Fertiliser and the economists’ only joke

Justin Sandefur, a former Oxford colleague, is now blogging over at the Centre for Global Development blog. His first post tackles the fertiliser subsidy debate:

The best rationale for Malawi-style input subsidies is that small-scale farmers have profitable investment opportunities that they fail to exploit.  This logic is hard for economists to swallow.   Economists really only ever tell one joke, but it fits here:

An economist and his friend are walking down the street when the friend sees a ten dollar bill on the sidewalk.

“Look,” he says, “it’s a ten dollar bill”.

“Nonsense,” says the economist. “If that was a ten dollar bill, someone would have picked it up by now.”

By this logic, if fertilizer were profitable, farmers would be using it already.  Unless you can point to a clear market failure or some widespread failure of economic rationality, subsidies are just money down the drain.

Justin goes on to discuss a few empirical studies which come down both for and against subsidising agricultural inputs, noting that we need more robust evaluations before we can be confident one way or the other.

2 thoughts on “Fertiliser and the economists’ only joke

  1. Ryan

    March 1, 2011 at 5:52am

    Nonsense! Economists also tell the joke about the guy trying to find his keys under the light (instead of where he lost them).

  2. Sceptical Secondo

    March 2, 2011 at 5:34am

    Nonsense part two:

    1. A chemist, a physicist and an economist are out hunting when they spot a deer. The physicist misses it by one meter to the left, the chemist misses it by one meter to the right. The economist exclaims in joyfulness: HOAH, WE GOT IT!

    2. Same party is stranded on a deserted island. To their relief, a box of canned food floats onshore. Debating how to open the cans and get to the food the physicist suggests that they climb the highest palm tree, drop the can and let gravity do the job. The chemist suggests that they store the cans in salt water from the ocean and wait to let the rust do its course. No, no, no, says the the economist, it’ll be much easier if we just assume we’ve got a can-opener.
    Drum-roll-cymbal-crash!

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