Tuesday, April 25, 2006

Jane Jacobs and Urban Diversity

I first heard about Jane Jacobs' work from Ed Glaeser when he was starting to write his well known JPE paper (1992) testing whether more diverse or more specialized cities grow faster. Glaeser's Dream Team of co-authors found that "Jacobs beat Marshall-Arrow-Romer". More diverse cities grew faster.

Why could diversity foster economic growth? In a dense, diverse city such as New York City, firms could learn from each other and synergies could be realized. In today's sprawling office parks, is there less cross-firm learning? We see Microsoft building and expanding its enormous corporate campus near Seattle. Clearly, learning is going on within this firm but not across nearby firms.

Diverse cities are also more likely to be diversified. Such cities (unlike a Houston) do not put all of their "eggs in one basket". This should mean less volatile local unemployment rates.

Such diverse cities may also enjoy a Richard Florida effect. This author has celebrated the importance of the creative class in making a city thrive and be interesting. It is intuitive that diverse cities (think of San Francisco and NYC) are more likely to score higher on the Richard Florida index.

What I find interesting about Jacobs' work is celebrating the benefits of diversity. Perhaps unfortunately, in my own work --- I have investigated the "costs of diversity" namely that people are less likely to be good civic citizens when other people in their community (broadly defined) do not look like them on income and racial attributes. For a good survey see: http://www.nber.org/papers/w10313
and papers on social capital here:
http://web.mit.edu/costa/www/papers.html

Monday, April 24, 2006

Los Angeles Earthquake Preparation

My wife and I were having a deep discussion the other day about how many natural gas explosions there might be in Los Angeles if a serious earthquake took place. I argued that this type of contingency is predictable and the smart government officials in Los Angeles must have installed a plan to handle this contingency. My wife wondered if my faith in government was over-stated.

Today, I found this link: http://www.socalgas.com/safety/valves.shtml

I'd like to know whether the gas company on its own, or with prodding from government, came up with this implicit "insurance policy"? Perhaps due to fear of liability, the company on its own has designed what appears to be a good plan. Perhaps the 1906 San Francisco disaster provided some clues over what to avoid.

This must be the tip of the iceberg but I can't think of other "Homeland security" steps to allow the people of LA to sleep well at night.

Saturday, April 22, 2006

The Household Level Ecological Footprint

Classes at Tufts end next week. I am ready for summer time. I need the peace and quiet to write 6 different papers that I had thought i would have finished by now. I have fallen so far behind on my tasks that I've stopped blogging for weeks now. I'm sure you've noted my absence!

I was going to write an entry on what factors determine whether an ambitious economics department moves up in the "rankings" and enters the top 20 or top 10. As I sat down and thought about the topic, I realized that I didn't have that much new to say on the topic. Some schools up, some schools move down but most schools stay ranked about the same. What interests me here is the co-location problem (that favors schools in big cities), and the rising demand for amenities (that favors California schools). To my surprise, many public universities have continued to compete well against private schools even as pay for superstars has soared.

With earth day approaching, I thought I'd point everyone to this site for you to have your own private "minute of shame"

ttp://www.earthday.net/Footprint/quiz.asp

The Household Level Ecological Footprint

Classes at Tufts end next week. I am ready for summer time. I need the peace and quiet to write 6 different papers that I had thought i would have finished by now. I have fallen so far behind on my tasks that I've stopped blogging for weeks now. I'm sure you've noted my absence!

I was going to write an entry on what factors determine whether an ambitious economics department moves up in the "rankings" and enters the top 20 or top 10. As I sat down and thought about the topic, I realized that I didn't have that much new to say on the topic. Some schools up, some schools move down but most schools stay ranked about the same. What interests me here is the co-location problem (that favors schools in big cities), and the rising demand for amenities (that favors California schools). To my surprise, many public universities have continued to compete well against private schools even as pay for superstars has soared.

With earth day approaching, I thought I'd point everyone to this site for you to have your own private "minute of shame"

ttp://www.earthday.net/Footprint/quiz.asp

Saturday, April 15, 2006

Exciting Environmental Economic Research on Arsenic Contamination of Groundwater in Bangladesh

On April 7th, I attended a great NBER environmental economics conference. If you would like to the see the papers presented take a look at this link.
http://www.nber.org/~confer/2006/ees06/EEs06prg.html. I'm hoping that ABC's 20/20 might run a show about our next conference!

I wanted to briefly blog about Pfaff et. al. paper on Arsenic Contamination of Groundwater in Bangladesh. The public health officials are convinced that this is a serious problem. Pfaff's team did something real simple. They tested local water wells for arsenic. If they discovered high levels of arsenic, they notified the locals who were drinking this water. Economists study choice. Here the choice is whether a person switches water wells when notified about pollution at their current choice. Pfaff finds a huge "treatment effect". The probability that a random household switches wells increases 50 percentage points when it is notified that the well is "poisoned".

This research highlights the role that information can play in changing household behavior and mitigating the damage from pollution exposure. Of course, there remain important questions of what these households who switch, switch to?

Our ability to adapt as we learn is a key parameter in environmental economics yet we know so little about it. Economists are optimistic that people respond to incentives but we need to continually estimate the degree to which this is true.

