Awards: Outstanding Master's Thesis Award The Distinct Impact of Food Stamps on Food Spending: Comparing Evidence from Economic Theory, Policy Experiments, and Non-Linear Regression Methods, by Parke E. Wilde Master's Thesis Award of Merit Economic Analysis of Different Herbicide Treatment Recommendations for Groundwater Protection, by Wei Liu Master's Thesis Award of Merit Implications of Changing European Union Trade Policies on Latin America's Trade in Bananas, by Kleber Machado Journal Article of the Year for 1995 Recreation Swimming Benefits of New Hampshire Lake Water Quality Policies, by Michael Needleman and Mary Jo Kealy Honorary Life Member Award: Olan D. Forker Distinguished Member Award: Conrado "Bobby" Gempesaw IITeaching/Communication/Extension/Profession,

Anonymous

English

Research Papers in Economics

NAREA  Awards
Outstanding Master's Thesis Award
The Distinct Impact of Food Stamps  on Food
Spending:  Comparing Evidence  from Economic
Theory,  Policy  Experiments,  and Non-Linear
Regression  Methods
Parke E.  Wilde
Cornell University
Advisor: Christine Ranney
Despite  the  size  and  importance  of  the  federal  Food  expected  to face  according to the Southworth  Hypothe-
Stamp  Program,  economists  have  remained  unsure  sis. By using this model in combination  with the exper-
whether  targeted  food  stamp  coupons  are  significantly  imental data,  it was possible  to improve estimates of the
more effective  than cash benefits in increasing consumer  marginal  impact of food  stamp coupons  and cash bene-
food  expenditures.  This uncertainty  has hindered  deci-  fits  and,  more  importantly,  to  test  whether  explicitly
sion-making regarding proposals  to "cash out" the Food  modeling the budget constraint in this manner accounted
Stamp Program.  for  the observed  differences  in  consumer  responses  to
In the past,  the main contributions  of theoretical  and  these  benefits.  The  models  were  estimated  with  four
empirical  economics  to this question  have  contradicted  different functional  forms  for the  underlying  Engel re-
each  other.  A  famous  application  of economic  theory,  lationship.
known  as  the  Southworth  Hypothesis,  held  that  those  The principal results were the following: (1) the PLC
food stamp  recipients  whose  food expenditure  exceeds  model yielded estimates of the relevant marginal impacts
their benefit allotment should exhibit the same spending  that  were  similar  in magnitude  to  corresponding  esti-
pattern whether they  receive their benefits as  checks  or  mates  by  ordinary  least  squares  (OLS);  (2)  the  PLC
as targeted  coupons. In theory,  such recipients are  "un-  model did not remove the evidence from San Diego that
constrained"  by the  form of benefits  they receive.  Al-  coupons  and  checks  had  different  effects  even  for  un-
though most current recipients are unconstrained,  twenty  constrained  families;  (3)  even  ordinary  income  and
years of empirical studies using regression techniques on  check  benefits  appeared  to  have  different  impacts  on
cross-sectional  survey  data  found that food  stamp cou-  food spending.  Because  of evidence  that all  three types
pons do appear to have a distinct impact on food spending.  of household  resources could have different  parameters
Cashout demonstrations in San Diego and Alabama in  in the Engel  equation,  a more  general model  was esti-
the early  1990s randomly  assigned recipients  to receive  mated  that  allowed these parameters  to differ.  A Like-
either coupons or cashable  checks. The Alabama  exper-  lihood Ratio  test of restrictions  on this  general  model
iment found no difference in food spending between  the  again  rejected  predictions  implied  by  the  Southworth
check and  coupon cohorts,  while  the San Diego exper-  Hypothesis.
