Environmental Economics

How professors pick exam questions (and how we stop silly questions from students)

Society for Benefit-Cost Analysis 2017 Annual Conference

Conference and Meeting: March 16-17, 2017

Pre-conference Professional Development Workshops: March 15, 2017

The Society for Benefit-Cost Analysis (SBCA) is an international group of practitioners, academics and others who are working to improve the theory and application of the tools of benefit-cost analysis. Please join us at our Ninth Annual Conference and Meeting.

Call for Submissions

The Society for Benefit-Cost Analysis (SBCA) is accepting abstracts and workshop proposals for participation in our 2017 annual conference on Improving the Theory and Practice of Benefit-Cost Analysis.

The SBCA is an international group of practitioners, academics and others who are working to improve the theory and application of the tools of benefit cost analysis (BCA). We welcome submissions that support the enhanced use of such analysis to promote evidence based decision making. We define BCA broadly, including cost analysis, cost effectiveness analysis, risk-benefit analysis, applied welfare economics, damage assessment and other methods. Applications in any public policy area are encouraged. For example, proposals may be in such areas as:

• Energy, natural resources, and environment ...

 

More information is here: https://benefitcostanalysis.org/2017-annual-conference.

Consensus among AEA members about environmental policy

From Consensus Among Economists - An Update:

Three of the propositions focus on environmental policy. In contrast to the moderate consensus of disagreement found in the two earlier surveys, the 2011 sample now exhibits a substantial consensus of disagreement with the proposition that reducing the power of the Environmental Protection Agency (EPA) would improve the efficiency of the U.S. economy (#27). There is also substantial agreement with a new proposition in the 2011 survey that the long-run benefits of higher taxes on fossil fuels outweigh the short-run costs (#29). One possible interpretation is that economists generally accept evidence of mankind’s contribution to climate change and would support the decision by the EPA to declare carbon dioxide a pollutant. A somewhat notable result is the increase, at a 10-percent level of significance, in the proportion of the 2011 sample who disagree with the proposition that pollution taxes or marketable pollution permits are a more efficient approach to pollution control than emission standards (#28). Although only a small proportion of economists disagree, it is a bit surprising, given the standard treatment in microeconomic texts of the production cost efficiencies of taxes and marketable permits relative to emission standards.

Here is the table (edited for relevance):

Graphic of the Day: Verifying the value of time in different markets

Using the relationship between rents for New York city apartments and commute times, fivethirtyeight.com finds that the average commuter is willing to pay $56 a month to reduce commute times by 1 minute. 

Here's a picture:

Assuming a commuter commutes about 23 days per month, and assuming those are 1-way commute times (so they are willing to pay $56 per month in higher rents to reduce commute times by 46 minutes per month), that works out to $1.22 per minute or $73 an hour.  That's really high.

These kinds of numbers are important to economists who do a lot of cost/benefit analysis because the value of time gives us an estimate of the price of travel.  The price of travel is important for estimating the demand for trips.  The demand for trips is important for estimating the value of trips and how the value of those trips change when environmental quality changes.   

As a rough rule of thumb, we typically use the hourly wage rate as the value of one-hour spent traveling--under the assumption that a worker can choose to either work and additional hour or spend that hour in leisure.  If the worker is a salaried worker (a worker who can't choose the number of hours to work) then we often use a fraction of the wage rate as the value of time (usually 1/3 the wage rate). 

According to the BLS, the average weekly wage rate in New York city in 2015 was $2,847 per week. Assuming a 40 hour work week, that's $71.18 per hour.  That is shockingly close to the $73 per hour calculated from the rent study mentioned above. 

Shockingly close.

And I didn't even rig the numbers.

I just calculated the numbers as I was typing this and I am stunned.

So based on these really crude numbers, the market for rental properties in New York fully captures the value of time as indicated by the labor market.

I love the smell of markets in the morning.

