Working Paper: CEPR ID: DP9452
Authors: Hans Peter Gruner; Daniel Müller
Abstract: This paper develops a method to estimate information rents of losers of a reform who receive a monetary compensation. Our method explicitly accounts for survey respondents' reluctance to reveal a willingness to accept which is smaller than the actual compensation. We apply our approach to the case of the 2005 European agricultural reform using uniquely gathered survey data from farmers in Lower Saxony, Germany. We find empirical indications for strategic misreporting. Correcting for these effects with a structural model, we find that information rents are in the order of up to 15 per cent of total compensation paid. Moreover, we show that the reform could not have been implemented distinctly cheaper by conditioning compensation schemes on observable factors.
Keywords: European Agricultural Reform; Information Rents
JEL Codes: D70; D78; H20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| distribution of losses (G33) | compensation paid (J33) |
| observable factors (C90) | compensation costs (J30) |
| current compensation scheme (J33) | efficiency of compensation (J33) |
| information rents (D89) | total compensation paid to farmers (J33) |
| strategic misreporting and nonresponse biases (C83) | information rents (D89) |