defendants in the ongoing cattle and beef antitrust litigation. The case study also introduces a basic empirical analysis of beef production, beef values, and marketing margins in the beef supply chain based on publicly available data reported by the U.S. Department of Agriculture. The intended audiences are undergraduate and graduate students. The teaching note summarizes student learning objectives and teaching strategies. It also includes multiple-choice questions, as well as suggested answers and guidance to analytical, discussion, and multiple-choice questions."

Keywords: Beef packing industry, marketing margins, oligopoly, oligopsony, price-fixing

Mountain States Oilseeds: Can Contracts Enhance Safflower Seed Procurement?

Jameson Packer, Tanner McCarty, and Ryan Feuz

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Posted online: December 21, 2023
DOI: 10.22004/ag.econ.341814

Abstract: This case examines the contracting decisions facing a safflower seed processing company in southern Idaho. Mountain States Oilseeds (MSO) specializes in the procurement, storage, cleaning, drying, packaging, and transportation of safflower seeds. Recent supply chain disruptions coupled with regional drought have greatly decreased safflower seed availability. MSO must adjust their procurement strategy to secure sufficient safflower seed to meet their own commitments to their buyers. This case study illustrates the various hurdles to be overcome in drafting a successful producer-processor agricultural contract (farmer participation, moral hazard, etc.). It also highlights the trade-offs associated with various contractual payment mechanisms common within agricultural contracts (performance payments, acreage payments, and quality adjustments)."

Keywords: Agricultural contracting, marketing, safflower seed, strategy

Teaching and Educational Commentary

We Need to Talk About Curriculum Innovation

Roger Brown, Jennifer Clark, Rachna Tewari

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Posted online: January 26, 2024
DOI: 10.22004/ag.econ.341815

Abstract: Is it time to refresh your applied agricultural economics and agribusiness curriculum? How do you know? Where do you start? In this commentary, we review why curriculum updates are challenging and suggest that an information problem is partly to blame. Others highlight our discipline’s wide scope, our students’ diverse backgrounds, and our employers’ high expectations as inherent challenges to curricular planning. We point additionally to an economic challenge, namely that curriculum innovators do not advertise their discoveries and lessons learned at the socially optimal level. To address this public goods problem, we propose that an interested organization (e.g., the Agricultural and Applied Economics Association, AAEA) centrally facilitate information sharing in two ways: (1) inventory the range of curricular diversity regularly and (2) create an annual curricular innovation award. "

Keywords: Award, curriculum, information, public good, survey