Environmental Economics

Daily Demand and Supply: Mary Jane's Last Dance?

With reference to Colorado proposing a 30% tax on recreational marijuana sales (15% excise tax and 15% sales tax),

Jeffrey Miron, an economics professor at Harvard University and a senior fellow at the Cato Institute, a libertarian group ... said that as long as federal marijuana laws continued to be unsettled, collecting taxes would be challenging. Moreover, he said, there is no way to predict how many customers would continue to buy on the black market.

After Prohibition ended in 1933, states levied taxes on alcohol, in part because they were desperate for revenue after the Great Depression. But that shift, Dr. Miron noted, was undertaken with the full support of the federal government.

“It’s easy to get a little overexcited that legalizing marijuana is going to solve the world’s budgetary problems,” Dr. Miron said. “But the question for the tax revenue part of this will be how much the federal government allows these markets to come completely above ground.”

via www.nytimes.com

The revenue collected from a tax will hinge on the relative price-elasticities of demand and supply.  The less price elastic the demand for a good, the more revenue can be collected with a tax--because people still buy the good even at higher prices.  With federal support for marijuana sales it is likely that demand for legal marjuana would be much less price elastic, and a state tax would raise much more revenue for the state than without federal support--making the tax more effective at raising revenue. 

But then again, I guess it depends on whether the goal of the tax is to raise revenue.

And I wonder if the demand for Doritos has increased in Colorado?

If so, maybe they should tax Doritos instead.

 

Friday beer post: all in moderation, of course

My favorite archeologists have determined that:

We needed beer.

Luckily, from time to time, our ancestors, like other animals, would run across fermented fruit or grain and sample it. How this accidental discovery evolved into the first keg party, of course, is still unknown. But evolve it did, perhaps as early as 10,000 years ago.

Maybe they got the idea after watching Animal House?

Current theory has it that grain was first domesticated for food. But since the 1950s, many scholars have found circumstantial evidence that supports the idea that some early humans grew and stored grain for beer, even before they cultivated it for bread.

Circumstantial evidence -- fossilized pizza bones are carbon dated soon after that of beer mug pottery. 

Brian Hayden and colleagues at Simon Fraser University in Canada provide new support for this theory in an article published this month (and online last year) in the Journal of Archeological Method and Theory. Examining potential beer-brewing tools in archaeological remains from the Natufian culture in the Eastern Mediterranean, the team concludes that “brewing of beer was an important aspect of feasting and society in the Late Epipaleolithic” era. ...

Also know as the "Roaring Epipaleolithics."  

Once the effects of these early brews were discovered, the value of beer (as well as wine and other fermented potions) must have become immediately apparent. With the help of the new psychopharmacological brew, humans could quell the angst of defying those herd instincts. Conversations around the campfire, no doubt, took on a new dimension: the painfully shy, their angst suddenly quelled, could now speak their minds.

Just like my first year of college.

But the alcohol would have had more far-ranging effects, too, reducing the strong herd instincts to maintain a rigid social structure. In time, humans became more expansive in their thinking, as well as more collaborative and creative. A night of modest tippling may have ushered in these feelings of freedom — though, the morning after, instincts to conform and submit would have kicked back in to restore the social order.

I write my best poetry during modest tippling.

Some evidence suggests that these early brews (or wines) were also considered aids in deliberation. In long ago Germany and Persia, collective decisions of state were made after a few warm ones, then double-checked when sober. Elsewhere, they did it the other way around.

All department meetings at the Boone Saloon?

Beer was thought to be so important in many bygone civilizations that the Code of Urukagina, often cited as the first legal code, even prescribed it as a central unit of payment and penance.

via www.nytimes.com

Hat tip: Ken Acks

Friday Beer Post

OK,it's Thursday, and this is about vodka, but being from Bawlmer (Baltimore) I couldn't pass this one up:

On Monday – which was Maryland Day, for those of you not from the Old Line State – Philadelphia Distillers officially launched its new vodka, the Bay, which is flavored with “traditional Chesapeake seasoning,” an apparent relative of Old Bay.

via www.washingtonpost.com

Bloody Mary here I come.

Update on letting a coin toss decide my future

Freakonomics:

Our latest Freakonomics Radio podcast is called “Would You Let a Coin Toss Decide Your Future?” ...

In it, Stephen Dubner grills Steve Levitt about a new project called Freakonomics Experiments. (Levitt blogged about it here and stopped by Marketplace last week.) The basic idea is to learn more about how people make decisions, especially when they’re on the margin. ...

