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A critical assessment of the political preference function approach in agricultural economics

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  • Cramon-Taubadel, Stephan von
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    The policy preference function (PPF) approach has become popular with economists seeking to explain the origin of government policies. In this paper, a distinction between positive and normative work with the PPF concept is made. Positive work is shown to suffer from a variety of shortcomings including the misspecification of traditional PPFS and the failure to consider the importance of institutions, constraints and the interaction between different commodity policies. These weaknesses are reflected in the counter-intuitive results of a simple PPF model designed to reflect the interaction between the EC's wheat and barley policies. Furthermore, it is demonstrated that PPF weights change as a result of both political preferences and market parameters. Hence, changes in PPF weights cannot be attributed to changes in preferences alone. Tests of the axioms of revealed preference theory are used to demonstrate that even though PPF weights derived for the EC's wheat and barley markets have fluctuated considerably since the early 1970s, we are not able to conclude that there has been a shift in political preferences. The paper concludes with some comments about the use of PPFS in a normative framework. The underlying assumption that policy-makers optimise seems, not surprisingly, often to lead practitioners to the conclusion that observed policies are not so bad after all. Economists should also beware of the tendency to overlook possible differences between the PPF and the social welfare function.

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    File URL: http://purl.umn.edu/172992
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    Article provided by International Association of Agricultural Economists in its journal Agricultural Economics of Agricultural Economists.

    Volume (Year): 07 (1992)
    Issue (Month): 3-4 (October)
    Pages:

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    Handle: RePEc:ags:iaaeaj:172992
    Contact details of provider: Web page: http://www.iaae-agecon.org/
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    1. D. MacLaren, 1991. "Agricultural Trade Policy Analysis And International Trade Theory: A Review Of Recent Developments," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(3), pages 250-297.
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    8. Rausser, Gordon C & Freebairn, John W, 1974. "Estimation of Policy Preference Functions: An Application to U.S. Beef Import Quotas," The Review of Economics and Statistics, MIT Press, vol. 56(4), pages 437-449, November.
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    10. Rausser, Gordon C & de Gorter, Harry, 1991. "The Political Economy of Commodity and Public Good Policies in European Agriculture: Implications for Policy Reform," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(3-4), pages 485-504.
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    12. Gordon C. Rausser, 1982. "Political Economic Markets: PERTs and PESTs in Food and Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(5), pages 821-833.
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    14. M. P. Burton & T. Young, 1991. "Non-Parametric Tests For Changes In Consumer Preferences For Meat In Great Britain," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(2), pages 138-145.
    15. Gardner, Bruce L, 1987. "Causes of U.S. Farm Commodity Programs," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 290-310, April.
    16. Rabinowicz, Ewa, 1991. "New Strategies in Agricultural and Rural Policies: Some Comments," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(3-4), pages 505-510.
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