.... it seems my appalling lack of depth in things economic may be greater
than your appalling lack of depth in things economic......
>..........why would variance at the *micro* level not be the same as at
the *macro* level? I'd have thought that micro would be different from
macro only if the macro was the integration of a number of differing
micro-scale decisions - but we've already accepted that corn producers are
NOT behaving as independent decision makers, but in a substantially
homogeneous fashion. Perhaps you can clarify this for me.
..... I'm only guessing and maybe trying to stretch a concept from the
study of economics to your observations on increasing CVs for crop yields
is a fallacy, but I think Mr. Corn Farmer isn't necessarily concerned about
rising CVs for the Province of Ontario or the US as a whole when he puzzles
through his corn production decisions each season. His CVs may well be
rising right along with the sum of all corn production, or not, but it
apparently does not seem so to him. Else he would have backed off his
nitrogen application rates before you or I had our first lessons in
microeconomic theory. His decision to over-fertilize corn is rational as an
insurance practice in the absence of a licensed insurance instrument.
Apparently crop insurers have not been willing to offer such insurance for
lack of actuarial data or some such thing.
..... an individual corn producer is pursuing self-interest in planning his
management steps for his corn crop each season. He recognizes insufficient
nitrogen as a greater problem (potentially more costly) than excessive
nitrogen (not less costly over a number of seasons, but less costly during
the one season nitrogen insufficiency would actually occur). His lack of
actuarial data or even his lack of actuarial comprehension allows his
perception of self-interest to give inordinate worry to the nitrogen
insufficiency possibility every season. Replicate that thought process 100
times, 1,000 times, or 1,000,000 times. It remains an individual decision
to pursue self-interest. You might be assuming too much when you ignore the
role of self-interest at the individual level. As for your thought that
micro would be different from macro only if the macro were the integration
of a number of micro decisions, I recognize the definition. But I'm having
trouble with the trick of assuming away the individual's decision in the
first place.
..... getting back to the CVs, they may indeed be rising with rising
absolute yields in both the macro and micro sense. Perhaps it is just that
the corn farmer is not aware of the true nature of the CV at the individual
level. This may be very difficult to determine and I am probably guilty of
flippancy where I should have been more observant.
Jim Quinton, Risk Management Coordinator
Agricultural Conservation Innovation Center (ACIC)
2234 S. Hobson Ave.
Charleston, SC 29405-2413
phone: (843) 740-1327
fax: (843) 740-1331
e-mail: Jim.Quinton@agconserv.com
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