SUMMARY: When cold weather looms across the U.S., natural-gas prices usually rise. This year they are falling, after a record production boom nearly replenished stockpiles left at their lowest since 2003 by last winter's freeze.
CLASSROOM APPLICATION: Students can use supply and demand to examine the effects of shifts in both demand and supply on the equilibrium price of natural gas. Also, they can compare factors, such as weather, that have differing effects on the prices of two major energy sources: natural gas and oil. Lastly, they can examine how bottlenecks in supply chains affect prices.
QUESTIONS: 1. (Advanced) How do weather forecasts affect the price of natural gas? Why does the weather have a greater effect on the price of natural gas than it does on the price of oil?
2. (Advanced) During periods of high demand for natural gas, how do bottlenecks in the natural gas supply chain affect the price of natural gas?
3. (Introductory) Why did prices for prices for natural gas last week reach to their lowest point of 2014?
Predictive Validity of Stated Preference Data: Evidence from Mountain Bike Park Visits Before and After Trail System Expansion
Kevin Atkinson and John C. Whitehead (firstname.lastname@example.org)
No 14-09, Working Papers from Department of Economics, Appalachian State University
Abstract: This paper investigates the validity of stated preference data for use in recreation demand estimation. We use stated preference and revealed preference data from users of a mountain bike park collected before and after an expansion of the trail system. The ex-ante stated preference data elicited before the change exhibits hypothetical bias, but, it would provide useful information for demand prediction.
It is on that website that faculty members might learn, for example, that their students think they are “useless” or a “general moron,” and say anyone “would enjoy eating the rectum of a brown, exotic Australian toad” more than taking their course.
Yes, those are real reviews.
Many professors assail the website and anything that might give it credence. But at least some faculty members have recently concluded that the best way to challenge the site and its unsubstantiated ratings is to mock it without mercy.
Lehigh University became the latest institution to use the website as fodder for comedy. Taking a cue from a popular late-night comedy trope in which celebrities read cruel tweets about them, Lehigh filmed faculty members reading negative comments about themselves from Rate My Professors, and posted the videos online.
H.R. 5069 would allow the Department of the Interior (DOI) to raise the price charged for Federal Migratory Bird Hunting and Conservation Stamps (referred to as federal duck stamps). Federal duck stamps are annual permits sold by the federal government to hunt migratory waterfowl. The stamps also allow entry to National Wildlife Refuges that charge entrance fees. Sales proceeds are used to acquire wetlands for inclusion in the National Wildlife Refuge System.
CBO estimates that enacting H.R. 5069 would reduce the deficit by $5 million over the 2015-2024 period. Collections from the sale of duck stamps are recorded in the budget as revenues, deposited in the Migratory Bird Conservation Fund (MBCF), and later spent. Because the bill would affect direct spending and revenues, pay-as-you-go procedures apply. In addition, we estimate that implementing the bill would have no significant effect on discretionary spending.
H.R. 5069 contains no intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would impose no costs on state, local, or tribal governments.
By increasing the annual fee for duck stamps, H.R. 5069 would impose a private-sector mandate, as defined in UMRA, on individuals required to obtain the stamp as a federal permit to hunt migratory waterfowl. Based on information from gaming officials at DOI, CBO estimates that the incremental cost of complying with the mandate would fall well below the annual threshold for private sector mandates ($152 million in 2014, adjusted annually for inflation).
If the federal government does manage to raise revenue it is only because almost all of the revenue will be used to buy wetland habitat, effectively scaling the no-new-taxes-no-matter-the-need constraint that we find ourselves in.
This part of the cost estimate got me to thinking [pdf]:
H.R. 5069 would increase the price of federal duck stamps from $15 to $25 for an annual permit. Based on information provided by DOI, CBO estimates that federal revenues would increase by $119 million over the 2015-2024 period. That estimate includes a reduction in the number of stamps sold compared with the number that would be sold at a price of $15, reflecting CBO’s assessment of the effects of prior stamp price increases.
I'm not sure about the "CBO's assessment of the effects of prior stamp price increases" since the two most recent duck stamp price increases, $10 to $12.50 in 1989-90 and $12.50 to $15 in 1991-92, have been followed by increases in sales (the 1987-88 increase from $7.50 to $10 led a 7.3% decrease in sales, an elasticity of -0.22; you can get the data here).
It would be interesting to know how price sensitive the CBO thinks waterfowl hunters are. In a sport that requires thousands of dollars of equipment, I wonder how much a $10 increase would have on the participation decision. The FWS says that 1,517,647 duck stamps were sold in 2011-12 (pdf). If revenues increase by $13 million annual, my back of the envelope calculation suggests that they think they'll sell 1.42 million stamps.*
Most (I say most because I don't read them all, I don't even read a few, but all that I've read have done this) of the CBO's "cost analyses" are actually benefit-cost analyses where market prices are assumed constant. Under this assumption the benefits of a government program is the government revenue and the cost is the government expenditures. This reason I find this one interesting is that the policy is a price increase so that the one thing that is missing is the lost consumer surplus, which I estimate is about $400,000.*
The Senate bill (S. 1865) would raise the price to $30 after five years of $25 and revenues are estimated to increase by $8 million. I'll leave these calculations as an exercise (i.e., I can't figure out why sales do up, unless we are adding a population trend).
