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Agricultural economics is an applied field of economics concerned with the application of economic theory in optimizing the production and distribution of food and fiber. Agricultural economics began as a branch of economics that specifically dealt with land usage, it focused on maximizing the crop yield while maintaining a good soil ecosystem. Throughout the 20th century the discipline expanded and the current scope of the discipline is much broader. Agricultural economics today includes a variety of applied areas, having considerable overlap with conventional economics.Agricultural economists have made substantial contributions to research in economics, econometrics, development economics, and environmental economics. Agricultural economics influences food policy, agricultural policy, and environmental policy.
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Economics has been defined as the study of resource allocation under scarcity. Agricultural economics, or the application of economic methods to optimizing the decisions made by agricultural producers, grew to prominence around the turn of the 20th century. The field of agricultural economics can be traced back to works on land economics. Henry Charles Taylor was the greatest contributor with the establishment of the Department of Agricultural Economics at Wisconsin in 1909.
Another contributor, 1979 Nobel Economics Prize winner Theodore Schultz, was among the first to examine development economics as a problem related directly to agriculture.Schultz was also instrumental in establishing econometrics as a tool for use in analyzing agricultural economics empirically; he noted in his landmark 1956 article that agricultural supply analysis is rooted in "shifting sand", implying that it was and is simply not being done correctly.
One scholar summarizes the development of agricultural economics as follows:
Agricultural economics arose in the late 19th century, combined the theory of the firm with marketing and organization theory, and developed throughout the 20th century largely as an empirical branch of general economics. The discipline was closely linked to empirical applications of mathematical statistics and made early and significant contributions to econometric methods. In the 1960s and afterwards, as agricultural sectors in the OECD countries contracted, agricultural economists were drawn to the development problems of poor countries, to the trade and macroeconomic policy implications of agriculture in rich countries, and to a variety of production, consumption, and environmental and resource problems.
Agricultural economists have made many well-known contributions to the economics field with such models as the cobweb model,hedonic regression pricing models, new technology and diffusion models (Zvi Griliches), multifactor productivity and efficiency theory and measurement, and the random coefficients regression. The farm sector is frequently cited as a prime example of the perfect competition economic paradigm.
In Asia, agricultural economics was offered first by the University of the Philippines Los Baños Department of Agricultural Economics in 1919. Today, the field of agricultural economics has transformed into a more integrative discipline which covers farm management and production economics, rural finance and institutions, agricultural marketing and prices, agricultural policy and development, food and nutrition economics, and environmental and natural resource economics.
Since the 1970s, agricultural economics has primarily focused on seven main topics, according to a scholar in the field: agricultural environment and resources; risk and uncertainty; food and consumer economics; prices and incomes; market structures; trade and development; and technical change and human capital.
In the field of environmental economics, agricultural economists have contributed in three main areas: designing incentives to control environmental externalities (such as water pollution due to agricultural production), estimating the value of non-market benefits from natural resources and environmental amenities (such as an appealing rural landscape), and the complex interrelationship between economic activities and environmental consequences.With regard to natural resources, agricultural economists have developed quantitative tools for improving land management, preventing erosion, managing pests, protecting biodiversity, and preventing livestock diseases.
While at one time, the field of agricultural economics was focused primarily on farm-level issues, in recent years agricultural economists have studied diverse topics related to the economics of food consumption. In addition to economists' long-standing emphasis on the effects of prices and incomes, researchers in this field have studied how information and quality attributes influence consumer behavior. Agricultural economists have contributed to understanding how households make choices between purchasing food or preparing it at home, how food prices are determined, definitions of poverty thresholds, how consumers respond to price and income changes in a consistent way, and survey and experimental tools for understanding consumer preferences.
Agricultural economics research has addressed diminishing returns in agricultural production, as well as farmers' costs and supply responses. Much research has applied economic theory to farm-level decisions. Studies of risk and decision-making under uncertainty have real-world applications to crop insurance policies and to understanding how farmers in developing countries make choices about technology adoption. These topics are important for understanding prospects for producing sufficient food for a growing world population, subject to new resource and environmental challenges such as water scarcity and global climate change.
