beware of statistical designs

The United States Department of Agriculture (USDA), like agriculture departments in most industrialized countries, channels subsidies to farmers.  Part of the justification for agricultural subsidies is to give farmers a fair share of national income.  Farmers’ share of U.S. consumer food-spending, according to USDA statistics, fell from about 48% in 1913 to 19% in 2000.  A declining farm share in consumer food-spending suggests that farmers are getting squeezed.  The statistics showing a declining farm share have spurred major government investigations into causes and remedies.

The design of the USDA statistic largely explains the fall in farm share.  The farm share statistic doesn’t capture food work within the home.  A large  increase in women’s labor-force participation generated a shift from food work within the home to purchasing food work (acquiring, preparing, cooking, and kitchen-cleaning) bundled with prepared food.  The result was an increase in consumer food spending relative to farm product sales, i.e. a fall in the farm share.  Farm share statistics that control for changes in non-market-based food work show a constant farm share.

The U.S. communications industry has considerable similarities with the U.S. agricultural industry.  Like family farms, small, rural telephone companies have an important place in U.S. economic history.   Statistics that support subsidies for telephone companies under the justification of universal service deserve strict scrutiny.

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Source notes:

Sheldon Kimmel (August, 2011), “The Illusion of Anticompetitive Behavior Created by 100 Years of Misleading Farm Statistics,” explains the trend in farm share. The first two paragraphs above are based on that work.  The food share statistics are from id., Figure 1.  For references on political concern about the food share and government investigations, see id. footnotes 2-5.

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