The Econometrics of Damage Control: Why Specification Matters

Abstract The contribution of damage control agents to production differs fundamentally from that of standard inputs (lands, labor, capital). This paper develops an econometric model based on the key characteristics of damage control agents and examines its properties. It demonstrates that standard production function specifications overestimate damage control agent productivity and have erroneous implications for the evolution of damage control agent productivity and use in response to changing environments (e.g., the spread of pest resistance). It also proposes several alternative specifications and discusses methods for estimating them.