 

The biggest fish in a small pond

Abstract:

This study applies the methodology of a recent study that ranks economics departments at national universities in the U.S. South to economics faculties at regional universities in the same geographic location. Ranking results from a “core” (i.e., the top five faculty researchers) of each institution's economics faculty reveals that Appalachian State University, James Madison University, Southeastern Louisiana University, Trinity University and Loyola University – New Orleans currently maintain the top five economics faculties, respectively, among the approximately 200 regional universities in the U.S. South.

Citation: Mixon, Franklin G., and Kamal Upadhyaya. "Out of Big Brother's Shadow: Ranking Economics Faculties at Regional Universities in the US South''." Economics Bulletin 36, no. 3 (2016): 1609-1615. http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I3-P158.pdf

Footnote 9 says: 

Appalachian State is known by many in the U.S. South (and beyond) as what Nobel Laureate George Stigler would refer to as an academic beehive in terms of environmental and resource economics (Stigler, 1985). 

Here are the rankings:

 

"The New Cheating Economy"

This is truly frightening:

Cheating has become second nature to many students. In studies, more than two-thirds of college students say they’ve cheated on an assignment. As many as half say they’d be willing to purchase one. To them, higher education is just another transaction, less about learning than about obtaining a credential.

The market, which includes hundreds of websites and apps, offers a slippery slope of options. Students looking for class notes and sample tests can find years’ worth on Koofers.com, which archives exams from dozens of colleges. And a growing number of companies, including Course Hero and Chegg, offer online tutoring that attempts to stay above the fray (one expert calls such services a "gateway drug").

Many students turn to websites like Yahoo Answers or Reddit to find solutions to homework problems. And every month, hundreds of students put assignments up for bid on Freelancer.com and Upwork, where they might get a paper written for the cost of a few lattes. ...

Ultius protects its business by keeping those orders private. ...

The company’s dealings with one Ph.D. candidate illustrate the increasingly complex work that students are outsourcing, while faculty members remain in the dark. Last year, Ultius contracted with a student who described herself as a "single active duty parent" to help write a concept paper for her doctoral program, records show. The job included revisions requested by the chair of her dissertation committee.

The Ph.D. student requested that Ultius complete a literature review and produce a theoretical framework for her dissertation. The order required the company to find data on migration patterns and economic growth in Jamaica, and to apply advanced economic theory. The company did the work, but the customer was so displeased with it that she filed a complaint with the Better Business Bureau. That complaint details the case.

via www.chronicle.com

My strategy in classes with papers is to have an empirical component and individualized assignments. Also, I remind students that "cheaters never prosper." Maybe next time I teach one of those classes I'll see how much it would cost to buy the paper. 

xkcd: Linear Regression

Source: http://xkcd.com/1725/

How could something that isn't happening have been happening for longer than we thought?

Humans are not good for the planet.  But humans are the only ones capable of judging good from bad...as far as we know right now.  So if humans didn't exist, would the planet be better off or worse off?  Who would judge? 

I'm confused. 

And all of that is irrelevant to this:

A new paper is challenging our understanding of how long human-caused climate change has been at work on Earth. And the authors say their findings may question existing ideas about how sensitive the planet is to greenhouse gas emissions — with potentially big implications for our global climate policy.

The new study, just out on Wednesday in the journal Nature, suggests human-caused, or anthropogenic,  climate change has been going on for decades longer than existing temperature records indicate. Using paleoclimate records from the past 500 years, the researchers show that sustained warming began to occur in both the tropical oceans and the Northern Hemisphere land masses as far back as the 1830s — and they’re saying industrial-era greenhouse gas emissions were the cause, even back then.  

“I don’t think it changes what we know about how the climate has warmed during the 20th century, but it definitely adds to the story,” said Nerilie Abram, an expert in paleoclimatology at Australian National University and the new study’s lead author.  

And the Humuhumunukunukuapua'a* celebrate

The President is dramatically expanding the Papahanaumokuakea Marine National Monument:

President Obama is set to vastly expand a marine sanctuary northwest of the main Hawaiian Islands, White House officials said Thursday, creating the world’s largest protected marine area as he seeks to cement his environmental legacy in his last months in office.