iment found the check cohort spent on average about 7%  Several explanations  for these  surprising results  were
less money  on food  at  home per  person per week than  explored.  Some  explanations  imply  only  minor  alter-
did the coupon  cohort.  A larger  proportion of recipients  ations  to  the  Southworth  Hypothesis.  Others  require
in  San Diego  were  unconstrained,  so  these results  ap-  changes  in  the  model's  basic  presumptions.  Evidence
peared in conflict with the  Southworth Hypothesis.  from survey data and focus group  interviews in San Di-
In this thesis,  the San Diego and  Alabama data  were  ego and Alabama were used to evaluate  alternative mod-
employed to estimate Engel functions for food expendi-  ifications to the traditional  theory. In sum, this research
ture using a non-linear regression  model that was  devel-  suggested that the Southworth Hypothesis does not cap-
oped  in the  1980s.  This model  accounts  for  the piece-  ture at  least  some relevant  effects  of the different pos-
wise-linear  budget  constraint  (PLC)  that  recipients  are  sible  delivery  systems.250  October 1996  Agricultural and Resource Economics Review
Master's Thesis Award of Merit
Economic  Analysis  of Different Herbicide  Treatment
Recommendations  for Groundwater Protection
Wei  Liu
University  of Massachusetts
Advisor:  L. Joe Moffitt
Although there is evident public concern about pesticide  of herbicide  treatment  recommendations  for  weed con-
contamination of groundwater,  few quantitative  studies  trol  by  utilizing  a  groundwater  loading  model  in  con-
have been done to incorporate economic  efficiency con-  junction  with  an  empirical  crop-weed  pest  system and
siderations  in achieving groundwater  quality  goals with  economic  optimization.
respect to pest control recommendations  used in agricul-  Results provide profit maximizing herbicide treatment
tural production.  Moreover,  even fewer empirical  stud-  recommendations  corresponding  to  specific  expected
ies have  focused  on pesticide  contamination  of ground-  herbicide  concentrations  in groundwater.  Moreover,  re-
water.  Based on  an  existing  theoretical  method  for in-  suits  verify  the  potential  for use of existing  pest man-
corporating environmental  quality  goals with respect to  agement  information  efforts  in  accommodating  public
pesticides  into  the  economic  threshold,  this  thesis  ex-  concern  for groundwater  protection  and  for supporting
plicitly incorporates groundwater quality into calculation  farm profitability.
Master's Thesis Award of Merit
Implications  of Changing European Union  Trade
Policies  on Latin America's Trade in Bananas
Kleber Machado
Cornell University
Advisor:  David  R.  Lee
Bananas are among the largest  agricultural export  crops  tempts  to  clarify  the  impacts  of  changing  EU  banana
worldwide and are,  after citrus, the second most impor-  policies on Latin America's banana  trade.
tant fresh fruit entering international  trade.  Furthermore,  In  this  study,  a multicountry  trade  model  is  used to
of all tropical  fruits of importance to developing  coun-  investigate the effects  of EU banana policy  alternatives
tries,  bananas  rank  fifth  in  export  value,  after  sugar,  on trade  flows,  market  share composition,  and prices  in
coffee,  cocoa,  and rubber.  the  international  banana  trade.  This  model  has  seven
In 1992,  the European Union (EU) became the largest  exporters  (Costa Rica,  Colombia,  Ecuador, Guatemala,
banana  market,  accounting for 37%  of global  imports.  Honduras, Panama,  and ACP countries) plus ROW; and
EU  imports  come  mainly  from  three  sources:  (1) EU  five  importers  (EU  without  France  and  Germany,
territories,  (2) producers  from African,  Caribbean,  and  France,  Germany,  the  United  States,  and  Japan)  plus
Pacific  signatories  of  the  fourth  Lome  Convention  ROW.  The  model  is  an  Armington-type  model;  it  as-
(ACP), and (3) producers from Central and South Amer-  sumes that the trade system is primarily demand driven.
ica.  Within the framework  of the EU common  agricul-  The  model  is  econometrically  estimated  and  the  esti-
tural  policy  (CAP),  the  EU  has  adopted  a new  single  mated  coefficients  are  used  to  stimulate  four  different
Community market for bananas ruled by a single banana  policy scenarios:  S1, the "status-quo"  scenario;  S2,  the
policy.  This  policy  is  expected  to  have  an  enormous  "free-trade"  scenario;  S3,  the  "1993  EU Banana  Pol-
effect  on Latin  America's banana  trade.  This  study  at-  icy" scenario; and S4, the "GATT-bound  Agreement of251
1994"  scenario.  The simulation is  an "out  of sample"  alternatives  are  simulated, the protected EU markets and
exercise for five years  (1994  to 1999)  and forecasts the  Germany  decrease  their  imports  while  Japan  and  the
effect  of EU  banana  policy  alternatives  on  trade  flows  United  States  increase theirs.