Development economics is broadly concerned with the improvement of living conditions in low-income countries, and the improvement of economic performance in low-income settings. Because agriculture is a large part of most developing economies, both in terms of employment and share of GDP, agricultural economists have been at the forefront of empirical research on development economics, contributing to our understanding of agriculture's role in economic development, economic growth and structural transformation. Many agricultural economists are interested in the food systems of developing economies, the linkages between agriculture and nutrition, and the ways in which agriculture interact with other domains, such as the natural environment.
The International Association of Agricultural Economists (IAAE) is a worldwide professional association, which holds its major conference every three years. The association publishes the journal Agricultural Economics.There also is a European Association of Agricultural Economists (EAAE), an African Association of Agricultural Economists (AAAE) and an Australian Agricultural and Resource Economics Society. Substantial work in agricultural economics internationally is conducted by the International Food Policy Research Institute.
In the United States, the primary professional association is the Agricultural & Applied Economics Association (AAEA), which holds its own annual conference and also co-sponsors the annual meetings of the Allied Social Sciences Association (ASSA). The AAEA publishes the American Journal of Agricultural Economics and Applied Economic Perspectives and Policy .
Graduates from agricultural and applied economics departments find jobs in many sectors of the economy: agricultural management, agribusiness, commodities markets, education, the financial sector, government, natural resource and environmental management, real estate, and public relations. Careers in agricultural economics require at least a bachelor's degree, and research careers in the field require graduate-level training;see Masters in Agricultural Economics. A 2011 study by the Georgetown Center on Education and the Workforce rated agricultural economics tied for 8th out of 171 fields in terms of employability.
Environmental economics is a sub-field of economics concerned with environmental issues. It has become a widely studied subject due to growing environmental concerns in the twenty-first century. Environmental Economics "...undertakes theoretical or empirical studies of the economic effects of national or local environmental policies around the world .... Particular issues include the costs and benefits of alternative environmental policies to deal with air pollution, water quality, toxic substances, solid waste, and global warming."
Theodore William Schultz was an American economist and chairman of the University of Chicago Department of Economics. Schultz rose to national prominence after winning the 1979 Nobel Memorial Prize in Economic Sciences.
The Pakistan Institute of Development Economics, is a post-graduate research institute, and a public policy think tank located in the vicinity of Islamabad, Pakistan.
Applied economics is the application of economic theory and econometrics in specific settings. As one of the two sets of fields of economics, it is typically characterized by the application of the core, i.e. economic theory and econometrics, to address practical issues in a range of fields including demographic economics, labour economics, business economics, industrial organization, agricultural economics, development economics, education economics, engineering economics, financial economics, health economics, monetary economics, public economics, and economic history.
The Allied Social Science Association (ASSA) is a group of academic and professional organizations that are officially recognized by the American Economic Association (AEA) and are related to the study of social sciences. As of 2007, there are fifty organizations that participate in the annual meetings of the ASSA, including:
Gordon C. Rausser is the Robert Gordon Sproul Distinguished Professor at the University of California, Berkeley who served as Dean of UC Berkeley's College of Natural Resources from 1994-2000. On three separate occasions he served as Chair of his academic department. He is an economist who served on the Council of Economic Advisors under President Ronald Reagan (1986–87) and as Chief Economist at the Agency for International Development (1988–90). He also co-founded the Institute for Policy Reform in Washington, D.C., in 1989. The institute’s purpose was to enhance the foundation for economic growth in developing countries by supporting and disseminating research in the field of economic, finance, and policy reform. Rausser served as president of the IPR for 5 years (1990–94). Rausser’s distinguished governmental service has been recognized with a Superior Unit Citation Award from the Agency for International Development (1990). Dr. Rausser is also Chairman and co-founder of OnPoint Analytics, an economic and statistical consulting firm specializing in litigation and expert witness testimony.
