Environmental Economics

I violated "proper decorum" for 8 (long) years

Matt Kahn's blog just got boring:

My term as the Chair of USC Economics starts this week.  Proper decorum suggests that I should no longer be blogging.   I've decided on a compromise path.  I will no longer write about current events or politics or my humor.   I will write about my own research and about activity at USC Economics. Of course, I will be a cheerleader for USC and readers are free to filter my slanted messages.

via greeneconomics.blogspot.com

Tim hasn't violated "proper decorum" for quite as long but he isn't a former department chair/head yet so he is currently violating it.

I have to say, the professional penalties for violating "proper decorum" have been rather severe. For example, I've been blacklisted from publishing in the top 5 journals for the past 8 years. I'm not sure if the blacklist will be lifted now that I'm a former chair. I guess the only way to find out is to take my most recent and/or best paper, reduce the font, add a 30 page appendix of redundant robustness checks and submit it to the AER. 

"Even top economists publish in predatory journals, study finds" #RePEc

Retraction Watch:

Top-ranking economists sometimes publish papers in open access journals deemed potentially “predatory,” according to a new analysis.

The findings contradict previous results that show that researchers who publish papers in “potential, possible, or probable” predatory journals (as defined by librarian Jeffrey Beall) are largely inexperienced.

According to the study, 27 of the most eminent economists (within the top 5% of their field) have published nearly 5% of their papers in predatory journals. These researchers published 31 papers in predatory journals in 2015 alone.

The finding — which is not yet peer reviewed — comes as a “big surprise,” co-author Frederick Wallace of the Gulf University for Science and Technology in West Mishref, Kuwait, told Retraction Watch.

At the end of last year, Wallace and Timothy Perri from the Appalachian State University in Boone, North Carolina noticed that 39 predatory journals were listed on the database Research Papers in Economics (RePEc). After some digging, the pair identified just under 1,300 papers published last year in predatory journals in RePEc, submitted by close to 2,800 authors.

Although only around 5% of the study’s sample authors who’d published in predatory journals (124 individuals) were registered with RePEc, 27 (around one-fifth) are listed among the top 5% of RePEc-registered authors. ...

 

Mark McCabe, an economist at Boston University in Massachusetts and SKEMA Business School in Sophia Antipolis, France, raised some doubts over whether the findings truly represent how often the field’s top researchers are publishing in predatory journals. For instance, the top 5% in RePEc may not represent the true top 5% of the field, he noted:

1.  In what type of non-predatory journals are these (top 5%) authors publishing papers (the difference between predatory and non-predatory can be very small)?  Impact Factors?  Publishers?  etc.  Are any of them among the top 100 journals in economics?

2. What are the institutional affiliations of [these] (top 5%) authors?  Any top-ranked economics departments or business schools?

3.  Where is the list of the predatory journals in which these 148 papers were published?

Jeffrey Beall, a librarian at University of Colorado Denver and the creator of Beall’s lists, noted: 

Actually, a broad range of people submit to predatory journals.

He added that he was also hesitant to draw too strong a conclusion from these findings:

I see this study as preliminary, and I am not sure it contains strong evidence.

Asked about the criteria RePEc uses to rank researchers, Wallace pointed us to this paper, which outlines the process RePEc uses to rate authors registered on the site using factors such as the number of papers, citations received, journal page counts, and views and downloads statistics.

Wallace argued that he believes that a high ranking in RePEC is something the field takes seriously:

I’d blow my own horn if I was listed as a top 5% researcher. I’d include it in my annual report every year.

via retractionwatch.com

I've read the paper (I prefer this link) and the evidence it presents is quite strong. The evidence is an accounting exercise, matching journals from Beall's list to economists on the RePEc list. There is no fancy analysis. If you don't like the evidence then you must think there is something wrong with one of the lists. I know of no other list of predatory journals. The RePEc economist ranking list is objective (here is a paper that critically examines the rankings) and includes everyone who wants to be included (you must be a registered RePEc author to be ranked). So, the questions from Dr. McCabe are easily answered:

1. https://ideas.repec.org/top/top.person.all.html
2. https://ideas.repec.org/top/top.person.all.html
3. http://www.env-econ.net/2016/09/a-new-paper-on-predatory-journals-in-economics-repec.html

For evidence that RePEc rankings are taken seriously, here is Matt Kahn: 

From a worker's perspective, if you earn a good reputation at one firm --- how do you cash in on this fact with firms that don't know you have a good reputation? How do you signal your quality? In the past, an Ivy League degree or a Mensa membership card helped but in this economy --- will workers soon have a vector of crowd sourced metrics that they can display to potential employers? A future labor economist could then run hedonic wage regressions to test how the labor market rewards each of these metrics.

