Environmental and Urban Economics

Does Terror impose equal risks on all people in the United States? It seems clear that urbanites who live and work in dense, coastal areas are at greater risk to bear the costs of the next surprise attack.

A cliche from the last presidential election is that the Republican majority is based on rural votes and suburban votes. If urbanites vote for the Democrats, then under Republican rule do urban threats receive the efficient amount of Homeland Securty funds to protect them from anticipated threats?

What do the words efficient amount here mean? We would need to prioritize what threats we face and know what is the production function mapping an increase in Homeland Security expenditure on activity j into how much this expenditure reduces terror risk.

In 2001, the Nobel Prize in Economics was awarded for research on asymmetric information. I didn't win this prize but I do see the relevance of this research for the current debate concerning the UAE purchasing port access in many of our major cities.

You don't have to be Joe Stiglitz to appreciate that these companies know that they have private information about what goes on in their business. Homeland Security will not be able to monitor them 24 hours a day 365 days a year.

Too much of modern environmental economics focuses on localized externalities such as air and water pollution. I wonder if this interesting New York Times editorial reported below highlights what 21st century environmental economists will focus on? In a Globalized economy where people come and go. If a poor nation's weak governance means that it doesn't handle public health challenges then these problems become rich nation's problems.

Migration and global travel spread risk.

There is an interesting economics literature vaguely titled as "lulling". If New York City's Central Park is now viewed as safe, then muggings there could actually increase as more people go out for Midnight jogs during good weather.

An unintended consequence of safety regulation is that people can be "lulled" into thinking the product is safe and this leads them to reduce their own costly precautionary actions.

I wonder if I'm the only blogger who sometimes runs low on ideas worth posting? To fill this void, here I post the introduction of a new working paper of mine. For a low price, you will soon be able to download: "Environmental Disasters as Regulation Catalysts? The Role of Bhopal, Chernobyl, Exxon-Valdez, Love Canal, and 3 Mile Island in Shaping U.S. Environmental Law".

INTRODUCTION

Unexpected events such as environmental catastrophes capture wide public attention.

An interesting economics debate has asked whether a nation's endowment of natural resources is a "curse" or a "blessing" for economic development? Jeff Sachs has argued that in South America nations endowed with a lot of oil and other natural resources experience slower economic growth. Gavin Wright's historical examination of the United States (a nation with a lot of natural resources) convinces him that Sach's thesis does not generalize.

We teach comparative advantage in all of our courses but do we believe that it applies in our own lives? If ability were truly one dimensional, then the best economists would be the best chess players, the best cooks and the best University Presidents. In recent years, Jim Heckman has devoted considerable research (see http://www.nber.org/papers/w12006) on this topic. It builds on his re-examination of Charles Murray's Bell Curve.

Harvard is a great University. I taught there from 1996 to 1998 and I was married in its Faculty Club. That said, the world spends too much time thinking about this place. I asked my father why the New York Times devotes so much ink on this one joint. He said: "Everyone has either gone there or been rejected by them." I hope that Larry Summers enjoys seeing his name in the New York Times.

Randy Crane of UCLA has started up a new urban planning blog (see http://planningresearch.blogspot.com/ ). It is quite thought provoking.

Today Columbia University's student newspaper has a piece that hints at the endowment effect. If you live in a NYC rent control apartment, how much should your landlord be allowed to raise your rent each year? The article hints that the incumbents have a "constitutional right" to stay in their apartment regardless of market signals and opportunity cost.

It seems to me that the economics profession is dividing. This isn't the old "Keynesian/neo-classical macro divide". Smart people will disagree over what is the "best new work" depending on whether they are structural or reduced form researchers, behavioral or neo-classical researchers, and whether they do non-experimental or experimental applied work.