Environmental Economics

Took two kids trick-or-treating in the dorms and this is what I learned

Quote of the day

An assistant professor:

"A 50-minute lecture takes me two days to prepare ..."

via online.wsj.com

Me too! I teach one class each semester (it is actually 1 hour and 15 minutes twice a week) so I'm preparing for class 6 full days a week. Somehow I am able to squeeze in my administrative, service and research responsibilities and still manage to be a wonderful family man who enjoys a little bit of free time every day. Hooray for me!

As an administrator, I now pay attention to this kind of stuff...as an economist I think this is stupid

The Texas A&M University system has embarked on a new accountability program. For every department — indeed, for every professor — revenue generated and cost incurred are calculated; and profit — the difference — is reported. Each professor is presumably supposed to have a marginal revenue product above his/her compensation.

Cost (at least the professor’s pay) is easy to calculate.   Unfortunately, the calculation of revenue includes only outside grants received and tuition revenue.  Any unfunded research, no matter where published, is assumed to have zero value, as is any service. Were this to spread throughout Texas (as I sadly expect it will), any publication — even in the most visible scholarly outlet, even if it affects how the average person thinks about the world — would be valued at zero; so too would an appearance in a nationally visible media outlet.

University administrators facing these incentives would have every reason to construct a faculty of grant-hustlers and low-paid teachers (subject, one might perhaps vainly hope, to some minimum teaching quality).  Despite the traditional UT-A&M rivalry, I hate to see a great institution do this damage to itself.  Worse still, this kind of mindless accounting, if it spreads, would increase still further the widening gulf between the quality of the nation’s best private universities and its top public universities.  Very depressing — especially to someone who has spent 38 years teaching at public universities.

via freakonomics.blogs.nytimes.com

Warning: rant ahead

As economists, we try to understand incentives and how people respond to those incentives.  If you want a certain outcome, then you have to understand what incentives people have to generate those outcomes.  I can imagine the good intentions of the TAMU administration hoping to put in place a system of incentives designed to incentivise faculty to generate more classroom contact with students and more grant income for the University.  These are both ways Departments and Universities can counter repeated budget cuts.  Unfortunately, often good intentions lead to unintended consequences.  If you tell faculty that their compensation adjustments will be based only on the # of students they teach and the amount of grant money they generate, guess what faculty will do?  Yep, they will scramble to teach large section introductory classes in large lecture halls getting as many butts in seats as possible.  Then they will spend the rest of their nonteaching time writing grant proposal after grant proposal throwing as much s@#! against the wall as they can to see how much (not even what) sticks. In the long term, the results get worse.  As good researchers are driven to occupations where research outputs are awarded, they are replaced, as Dr. Hammermesh points our, with grant chasing low paid teachers with no incentives to improve. 

OK, rant over.

Reverse hypothetical bias?

John David Dyche:

The parallel expansion of direct democracy and explosion in the size and scope of federal government are neither coincidental nor surprising. The people always and obviously want more government than they are willing to pay for, and politicians pandering to them have been only too willing to provide it. That cannot continue.

via www.courier-journal.com

Stated willingness-to-pay is less than real? Or, everyone wants a freebie?

Would it be "economic poison" if it were cheaper?

"Clean air rules may wait till after election":

With a mid-term congressional election looming, the Obama administration is expected to delay issuing controversial air pollution rules that the Republican opposition has characterized as economic poison.

The U.S. Environmental Protection Agency had planned to issue the nation's strictest-ever standards for ground-level ozone this week. The new standards would cost states and businesses anywhere from $19 billion to $90 billion to implement in 2020 alone, the EPA has estimated.

It could be cheaper with incentive-based policy: sounds like implementation in North Carolina will include uniform technological standards.

The effect of technology on infrastructure benefit-cost analyses

via www.courier-journal.com

The bridges over the Ohio River connecting Kentucky and Indiana will cost $4.1 billion. The Numbers Guy suggests the costs are underestimated. Mark Murphy suggests the benefits are overestimated as well.

I thought I moved away from hurricanes when I moved north

THE NATIONAL WEATHER SERVICE IN WILMINGTON HAS ISSUED A HIGH WIND WARNING... WHICH IS IN EFFECT FROM 10 AM THIS MORNING TO 8 PM EDT THIS EVENING....STRONG WINDS WILL DEVELOP AHEAD OF AN APPROACHING COLD FRONT BY LATE THIS MORNING. SOUTH TO SOUTHWESTERLY WINDS OF 25 TO 35 MPH CAN BE EXPECTED WITH GUSTS UP TO 60 MPH AS THE FRONT CROSSES THE AREA THIS AFTERNOON.

via www.weather.com

I spent the morning putting away my patio furniture.

Urban word of the day

From the inbox:

October 26: Mooselini

A petty dictator from a sparsely populated state with a large moose population.

Governor Mooselini today fired yet another agency chief for daring to question her policies.

Hey Kauffman, where's my survey?

Aguanomics:

I participated in the Kauffman survey of economics bloggers [pdf] on the US and world economy.

From the survey report:

This paper reports the results of a survey of top economics bloggers. The survey was conducted in mid-October 2010 by soliciting input from among the top 200 economics bloggers as ranked by Palgrave’s Econolog.net. ...

According to Palgrave, we're #28. I'm still waiting to be invited to take the survey and therefore declare the entire Kauffman effort invalid.

 

It means either 1), the Cap and Trade theory was right, or 2) it was wrong

...as I observed in my earlier posting on this issue (here) the graph from Richard Woodward's presentation (above) indicates that trading volume and the price of SO2 allowances were both declining well before the DC Circuit vacated the CAIR rule. This does not necessarily mean that the trading market was dying; and after all we need to bear in mind that the trading market itself is not an end in itself, but simply a means of minimizing the costs of complying with an exogenously set environmental protection goal. It could be that the SO2 trading program has served its purpose and is now ready to be superseded by new programs with somewhat different aims, which (for reasons relating to NAAQS compliance in downwind states) are not amenable to widespread emissions trading.

If, and it remains a big if, SO2 emissions trading is winding down, what are the implications for the theory of emissions trading generally, and for trading programs relating to other pollutants, such as carbon dioxide? I find these questions immensely interesting, and just wish I had time to deal with them right now.

via cyclingprof.blogspot.com

My opinion? The theory is sound.  The real question is whether the theory is so sound that the practical implementation resulted in suicide for Cap'n Trade, or whether Cap'n Trade is a theoretical construct, similar to Hotelling's rule, which, while nice on paper, is confounded when put into practice by the annoying nuisances of the political, legal and economic systems.