Although historians have long employed counterfactual arguments — sometimes it seems without realizing it — to most historians the idea of an explicit counterfactual was still a very foreign notion in the early s. Second, in both chapters Fogel employs the concept of social savings the difference in social costs between the real and the counterfactual worlds to provide a measure of the value of the introduction of the railroad. As an aside, however, it is interesting to note that, although the two studies are very very important from the view point of methodological innovation, from the point of view of traditional economic history, they are not as strong as the third and fourth substantive essays.
In the second substantive essay — the social savings arising from the intraregional distribution of agricultural commodities — Fogel begins by noting that the substitution of rail for water was more rapid in the intraregional than in the interregional distribution of agricultural commodities, and, that, since the distances to be shipped in the intraregional case were only a third as great for rail as for water transport, one would expect that the social savings from the innovation would be greater.
To estimate those savings he proposes two measures: alpha a direct measure of the cost differences with and without the railroads and beta an indirect measure based on the difference in the value of the land that would have been economically productive with railroads and the lesser number of acres and, thus, the lesser value of land that would have been economically productive in the absence of those railroads. Fogel then estimates alpha for a sample of counties in the North Atlantic region and concludes that the direct costs alpha would amount to a loss of 2.
Neither estimate, however, includes the potential savings that would have resulted from the construction of additional canals and better roads. He admits that the North Atlantic region may not provide an adequate representation of the entire country, but he argues that it would be too expensive and difficult to extend this direct measure of savings to the rest of the country. He concludes that the cost of the direct loss of arable land from the absence of railroads beta would amount to 1.
Again, however, beta-2 does include the potential savings that would result from additional canals and better roads.
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Making further adjustments for the unbuilt canals and better roads, Fogel provides two estimates for the social savings from intraregional trade: alpha-3 equal to 1. As in the second essay, the use of explicit counterfactuals and the innovation of the concept as well as his estimates of the social savings broke new ground.
In this case, however, there were also other very important methodological innovations. He focuses of four commodities wheat, corn, beef, and pork — commodities that together represented 42 percent of agricultural income. He, first, estimates the export surplus at ten primary markets in the west and the consumption in the almost deficit trading areas in the East and South exports are attributed to the port from which they were shipped. The potential rail and water shipping routes from West to East were easily identified, and the costs of rail and water shipment were well known.
To simplify the problem, Fogel focuses on a sample of 30 of the potential routes between pairs of cities in the West and the East.
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Since the actual choice of routes is unknown, he very imaginatively suggests a linear programming model to estimate the routes — with and without railroads — that would have been selected had the shippers been guided by cost minimization. He then estimates the costs of the inferred shipments, costs estimated both with and without rails. Since there were also additional costs of water transport lost cargoes, transshipment expenses, extra wagon haulage, time lost because of slower speed and because the canals and rivers froze, and the capital costs of the canals that were not included in the water rates , Fogel adjusts his original cost differentials to account for these additional expenses.
Publication Baltimore, Johns Hopkins Press, , c Extent xv, p. Note Includes index. Isbn Isbn Isbn Type pbk. Other physical details ill.
ISBN 13: 9780801802010
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Mesoamerican Languages. Nora C. England , Roberto Zavala Maldonado. Allan J. Kuethe , J Kenneth. Fogel was a visionary economic historian whose works and lectures have informed and incited for more than half a century and whose writings will continue to do so for decades to come. Pecquet , M.
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