On the difference between Agricultural Economics


View of Ag Econ


For fifty years, I wondered what the difference between an agricultural and resource economics (ARE) and ECON departments was?  Thinking about it for over forty years, I will tell you how I came to an answer.  I began my working life as a computer programmer and studied economics and statistics in Israel.  Eithan Hochman and Uri Regev, two of my teachers, encouraged me to approach Berkeley Ag Econ. “It has the same program as Econ, it provides better support, and the people are great.  The department will let you do whatever you want, and Berkeley is the gem of California – the Promised Land.”

At Berkeley, I continued to wonder.  Professor Andy Schmitz argued that ag econ is econ, with some emphasis on agriculture.  He advocated publishing in Econ journals on broad issues and opportunistically writing papers on ag problems.  The chairman of my department, Jim Boles, knew we received money from the agricultural experiment station to do work relevant to agriculture and assigned Regev and Hochman (as visiting faculty) to work on the experiment station project.  I collaborated with Hochman to study the economics of animal waste, and my computer background helped us write some papers targeted toward both farmers and economists.  Regev worked on impactful articles concerning the biological control of pests.  At the time, the department hired excellent people in agricultural economics, and Alain de Janvry ran our popular program on Economic Development.  However, agricultural economics was considered a minor area of inquiry, and few of us attended the Agricultural Economic Association meeting.  Then Gordon Rausser arrived and became our department chair.

Gordon realized that we could not last as a second-best econ department in Berkeley and instead Challenged us to become the best ARE Department in the country (we met the challenge).  Gordon assigned me to teach Agricultural Policy and was very supportive as I educated myself about the topic.  He provided resources for travel and good research assistants but insisted that I wouldn’t spend my research funds on an exciting issue, “factors that affect basketball game pricing .”I started going to Ag Econ meetings and discovered a new parallel universe to the mainstream economic world.  There was more real-world emphasis on technology adoption, supply chain, future markets, and political economy.  While the analyses may not be as elegant as one may see in mainstream econ, there was a lot of conceptual innovation and relevance.  I realized that this is my discipline.

What are the differences?

These are closely allied disciplines with a symbiotic relationship – but ag econ is not a pure subset of Economics.  Economics aims to understand behavior and explain prices, resource allocation, production patterns, the macroeconomy, and international trade.  Over time, its coverage grew to explain almost all human choices, including marriage and interaction within the family, and political outcomes.  When I was an undergraduate, we learned about the laws of supply and demand, as well as Say’s law (“Supply creates its own demand.”), and my teachers emphasized the importance of identifying general behavioral patterns through rigorous analysis.  Economics aspires to be a “basic science” like physics, aiming to explain major patterns, yet economics itself has evolved.  In the early days, it relied on logic, and then its content was enriched by developments in mathematics, statistics, data science, and other social sciences.  Like Physics, economics generates principles and techniques that can apply to improve human lives, and economics has spawned multiple applied disciplines that address significant practical aspects of life.

Agricultural economics emerged as the union of farm economics and farm management and evolved in agricultural schools.  Over time, the domain of the field has expanded to include the whole food supply chain, natural resources, and development, but the practical essence remained.  ARE departments are part of professional schools that aim to solutions to problems of production, management, utilization of food, natural resources, and the environment.  Agricultural and resource economics should complement disciplines like plant biology, agronomy, applied environmental science, and nutrition.  These disciplines tend to develop technologies and practices to address major challenges (increase productivity, reduce pollution, etc.).  ARE is supposed to elucidate how these technologies benefit society: when and where to adopt them?  How can policies address some of their harmful side effects?  What are the distributional impacts of policies, and how to improve them?  The relationship between ARE and ECON is like that of physics and engineering or economics and business administration.

Agricultural and resource economists have emphasized multidisciplinary work and collaboration with scientists aiming to solve emerging problems.   Their research portfolio includes applied theories integrating socio-political with natural resources systems and studies to assess past policies, project their impacts, and design new approaches for diverse decision-makers, from farmers to local government and the international community.  In addition to research and education of undergraduate and graduate students, ARE department departments aim to educate practitioners and policymakers through their extension activities.  Agricultural and resource economists have discovered aspects of reality and techniques that have enriched basic economic knowledge and published in the leading economic and scientific outlets.  In addition, they have improved economic methods of estimation and analysis and introduced new research areas, including the economics of adoption and human capital.

Why does it matter?

When agricultural economists aspire mostly to publish economic journals, they may underemphasize research that addresses specific problems of agriculture and natural resources, leading to misuse of public money.  University of California campuses do not need multiple economic departments.  Still, the challenges of climate change, loss of biodiversity and water, and food security urgently require research that combines the rigorous understanding of economics and policies with knowledge of the subject matter in ARE departments.  There is resource misallocation when “top 5” ECON journals serve as a prime benchmark for ARE  research.  We may develop researchers and scholars who do not have the skills and produce the essential knowledge to solve the problems their departments were enfranchised to address.

When Gordon Rausser became our chair and demanded that we will emphasize agriculture and resource economic issues and sometimes give up research that may attract a more “prestigious” outlet but has little to do with our mission, I resented this for a while.  Now I realize the wisdom of his vision.  A significant challenge for ARE departments and the schools of natural resources they belong to is to use the new tools of biology and information technology and develop the knowledge and capabilities that address crucial societal problems.  In particular, to contribute to decarbonizing the economy, transitioning away from non-renewable to renewable resources, and sustainably supplying nutritious and affordable foods.  Meeting these challenges require publications in the most relevant and impactful channels, which are not necessarily the most prestigious outlets.  University administrators and the scientific community should evaluate publications by their content, not by their outlets.  ARE and ECON should co-evolve, pursuing their distinct missions, thus contributing to making the world a better place.