Environmental Economics

My best post of 2008

I left a comment on a green jobs post the day after pagan celebration of a Christian holy day:

That is why economics is known as the dismal science. We strange economists are most adept at recognizing the opportunity costs of various decisions. No one else really seems to care if opportunity costs offset some, or all, of the benefits of a good idea.

Opportunity cost is a strange notion to some (especially intro micro students) ... it is the value of the next best alternative whenever a choice is made. For example, if I purchase a $1000 flat panel LCD TV, the true cost of the TV is not $1000, but what I could purchase instead (such as $500 in each kid's college education 529 plan [sorry kids]).

In the case of green energy subsidies, if you are an economist then you must at least wonder if this is the best way to spend the money. There are benefits of pushing down the costs of green energy (e.g., improved air quality), and there are opportunity costs. Ignoring the opportunity costs is likely to lead to wasteful spending. Considering the opportunity costs is likely to lead to better social decision making -- regardless of whether the benefits of the subsidies exceed the costs.

The notion of opportunity cost, its recognition and the inevitable result that not all great sounding ideas are really great ideas, is the most important thing that economists bring to many policy discussions. Pointing out the unpleasantantries of opportunity cost is one of the purposes of this blog. The dismal part of the dismal science can not be avoided.

The obligatory post-election analysis: pirate behavior on a sinking ship

If I was a Pirate and my ship was sinking, I'd grab the money too (Pirates left quickly).

Artifacts from the wreckage of a sailing vessel thought to have been the pirate Blackbeard's flagship suggest that the crew left in a hurry, but the reasons aren't clear, the director of a recovery project said yesterday.

...

He also said the fact that cannons were left shows that the crew grabbed money and other items of immediate value when they abandoned the ship after it ran aground off Beaufort Inlet in 1718. The wreck was discovered in 1996 in 20 to 25 feet of water.

"Folks took most everything off of value," he said. "They were in a hurry. It may have been the elements. It probably went down pretty fast, and that's fortunate for us."

I wouldn't need anything else. And that's it and that's the only thing I would need. I wouldn't need this [kicking a pair of pirate boots] or this [dropping a pirate hat]. Just the rum. I would need the rum. And my earring. The rum and the earring and that's all I would need. And the purple bandana. The rum, the earring, and the purple bandana, and that's all I would need. And the sword. The rum, and the sword, and the purple bandana and the earring. I wouldn't need one other thing, not one - I need this [as I grab a parrot]. And that's all I would need. The rum, the sword, the purple bandana, the earring and my parrot. [Parrot squaks] I don't need my parrot. [*]

*Note: Adapted from the famous Navin Johnson line in The Jerk.

Rock Star: The Sequel

Aguanomics is at it again at Freakonomics:

In my second piece, I discuss water and oil.