Monday, April 10, 2006

The Geography of New U.S Nuclear Plants

Should the U.S follow France and produce more electricity using nuclear power? How much power? Where should these nuclear power plants be located? Upwind of New York City and Boston? Have people gotten over their fears of Three Mile Island and Chernobyl? Has technological advance made enough progress to sharply reduce the probability of future "meltdowns"?

This NYT article below argues that some small southern towns are trying to lure nuclear plants to locate there. Is this a "domestic pollution haven"? Or do these towns project that by luring such plants that they will have a "multiplier" effect lowering the price of local energy and attracting other businesses that are energy intensive?

April 10, 2006
Town Sees Nuclear Plans as a Boon, Not a Threat
By RICK LYMAN

GAFFNEY, S.C. — Bill Whelchel, working the main chair at Elmore's Barber Shop on Limestone Street, paused the clippers above his customer's half-sculptured crew cut to consider the question of atomic energy.

"I'm not worried at all about putting in a new nuclear power plant," said Mr. Whelchel, 76. "We're used to nuclear power around here. Plus, it'll create jobs, and one thing I've learned is that working people are happy people."

More than a quarter century after the accident at Three Mile Island and two decades after Chernobyl, America's utilities stand at the early edge of what promises to be the first large-scale wave of nuclear plant construction since the 1980's.

And the energy companies are finding — especially in the small, struggling Southeastern towns like Gaffney where most of the plants are planned — that memories of those tragedies have faded and that local governments and residents, eager for jobs and tax revenues to replace vanished industries, are embracing them with enthusiasm.

Indeed, none of Mr. Whelchel's half-dozen customers said they had any problem whatsoever with the idea of a nuclear facility going up down the road.

"I can't remember hearing a single negative comment from any local resident," Cody Sossamon, publisher of The Gaffney Ledger, said as he sat in his office out near the highway.

Driven partly by federal Department of Energy projections that demand for electrical power will increase 50 percent by 2025, and by recent federal legislation offering a more streamlined application process and financial incentives for new nuclear facilities, many utilities are eager to get back into the atomic business.

"We initially were looking at 14 communities in the Southeast, and then we narrowed that down to four," said Henry B. Barron Jr., chief nuclear officer for Duke Power, which announced last month that it would apply to build its first new nuclear plant in three decades just outside Gaffney. "I found no single individual who had any concerns about the plant. The few who did have concerns were worried about increased traffic on the roads during construction."

In a March report, Fitch Ratings, a global financial research company, said: "It is no longer a matter of debate whether there will be new nuclear plants in the industry's future. Now, the discussion has shifted to predictions of how many, where and when."

How many remains to be seen. Nine utilities have said they will apply to build as many as 19 new nuclear units, but that does not mean all of them will be built.

As to where, the list includes every state south of Maryland that touches either the Atlantic Ocean or the Gulf of Mexico, except Texas, and one facility in central Illinois. And the sites tend to be in rural counties whose hard-pressed small towns — like Gaffney, population 13,000 — clutch at the chance for new jobs and tax revenue.

"The timeline that Duke gave us was that the application process would take three to five years," said James P. Inman, executive director of the Cherokee County Development Board, which led the local drive to attract the new plant. "Then they'd build the first unit, and it would go online around 2015. At least, that's the least optimistic projection. We think it could happen as early as 2012."

Wanting the plant was a no-brainer for Gaffney, Mr. Inman said.

Some 1,500 new jobs are expected in the construction phase of the $4 billion to $6 billion facility, and then running the plant will take 1,000 employees. In addition, the plant is to pay $8.5 million in annual taxes, to be split between the county and the state.

"You add to that the new home construction and the new businesses and it looks to be a really good things for this community and this county," Mr. Sossamon said.

If residents of the communities do seem eager for the plants, it is not entirely unanimous. The Blue Ridge Environmental Defense League, based in North Carolina, said earlier this month that it intended to oppose construction of the plant outside Gaffney.

To attract Duke, county officials agreed to a package of financial incentives, pretty much the same combination of tax breaks offered by the other counties in North and South Carolina that were finalists for the plant. But Gaffney also promised to establish new science, math and engineering courses in local schools to make sure Duke finds people to hire if the plant opens.

"We're looking at the kids who are in fifth grade," Mr. Inman said. "Those are the ones who need to start getting ready now for the jobs that are coming. That way they won't have to move away to find work if they don't want to."

Founded in 1803 at the intersection of two Indian trails and named for the first man to open a store here, Gaffney has seen better days. For decades, textile mills dominated the town, employing thousands of local residents.

But now all of the big old mills have closed. From 1999 to 2003 alone, 2,500 textile employees lost their jobs. A few smaller companies have come in to build newer and smaller mills, but now the biggest employer is a Stouffer's frozen food plant on the outskirts of town.

Gaffney's downtown today is a grid of small gift shops, bank branches, pawnshops and dozens of empty storefronts. On a recent weekday morning, Elmore's Barber Shop had the biggest crowd. The only crane rising above downtown was in the process of tearing down the last of the big textile mills.

For those from outside the area, Gaffney is probably best known for the annual South Carolina Peach Festival, for the huge water tower beside Interstate 85 in the shape of a giant peach and for the sprawling outlet mall — roughly midway between Charlotte, N.C., and Spartanburg, S.C. — that locals call the "yellow mall," for its egg yolk color.