This world already exists in academic economics.  REPEC does a pretty good job of ranking us.  For those at public universities, you can look up our salaries and correlate it with our REPEC rankings. You will see a very high positive correlation.   Academic economics can be modeled pretty well as  a perfectly competitive labor market.  There is an element of crowd sourcing to REPEC rankings as citations and paper downloads are some of the metrics used to create the single index of economist "quality".

And for evidence that "I'd blow my own horn if I was listed as a top 5% researcher", here again is Matt Kahn:

REPEC provides an objective measure of who is "Royalty" in the economics profession.  The current list of the top 5% is here.   I am ranked #681 out of 27,365 economists so that's not bad (and my 3 books aren't counted here).

I'm at that point in my career where I'm ready to do something absolutely crazy

And, as always, Matt Kahn makes a timely suggestion:

In the past, I've done some writing on social capital and civic engagement.   I just put the theory to the test by volunteering to serve on USC Econ's PHD Admissions Committee.     USC Economics is world renown for its excellence in econometrics.   With Antonio Bento, Dana Goldman, me and Arie Kapteyn now all at USC (and many other research active Price School faculty),  a talented student can take his/her knowledge of econometrics and apply it to the economics of aging, health, the environment and cities.  There are many exciting possibilities and permutations here.  I strongly encourage serious students to apply. I'm especially interested in attracting students who are graduates from U.S undergraduate institutions.  Please contact me if you have any questions.

For those of you who already have a Ph.D., perhaps it is time for you to do a refresher course to see if you are still at the frontier. It is sunny and 80 degrees today on November 18th 2015 in LA. Can you say the same thing about where you are now standing?

via greeneconomics.blogspot.com

Yes, I'm definitely within the frontier. What could be a better challenge than applying to the PhD program in a top economics department and doing the whole g.d. thing all over again? Of course, I'll need to bone up on my maths. I stopped at integral calculus as an undergrad but it should be fun taking real analysis and whatnot from the folks in Walker Hall. After I get accepted I can only hope to get an assistantship that would allow me and my family to live in the sunny city of angels for 6+ years. But dang, I'm just so excited about thinking a dissertation topic that would apply my new world renown econometrics skills (I've always wanted to be able to write out my own likelihood function in "matlab" ... [is that what the kids call it?]) to some hedonic data!!! And then I could jump in the labor market and go for that R1 job that I've always dreamed about. But, I also have location preferences. I hear that the weather is always wonderful in southern CA. 

Congratulations to Matt!

Matt Kahn:

Based on a ranking of all of the world's economists based on one's publications over the last 10 years, I rank #257.  Based on this ranking, you can take a look at my peers.   Some of these folks are pretty good.  Based on this criteria, I'm ranked #2 among all UCLA economists.  Sounds right to me.

via greeneconomics.blogspot.com

Only a chump would buy this book

Day 3 of the great textbook giveaway experiment:

To celebrate my first day Visiting NUS next week,  I will be giving away free copies of my Fundamentals book on Monday 8/26/13.   The new version now includes a good example of a regression discontinuity design (for testing for whether California's energy efficiency laws have caused the Rosenfeld Curve) and many other ideas that closely link micro environmental economics to basic econometrics.   Since 99.9% of the economics profession has never read an environmental textbook, I figure that there are a lot of possible sales here.

via greeneconomics.blogspot.com

Here are the first and second giveaway laments.

What I did on election night*

At the risk of angering the gods ... KAAAAAAAAAAAAHHHHHHHHHHHHHNNNNNNNNNNNNN:

Jerry Hausman is a straight shooter.  In this well written Journal of Economics Perspective piece, he presents  a coherent critique of contingent valuation as a credible tool for valuing non-market goods.    Long live hedonics?

via greeneconomics.blogspot.com

Nothing wrong with hedonics. Nothing at all. Move along folks. And, weirdly, as it turns out, a number of studies find convergent validity between contingent valuation and hedonics (and other revealed preference methods). It must be pure coincidence. Luck. Happenstance.

Listen. Listen to me! Most economists who engage in stated preference method trashing engage in the weakest and emptiest sort of academic criticism. My favorite discussant comment received at a conference is "I wish there was a better way to do this" preceded by the classic "I don't like it when economists ask hypothetical questions." Classic. This seems to be enough of a criticism for many economists. Weak.  

