Setting Efficient Incentives for Agricultural Research: Lesson from Principal-Agent Theory II

Abstract

<p>At least since the 1950s, studies have shown unusually high productivity of public agricultural research (e.g., Griliches; Huffman and Evenson; Ruttan; Schultz). In response, many have asked why more funds are not allocated to public agricultural research. More recently, following the large budget deficits of the 1980s, funding conditions have tightened and forced both the research agencies of the U.S. Department of Agriculture and many of the state agricultural experiment stations (SAES) into a contracting mode. Under unprecedented budget pressures, administrators and public decision makers have struggled to set priorities to reduce budgets without significant loss of productivity. In response, considerable debate has emerged over the last decade about how to organize and manage agricultural research (e.g., Alston, Norton, and Pardey; Huffman and Just 1994, 1999a; Just and Huffman).</p>