The prospective plant site is about a half-hour southeast of town, on 2,000 sloping acres beside the Broad River that Duke had previously considered for a nuclear plant, 30 years ago, before declining demand and increasing public anxiety about nuclear power caused them to drop the plan. The land had since passed into the hands of another utility, the Southern Company, which will be Duke's partner in the new facility.

L. Hoke Parris, who retired from a local brick-making factory before beginning a political career that has seen him become chairman of the Cherokee County Council, said he was not surprised that the town and its residents had no problem welcoming atomic energy into their community.

"The financial impact here will be phenomenal," Mr. Parris said. "Right now, downtown's pretty much dead. Pretty much all we've got is Wal-Mart and the yellow mall."

Besides, he said, there have been nuclear facilities around the region for decades, and he thinks residents in the Carolinas have gotten used to them.

"I think people are just pretty much comfortable with nuclear power in this part of the country," Mr. Parris said. "We're getting farther away from Chernobyl and Three Mile Island."

Friday, April 07, 2006

Events as Catalysts: Evidence from Duke University

My son keeps telling me that after the Titanic sank in 1912 all subsequent passenger ships were required to have a lifeboat seat for each passenger on board. Such an ex-post response is the tip of the iceberg. Shocks such as 9/11, Enron's meltdown, Bhopal, coal mining accidents that are publicized, new drug fatalities (i.e vioxx) all appear to trigger serious responses.

Rarely are they "written off" as flukes that won't take place again. Instead, our inner Bayesian updates our priors based on observing the shock. Such events can become cultural focal points if everyone is talking about them then they may grow even more concerned.

This NYT article below about Duke suggests that this Major research university has become preoccupied with this issue. I feel for their Dean of Admissions. We will have to see what their matriculation rate this year is relative to other years. The timing could not have been worse.

I would also want to hear the President's graduation day talk and how he modulates between celebrating the graduates and pontificating about the lessons learned from this salient event.


April 7, 2006
Duke Grappling With Impact of Scandal on Its Reputation
By KAREN W. ARENSON

DURHAM, N.C., April 6 — Duke University is widely considered one of the great success stories in higher education, having transformed itself from a respected regional university with a history of segregation into a selective research university on a par with the country's most elite institutions.

But now as university officials grapple with accusations that three white members of the lacrosse team sexually assaulted a black woman, officials fear that the events could affect how many recently accepted students — particularly women and blacks — will enroll. They have scoured the e-mail messages that roughly 600 alumni have sent to monitor opinion. And they say they worry that everything they have accomplished across several decades could be at risk.

"This event served as a lightning rod," said Robert J. Thompson Jr., vice provost for undergraduate education and dean of the undergraduate college of arts and sciences, pointing to underlying issues of race, class, sex and privilege.

"It tapped into underlying feelings that existed," Mr. Thompson said in an interview, adding, "Whatever we have been doing to address these problems has been insufficient and needs to be redoubled and tripled."

The stakes are reflected in the breadth of the university's response Wednesday after Durham County authorities disclosed an e-mail message, sent less than two hours after the alleged rape, in which a lacrosse player said he wanted to invite strippers to his room, kill them and cut off their skin.

Richard H. Brodhead, Duke's president, canceled the men's lacrosse season and accepted the coach's resignation. He also announced creation of several in-depth investigations — not only into lacrosse, but also into his administration's handling of the accusations and into the campus culture, especially drinking.

Peter Lange, Duke's provost, who has watched the university's transformation in his 25 years here, said, "I only hope that after we get through this that we can restore and expand the real character and reputation of the institution."

Christoph Guttentag, director of the office of undergraduate admissions, said he would not know until May how many students had decided to enroll in the fall. "We'll be paying attention to the responses over all and group by group," Mr. Guttentag said.

Duke had 19,358 applicants this year and admitted 19 percent of them. The university has 6,200 undergraduates.

From the start of the two-week-old crisis, administration officials have said they have been hampered by uncertainty about what actually happened at the March 13 off-campus party for which the lacrosse players hired the woman to strip. The woman has said she was assaulted in a bathroom by three team members. The players say that they are innocent and that they will soon be vindicated by the results of DNA tests.

"The issues at root are very serious and are a source of outrage," Mr. Brodhead said in an interview, "and yet we know we need to balance that against waiting until the facts are established, and each day brings fresh surprises."

But critics have called the Duke administration's response slow and insufficient. Houston A. Baker Jr., a black professor of English and of African and African-American studies, in a letter before the latest e-mail message emerged, accused the university of "a tepid and pious legalism."

"All of Duke athletics," Mr. Baker wrote, "has now been drawn into the seamy domains of Colorado football and other college and university blind-eyeing of male athletes, veritably given license to rape, maraud, deploy hate speech and feel proud of themselves in the bargain."

A full-page advertisement in the college newspaper on Thursday, taken out by the department of African and African-American studies along with other departments, called the situation a "social disaster."

Duke was for decades a bastion of Southern privilege that worked to broaden itself and started attracting some of the best students from outside the region.

It also sought diversity. From 1994 to 2004, Duke doubled the number of black faculty members, to about 80, or about 3.5 percent of its faculty. In 1984, 91 percent of its incoming class was white and 9 percent of the class members identified themselves as students of color. Last year, 10 percent of the incoming class was black, 7 percent Latino and 20 percent Asian-American.