and market share  composition.  This  study shows that the effects  of EU banana policy
The  individually  estimated  equations  (export  supply  alternatives  on the  market  shares  that individual  Latin
equations,  first-stage  demand  equations,  and  second-  American  countries  will have  of the total imports to the
stage  demand equations)  have good statistical fits.  The  EU from  non-ACP sources  are small.  The results  show
model  estimated  in  this  study results  in  elastic  export  that  the implementation  of either  the  1993  EU Banana
supply elasticities and inelastic  import demand  elastici-  Policy  or the GATT-bound  Agreement  of 1994 will re-
ties.  It appears  that market intermediaries  have  an im-  suit in a reduction of Latin America's market share in the
portant role  in international  trade  of bananas.  EU market.  The  magnitude  of the effect,  however,  is
The  study  presents  strong  evidence  that  the  banana  smaller when the GATT-bound  agreement  is  simulated.
market responds  differently to different types of changes  The loss  of Latin  America's market  share  is primarily
in trade  policy.  The  effect on the banana  market when  gained  by  ACP  countries,  which  will  improve  their
trade  is liberalized is smaller (in absolute terms) than the  terms  of trade  as  a  result.  The  analysis  of  these  two
effect when trade is further restricted; this occurs mainly  scenarios,  in terms  of their  effects  on  Latin American
because  banana trade  is already  largely  liberalized.  exporters, shows that the GATT-bound  agreement offers
The effects of the different policy scenarios on exports  a  preferable  scenario  for  non-ACP  exporters  than  the
are different for each exporting country. The results sug-  previous  policy.
gest that when trade is liberalized,  Latin American coun-  The effects  of the different policy scenarios  on export
tries  increase  their  exports,  while  ACP  countries  de-  prices  was  a priori  expected.  Under  the free-trade  sce-
crease theirs.  However,  when the EU banana policy  al-  nario, export  prices increase  in the short run  as increas-
ternatives  are  simulated,  ACP  countries  increase  their  ing  demand  drives  total  exports  up.  Under  the  trade-
exports  to EU  markets  at  the  expense  of exports  from  distorting scenarios,  export prices decrease  as diminish-
Latin America.  The EU banana policy  of 1993  is  more  ing  demand  drives  exports  down.  Interestingly,  the
costly,  in terms of total exports and export revenues, for  effects  on  export prices,  as  well  as  the  effects  on  the
Latin  American  countries  compared  with  the  GATT-  market shares  and trade  flows, indicate that a free-trade
bound  agreement.  The  effects  of the  different  policy  scenario does improve the terms of trade for Latin Amer-
scenarios  on  imports  is  different  for  each  importing  ican countries.  Also,  the results  indicate that of the two
country  as  well.  The  results suggest  that  when trade  is  EU Banana  Policy  alternatives  analyzed  in this  study,
liberalized,  the protected EU markets  (i.e., EU-FG and  the  new  GATT-bound  agreement,  signed on  April  15,
France)  increase  their  imports,  while  the  free  market  1994,  is  less  damaging  to  Latin  American  exporting
importers  (i.e., Germany,  Japan,  and  the United States)  countries than  was the previous  policy.
decrease  theirs.  However,  when  the EU banana  policy
Journal  Article  of the  Year for 1995
Recreational Swimming  Benefits  of New  Hampshire
Lake Water Quality Policies
Michael Needleman  and Mary Jo Kealy
University  of Delaware  and U.S.  Environmental Protection Agency
Water pollution control policies generally  direct sources  relative recreational  swimming benefits  that may result
(i.e., industry,  agriculture)  to reduce loadings of certain  from  controlling  point  and  nonpoint  sources  of pollu-
pollutants.  Thus,  evaluating the relative  net recreational  tion, respectively,  in New Hampshire's  lakes.  We use a
benefits  of policies  to  improve  water  quality  requires  repeated  discrete choice framework to model swimming
establishing a linkage between  the sources, the resultant  behavior  as  a function  of each lake's  level of eutrophi-
water quality  degradation  at  the affected  water  bodies,  cation,  bacteria,  and oil and grease. For each pollutant,
and, ultimately,  the effect on recreational  behavior. This  at each  affected  lake,  we  identify  which  source  is  re-
linkage  is  rarely  present  in  the  empirical  literature,  sponsible  for  the  pollution,  and  we  conduct  scenarios
which  is, thus, deficient for water pollution control pol-  controlling each pollution source independently and then
icy assessment  purposes.  In this paper, we  estimate the  taken together.  Seasonal  benefit estimates are presented252  October 1996  Agricultural and Resource Economics Review
for each scenario. Coupled with information on the most  tive assessment  of the net recreational  benefits  of poli-
cost-effective  means  of generating  the scenarios,  these  cies to improve  the quality of New Hampshire lakes.
