Is government efficient? An illustration from US agricultural policy

Agricultural programs are often criticized for being expensive and wasteful. However, spurred by the ideas of Nobel Prize winner Gary BECKER many studies in agricultural policy have implicitly assumed or tried to test whether, given the political constraint it faces, government is as efficient as it possibly can be. Given the importance of this efficient redistribution hypothesis (ERH) in the prevailing agricultural economics literature, proper understanding of this hypothesis and how it might be tested are important. This paper illustrates the meaning and ramifications of the ERH. We critique one of the two methods commonly used to examine empirically the validity of the ERH, and we illustrate our critique with an empirical example from U.S. agricultural policy.