Reducing Self-Selection Bias in Feeder Cattle Premium Estimates Using Matched Sampling
Past value-added research employs hedonic pricing models to estimate premiums associated with value-added feeder cattle characteristics. However, hedonic pricing models require restrictive assumptions and impose a functional form. Producers also self-select into a treatment group, potentially biasin...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Western Agricultural Economics Association
2014-04-01
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| Series: | Journal of Agricultural and Resource Economics |
| Subjects: | |
| Online Access: | https://ageconsearch.umn.edu/record/168263 |
| Summary: | Past value-added research employs hedonic pricing models to estimate premiums associated with value-added feeder cattle characteristics. However, hedonic pricing models require restrictive assumptions and impose a functional form. Producers also self-select into a treatment group, potentially biasing estimates. Using propensity score matching, we reduce potential bias from producer self-selection and from imposing a functional form. Results suggest that hedonic pricing models may be negatively biased in estimates of premiums received by value-added calf producers. Current adopters receive a premium of $5.38/cwt from participation in a certified preconditioning program, while nonadopters would realize $5.17/cwt by adopting certification. Hedonic model values range from $0.52/cwt to $4.32/cwt, for similar or identical preconditioning programs. |
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| ISSN: | 1068-5502 2327-8285 |