Looking back, some Duke officials said they had inklings that the university's athletic culture — and particularly the lacrosse team — could bring problems.

In early December, the president, the provost and the executive vice president met with members of their audit committee to analyze what could go wrong on campus and how they would handle it. Athletics was an area of possible concern, along with health care quality and billing, relationships with Durham, research practices and some kind of catastrophic event.

"I think the thing we were most worried about was that something could happen in athletics," said Tallman Trask III, the executive vice president. "We didn't know what or how. But Duke athletics are on a pedestal, and the higher you climb, the faster you fall."

Mr. Trask, who helps oversee the athletic functions at Duke, said that the fact that so many lacrosse students had received notices of violations for misbehaving — 15 in three years — had been a kind of red flag. "I pulled all their disciplinary records a year ago," he said, adding that he had found 13 citations for holding malt cans in public and 2 for public urinating.

"In hindsight, do I wish I had done more?" Mr. Trask asked. "It is a stretch to get from their previous boorish behavior to gang rape."

William G. Bowen, the president of the Andrew W. Mellon Foundation, who has been the co-author of two books about what he sees as deeply rooted problems with college sports, said the problems at Duke could have happened anywhere.

"If you recruit aggressively, as Duke does in lacrosse, then you are going to end up with a group of students who are there primarily to play their sport," said Mr. Bowen, one of two people named by Duke to investigate how the university had responded to the accusations against the lacrosse team. "That's their focus. That is why they were recruited, why they were admitted. Then if you allow them to hang out together, to live together, you get a group of people largely cut off from the values of campus."

Several top Duke officials, including the president, argued that big-time sports was not at the heart of the problem. "The notion that this kind of behavior is confined to athletes is just not so," Mr. Brodhead said.

Student reaction is divided. Shawn Brenhouse, a white junior from Montreal, said that he saw no racial tension on campus and that he did not believe that the current problems would be a blot on Duke's prestige.

"When it's over, we'll remember it," Mr. Brenhouse said. "But it's not something we will stress on."

Taiesha Abrams, a black freshman from Brooklyn, said she had not had any problems on campus. But she said one of her black male friends, "a big guy but not an athlete, found that when he walks around, white women look at him and are scared."

"If racism is a problem," Ms. Abrams said, "then we need to act on it; both races need to work together to change Duke."

Thursday, April 06, 2006

Hybrid Cars Besides For the Prius

Why have Japanese car makers been leaders in developing "Green cars" such as those mentioned below? How much higher are gas prices there relative to the U.S? At the end of the article there is a discussion of the roughly $5,000 subsidy U.S drivers receive for buying such hybrid cars. I have not seen a cost/benefit study examining the size of the "social benefits" of purchasing a hybrid versus a conventional (i.e reduced greenhouse gas emissions and local air pollution) relative to this subsidy. In the year 2015 will this subsidy still exist or was this meant to be an incentive to lure people to experiment and buy these hybrids and it will be phased out in the future?


April 2, 2006
Behind the Wheel
Honda Accord and Toyota Camry: Hybrids for Ozzie and Harriet
By JIM MOTAVALLI

RELIABLE, practical and popular, the Honda Accord and Toyota Camry are as mainstream as white bread and as exciting as mom's meatloaf. But hybrid technology has transformed versions of these family cars from conservative appliances into cutting-edge green machines.

Having redesigned the Camry for 2007, Toyota joins Honda in offering a midsize sedan with a hybrid gas-electric powertrain. Honda, meanwhile, has freshened and mildly restyled its Accords, including the hybrid.

While both cars wear hybrid labels, Toyota's approach is markedly different.

The Accord was the first hybrid built around a V-6 gasoline engine, and it has emphasized performance over economy — as have the Toyota Highlander Hybrid and Lexus RX 400h that came later, also with V-6's. But in the Camry Hybrid, Toyota uses a four-cylinder engine, which it paired with an electric motor more powerful than Honda's. The Camry can be expected to attain significantly higher mileage, especially in city traffic.

The Accord Hybrid arrived in late 2004. While it carried a fuel economy rating of 29 m.p.g. in town and 37 on the highway — respectable but hardly breathtaking — it was also quicker than the conventional Accord with a V-6. The hybrid's 3-liter engine produced 240 horsepower, plus 16 from the electric motor. (The horsepower figure has since been revised to a total of 253 because of a shift in how the number is calculated.) Half of the cylinders shut down when power demand is low (below 3,500 rpm), turning the 6 into a 3.

At a price of $29,990, the original Accord Hybrid cost some $3,500 more than the similarly equipped EX V-6 model. It lacked both a spare tire — there was an air compressor and a can of sealant instead — and a sunroof, both sacrificed to save weight. While Honda expected to sell 20,000 a year, cumulative 15-month sales through February totaled just 19,021.

For 2006, the improved Accord Hybrid added the moonroof and a temporary spare — and gained 85 pounds. That pushed the car into a higher weight class for E.P.A. testing and reduced the mileage rating to 25/34. In the real world, an owner is unlikely to notice the drop, since new underbody panels make the car more aerodynamic.

