Measuring the economic contribution of Agricultural and Applied Economics departments in the United States

Abstract

Agricultural and applied economists make substantial positive contributions to the domestic economy. Defining a measure of the true total value of their contributions is likely impossible, because so much about their efforts is difficult to comprehensively observe and quantitatively document. In this paper, we adopt a conservative approach to generating an estimate of the contributions ag and applied economists make to U.S. economic output and the associated welfare of society through their teaching, research, and outreach efforts. To conduct the analysis, we implemented a nationwide survey of Agricultural and Applied Economics (AAE) departments and developed a framework to calculate the value of their contributions to national income, or Gross Domestic Product (GDP). We estimate that AAE departments increase overall U.S. GDP by $2.6 billion, annually. Through its efforts to improve the human capital of its graduates, AAE teaching raises the (expected) national income by $2.2–$2.3 billion, while we value direct research and outreach contributions at $207 million and $146 million, respectively. Because we do not observe the opportunity cost of the resources used to generate those contributions, we do not claim to estimate a true net economic impact but rather attempt to quantify the gross economic contributions of the professional services AAE departments currently offer the economy. The values we provide—especially the research and extension estimates which are exceedingly difficult to measure—likely underestimate the true benefits AAE offers to the nation.