Has the most important sector been ignored by economists?

During my usual morning routine of newspaper reading and coffee sipping on the way to work, I came across an interesting article and it got me curious. Noeleen Heyzer, the UN Under-Secretary-General and Executive Secretary for UN-ESCAP put forward the point that “over these past decades, agriculture has been neglected” by policy makers in East Asia & the Pacific region. (Bangkok Post, March 28) Her arguments are founded as followed. Despite being the sector that embraces a very large chunk of the employment of many countries’ economy, the macroeconomic & growth policies, especially the ones aiming to eradicate poverty, has not given the attention to the agriculture sector as it really deserves. Her main statement is that for the development policies to work, big men sitting in the Cabinet & academia should come together and give “Agriculture” a revolutionary facelift.

So, why did I become curious? I began to wonder if indeed Agriculture has been neglected by people at the Top, does the same phenomenon persist at the bottom. And by bottom, I mean students of Economics discipline and academia working in the field of Economics. I set 2 assumptions for this brief investigation of mine. First, surrounding circumstance& current trends in everyday life play quite a strong part in students’ choice of academic interests. They tend to select degree, programme or study options based on what are ‘in’ at the time. Second, the supply of education i.e. the availability of courses and books is demand-driven.

Has Agriculture also been ignored by economists and economic students in this sense? My quick finding shows some results.

As a field of study, agricultural economics is offered as an option course in nearly all of public universities in Thailand. However, out of 33 universities, only 3 of them offer a full programme in Agricultural Economics. Only for Chulalongkorn University that I have the number for the enrolment rate, and it reveals that merely 16 senior year students (of 200) took a class in Agricultural Economics in 2007, compared to 120 in International Economics, 96 in Public Economics and 68 in Development Economics.


A quick visit to amazon.com gives me some fascinating stats. First, there are not as many books on Agricultural Economics available in the online market. In the past 2 decades, books on Agricultural Economics published during these periods has not only been the fewest, but also declining in quantity. However, a quick page-flip in a book on Development Economics will show that, Agricultural Economics is reduced to become an integrated chapter on Rural Economics. So, perhaps, one should congratulate the current popularity of Development Economics as a good sign for the revival of Agricultural Economics? That, I would not argue.

My last tour on the web was to do a blunt check on the popularity of Agriculture, as a discipline in Economics in the virtual world. So I checked out google.com. The number of hits from the search for “Agricultural Economics” came back as 4%, out of the total number of search for all other discipline in Economics that I can think of. And for that, Business Economics takes the lion share of 34%, and 24% for Political Economy.

All in all, does my investigation support Noeleen Heyzer that a Revolution is urgently needed for the field of Agriculture, at least in Economics? This, I leave it for you to decide.

Punitive Damages in private suit: justice or injustice?

In order not to get into a hot debate on the newly decided US Supreme Court case on Medellin regarding a long dispute in US’s violation to provide consular access to foreigners and a relationship between domestic court and ICJ (lots of discussion can be found on http://www.opiniojuris.org/), I have found something of interesting and, of course, less controversial.

In 1985, Kurt Parrott, a 15-year old, was thrown from his motorcycle in Opelika, Alabama. The buckle of his helmet failed, and he died when his bare head hit the pavement. Mr. Parrott’s mother sued the Italian company that made the helmet, and an Alabama court awarded her 1$ million!

Of course, the company refused to pay thus the Parrott family sought to collect the damage in Italy. However, their attempt was rejected by the Italian Supreme Court.

The court reasoned its decision that the notion of punitive damages within a common law country is so offensive to Italian notions of justice that it would not in any circumstance enforce the Alabama judgment. Moreover as the court further explained, private lawsuits brought by injured people should have only one goal – compensation for an actual loss. Allowing separate awards meant to punish the defendant is a terrible idea. The idea of punishment should be dealt only by the criminal justice system, which has elaborate due process protections and disinterested prosecutors.

The court even emphasized that it is not fair for the defendant to obtain a windfall award beyond what they actually have lost. Furthermore, the system of ad hoc jury is even considered a poor substitute for the considered judgments of government safety regulators. (Source: New York Times)

This judgment seems to directly attack the basic root of the notion of punitive damage in a private suit. Of course, punitive damages have deep roots in American and English common law even though their nature has changed over time. Justice Stevens of the US Supreme Court wrote in 2001: “Until well into the 19th century, punitive damages frequently operated to compensate for intangible injuries like pain and suffering or emotional distress”. These days, it has been used to send out messages to large corporations, and to reward successful plaintiffs with all the costs they have lost – including all court fees.

