Please join the faculty, staff and students of AEDE in congratulating AEDE Ph.D. students Mitch Livy and Wendong Zhang for winning the department's 2012 award for best doctoral research manuscript. Honorable mention was awarded to Matthew Pham and John Newton. More on each of the winning research papers is below.
The AEDE department would also like to thank the Award Committee, which was comprised of AEDE faculty Tim Haab, Brian Roe, H. Allen Klaiber, Sathya Gopalakrishnan, Alessandra Faggian, Elena Irwin and Matthew C. Roberts, who put forth a considerable amount of time and effort in reviewing the manuscripts.
Winners – 2012 Best Doctoral Research Manuscript
Mitch Livy – Dissecting Open Space: The Role of Amenities in Park Valuation
Abstract: Previous studies on open space have focused solely on the existence value of land types, while the effect of attributes on land value has been overlooked. To investigate this deficiency, proximity driven hedonic models of Baltimore County, Maryland parks are calculated to determine the significance of park amenities on the value of public parks. Park attributes are found to have significant, yet differing, effects on housing prices, and these effects are more pronounced as proximity to the nearest park(s) increases. Further, the estimates indicate that an aggregate value for open space can be misleading if attributes vary across location. As a result, this analysis supports valuing open space as a bundle of attributes, instead of as a single unit.
Wendong Zhang – The Expanding Ethanol Market and Farmland Values: Identifying the Changing Influence of Proximity to Agricultural Delivery Points
Abstract: The recent housing market bust and subsequent economic recession have led to a dramatic decline in urban land and housing values across the U.S. The same is not true, however, of agricultural land values. Parcel data on agricultural land sales from Ohio reveals that although the number of agricultural land sales dropped precipitously after the housing market bust in 2007, there was no corresponding dip in the average sales price of agricultural land. Concurrent with the housing market bust, six new ethanol production facilities came into operation in Ohio in 2008. I hypothesize that changes in agricultural output markets, including increased demand for biofuels (and hence corn) and grain exports were capitalized into agricultural land values and that these effect offset the decline in the urban value of agricultural land parcels so that on average, agricultural and prices remained stable. Using parcel-level data on agricultural land sales from 2001 to 2010 for a 50-county region of western Ohio and a quasi-experimental design, this paper tests for structural change in the relative effects of proximity to agricultural delivery points (including ethanol plants, grain elevators and ports) before and after 2007, the year of the housing market bust and the concurrent ethanol market expansion in Ohio. Specifically, I use propensity score matching (PSM) and difference-in-difference (DID) estimation on matched samples to isolate the effects of proximity to agricultural delivery points and test the hypothesis that the relative effect of proximity to these destinations has increased since 2007. This study's estimator is subject to less bias than the standard hedonic estimates, because it controls for the systematic differences between parcels nearer versus farther away from an agricultural delivery point by matching and for the time-invariant unobserved heterogeneity using DID regression. Results from the DID regression using the matched sample suggest that the marginal value of being in close proximity (less than 16 kilometers) to an ethanol plant was $207 per acre after 2007 and not significantly different from zero before this. These results demonstrate the growing importance of the biofuels market for farmland values and show that proximity to ethanol plants has recently become a significant determinant of agricultural land values. This parcel-level analysis re-highlights the needs and superiority of disaggregated data analysis, and illustrates the necessity of addressing potential selection bias using methods such as PSM matching employed here.
Honorable Mention – 2012 Best Doctoral Research Manuscript
Matthew Pham – The Trade-Off between Profit and Nutrition in Reforming School Lunch Healthiness
Abstract: Since childhood obesity is a public health crisis, policymakers and school district officials have attempted to improve the nutrition in school lunches to solve this problem. The main problem in reforming school lunches is that students may choose to obtain their food from outside sources. This study answers the questions of whether if it is profitable for foodservice operations to serve nutritionally healthy food and will the menu change drive students to eat non-school lunch food.
A two-stage regression analysis was employed. The first stage ranked food items using an ordered probit model according to their perceived healthiness and child palatability and generated estimated perceived healthiness and child palatability rankings using a linear probability model. The second stage used a probit model to predict the buying decision as functions of predicted healthiness and child palatability rankings along with demographic variables. Consumers were sorted into latent classes based on their perceived healthiness and child palatability rankings.
The respondents were grouped into 3 latent classes. Certain lunch items, particularly main entrées, are the major drivers of perceived child palatability and healthiness. Factors that influence households’ lunch purchasing decisions were price, dietary restrictions, grade of youngest child, and household size. School lunches do not lose profitability by serving healthier food, but raising prices might harm profits if respondents do not perceive the new food to be healthy. Since 85% of the respondents earn more than $75,000, replications should be performed in other school districts to ensure that these results hold.
John Newton – Road Block to Risk Management – How Federal Milk Pricing Provisions Complicate Beverage Milk Cross-Hedging Incentives
Abstract: In 2000 the USDA introduced new methods to price milk used to produce class 1 beverage milk in the U.S. This shift in the dairy policy complicated hedging incentives by exposing traders to basis risk and increased milk price uncertainty. This study examines the risk management opportunities for class 1 cash market participants through the use of milk futures contracts. The research considers the basis associated with a variety of futures cross-hedging scenarios using class 3 and class 4 milk futures contracts; uses the constant relative risk aversion utility framework to identify agent preferences towards basis risk; computes the generalized hedge ratio under different hedging strategies; and uses prediction algorithms to foreshadow basis variability. The results indicate that at sufficient hedging intervals (using deferred contracts) milk futures contracts can reduce the cash price variance; however, the reduction is less than half. Additionally, modeling techniques to forecast the expected basis perform poorly compared to observed levels. These limitations to fluid milk hedging hinder risk reduction and revenue stability for both buyers and sellers of class 1 beverage milk. Policy and market options may be considered to improve risk management in the beverage milk sector. These options include: forward contracting in class 1 milk, alternative price discovery methods, and the reintroduction of an exchange traded fluid milk contract.
Past Award Winners
Previous winners of the AEDE Best Doctoral Research Manucript Award include the following (links are included below to the winning manuscript or a published paper that was further refined from the winning manuscript):
Winner: Matt Gnagey
Honorable Mention: Jenny Trump Gnagey
Winner: Greg Howard
Honorable Mention: Carlianne Patrick, Chang Wang
Winner: Michael Kidoido
Honorable Mention: William McGuire, Matthew Winden
Winner: Charity Moore
Honorable Mention: Ben Anderson, Carolina Castilla, Xuetao Huang, Paula Cordero-Salas
Winner: Emilio Hernandez
Honorable Mention: Matt Interis