The Association of Environmental and Resource Economists, (AERE), was founded in 1979 in the United States as a means of exchanging ideas, stimulating research, and promoting graduate training in environmental and natural resource economics. The majority of its members are affiliated with universities, government agencies, non-profit research organizations, and consulting firms. Many of AERE's members hold graduate degrees in economics, agricultural economics, or related fields, but there are numerous student members as well, and the organization also serves many non-specialist members with environmental policy interests. The United States is the country with the largest single share of AERE members, but the organization welcomes members from all countries. Annual individual memberships currently number approximately 800. AERE is generally acknowledged as the primary professional organization for Environmental and Natural Resources economists in the USA. The European Association of Environmental and Resource Economists is its European equivalent.
Siegfried von Ciriacy-Wantrup was born in Langenberg, Germany in 1906. After doing his master's work in Illinois, he returned to Bonn to get his Ph.D. in 1931. In 1936, he left Nazi Germany for the United States, arriving at UC Berkeley and the Department of Agricultural and Resource Economics in 1938.
Colin Andre Carter is Professor of Agricultural and Resource Economics at the University of California, Davis. His research/teaching interests include international trade, futures markets, and commodity markets.
Daniel W. Bromley is an economist, the former Anderson-Bascom Professor of applied economics at the University of Wisconsin–Madison, and since 2009, Emeritus Professor. His research in institutional economics explains the foundations of property rights, natural resources and the environment; and economic development. He has been editor of the journal Land Economics since 1974.
Rural economics is the study of rural economies, including:
The European Association of Environmental and Resource Economists (EAERE) is an international scientific association. Its aims are:
Applied Economic Perspectives and Policy (AEPP) is a peer-reviewed journal of applied economics and policy. Published four times per year, it is the one of two journals published by the Agricultural & Applied Economics Association (AAEA), along with the American Journal of Agricultural Economics (AJAE). Today is the leading journal in 'applied economics' with a 2011 impact factor of 1.552.
David Zilberman is an Israeli-American economist, professor and Robinson Chair in the Department of Agricultural and Resource Economics at the University of California, Berkeley. Zilberman has been a professor in the Agricultural and Resource Economics Department at UC Berkeley since 1979. His research has covered a range of fields including the economics of production technology and risk in agriculture, agricultural and environmental policy, marketing and more recently the economics of climate change, biofuel and biotechnology. He won the 2019 Wolf Prize in Agriculture, was the President of the Agricultural and Applied Economics Association (AAEA), and is a Fellow of the AAEA and Association of Environmental and Resource Economics. David is an avid blogger on the Berkeley Blog and a life-long Golden State Warriors fan.
Jayson Lusk is an economist, Distinguished Professor and Department Head in the Department of Agricultural Economics at Purdue University. He authors books and articles related to contemporary food policy issues.
George Stanford Tolley is an agricultural economist at the University of Chicago. Along with the faculty at the University of Chicago, he has worked on the faculty of North Carolina State University. In 1965-1966, he was Director of the Economic Development Division of the Economic Research Service at the US Department of Agriculture, and in 1974-1975 he was Deputy Assistant Secretary and Director of the Office of Tax Analysis at the US Department of Treasury.
John Donald Black was an American economist. He was a professor of economics at University of Minnesota from 1918 to 1927, and then from 1927 to 1956 at Harvard University. Black was one of the authors of the Agricultural Adjustment Act. He was also president of the American Economic Association in 1955. Black died at a Boston hospital in 1960.
Yoav Kislev was an Israeli agricultural and water economist, who continued until his death with active research as Professor Emeritus of Agricultural Economics at the Department of Environmental Economics and Management in the Rehovot Campus of the Hebrew University of Jerusalem.
Gerald Shively is an American economist and Professor in the Department of Agricultural Economics at Purdue University. He teaches and publishes research articles and books related to contemporary policy-related issues in economic development. His specializations are in poverty, food security and sustainable development.
Scott H. Irwin is the Laurence J. Norton Chair of Agricultural Marketing and professor in the department of agricultural and consumer economics at the University of Illinois at Urbana-Champaign.