The (still) mysterious case of agricultural protectionism

Abstract

Existing research demonstrates why farmers demand subsidies, but remains ambiguous as to why consumers/taxpayers support or rather do not oppose such subsidies. We approach this puzzle from two angles: how sensitive are citizens to cost implications of agricultural subsidies, and what is their “value function” with respect to agricultural policy? We argue that farm subsidies, besides benefiting farmers, promise to generate an array of non-market goods that serve various interests in society and thus receive strong support overall. To test our argument, we conducted conjoint survey experiments in two countries: Switzerland and the United States. Our results show that while cost implications only marginally reduce support for subsidies, support is positively affected by the allocation of subsidies to various policy goals, such as guaranteeing food security and enhancing animal welfare. These findings suggest that individual-level support for agricultural subsidies does not result from a lack of information, but reflect genuine appreciation of the perceived multi-functionality of agricultural subsidies.