Popper or Production?

Abstract

Invited Paper This paper assesses the way in which agricultural economists have employed the neoclassical theory of production. For purposes of appraisal, we adopt the falsificationist perspective of Samuelson (1947/l965) Silberberg (1978) and Blaug (1980). Appelbaum (1978) concludes that neoclassical production theory does not perform well with data from U.S. manufacturing. Our purpose in preparing this paper is to evaluate the empirical performance of production theory in agricultural, fisheries and forestry applications. To this end, we identify every paper that uses econometric techniques to estimate cost functions, profit functions or systems of factor demand functions published in the American Journal of Agricultural Economics, the Journal of Agricultural Economics, the Australian Journal of Agricultural Economics, the Canadian Journal of Agricultural Economics, the Review of Agricultural Economics formerly the North‐Central Journal of Agricultural Economics), the Southern Journal of Agricultural Economics, the Journal of Agricultural and Resource Economics (formerly the Western Journal of Agricultural Economics), the Agricultural and Resource Economics Review (formerly the Northeastern Journal of Agricultural and Resource Economics) and the Review of Marketing and Agricultural Economics from 1976 to 1991 inclusive. The results of a survey of these articles indicate that agricultural and natural resource economists have not taken falsificationist methodology seriously. In particular, the treatment of the falsifiable hypotheses of cost minimization and profit maximization as assumptions has been widespread. When these hypotheses have been tested, the track record of production theory is disappointing.