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The Effect of the Conservation Reserve Program on Rural Economies: Deriving a Statistical Verdict from a Null Finding

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  • Brown, Jason P.
  • Wojan, Timothy R.
  • Lambert, Dayton M.

Abstract

This article suggests two methods for deriving a statistical verdict from a null finding,allowing economists to more confidently conclude when ?not significant\" can in fact be interpreted as ?no substantive effect.\" The proposed methodology can be extended to a variety of empirical contexts where size and power matter. The example used to demonstrate the method is the Economic Research Service's 2004 Report to Congress that was charged with statistically identifying any unintended negative employment consequences of the Conservation Reserve Program (the Program). The report failed to identify a statistically significant negative long-term effect of the Program on employment growth, but the authors correctly cautioned that the verdict of ?no negative employment effect\" was only valid if the econometric test was statistically powerful. We replicate the 2004 analysis and use new methods of statistical inference to resolve the two critical deficiencies that preclude estimation of statistical power by economists: 1) positing a compelling effect size, and 2) providing an estimate of the variability of an unobserved alternative distribution using simulation methods. We conclude that the test used in the report had high power for detecting employment effects of -1 percent or lower resulting from the Program, equivalent to job losses reducing a conservative estimate of environmental benefits by a third.
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Suggested Citation

  • Brown, Jason P. & Wojan, Timothy R. & Lambert, Dayton M., 2017. "The Effect of the Conservation Reserve Program on Rural Economies: Deriving a Statistical Verdict from a Null Finding," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258354, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea17:258354
    DOI: 10.22004/ag.econ.258354
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    References listed on IDEAS

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    1. Deirdre N. McCloskey & Stephen T. Ziliak, 1996. "The Standard Error of Regressions," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 97-114, March.
    2. Stephen T. Ziliak & Deirdre N. McCloskey, 2004. "Size Matters: The Standard Error of Regressions in the American Economic Review," Econ Journal Watch, Econ Journal Watch, vol. 1(2), pages 331-358, August.
    3. Luther Tweeten, 1983. "Hypotheses Testing in Economic Science," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(3), pages 548-552.
    4. Kevin Hoover & Mark Siegler, 2008. "Sound and fury: McCloskey and significance testing in economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 15(1), pages 1-37.
    5. Timothy R. Wojan & Jason P. Brown & Dayton M. Lambert, 2014. "What to Do about the "Cult of Statistical Significance"? A Renewable Fuel Application using the Neyman-Pearson Protocol," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 36(4), pages 674-695.
    6. Principal Statistical Agencies, 2012. "Statement of Commitment to Scientific Integrity," Administrative Publications 292114, United States Department of Agriculture, Economic Research Service.
    7. Sullivan, Patrick & Hellerstein, Daniel & Hansen, LeRoy T. & Johansson, Robert C. & Koenig, Steven R. & Lubowski, Ruben N. & McBride, William D. & McGranahan, David A. & Roberts, Michael J. & Vogel, S, 2004. "The Conservation Reserve Program: Economic Implications for Rural America," Agricultural Economic Reports 33987, United States Department of Agriculture, Economic Research Service.
    8. Christensen, Ronald, 2005. "Testing Fisher, Neyman, Pearson, and Bayes," The American Statistician, American Statistical Association, vol. 59, pages 121-126, May.
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    Citations

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    Cited by:

    1. Tian Jiarui (Alex), 2023. "A Replication of “The Effect of the Conservation Reserve Program on Rural Economies: Deriving a Statistical Verdict from a Null Finding” (American Journal of Agricultural Economics, 2019)," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 17(1), pages 1-7, January.
    2. Jiarui Tian, 2021. "A Replication of “The effect of the conservation reserve program on rural economies: Deriving a statistical verdict from a null finding” (American Journal of Agricultural Economics, 2019)," Working Papers in Economics 21/12, University of Canterbury, Department of Economics and Finance.
    3. Assogba, Noel Perceval & Zhang, Daowei, 2022. "The conservation reserve program and timber prices in the southern United States," Forest Policy and Economics, Elsevier, vol. 140(C).
    4. Sarah A. Janzen & Jeffrey D. Michler, 2021. "Ulysses' pact or Ulysses' raft: Using pre‐analysis plans in experimental and nonexperimental research," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1286-1304, December.
    5. Nicole Didero & Marco Costanigro & Becca B. R. Jablonski, 2021. "Promoting farmers market via information nudges and coupons: A randomized control trial," Agribusiness, John Wiley & Sons, Ltd., vol. 37(3), pages 531-549, July.
    6. Yu, Zhenning & She, Shuoqi & Xia, Chuyu & Luo, Jiaojiao, 2023. "How to solve the dilemma of China’s land fallow policy: Application of voluntary bidding mode in the Yangtze River Delta of China," Land Use Policy, Elsevier, vol. 125(C).
    7. Ghislain B. D. Aihounton & Arne Henningsen, 2023. "Does Organic Farming Jeopardize Food and Nutrition Security?," IFRO Working Paper 2023/02, University of Copenhagen, Department of Food and Resource Economics.
    8. Leah H. Palm-Forster & Paul J. Ferraro & Nicholas Janusch & Christian A. Vossler & Kent D. Messer, 2019. "Behavioral and Experimental Agri-Environmental Research: Methodological Challenges, Literature Gaps, and Recommendations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 719-742, July.
    9. Mykel R. Taylor & Nathan P. Hendricks & Gabriel S. Sampson & Dillon Garr, 2021. "The Opportunity Cost of the Conservation Reserve Program: A Kansas Land Example," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 849-865, June.
    10. Aïhounton, Ghislain B.D. & Henningsen, Arne, 2024. "Does organic farming jeopardize food security of farm households in Benin?," Food Policy, Elsevier, vol. 124(C).
    11. Carlos J. O. Trejo-Pech & Karen L. DeLong & Dayton M. Lambert & Vasileios Siokos, 2020. "The impact of US sugar prices on the financial performance of US sugar-using firms," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 8(1), pages 1-17, December.

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    More about this item

    Keywords

    Resource/Energy Economics and Policy; Research Methods/Statistical Methods; Community/Rural/Urban Development;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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