Three quick comments on Hausman's well written piece. He dismisses contingent valuation because of hypothetical bias, the WTP-WTA divergence and CVM studies that don't pass the Diamond-Hausman adding up test:

1. When hypothetical bias exists, and I believe it does in many studies, it is systematic and readily adjusted for accuracy. In benefit cost analysis sensitivity analysis is a useful way of adjusting numbers that you know to be wrong (and there are plenty of these wrong numbers in most benefit cost analyses). With CVM estimates, there are a number of ways to adjust these upward biased WTP estimates downward (see Loomis) and a number of studies find that the adjustment procedures are accurate. 
2. Willingness to pay is less than willingness to accept because there are not many good market substitutes for many public goods and willingness to accept is not income constrained. If I'm selling my car I start the bidding high. Hausman doesn't reference Hanemann. Google scholar says that 970 others have. 
3. As far as I can tell, the only thing in economic theory to guide a scope test is that willingness to pay should be nondecreasing in quantity or quality (more is better and free disposal). More restrictive tests can be developed and the Diamond-Hausman test is a neat one, for sure, but failure of these tests should also cause one to wonder if the test is too restrictive. Hausman notes that Heberlein et al. admit that some contingent valuation studies fail to find scope. He doesn't mention that they also argue that scope shouldn't be the most critical validity test. I don't really agree with Heberlein et al. about that but Hausman leaves the impression that Heberlein et al. are happy to walk away from contingent valuation. They aren't. 

I've conducted n = I don't know how many contingent valuation and other stated preference studies. Much of my research time these days is spent trying to figure out ways to deal with hypothetical bias in stated preference data. I imagine I know the problems of the method better than most. There are problems with contingent valuation, just like there are problems with revealed preference methods. But these problems are not intractable. 

It is an insult to the research process and spirit of inquiry for an AEA journal to allow a top economist to "selectively review the contingent valuation literature" (p. 43), somehow miss well-cited studies that provide contrary evidence, and declare a method for assigning values "hopeless" (I'm truly surprised that the Journal of Economic Perspectives editors allowed that title). Proof by potentially outlying counter example isn't good social science. 

Oh, and you guys should read this book. 

Comments open. Straight shooters with coherent comments welcome. 

*I was trying to take my time with the JEP symposium, focusing on the election by reading Deadspin's coverage and watching Tosh reruns, but Matt's post set me off. Sorry Matt, nothing personal: wrong place, wrong time. As the athletes say these days, it is what it is. 

We're part of a new enlightenment

From the inbox:

I'm following up with you about the list EconomicsDegree.net has published of the Top 100 Sites for Enlightened Economists.

I emailed you last week to let you know you'd been nominated, and I'm pleased to report that your site made the Top 100. You can view the list here: http://www.economicsdegree.net/enlightened-economists/

...

While our site is geared toward prospective students in economics, and they will no doubt find this list to be useful, we also published it to benefit all readers interested in economic topics. Congratulations, and thanks for maintaining such a useful site!

And from the description of env-econ:

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.

via www.economicsdegree.net

Small quibble: I prefer to think of myself as an environmental economist rather than an economic environmentalist. 

The latter just sounds like a cheap tree hugger.

Oh, and we're rated ahead of Kaaaaahhhhhn.

I assume that means we're more enlightening.

Just sayin'.

I thought Tim and I were the only ill-informed and self-serving environmental economics bloggers?

Matt Kahn:

The Sacramento Bee has published an opinion piece that I wrote with Bo Cutter.   We argue that California's AB32 (the legislation intended to sharply reduce the state's greenhouse gas emissions) is off to a good start.  While AB32 embodies many different rules and regulations, I view it as essentially creating a new set of "rules of the game".   Households and firms are continually making investment decisions.  Rational investors should anticipate that this regulation will tighten energy efficiency standards, fuel efficiency standards, and it will induce changes in land use patterns, changes in the pricing of electricity and changes in requirements for renewable power to be a larger share of the electricity mix.     Some households and firms will easily and happily adapt to these new rules while there are other households and firms who will face greater compliance challenges.    I am well aware that no regulation is ever a "free lunch". 

I am a big believer in "induced innovation". This AB32 regulation will induce innovation that will "bend the curve".   I am highly optimistic that the combination of California smart engineers, entrepreneurs, venture capitalists and committed environmentalists  will co-ordinate through free markets to figure out next generation technologies for buildings, cars, power generation that uncouple economic growth form carbon dioxide production.  In the absence of AB32, there would not have been the "nudge" for the venture capitalists and the engineers to direct their scarce time and talents towards this sector.   In the absence of Federal legislation, we as a society need someone to be the "green guinea pig". As I have said many times,  the rest of the nation should thank California and send us a check for providing public goods (i.e new ideas) for the rest of the nation and world. 

Matt Kahn again (perhaps taking offense with this quote "The rosy message propagated by ill-informed and self-serving proponents is the real fairy tale."):

In today's Sacramento Bee, Andrew Chang has some tough things to say about California's AB32 and about Bo Cutter and myself.  He omits some details that are worth mentioning.  ...

Point #1:  We were not paid to write our OP-ED and we collect no payments at all from the Air Resources Board.  I do serve on its Research Screening Committee and I am paid $400 a year for the work (roughly 20 hours a year).

Point #2:  Dr. Chang does not reveal how much his firm was paid for their "study" but I guess his firm was paid around $100,000.  He has the right incentives to push his case that AB32 will end the world.