Other additions include a standard electronic stability control, L.E.D. taillights, a rear spoiler, new alloy wheels and heated outside mirrors with built-in turn signals. The price is now $31,540 including shipping — or $33,540 with a navigation system.

The Accord Hybrid uses its small electric motor mostly for added boost, but the Camry actually runs on batteries alone at low speeds. Toyota's approach is different in other ways, too. Instead of a sizable V-6, it has a 2.4-liter 4-cylinder engine rated at 147 horsepower. But the Camry's electric motor contributes more than the Accord's.

The Camry reaches 60 m.p.h. in 8.9 seconds, a decent showing that nonetheless pales before the zippy Accord's 6.9 seconds.

Last week, Toyota announced that Camry Hybrid prices would start at $26,480, giving the car a $5,000 edge over the Accord.

The Accord comes loaded — a navigation system is one of the few options — and the Camry Hybrid is nearly as well equipped as the similarly priced top-of-the-line XLE, from its Bluetooth-compatible audio system (which includes a six-CD changer and can also play your MP3 files and dock your iPod) to its dual-zone climate control. The Accord throws in the sunroof and leather upholstery. The Camry counters with a split folding rear seat — a neat trick, considering how much of the trunk was sacrificed to accommodate the battery pack (30 percent, versus 18 percent in the Accord).

The Camry's economy edge is significant, with an E.P.A. rating of 40 m.p.g. in the city and 38 on the highway. According to the trip computer, my performance varied: I drove the Camry 269 mostly highway miles, achieving a "personal best" of 39.3 m.p.g. and an average of 31.7. By happenstance, I was the first journalist in the Northeast to drive both the Camry Hybrid and the freshened Accord Hybrid. The Accord test car came with only 125 miles on the odometer, and that may account for my poor indicated mileage: in 192 miles of mixed driving, I averaged 20.8 m.p.g. On a second tank of gas, it did much better, achieving 28 m.p.g.

While Honda's Integrated Motor Assist system emphasizes performance, Toyota's Hybrid Synergy Drive stresses economy. Yet on the road, the cars are not as different as those labels might indicate.

The Accord is moderately luxurious inside. A green "Eco" light indicates economy of 25 m.p.g. or more, usually a sign that three cylinders have shut down. The Honda's acceleration edge is obvious, and the extra power will bring out your inner Mario Andretti. The switch from six to three cylinders and back is nearly imperceptible; the slightly rougher engine note is, in fact, masked by the Accord's ingenious noise-canceling technology and "active" engine mounts, which anticipate and counter vibration.

The Honda's ride is stiffer, which should help it handle the extra power. Big bumps can jar its composure.

The Camry handles better than the Accord, with pin-sharp, well-weighted steering and a suspension that absorbs rough terrain without allowing much body lean. It also has slightly more rear leg and shoulder room.

While the Camry feels spacious, it is smaller in some measures of headroom, legroom and cargo volume than the less expensive Prius.

Both the Camry and Accord are emissions champs, scoring as AT-PZEV's ("advanced technology partial zero emission vehicles") under California's arcane rating system. The only cars that are cleaner are those that run on batteries alone.

Toyota also has an edge in styling with the fresher, sleeker look it shares with all '07 Camrys.

Toyota really wants you to know you're in a hybrid. A huge real-time fuel consumption gauge sits where you'd expect a tachometer to be. Set into the speedometer is a graphic display, carried over from the Prius, in which arrows show whether the car is running on its gas engine, its electric motor or both.

An "Eco" button uses several subterfuges, like limiting energy used by the air-conditioner, to enable greater use of the "auto stop" feature that shuts off the gas engine at stoplights.

The Camry that I drove was a preproduction car that came with a note stating that it might not meet factory standards. So my 9-year-old took it in stride when an inside door handle came off in her hands.

But even with parts falling off, the Camry won handily over the Accord, in my view. Still, both are good cars. Are they also good values when compared with conventional vehicles?

Consumer Reports dropped a bomb in its April auto issue by predicting that none of the six hybrids it tested would recover their price premiums within five years of ownership. The magazine did not test the Camry Hybrid, but said the Accord Hybrid would cost a whopping $10,250 more to own over five years than a comparable EX model, and the Prius would cost $5,250 more to own than a Corolla LE.

A few days after the magazine reached subscribers, however, the editors announced that they had overstated the hybrids' depreciation costs, and they revised the figures. Now, provided the Prius could qualify for federal tax credits, the magazine said it would actually save its owner $406 over five years. The Accord owner would still be in the hole, but for $4,263 instead of $10,250.

Wednesday, April 05, 2006

A Short Book Review of Jeff Sach's "The End of Poverty"

Do economists write best sellers? Could a movie be based on Joe Stiglitz books? Who would play the head of the IMF? According to Amazon's website. Freakonomics is ranked #12, Ben Friedman's book "The Moral Consequences of Economic Growth" is ranked 6,211 and Jeff Sach's book "The End of Poverty" is ranked 543. In the recent issue of the Journal of Economic Literature, William Easterly has some tough things to say in his review of Sachs' book.

On a recent flight to California, I skimmed through Sachs' book. Here are some thoughts.

1. Would Jim Heckman ask Bono to write the foreword for him? Are there any good synergies between rock stardom and economic analysis?

