Measures of Social Costs of Agricultural Programs

SEVERAL alternatives may exist for satisfying a specific policy goal. Once a goal (or set of goals) is agreed upon by society, and some alternatives specified, the decision is economic-costs and returns must be weighed. This paper represents an attempt to compare some stereotyped agricultural policy proposals on the basis of social costs. There are three parts to the paper. The first part reviews a formal scheme for evaluating social costs of some alternative price policies. Some necessarily crude estimates of social costs of two types of price policy under three alternative assumed goals are presented in the second part. Since many agricultural economists are convinced that free market agriculture would be far from Pareto optimal, the last section is reserved for examining some of these arguments for possible modification of the results arrived at in the first two parts.