estimates provide  a useful starting  point for a quantita-
Honorary Life Member Award
Olan D.  Forker
Department of Agricultural,  Resource  and Managerial  Economics
Cornell University
Dr. Olan Forker is recognized as Honorary Life Member  professors in the United States and as a national author-
of NAREA  based  on  his  exemplary  career  at  Cornell  ity  on generic  commodity promotion programs.
University, his contribution  to agricultural marketing re-  Olan  served  the  NAREA  as  president  in  1991-92.
search in the United  States,  and  his active  participation  Earlier,  during  the  formative  years  of  NAREA,  he
in NAREA  for many years.  served  as a member and  president of the Northeast As-
Olan  Forker retired  in 1995  after thirty-three  years of  sembly,  which directed the affairs of the association. He
distinguished  service  to  the  profession,  with  thirty  of  has  been  a regular participant  at  the annual  meeting of
those  years  at  Cornell  University.  Raised  in  Indiana,  the association  and  coauthored  the article  that received
Olan received  a B.S.  degree  from Purdue,  an M.S.  de-  the  first  "Journal  Article  of  the  Year"  award  of  the
gree from Michigan State,  and the Ph.D. from the Uni-  association  in  1990.  He  was  named  a  Distinguished
versity  of  California,  Berkeley.  He  was  an  extension  Member of the NAREA  in  1994.
economist at Berkeley for three years until he joined the  Olan Forker's career is marked by outstanding service
faculty  at  Cornell  in  1965.  and  quality  of  professional  accomplishment.  He  has
He  served  as  chair  of the  department  from  1976  to  been a wonderful role model  and mentor for  young col-
1985,  was director of the graduate program from 1971 to  leagues  and has  made  an  impact  on the profession  and
1973  and  1975  to  1976,  and  was  director  of the under-  the  agricultural community  through  his contributions  to
graduate  program  in  applied  economics  and  business  research  and  extension.  More  than most in  our profes-
management  from 1986 to 1993.  He served Cornell as a  sion,  through his efforts,  he has had measurable impacts
faculty trustee  from  1984 to  1988.  Despite all of these  on decision  makers and on other professionals.  We rec-
administrative  assignments,  Olan  has  continuously  ognize Dr. Forker as an Honorary Life Member based on
maintained  an  active research  program and  is generally  his record  and his  contributions  to NAREA.
recognized  as one of the leading  agricultural  marketing
Distinguished Member Award
Conrado "Bobby"  Gempesaw  II
Department of Food  and Resource  Economics
University of Delaware
Dr.  Conrado  "Bobby"  Gempesaw  II  is recognized  as  introduced  more people  to  the journal  and  led  them to
Distinguished Member of NAREA for his extraordinary  consider it as  an outlet for their papers.
efforts  as  editor of the Agricultural and Resource Eco-  The  success  of these and  numerous  other efforts that
nomics Review  during  his  three-year  term.  His  major  Bobby made to enhance the ARER are evident in looking
initiatives  for  the  journal  include  implementing  the  at  the journal's  content and  appearance.  Because of his
changes  in  the journal's  name  and  appearance,  active  efforts  the journal has made an excellent transition from
solicitation  of  quality  papers,  increasing  submissions  a  regional  to  a  national  journal,  while  continuing  its
during his tenure,  designing and  implementing two spe-  Northeast  roots  and  publication  of  Northeast  authors.
cial  theme  issues  of ARER,  and  developing  a  national  We recognize Dr. Gempesaw's  contribution to NAREA
pool of reviewers to supplement the existing pool, which  through  the  Distinguished Member Award  of NAREA.

NAREA AWARDS

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