*Here is my logic (invoking ceteris paribus at the outset): Let's say that 1.5 million duck stamps are sold. At a price of $15 that is revenue of $22.5 million (which is the correct order of magnitude). Given a downward sloping linear demand revenue will rise by area a and fall by area e. The CBO estimates that the revenue increase (a - e) will equal $13 million suggesting, logically, inelastic demand (the picture is not to scale!). Based on this it looks like 1.42 million duck stamps are expected to be sold (i.e., 1.42 = [25.5+13]/25). These numbers suggest an elasticity of -0.08 which is more inelastic than the 1987-88 experience.
The only cost that is not included in this calculation is the lost consumer surplus from area b. Area b is equal to $400,000. However, all is not lost because the waterfowl hunters that remain in the market will likely take more visits to wildlife refuges with more habitat, increasing consumer surplus [what am I missing?].
... is our passivity when our employers erect monopolies on campus to exploit students:
The rise of online textbook retailers such as Chegg, Amazon, and Half.com, has put official college and university bookstores on the defensive. Once the default source of course materials, campus bookstores run by Barnes & Noble and Follett are responding to the pressure by cracking down on competitors’ on-campus advertising, which bookstores contend violates their exclusivity contracts with colleges.
Chegg is a nine-year-old company that offers textbook rentals and sales, along with tutoring and career services. It has irked campus officials and bookstore managers with its marketing techniques, which include recruiting students as brand ambassadors, slipping free Red Bull and Starbucks products into book-delivery packages, and buying back books on the campus, often for more money than the bookstore offers.
The company has received dozens of cease-and-desist letters, according to its president, Dan Rosensweig, but it has no plans to scale back its efforts.
"There’s no legal basis for it, and we’ve never been sued," Mr. Rosensweig said. The aggressive tactics have helped bring rapid growth to the company, which couches its arguments in populist terms. "Everything we can be doing to help kids save money and time, we should," Chegg’s chief executive argued. "The school should not be working against the interest of the student financially."
3. Don’t pack up your things as the class is ending.
We get it. The minute hand is closing in on the end of class, there’s a shift in the instructor’s voice, and you hear something like “For next time …” That’s the cue for the students to start putting their stuff away. Once one person does it, it’s like an avalanche of notebooks slapping closed, backpack zippers zipping, and cell phones coming out.
Don’t do it.
Just wait 10 more seconds until the class is actually over. If you don’t, it makes it seem as if you are dying to get out of there and, hey, that hurts our feelings!
Tar Heels in search of the easy A, beware. Starting this fall, UNC-Chapel Hill transcripts will provide a little truth in grading.
From now on, transcripts for university graduates will contain a healthy dose of context.
Next to a student’s grade, the record will include the median grade of classmates, the percentile range and the number of students in the class section. Another new measure, alongside the grade point average, is the schedule point average. A snapshot average grade for a student’s mix of courses, the SPA is akin to a sports team’s strength of schedule.
The nuanced transcripts will provide more information for graduate schools and employers, who should be better able to judge the difference between good and excellent performance. An A- in psychology might not look so swell when the average grade in the class is an A. On the other hand, an A- in physics looks downright impressive if the class average is a C+.
The new contextual transcript is the university’s response to grade inflation – the long-term trend of rising grades that began in the 1960s and accelerated in the 1980s. ...
Andrew Perrin, a sociology professor at UNC-CH, said the [grade inflation] system provides a perverse incentive for students to seek courses not because of intellectual interests or career aspirations, but to pad their GPAs. Popular sites such as Rate My Professors include a measure of “easiness” for each faculty member.
Anything less than an A is unacceptable for some students.
“Elite universities, both elite state universities like ours or elite private universities, face a particular challenge, which is that everybody here is used to being the best,” Perrin said. “And in many cases, they’re used to complaining if they’re not the best.”
At elite regional comprehensive state universities or elite community colleges, professors face a particular challenge, which is that not everybody here is used to being the best and they don't complain if they're not the best. They especially don't complain if you explain to them that this is a college course and not everyone is going to get an A.
With a new school year approaching, this is a good time to update our review of the treatment of climate change in economics textbooks. As in our 2010 and 2012 reviews, some books hit the mark while others are wildly misleading. But we’re happy to say that there’s plenty of good news, especially at the top and the bottom of the grade distribution: the good books have gotten better (including the first-ever A+ grade!) and even the worst ones have made improvements (the lowest grade is now a D-, not a F!).
Some books, of course, suffered some backsliding. Out of 18 books reviewed, four still make the “Not Recommended” list, with the biggest loser being Gwartney, Stroup, Sobel, and Macpherson’s Economics: Private and Public Choice (15th ed.), hereby dubbed the recipient of the undesired 2014 Ruffin and Gregory Award for the Worst Treatment of Climate Change in an Economics Textbook (so named for a comically bad treatment of climate change in a textbook now thankfully out of print).
