Reducing Self-Selection Bias in Feeder Cattle Premium Estimates Using Matched Sampling

Brian R. Williams, Eric DeVuyst, Derrell S. Peel and Kellie Raper

Journal of Agricultural and Resource Economics, 2014, vol. 39, issue 01, 15

Abstract: 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.

Keywords: Livestock Production/Industries; Marketing (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:168263

DOI: 10.22004/ag.econ.168263

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