Mr. Obama will travel next week to Midway Atoll, a remote spit of land within the Papahanaumokuakea Marine National Monument, to recognize the designation and highlight the importance of protecting pristine lands and waters as the perils of climate change intensify.

The move, which will more than quadruple the size of the refuge and has been championed by conservationists, scientists and native Hawaiians, is the latest example of Mr. Obama’s expansive exercise of executive power to preserve public lands and waters.

“This act — to build resilience in our oceans, and sustain the diversity and productivity of sea life — could usher in a new century of conservation for our most special, and fragile, ocean areas,” said Sarah Chasis, director of the oceans program at the Natural Resources Defense Council.

Using the 100-year-old Antiquities Act, which was signed by President Theodore Roosevelt, Mr. Obama has protected hundreds of millions of acres in places of ecological, historical or cultural significance — more than any other American president. In 2014, he also greatly expanded the Pacific Remote Islands Marine National Monument, south and west of Hawaii. But he has often drawn criticism from Republicans for acting unilaterally.

Created by President George W. Bush in 2006, the Papahanaumokuakea monument surrounds the uninhabited Northwestern Hawaiian Islands and is home to an estimated 7,000 marine and terrestrial species, a quarter of which are found nowhere else on earth.

These include millions of tropical sea birds, endangered whales and sea turtles, and black coral, considered the longest-living marine species, according to information provided by the administration. Mr. Obama’s action will expand the size of the monument, which now encompasses a little less than 140,000 square miles, to more than 580,000.

*The state fish of Hawaii. 

And yes, I can pronounce it. 

It's pronounced "Reef Trigger Fish". 

Come on, that was funny. 

But, I really can pronounce it. 

But that's kind of hard to prove in print. 

Here's a picture.

 

"More Evidence That Soda Taxes Cut Soda Drinking"

Do all industries react like this when their risky product is recognized as such?

It may seem obvious that taxing sugary drinks causes people to drink less of them. But that’s actually controversial.

Now a new study out of Berkeley, Calif., adds to the evidence that our intuition is right.

Researchers followed residents of several low-income communities in Berkeley, San Francisco and Oakland around the time that Berkeley voters passed the country’s first big soda tax in 2014. The study found that, in the four months after the tax took effect last year, self-reported consumption of sugary drinks fell by 21 percent in the Berkeley neighborhoods, but rose by 4 percent in the other two cities.

The study, published in The American Journal of Public Health on Tuesday, also found that the Berkeley residents reported drinking more water, a sign that they were replacing sugar-sweetened beverages with something healthier.

The research was conducted using in-person surveys of neighborhood residents, a method with some problems because people are not always accurate in describing their diets. But the study is the first to assess soda drinking since the tax went into effect. And its results are consistent with research from Mexico, which passed a nationwide soda tax in 2014. In that country, sugary drink sales fell by about 17 percent among the poorest households by the end of a year.

Other research will most likely clarify the precise size of the effect. But the study seems to confirm that a soda tax will encourage low-income consumers to choose different beverages. ...

The soft drink industry criticized the study for its survey methodology, and noted that even the recorded drop in consumption was unlikely to have a big impact on public health. ...

The researchers said they can’t be sure that the reduced consumption of sugary drinks was a result solely of the tax, which amounted to less than a 1-cent-per-ounce price increase at the cash register. People also became more aware of the health issue during the debate around the tax’s passage and the city’s efforts to discourage sugary drink consumption around the same time.

 

via mobile.nytimes.com

William Dermody [vice president for policy] from the American Beverage Association says this: "The authors of this street survey acknowledge that it had a number of flaws, and there is no indication that the tax had or will have a measurable impact on public health.” The article says this: "Within each neighborhood, we administered intercept surveys near the highest foot-traffic intersection."  So OK sue me, it is a convenience sample. But if the same methods were used at the study and comparison sites then the comparison is valid. But, of course, the guy from the American Beverage Association just wants normal people to think the authors are stupid with a broad criticism that doesn't hold up. Sound familiar?