2. How often do economists include detailed autobiographical material in their work? I don't believe that Freakonomics does this. George Stigler's autobiography did. Milton Friedman and Gary Becker's major books did not.

In Sachs' case the autobiography actually serves a purpose. I have always wondered how he "meandered" from boring macro-economics of hyperinflation stablization to more sexy (Angelia Jolie and Bono) topics of public health and death in Africa.

The autobiography parts also hint at how much time he spent on airplanes. I would have liked for him to list how many courses he taught at Harvard over that time and how he ever found any time to write academic papers.

3. I've recently read Bill Clinton's "My Life". One of the things I liked about Clinton's book is that he was slightly honest about policy mistakes he had made and why he made them. When I skimmed Sachs' book, I didn't find similar critical analysis of what consulting mistakes he had made and why they had taken place.

4. I am very interested in whether economists actually ex-ante influence public policy decisions or whether our policy memos are used to "rubber stamp" what politicians wanted to do but were looking for an intellectual justification. For example, Arthur Laffer's laffer curve "allowed" Reagan to cut taxes while being less concerned about budget deficits. I would have liked to have seen Jeff Sachs discuss in public health cases whether economists are playing a key role in different governments around the world in influencing public policy. Are lawyers making the key allocative decisions? In nations where economists are more influential, are "better" policy decisions made?

Tuesday, April 04, 2006

First Names and Economic Success

I wanted to report some research on what types of first names are correlated with greater economic success. I've learned that "Matthew" is not a sufficient treatment and I'm considering changing my first name to "Dora", "Ed", "Steve", "Larry", "Gary", or "Andrei" but I haven't made up my mind yet.

Motivated by this blog entry:
http://www.freakonomics.com/blog/2006/04/04/what-kind-of-deodorant-does-mathias-want/

I took real estate transaction data from California's Santa Clara County over the years 2003-2005. I focused on home sales for single detached homes in which the sales price was over $1 million dollars. I have data for 1265 sales. Here is the tabulation of first names for these buyers. So there are 30 Davids among the buyers, thus there percentage of all million dollar sales = 30/1265. Is this first name over-represented here relative to the population as a whole?

You can go to the www.census.gov to get the 1990 frequency counts for names.


+--------------------+
| name C |
|--------------------|
1. | Ahmet 2 |
2. | Albert 5 |
3. | Alex 4 |
4. | Alexander 4 |
5. | Ali 2 |
|--------------------|
6. | An 2 |
7. | Andrew 8 |
8. | Andy 2 |
9. | Anthony 5 |
10. | Ariel 3 |
|--------------------|
11. | Armando 2 |
12. | Arnold 3 |
13. | Barbara 3 |
14. | Ben 2 |
15. | Benjamin 2 |
|--------------------|
16. | Bill 2 |
17. | Bing 2 |
18. | Brian 5 |
19. | Bruce 4 |
20. | Bryan 4 |
|--------------------|
21. | COYOTE 2 |
22. | Calvin 2 |
23. | Carl 5 |
24. | Chandrasekhar 2 |
25. | Charles 6 |
|--------------------|
26. | Chi 2 |
27. | Christine 3 |
28. | Christopher 13 |
29. | Craig 4 |
30. | Curt 2 |
|--------------------|
31. | Daniel 11 |
32. | David 30 |
33. | Dennis 2 |
34. | Don 2 |
35. | Donald 4 |
|--------------------|
36. | Dong 2 |
37. | Donna 2 |
38. | Douglas 3 |
39. | Edward 5 |
40. | Eric 9 |
|--------------------|
41. | Erik 2 |
42. | Eugene 3 |
43. | Fabio 2 |
44. | Francis 5 |
45. | Frank 7 |
|--------------------|
46. | Fred 2 |
47. | Frederick 3 |
48. | Gary 7 |
49. | Geoffrey 2 |
50. | George 6 |
|--------------------|
51. | Glenn 4 |
52. | Gordon 3 |
53. | Greg 3 |
54. | Gregg 2 |
55. | Gregory 5 |
|--------------------|
56. | Gurdip 2 |
57. | Harry 3 |
58. | Helen 3 |
59. | Henry 3 |
60. | Howard 3 |
|--------------------|
61. | Ian 2 |
62. | Jacqueline 2 |
63. | James 21 |
64. | Jason 5 |
65. | Jay 3 |
|--------------------|
66. | Jeffery 2 |
67. | Jeffrey 11 |
68. | Jing 2 |
69. | John 26 |
70. | Jonathan 3 |
|--------------------|
71. | Jose 2 |
72. | Joseph 10 |
73. | Joshua 2 |
74. | Judy 2 |
75. | Julie 2 |
|--------------------|
76. | Karen 3 |
77. | Katherine 3 |
78. | Keith 3 |
79. | Ken 2 |
80. | Kenneth 8 |
|--------------------|
81. | Kent 2 |
82. | Kevin 6 |
83. | Kim 3 |
84. | Lawrence 6 |
85. | Leslie 2 |
|--------------------|
86. | Levent 2 |
87. | Lisa 3 |
88. | Louis 2 |
89. | Maria 2 |
90. | Mark 21 |
|--------------------|
91. | Martha 2 |
92. | Mary 2 |
93. | Matthew 4 |
94. | Michael 40 |
95. | Mike 2 |
|--------------------|
96. | Mohammed 2 |
97. | Nancy 4 |
98. | Neil 3 |
99. | Nigel 2 |
100. | Patrick 4 |
|--------------------|
101. | Paul 14 |
102. | Peter 10 |
103. | Philip 3 |
104. | Ping 2 |
105. | Pradeep 2 |
|--------------------|
106. | R 2 |
107. | Rajan 2 |
108. | Ralph 2 |
109. | Randall 2 |
110. | Randy 2 |
|--------------------|
111. | Raymond 6 |
112. | Richard 12 |
113. | Robert 30 |
114. | Roger 4 |
115. | Ronald 5 |
|--------------------|
116. | Roy 2 |
117. | Ryan 3 |
118. | S 2 |
119. | Sandra 4 |
120. | Scott 16 |
|--------------------|
121. | Stanley 3 |
122. | Stephen 10 |
123. | Steven 17 |
124. | Subodh 2 |
125. | Sung 3 |
|--------------------|
126. | Sunil 2 |
127. | Susan 3 |
128. | Ted 2 |
129. | Thomas 21 |
130. | Timothy 5 |
|--------------------|
131. | Todd 4 |
132. | Tom 3 |
133. | Tony 2 |
134. | Tyson 2 |
135. | Vince 2 |
|--------------------|
136. | Vincent 2 |
137. | Vivek 2 |
138. | Wayne 3 |
139. | William 13 |
140. | Ying 2 |
+--------------------+

