The Pig-Cycle in Great Britain: An Explanation

MODERN economic theory is laying increasing emphasis on the importance of considering the nature of producers' anticipations. There is, however, comparatively little statistical analysis of the way in which producers do, in fact, forecast. In connection with one industry, that of pig production, some study of the problem has been made, but, unfortunately, as we showed in a previous paper,' the conclusion to which these investigations have led seems to be untenable. The view which had been commonly held by agricultural economists was that farmers assume that present prices and costs will continue unchanged in the future. This assumption we showed to be incorrect, a conclusion with which Miss Cohen and Mr. Barker2 were in agreement.3 They objected because we had in effect, tried to overthrow the existing explanation without putting anything in its place . In fact, however, such explanation as they attempted in their Reply involved certain important modifications of the theory previously held and was not based on any analysis of the way farmers had behaved but was purely hypothetical. It followed that the old theory had been abandoned while the one put forward in its place was not based on any investigation of observed facts. Such tests of this new hypothesis as we were able to make indicated that it did not seem to fit the facts and we concluded that a theory of the pig-cycle is still lacking . In this paper,