Point #3:  Dr. Chang refers to us by name but doesn't mention that we are academic economists.  The words "UCLA" and "Pomona College" do not appear in his piece.   Are all economists' opinions about economic issues weighted equally by the public?  Do we all have equal expertise about topics?  UPDATE: I now see that nobody at their firm has a Ph.D. and one of their associates graduated from Pomona!

Point #4  Here is  a direct quote:

"The California Air Resources Board acknowledges AB 32 will result in a net loss of up to $35 billion in gross state product, while researchers at Andrew Chang and Co. found that California will lose $153 billion, even under optimistic conditions."  

So, in a state with 40 million people, he is predicting that every man, woman and child will lose roughly $4,000 each from this regulation? I would like to hear a simple story for how this can happen?   The typical household spends roughly $1,600 a year on gasoline and $1,000 a year on electricity.    Under what scenarios, do these costs more than double under AB32?   I am an open minded scholar.  Can he tell a simple story about how this well meaning regulation translates into price gouging? ...

I agree with Mr. Chang that regulation is never a free lunch.  Where we disagree is about what is the engine of growth of the California economy and I am much more optimistic than he is about our state's ability to adapt to changing market and economic incentives.  He wants to protect the polluting firms and I want to nudge them to take a second look at their production and transport processes.  A gradual but credible introduction of cap and trade will achieve my goals.

What are his goals? He appears to want to keep his clients happy.  Who are my "clients"?The children of California!

 

"Q&A with UCLA's Matthew Kahn"

I'll be watching this today and "liveblogging" in the comments section:

"My unsexy bumper sticker for adapting to climate change," says UCLA Professor of Economics, the Environment, and Public Affairs Matthew Kahn, "is 'Give free markets a chance!'"

Kahn, the author of Climatopolis: How Our Cities Will Thrive in the Hotter Future , argues that "well-meaning government actions" designed to combat the effects of global warming need to be scrutinized more than they have been. Despite the hostility to markets and economic development shared by many green activists, Kahn says that "free-market capitalism" provides the most flexible - and most progressive - solution to environmental issues. Climate change is coming, he avers, and raising the urban poor's standard of living and generating new technological innovations will do far more to improve things than top-down attempts to control energy use and consumption patterns.

via reason.com

Keystone

Matt Kahn:

An interesting debate is playing out between the NY Times Joe Nocera and Joe Romm and friends.  You can read the details here.  I would like to add one simple point.  When has a boycott succeeded?   If Canada doesn't sell us their fossil fuel, will it really sit in the ground and not be consumed?   Global GHG emissions would be lower if such natural resources weren't tapped.  This is really an issue of transportation costs and economic incidence.  If the pipeline had been built connecting Alberta, Canada to U.S consumer destinations, what would have been the gains to trade?  In the absence of this pipeline, will this natural resource now be shipped to Asia?  At what transportation cost and what are the gains to trade?  So, does not building the pipeline have a causal effect on the dirty resource staying in the ground?  China smells an arbitrage opportunity here and is stepping in.  Have well meaning greens defended their "line in the sand" or have they merely diverted oil that will be consumed anyway?  World trade poses a challenge to the boycotters.  

Follow the "details here" link above for some interesting reading. And for one reason why Joe Romm has a strong distaste for economists, from the Kauffman Foundation (emphasis added):

For the Kauffman Economic Outlook: A Quarterly Survey of Top Economics Bloggers of 2012, the Kauffman Foundation sent invitations to more than 200 leading economics bloggers as identified in the Palgrave's econolog.net December 2010 rankings about their views of the economy, entrepreneurship, and innovation.

Looking ahead, only 33 percent now anticipate U.S. poverty to increase in the next three years, a significant positive change from previous surveys. Respondents also believe that employment and global output will rise faster than anything else and, surprisingly, some expect a higher marginal tax rate.

When asked to identify policy options to stimulate the economy, top economics bloggers overwhelmingly supported approval of the Keystone XL pipeline, with 77 percent in agreement (25 percent strongly agreeing), and 75 percent favor opening up more domestic areas to oil and gas exploration and drilling. Other preferred policy recommendations included giving states flexibility to set their own minimum wage (67 percent agreeing) and the revenue-neutral adoption of a value added tax (58 percent agreeing). Opinion remained split on raising the top marginal income tax.

I was one of those bloggers who favored the pipeline. I agree with Matt in terms of Keystone climate policy. Until there is a carbon tax or cap-and-trade, climate policy via restrictions on energy supply seems like a waste of time.

Can one favor strong climate policy, all the while supporting projects that product energy? I think so, as long as all of the benefits and costs of the energy project are accurately included in the analysis. In the case of Keystone I'm not sure, but it seems like the potential environmental costs could be efficiently internalized.