You’ll also hear about ... why this whole idea isn’t quite as ridiculous as it sounds.

Yes, the idea is definitely less ridiculous than trying to understand people's behavior in hypothetical, policy relevant situations.

Update: I haven't splurged on that expensive meal yet. 

I'm going to splurge on an expensive meal!

Stephen Dubner:

Our latest Freakonomics Radio on Marketplace podcast is called “Introducing ‘Freakonomics Experiments.’” ...

In it, Steve Levitt tells Kai Ryssdal about a new website we’ve just launched that will help you make tough decisions in life while also taking part in academic research. And there’s Freakonomics swag to be had, too.

via www.freakonomics.com

I've signed up, got help with a decision and took a survey. Here is the first email I received:

Dear John Whitehead,

You just flipped a coin as a part of Freakonomics Experiments to answer your question Should I splurge on an expensive meal? The coin came up heads—or that you should splurge on an expensive meal. We know that this is a big decision, and we’ll leave you alone over the next two months as you take this step.

In about two months, we’ll check in with you to see how you’re doing. At that time, we’ll send you a link with a short follow-up survey, and we’ll give you another chance to win some more Freakonomics prizes.

We’re so glad you are a member of the Freakonomics Experiments team!

Freakonomics Experiments

I decided not to let the flip of a coin determine if I should grow a mustache.

Updating the vita

From the inbox:

Dear Dr. Morgan,

Your article A Split-Sample Revealed and Stated Preference Demand Model to Examine Homogenous Subgroup Consumer Behavior Responses to Information and Food Safety Technology Treatments has just been published and is available as 'Online First' on SpringerLink:

http://www.springerlink.com/openurl.asp?genre=article&id=doi:10.1007/s10640-012-9608-9

Here is the cover page:

This is why you need to look at the data

From the National Journal:

Some observations that go against my own preconceptions:

• Bud leans left but Sam Adams leans right?  I would've thought Bud was preferred by the conservative NASCAR crowd while Sam Adams was preferred by them liberal Yankees
• Corona left, but Corona Light right? Heineken left but Amstel Light right? Miller Genuine Draft and Miller High Life to the left of Miller Lite? Are conservatives more concerned about their figures?

And is anyone surprised that Shiner Bock is the most conservative?

My Shiner Bock story.  Two years ago, I took my Dad down to the Final Four in Houston.  Due to flight delays, he beat me down there by a day.  When I met up with him at the hotel, he greeted me with, "Hey, I found this great new beer last night in the hotel bar*...It's called Shiner something, I think it's one of those new microbrews."

"Dad, it's Shiner Bock, it's a Texas beer and it's been around for a hundred years."

"Well, it's new to me."

*Apple...tree.

PBR Me ASAP

Results from the 2012 Great American Beer Festival:

Category: 33 American-Style Lager, Light Lager or Premium Lager, 51 Entries
Gold: Pabst Blue Ribbon, Pabst Brewing Co., Los Angeles, CA
Silver: Miller Lite, Miller Brewing Co., Milwaukee, WI
Bronze: Keystone Light, Coors Brewing Co., Golden, CO

What?

Living in Ohio it's often more about quantity than quality.

Wednesday Beer Post

You didn't think I could let this wait until Friday, did you?

From The Economist:

God Bless the USA.

The effects of recession on outdoor recreation

Subsistence hunting and fishing is an inferior good:

There’s definitely an interesting socioeconomic analysis to be done on the ways in which certain activities that were once deadly earnest attempts to gather food came, in an era of relative caloric abundance, to be luxury pastimes instead. But I’m hard-pressed to explain how Snuffy and Lukey, who never had any kind of job when times were flush, have had their lives affected by extra-Holler financial crises. Perhaps there’s less demand for chickens, Hootin’ Holler’s sole export, which means there are fewer chickens for the two old rascals to steal? More likely, “th’ economic downturn” refers not to anything that would affect us flatlanders, but rather to some apocalyptic event that severed the last tenuous economic tendril connecting Hootin’ Holler to the outside world, leaving its isolated residents with no option but to turn back to the forests and streams for sustenance. This crisis presumably happened decades ago, and so what we’re seeing here is a prequel strip showing the genesis of the Snuffy Smithiverse as we’ve come to know it.

via joshreads.com

Flatlanders don't unnerstand.