Without further ado, here is the full report, as well as our summary report card:
The course is for senior economics majors, MBAs and graduate students from other programs. My reading list includes BCA examples, overviews, technical stuff (in mostly non-technical language) and other stuff.
Am I missing anything?
Allen, Bryon P., and John B. Loomis. "The Decision to use Benefit Transfer or Conduct Original Valuation Research for Benefit-Cost and Policy Analysis," Contemporary Economic Policy 26, no. 1 (2008): 1-12.
Atkinson, Giles, and Susana Mourato. "Environmental cost-benefit analysis."Annual Review of Environment and Resources 33 (2008): 317-344.
Banzhaf, Spencer H. "Consumer surplus with apology: a historical perspective on nonmarket valuation and recreation demand." Annual Review of Resource Economics 2, no. 1 (2010): 183-207.
Barget, Eric, and Jean-Jacques Gouguet. "The total economic value of sporting events theory and practice." Journal of Sports Economics 8, no. 2 (2007): 165-182.
Blomquist, Glenn C. "Self-protection and averting behavior, values of statistical lives, and benefit cost analysis of environmental policy." Review of Economics of the Household 2, no. 1 (2004): 89-110.
Blomquist, Glenn C., Paul A. Coomes, Christopher Jepsen, Brandon C. Koford, and Kenneth R. Troske. "Estimating the social value of higher education: willingness to pay for community and technical colleges." Journal of Benefit-Cost Analysis 5, no. 1 (2014): 3-41.
Cohen, Mark A., Roland T. Rust, Sara Steen, and Simon T. Tidd. "Willingness-to-pay for Crime Control Programs,” Criminology 42, no. 1 (2004): 89-110.
Farrow, Scott. "How (Not) to Lie with Benefit-Cost Analysis." The Economists’ Voice 10, no. 1 (2013): 45-50.
Graves, Philip E. "Benefit-Cost Analysis of Environmental Projects: A Plethora of Biases Understating Net Benefits." Journal of Benefit-Cost Analysis 3, no. 3 (2012).
Griffiths, Charles, Heather Klemick, Matt Massey, Chris Moore, Steve Newbold, David Simpson, Patrick Walsh, and William Wheeler. "US Environmental Protection Agency valuation of surface water quality improvements." Review of Environmental Economics and Policy (2012): rer025.
Loomis, John B. "Incorporating distributional issues into benefit cost analysis: why, how, and two empirical examples using non-market valuation." Journal of Benefit-Cost Analysis 2, no. 1 (2011).
Rhodes, Raymond J., John C. Whitehead, and T.I.J. Smith, A Benefit-Cost Analysis of a Red Drum Stocking Program, unpublished paper presented at the 2006 Southern Economic Association Meetings, Charleston, SC, November.
Richardson, Leslie, Tatjana Rosen, Kerry Gunther, and Chuck Schwartz. "The economics of roadside bear viewing." Journal of environmental management140 (2014): 102-110.
Robinson, Lisa A. "How US Government Agencies Value Mortality Risk Reductions." Review of Environmental Economics and Policy 1, no. 2 (2007): 283-299.
Rose, Adam, Keith Porter, Nicole Dash, Jawhar Bouabid, Charles Huyck, John Whitehead, Douglass Shaw et al. "Benefit-cost analysis of FEMA hazard mitigation grants." Natural Hazards Review 8, no. 4 (2007): 97-111. [see also: Congressional Budget Office, Potential Cost Savings from the Pre-Disaster Mitigation Program, September 28, 2007]
Sunstein, Cass R. "The Real World of Cost-Benefit Analysis: Thirty-Six Questions (and Almost as Many Answers)." Columbia Law Review (2014): 167-211.
Van Houtven, George, and Maureen L. Cropper. "When is a Life Too Costly to Save? The Evidence from US Environmental Regulations." Journal of Environmental Economics and Management 30, no. 3 (1996): 348-368.
Vitaliano, Donald F., “Repeal of Prohibition: A Benefit-Cost Analysis,” Contemporary Economic Policy (2014).
"This blog aims to look at more of the microeconomic ideas that can be used toward environmental ends. Bringing to bear a large quantity of external sources and articles, this blog presents a clear vision of what economic environmentalism can be."
Don't believe what they're saying
And allow me a quick moment to gush: ... The env-econ.net blog was more or less a lifeline in that period of my life, as it was one of the few ways I stayed plugged into the env. econ scene. -- Anonymous
... the Environmental Economics blog ... is now the default homepage on my browser (but then again, I guess I am a wonk -- a word I learned on the E.E. blog). That is a very nice service to the profession. -- Anonymous
"... I try and read the blog everyday and have pointed it out to other faculty who have their students read it for class. It is truly one of the best things in the blogosphere." -- Anonymous