Pur Autre Vie

I'm not wrong, I'm just an asshole

Sunday, March 11, 2012

A Terrible Beauty is Corn

Imagine an argument between me, on the one hand, and Alan and Sarang, on the other. I argue that corn subsidies, whatever their merits, have contributed to obesity by making empty calories cheaper than they would otherwise have been. I argue that this has increased people's incentives to consume empty calories. (For the sake of this discussion, let's ignore those instances in which the government pays farmers not to grow corn.)

Alan responds that in fact people's incentives to consume empty calories have not increased, because empty calories have actually become more expensive as the result of government policy. Alan notes that sugar quotas increase the price of sucrose, which is a sweetener that competes with high fructose corn syrup. Assuming fructose and sucrose are substitutes, an increase in the price of sucrose should lead to an increase in demand for fructose, which could actually overwhelm any increase in supply brought about by the corn subsidies (that is, corn syrup could end up more expensive than it would be in a free market).

I might reply that I was just talking about corn subsidies. Holding other things constant, corn subsidies have led to cheaper empty calories. Maybe sugar quotas have caused empty calories to become more expensive, and maybe this has overwhelmed the effect of the corn subsidies, but I am holding sugar prices constant in my analysis.

Sarang and Alan note that corn subsidies and sugar quotas are closely linked: both involve the use of government policy to promote the interests of farmers. The two policies may have even been enacted in the same legislation. It might be very difficult to imagine a world in which corn farmers benefit from subsidies but sugar-cane and sugar-beet farmers don't benefit from quotas.

So then, what is our answer to the question, "Ceteris paribus, do corn subsidies make empty calories cheaper?" If, with Alan and Sarang, we answer, "No," then we are taking the view that there basically is no such thing as a "corn subsidy," as traditionally understood (that is, money that is paid to farmers based on how much corn they grow). Rather, there is something called "agricultural policy," and it is the only relevant unit of analysis. Indeed, it is what we mean when we use the term "corn subsidy."

So anyway, James has written a series of blog posts about how corn subsidies have led to increased incentives to consume empty calories. Sarang responds that James's response about holding sugar prices constant is point-missing because the point is just that James's model of corn subsidies is at odds with reality because it's missing the dynamics of the price of sugar.

I want to make two observations:

1. It may be valuable to consider the effect of corn subsidies (defined narrowly) separately from the effect of other policies, even policies that are almost certain to accompany corn subsidies (such as sugar quotas). This is standard in economics, and frankly I am not accustomed to thinking of it as a disreputable practice.

2. Even if it is not "valuable" in some deep sense to model corn subsidies separately from sugar quotas, it is still perfectly possible to do it for the sake of discussion, or for the sake of sorting out one's ideas. I might concede that any such discussion is entirely academic, since farm policy is in the hands of our mal-apportioned Senate, which will under no circumstances adjust corn subsidies while leaving everything else constant. And even if the Senate did such a thing, surely something would happen in the world that would shift sugar prices one way or another, or shift gasoline prices, or any number of things, ensuring that it will never be the case that only corn subsidies change and that everything else is truly equal. Nevertheless, it may be fun or engaging to ask the question, even if the circumstances underlying the answer (everything else being equal) will never obtain in the real world.

10 Comments:

Blogger Sarang said...

Corn subsidies and sugar quotas are logically independent, even if they happen to occur together. In my worldview (and Steph's, and maybe Alan's), the sexual revolution was a direct and essentially inevitable consequence of jobs for women. Thus the parallel fails.

6:55 PM  
Blogger Sarang said...

Also, I'm going to shut up on this topic because I'm tired of repeating myself endlessly; however, a better parallel from my perspective is the following. You argue that one should leave strawberries lying about on one's coffee table indefinitely because they smell good. Alan and I object that they do not, because they begin to rot. You say that this is irrelevant because you're investigating the smell of strawberries while ignoring the effect of putrefaction. You add that this is not an intellectually disreputable practice.

7:02 PM  
Blogger James said...

I don't see how your case would be much stronger if corn subsidies and sugar quotas were causally linked (for instance, if it were impossible to enact one without the other) - would that really undermine the case for analyzing each separately? Would it become meaningless to speak of the effect of corn subsidies, holding sugar prices constant? If not, then what makes the sexual revolution different?

7:30 PM  
Blogger James said...

I tried to make this point in the post, when I argued that a ceteris paribus analysis can be helpful even when it means ignoring "policies that are almost certain to accompany corn subsidies (such as sugar quotas)." My point is that ceteris paribus is not a commitment to the idea that other things will ever truly be equal, but rather a way of addressing a discrete issue within a larger set of issues. One might focus on a single issue because there is no other way to get traction, or because that issue happens to be of particular interest (as with the sexual revolution). The claim that the sexual revolution essentially doesn't exist as a discrete concept is similar to the concept that corn subsidies don't exist as a discrete policy, and I think it is about as defensible.

7:39 PM  
Blogger Sarang said...

As regards the general philosophy-of-science Q: if A always occurs with B and is causally connected to it, then it is prima facie silly to model A without B, because none of the predictions of the model would be testable. The importance of causal connectedness is as follows: even if we are unable to study corn subsidies and sugar quotas separately, there are lots of subsidies that occur without quotas and vice versa (because of lack of causal relation); empirically it is reasonable to believe that all subsidies and all quotas work roughly the same way; therefore you can apply knowledge learned from simpler cases to the case of corn.

Two further points: (1) There _are_ cases in which ceteris paribus is nonsensical, as I hope you will acknowledge. E.g., my prev. example -- "consider increasing the force on a body while keeping its mass and acceleration constant". (2) Where does one draw the line between this and a meaningful ceteris-paribus? I would say, when the counterfactual world is straightforward to imagine. To attribute something to the SR (or any other event) is to say that it wouldn't have happened if the SR hadn't happened; to evaluate this claim one has to be able to imagine a world in which all the other events of the 60s happen but the SR doesn't, and I'm afraid my imagination is not up to this task.

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