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The Application of Robust Regression to a Production Function Comparison – the Example of Swiss Corn

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  • Finger, Robert
  • Hediger, Werner

Abstract

The adequate representation of crop response functions is crucial for agricultural modeling and analysis. So far, the evaluation of such functions focused on the comparison of different functional forms. In this article, the perspective is expanded by also considering an alternative regression method. This is motivated by the fact that extreme climatic events can result in crop yield observations that cause misleading results if Least Squares regression is applied. We show that such outliers are adequately treated if and only if robust regression or robust diagnostics are applied. The example of simulated Swiss corn yields shows that the application of robust instead of Least Squares regression causes reasonable shifts in coefficient estimates and their level of significance, and results in higher levels of goodness of fit. Furthermore, the costs of misspecification decrease remarkably if optimal input recommendations are based on results of robust regression. We therefore recommend the application of the latter instead of Least Squares regression for agricultural and environmental production function estimation.

Suggested Citation

  • Finger, Robert & Hediger, Werner, 2007. "The Application of Robust Regression to a Production Function Comparison – the Example of Swiss Corn," MPRA Paper 4740, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:4740
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    References listed on IDEAS

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    3. Rajsic, Predrag & Weersink, Alfons, 2008. "Do farmers waste fertilizer? A comparison of ex post optimal nitrogen rates and ex ante recommendations by model, site and year," Agricultural Systems, Elsevier, vol. 97(1-2), pages 56-67, April.
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    6. Meinke, H. & Baethgen, W. E. & Carberry, P. S. & Donatelli, M. & Hammer, G. L. & Selvaraju, R. & Stockle, C. O., 2001. "Increasing profits and reducing risks in crop production using participatory systems simulation approaches," Agricultural Systems, Elsevier, vol. 70(2-3), pages 493-513.
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    Cited by:

    1. Rohling, Moritz & Ohndorf, Markus, 2012. "Prices vs. Quantities with fiscal cushioning," Resource and Energy Economics, Elsevier, vol. 34(2), pages 169-187.
    2. Markus Ohndorf, 2010. "Optimal Monitoring for project-based Emissions Trading Systems under incomplete Enforcement," IED Working paper 10-13, IED Institute for Environmental Decisions, ETH Zurich.
    3. Salvatore Di Falco & Marcella Veronesi, 2014. "Managing Environmental Risk in Presence of Climate Change: The Role of Adaptation in the Nile Basin of Ethiopia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 553-577, April.
    4. Julia Blasch & Mehdi Farsi, 2012. "Retail demand for voluntary carbon offsets - A choice experiment among Swiss consumers," IED Working paper 12-18, IED Institute for Environmental Decisions, ETH Zurich.
    5. Boere, Esther & Mosnier, Aline & Bocqueho, Geraldine & Krisztin, Tamas & Havlik, Petr, 2016. "Developing country-wide farm typologies: An analysis of Ethiopian smallholders’ income and food security," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246924, African Association of Agricultural Economists (AAAE).
    6. Finger, R. & Gerwig, C.N., 2008. "The Impact of Climate Change on the Profitability of Site Specific Technologies," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 0, March.
    7. Finger, Robert, 2012. "Nitrogen use and the effects of nitrogen taxation under consideration of production and price risks," Agricultural Systems, Elsevier, vol. 107(C), pages 13-20.
    8. Robert Finger & Stéphanie Schmid, 2008. "Modeling agricultural production risk and the adaptation to climate change," Agricultural Finance Review, Emerald Group Publishing, vol. 68(1), pages 25-41, May.
    9. Ines Kapphan & Pierluigi Calanca & Annelie Holzkaemper, 2011. "Climate Change, Weather Insurance Design and Hedging Effectiveness," IED Working paper 11-17, IED Institute for Environmental Decisions, ETH Zurich.
    10. Finger, Robert, 2011. "Reductions of Agricultural Nitrogen Use Under Consideration of Production and Price Risks," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114356, European Association of Agricultural Economists.
    11. Thomas Epper & Helga Fehr-Duda & Renate Schubert, 2011. "Energy-Using Durables: The Role of Time Discounting in Investment Decisions," IED Working paper 11-16, IED Institute for Environmental Decisions, ETH Zurich.
    12. Claassen, Roger & Duquette, Eric & Horowitz, John & Kohei, Ueda, 2014. "Additionality in U.S. Agricultural Conservation and Regulatory Offset Programs," Economic Research Report 180414, United States Department of Agriculture, Economic Research Service.
    13. Thomas Bernauer & Lena Maria Schaffer, 2010. "Climate Change Governance," IED Working paper 10-12, IED Institute for Environmental Decisions, ETH Zurich.
    14. Severini, Simone & Tantari, Antonella & Di Tommaso, Giuliano, 2016. "The instability of farm income. Empirical evidences on aggregation bias and heterogeneity among farm groups," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 0(Issue 1), pages 1-19, April.
    15. Horowitz, John & Ueda, Kohei, 2013. "Paying Farmers to Reduce Nitrogen Application on Corn: The Baseline Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150561, Agricultural and Applied Economics Association.
    16. Justin Caron & Markus Ohndorf, 2010. "Irreversibility and Optimal Timing of Climate Policy," IED Working paper 10-14, IED Institute for Environmental Decisions, ETH Zurich.
    17. Finger, Robert, 2012. "How strong is the “natural hedge”? The effects of crop acreage and aggregation levels," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122538, European Association of Agricultural Economists.
    18. Salvatore Di Falco & Marcella Veronesi, 2011. "On Adaptation to Climate Change and Risk Exposure in the Nile Basin of Ethiopia," IED Working paper 11-15, IED Institute for Environmental Decisions, ETH Zurich.
    19. Michele Baggio, 2012. "The Optimal Management of a Natural Resource with Switching Dynamics," IED Working paper 12-19, IED Institute for Environmental Decisions, ETH Zurich.
    20. Dewbre, Joshua, 2010. "Improving resource allocation and incomes in Vietnamese agriculture," IFPRI discussion papers 984, International Food Policy Research Institute (IFPRI).
    21. Salvatore Di Falco & Marcella Veronesi, 2011. "On Adaptation to Climate Change and Risk Exposure in the Nile Basin of Ethiopia," IED Working paper 11-15, IED Institute for Environmental Decisions, ETH Zurich.
    22. Finger, Robert, 2012. "Modeling the sensitivity of agricultural water use to price variability and climate change—An application to Swiss maize production," Agricultural Water Management, Elsevier, vol. 109(C), pages 135-143.

    More about this item

    Keywords

    production function estimation; production function comparison; robust regression; crop response;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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