Still, the possibility of a court awarding a huge amount of punitive awards consistently scares anyone. In 1995, a Mississippi court awarded $400 million punitive award against a Canadian company headlined newspapers and spurred huge tensions between Canada and the US for years.

Given that the decision as to the amount of the punitive damage award is entirely discretional – specific to each case and context, could there be any line to be drawn between a proper legitimate amount and an out-of-reality award?

At least, this sort of question seems heartless to Ms. Glebosky, Kurt’s mother. “A million-dollar award is really nothing. It is really not enough punish any large company in this day and age, and it certainly does not bring back Kurt.”

The Economics of Irrationality: Relativism

The first time I met Dan Ariely was about half a year ago at Harvard when both of us were attending ‘Happiness, Adaptation, and Prediction’ conference together. I had absolutely no idea who he was or what he does. All I knew was that he had a very visible scar on his face, which, I later learned, came from a horrible magnesium flare accident when he was still a young student in Israel.

He was very sharp – not surprisingly for an Alfred P. Sloan Professor of Behavioural Economics at MIT – and witty, and I thoroughly enjoyed his presentation (it was primarily an account of how his scar still has an attentional impact on his experiences today). And I was pleasantly surprised to find out just last week that he has recently published a book on the economics of irrationality, which he elegantly called Predictably Irrational: The Hidden Forces that Shape Our Decisions.

There are many interesting topics in this book, including the Cost of Social Norms, the Cost of Zero Cost, and even the Influence of Arousal. But what I find most interesting in Dan’s book is the role of ‘anything relative’ on our seemingly rational decisions. To give Dan’s own example, imagine that we want to subscribe to the Economist magazine. There are three subscription options we could choose from, and these are:

1) $55 – online version
2) $125 – print version
3) $125 – online and print version

So, which of these options would you choose?

If you’re like most of Dan’s students, you would have picked the 3rd option ($125 – online and print version). Some of you will probably choose option one ($55 – online version). But I would bet any money that none of you would have gone for the 2nd option ($125 – online and print version). Now, you might think that’s a rational thing to do, and you’re probably right – given the three options. You’ve probably thought in your head that comparing between the three the third option seems like the best option as it is definitely better than the 2nd option (who in their right mind would pay $125 to get a print version when you can pay exactly the same amount to get both!). The 1st option may seem good too for some, but it’s still quite difficult to compare it with the 2nd option (online only versus print only, hmm…). Given the price difference, it is also difficult to compare between the 1st option and the 3rd option – we are just not sure whether one option is better than the other. All we definitely know for certain is that the 3rd option is a better option than the 2nd option, and so it seems like a good reason to think that a $125 for online and print version is the best overall.

Is this a rational decision? You might think so. Economic theory would have suggested that if the 3rd option is preferred to the 2nd and the 1st, then that preference will always remain in that order, all else equal. But what happen if the Economist decides to remove the 2nd option from your choice together? Well, that’s what Dan did with his second class of students – he removed the 2nd option, or the option that he called the decoy option.

Now, an amazing thing happens. Almost 70% of his students prefer the ‘$55 – online only version’ than the ‘$125 – online and print version’ (this compares to the 84% who preferred the online and print version than the online version only when there is a decoy option present). That doesn’t seem very rational to me.

And what’s more amazing is that this kind of phenomenal keeps appearing everywhere in our daily lives. We go to restaurants and find that we don’t normally buy the most expensive food on the menu (that is, if you’re not one to always splash your cash unnecessarily) but more likely to buy the second most expensive food on the menu. We go into a mall to find many shops displaying ridiculously expensive set of clothes that we would never buy, but we go in anyway to buy the cheaper ones in the shop. We go to nightclubs and find ourselves much more attracted to somebody who comes with a slightly uglier version of himself or herself than somebody who’s equally attractive but alone. We vote (well, actually, don’t get me started there)…

The truth is it is not a rational decision, but it is a predictable one at that. The problem is all the market people also know this (hence, putting up very expensive food to drive up sales for the 2nd most expensive one, etc.) and most of us would happily go along with that. I’ll let you decide, however, how massive this problem it actually is.