.

Sunday, April 02, 2006

Fighting Sprawl in Texas?

At the Berkeley Transportation EMCT-OECD Conference I attended early this week, a prominent urban planner from Virginia Tech said that the United States faces a future mismatch between the housing people desire and what our current housing stock is.
As babyboomers age, these wealthy people who do not have children living at home will want to live in high amenity, high density areas. He argued that the current U.S housing stock was dominated by single detached homes. This article below from the Times highlights that developers are forward looking and are constructing such housing even at the "epi-center" of sprawl down in Texas.

It is true that one must have a car to drive from one's high rise condo to one's job and stores. It is unlikely that Texas' cities will re-create New York City's walking population density. But, this article does highlight the responsiveness of market capitalism to anticipated demographic trends.


April 2, 2006
National Perspectives
In Some Texas Cities, the Sprawl Is Vertical
By KATE MURPHY

HOUSTON -- NOT all Texans own ranches, but they tend to like good-sized yards even if they live in the city, which is why the state's urban areas sprawl into the sunset. It's possible to run out of gas crisscrossing Houston. The same could be said for Dallas, Austin and San Antonio.

Tall buildings are clustered mainly in downtown areas, which historically have been so deserted at night that tumbleweeds could blow unperturbed across the desolate streets. But now there's life after dark in and around Texas's central business districts, thanks to the construction of residential high-rise buildings. In a marked shift, more Texans are warming to high-rise living, particularly if the properties offer luxury amenities.

"The demand is kind of surprising because Texans are people who like dirt on the ground," said Nancy Elizabeth Garfield, an agent at Greenwood King Properties who specializes in high-rise residences.

According to Property and Portfolio Research, an independent real estate research and advisory firm in Boston, Houston is expected to add 3,119 high-rise condominium units in 2006 versus 1,001 in 2005.

The last time residential high-rises were built in Texas was in the 1980's, and they didn't do very well, Ms. Garfield said. Austin's high-rises were limited to student housing at the University of Texas, and the handful that were constructed in Houston, Dallas and San Antonio went bankrupt or remained vacant while the developers offered incentives like agreeing to buy back units at the purchase price up to 10 years later. Twin high-rises in Houston called the Four-Leaf Towers even offered favorable terms on apartments to local members of the clergy hoping their flocks would follow.

But now the Four-Leaf's 400 units are fully occupied and its local developer, the Interfin Companies, has built two more residential towers closer to downtown. One with 95 units was completed in 2000 and has no vacancies, and the other, built last year, has only 14 of 97 units available, according to brokers.

Cranes are pivoting around the shells of three other high-rise condominium projects nearby with another scheduled to break ground in May.

"We are seeing increased demand in Texas for the lock-and-leave condo lifestyle," said Mark Cover, executive vice president for the southwest region at Hines Interests, a privately owned international real estate firm based in Houston. "It appeals especially to people who travel a lot and don't want to worry about their home's security or maintenance while they're gone."

Hines has participated in the development of two high-rise projects in Houston — one completed last year, which is full, and another scheduled for completion by 2007, which already has contracts on 55 of its 70 units.

Mr. Cover said Hines would also break ground on a residential high-rise in Dallas this summer and was in negotiations to put up three more buildings in the city. Property and Portfolio Research reports that Dallas will add a total of 3,231 high-rise condos this year, up from 1,593 last year.

The increase is in contrast to other markets around the country. "In places like Florida, Arizona and California, the markets got overheated, but Texas arrived late to the party and is still very active," said Michael E. Puls, president of Foley & Puls, a real estate consulting firm based in Dallas.

Because of "irrational exuberance" elsewhere, he said, investor interest in residential high-rise projects has waned, so developers in Texas have had to come up with "concepts that will appeal to the people who will actually move into these places."

