Using Prospect Theory to Improve the Design of Agricultural Subsidy Schemes

Ocean, Neel; Howley, Peter

doi:10.2139/ssrn.3432955

Cited by 3 publications

(7 citation statements)

References 37 publications

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“…We match zip codes to counties and states using federal data files. 22 For each item purchased, we observe the quantity, the pretax amount paid, a flag for the use of WIC, and the dollar amount of coupons or other discounts applied to the purchase.…”

Section: A Household Purchases and Characteristicsmentioning

confidence: 99%

“…Stores Give Discounts, Sneak Peeks, Secret Sales; Just Hand over Personal Data," Wall Street Journal, May 5, 2011. 22 We assign zip codes to counties and states using the crosswalk for 2010:I from US Department of Housing and Urban Development (2017) and state codes from US Census Bureau (1990). We assign each zip code to the county that contains the largest fraction of the zip code's residential population, breaking ties at random.…”

Section: A Household Purchases and Characteristicsmentioning

confidence: 99%

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How are SNAP Benefits Spent? Evidence from a Retail Panel

Hastings

Shapiro

2018

SSRN Journal

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and from comments by discussant J.P. Dubé. We thank our dedicated research assistants for their contributions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w23112.ack NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Section: A Household Purchases and Characteristicsmentioning

confidence: 99%

Section: A Household Purchases and Characteristicsmentioning

confidence: 99%

How are SNAP Benefits Spent? Evidence from a Retail Panel

Hastings

Shapiro

2018

SSRN Journal

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“…For each household and month, we compute the store-brand share of expenditures and the share of purchases for which coupons are redeemed for both SNAP-eligible and SNAP-ineligible purchases. 27 We adjust these measures for the composition of purchases as follows. For each item purchased, we compute the store-brand share of expenditure among other households buying an item in the same product category in the same retailer division and the same calendar month and week.…”

Section: Shopping Effortmentioning

confidence: 99%

“…Alcohol, tobacco, pet food, and prepared food intended for on-premise consumption are SNAP-ineligible (FNS 2017a) 26. Using the Nielsen Homescan Consumer Panel data that we describe in Appendix A, we calculate that the share of SNAP-eligible spending among all classified nonfuel spending is at the fifteenth percentile of the top 20 grocery retail chains by total sales 27. We treat these shares as undefined whenever the household has a nonpositive SNAP-eligible or SNAPineligible expenditure in a given month.…”

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confidence: 99%

How Are SNAP Benefits Spent? Evidence from a Retail Panel

Hastings

Shapiro

2018

American Economic Review

155

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We use a novel retail panel with detailed transaction records to study the effect of the Supplemental Nutrition Assistance Program (SNAP) on household spending. We use administrative data to motivate three approaches to causal inference. The marginal propensity to consume SNAP-eligible food (MPCF) out of SNAP benefits is 0.5 to 0.6. The MPCF out of cash is much smaller. These patterns obtain even for households for whom SNAP benefits are economically equivalent to cash because their benefits are below their food spending. Using a semiparametric framework, we reject the hypothesis that households respect the fungibility of money. A model with mental accounting can match the facts. (JEL D12, H75, I12, I18, I38)

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“…Using hypothetical scenarios of food reserves and consumption, Huang et al (2020) find that Chinese farmers show mental budgeting in deciding how much to consume from their own-produced food. Ocean and Howley (2019) conducted an experiment among UK farmers Effects of mental budgeting trying to understand the heterogeneous effects of different subsidy schemes on environmental management expenses. The results show that there is a statistically significant difference in the allocation of subsidies across three subsidy schemes.…”

Section: Introductionmentioning

confidence: 99%

The effects of mental budgeting on the intentions to switch to low-toxicity pesticides: evidence from vegetable farmers in Sichuan, China

Zeng

Herzfeld

2021

CAER

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PurposeMental budgeting, as a part of mental accounting theory, is expected to impact a household's budgetary management in terms of expenses. The purpose of this paper is to study whether and how mental budgeting can explain differences in farmers' reactions to different incentives of low-toxicity pesticide use.Design/methodology/approachBased on data from a survey of 393 vegetable farmers in the Sichuan Province, this analysis, using a Likert Scale approach, first explores whether farmers utilize mental budgeting. Secondly, using a Probit model, this paper analyzes how mental budgeting affects farmers' intentions to switch to low-toxicity pesticide use when faced with different incentives.FindingsThe results show that the majority of farmers categorize agricultural inputs into different groups and that 26.46% of the investigated farmers utilize mental budgeting for pest control practices. In addition, farmers who utilizing mental budgeting report a higher willingness to switch to low-toxicity pesticides when they're presented with a specific subsidy. Furthermore, if offered a price premium for quality, the willingness to switch to low-toxicity pesticides for farmers utilizing mentally budget is lower compared to other farmers.Originality/valueThis paper examines the existence of mental budgeting among farmers. It provides a better understanding of how farmers categorize agricultural inputs and their mental mechanisms with respect to agricultural expenses. Finally, this paper is the first to study the effects of mental budgeting on farmers' reactions to different incentives aimed at stimulating the adoption of low-toxicity pesticides.

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Using Prospect Theory to Improve the Design of Agricultural Subsidy Schemes

Cited by 3 publications

References 37 publications

How are SNAP Benefits Spent? Evidence from a Retail Panel

How are SNAP Benefits Spent? Evidence from a Retail Panel

How Are SNAP Benefits Spent? Evidence from a Retail Panel

The effects of mental budgeting on the intentions to switch to low-toxicity pesticides: evidence from vegetable farmers in Sichuan, China

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