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Some Neglected Social Costs of Government Spending in Farm Programs
Author(s) -
Alston Julian M.,
Hurd Brian H.
Publication year - 1990
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243154
Subject(s) - liberian dollar , subsidy , economics , government spending , opportunity cost , government (linguistics) , social cost , public economics , marginal cost , normative , social welfare , welfare , marginal utility , payment , microeconomics , finance , market economy , linguistics , philosophy , epistemology , political science , law
Economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending. Recent literature suggests that the marginal opportunity cost of a dollar of U.S. federal government spending is more likely to be in the range of $@@‐@@1.20 to $@@‐@@1.50. This implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates. In addition, the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending.