Estimating the Economic Value of Specific Characteristics Associated with Angus Bulls Sold at Auction

Journal of Agricultural and Applied Economics, April 2008

Table 6. Changes Associated with EPD Accuracy Values

Source: www.angus.org/sireeval/accuracy.html (Accessed June 28, 2007).

The results of this model are presented in
Table 7, with summary statistics of model
variables reported in Table 8. The R² of
0.6286 again indicates that the model exhibits
a large degree of explanatory power. The age,
weight, production EPD, and marketing
variable results are consistent with the earlier
model. The only notable exceptions are that
the fullbrother and pathfinder coefficients are
not statistically significant in this model. The
coefficient signs and magnitudes on all the
statistically significant sale variables are con-
sistent with the earlier model as well.⁸ Each of
the ultrasound EPDs in this model were
significant, indicating that buyers value the
information they provide. The variables uim-
fepd and uribepd were positive, indicating that
additional units of intramuscular fat and
ribeye increased the price paid for a bull.
The coefficient for ufatepd was negative,

⁸ There are some differences in the particular sales
that are included in the models due to data
restrictions, and there are some notable differences
in parameter estimates for sale variables that are not
statistically significant in either model.
implying that increases in fat thickness de-
creased value. The sign for uprpepd was
expected to be positive, given that a bull’s
ability to sire progeny that yield greater
quantities of retail product would be desirable
to a buyer; however, the estimated coefficient
was negative, a result that is difficult to
explain.⁹

Because of the small magnitude of these
variables, nominally large parameter estimates
were generated. Thus, elasticities for each
variable provide a much clearer picture of the
effect of changes in the variable on price. This is
evident by the elasticity for ufatepd. The large
parameter estimate, 23.758, for this variable is
reduced to an elasticity measure of 20.015.

⁹ An alternative model specification that included
marbepd, ribepd, fatepd, and prpepd instead of the
corresponding ultrasound measurements yielded re-
sults consistent with those reported here. Similarly, a
model specification utilizing the actual ultrasound
scores (adjpctimf, adjribeye, and adjribfat) yielded very
consistent results (Turner). The authors chose to
report results of the specification with the largest
number of usable observations.

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