An example is the Plaza Turtle Creek high-rise apartments in Dallas, which was completed in 2001 and is now more than 80 percent occupied. The building is on a prime patch of wooded land just outside of the city's downtown and adjacent to the Mansion at Turtle Creek, a luxury hotel. The 18-story, 111-unit high-rise is managed by the hotel, and residents have access to room service and other amenities afforded hotel guests.

The developer, the Meyer Development Corporation, is planning another residential high-rise on the property that will also be managed by the Mansion at Turtle Creek. It will have larger units, from 5,000 to 11,000 square feet, and buyers will be able to design their own floor plans.

"To get people to move out of their houses in Highland Park," said Larry Meyer, president of Meyer Development, referring to an exclusive neighborhood in Dallas, "you've got to give them an exceptional level of service, privacy and customization."

Developers of residential high-rises in major Texas cities say their target is baby boomers whose children are grown. "These people can live anywhere they want, so we're not so much in the housing business as the lifestyle business," said Giorgio Borlenghi, president of Interfin. His company's newly built residential towers have Olympic-size pools, health clubs and day spas, along with concierge and valet service.

Last year, Sue Volk moved with her husband, Richard, from a three-story 4,500-square-foot house in Houston to a 2,200-square-foot apartment on the 21st floor of Interfin's newest high-rise, called the Montebello. "I like being able to leave my car out front, walk in and have them bring up my groceries," she said "The security is wonderful, and you don't have to deal with the upkeep of a house, yard and pool." Mrs. Volk also owns a second home in Aspen, Colo.

But empty-nesters are not the only ones moving into Texas high-rises. They also appeal to young professionals tired of commuting from outlying suburbs.

"The congestion in Austin has increased so much and become such a quality of life issue that people want to live near where they work so they can leave their car in the garage," said Charles Heimsath, president of Capitol Market Research, a real estate consulting firm in Austin.

There are 832 high-rise units scheduled for completion in its downtown area this year versus 20 last year, and at least 10 more high-rise projects are on the drawing board, according to Mr. Heimsath.

Another contributing factor is the number of big companies that have their headquarters in the state, including Dell Computer, Continental Airlines, American Airlines and ExxonMobil. These businesses attract employees from all over the world and many are already accustomed to living in high-rise buildings.

Wealthy people from Latin America and the Middle East who have oil or other business interests in Texas are also buying high-rise units in the state.

"We're only two hours from the border, so we have a lot of Mexican nationals who want to buy high-rise apartments here as a second home," said Phyllis Browning, an independent real estate agent in San Antonio, where two downtown high-rise condominiums were built within the last two years with five more under development.

"We had two high-rises that went up in the 80's and they failed and were foreclosed, but now even they are completely full," Ms. Browning said.

Like residential high-rises in other Texas cities, the ones in San Antonio offer high-end amenities, at prices ranging from $350,000 to $2 million. "Cheap ones wouldn't do well," said Ms. Garfield in Houston. "It's got to be well-built, luxurious and have a fabulous view for Texans to give up their yards."

Saturday, April 01, 2006

Do People Respond To Incentives?

This New York Times article suggests that demand curves do slope down! People engage in less risky behavior when the "price" of such behavior increases. Experts appear to be surprised by this good news. Could Peak Oilers learn something from this seemingly unrelated example?



March 31, 2006
New H.I.V. Cases Reported to Drop in Southern India
By LAWRENCE K. ALTMAN

In a rare piece of good news about AIDS, the prevalence of new H.I.V. infections has fallen significantly in southern India, the region of that country where the disease has occurred most often, scientists reported yesterday.

Many health officials have predicted major increases in H.I.V. in India, which has the world's second highest number of infected people, after South Africa. But new infections among young adults declined by more than a third from 2000 through 2004, according to a statistical study by Dr. Rajesh Kumar and a team of researchers reported in the journal Lancet.

The findings seem real and not due to statistical aberrations, the authors said. They are from academic centers and a government health institute in India, the University of Toronto and the United Arab Emirates.

The authors attributed the favorable trend to an increasing use of condoms by men and an insistence by prostitutes that their partners use them. That decline, in turn, reduced the transmission of H.I.V. to spouses.

Experts cautioned against drawing too firm a conclusion from one study and added that the new findings did not mean India's H.I.V. epidemic was over.

Still, the study has two key implications, the researchers said.

One is that strategies that emphasize education about how H.I.V. can be transmitted and the use of condoms offer the best hope for reducing the spread of the virus in India.

A second is that routine monitoring of H.I.V. and other sexually transmitted diseases are powerful and cost-effective ways to control AIDS in India. But experts urged constant vigilance for signs of a reversal of the favorable trend.

The findings were based on test results from 294,050 women who attended 216 prenatal clinics and 58,790 men attending 132 clinics for sexually transmitted diseases.

The prevalence of H.I.V. among women aged 15 to 24 in the southern states fell to 1.1 percent from 1.7 percent during the period of study. But H.I.V. prevalence did not fall significantly among women aged 25 to 34.

Epidemiologists often analyze the rate of H.I.V. among pregnant women because they consider it an indication of its prevalence in the general population.

The study showed that the prevalence of H.I.V. fell in men aged 20 to 29 in the southern states.

Reductions were more modest in 14 northern states, where the prevalence of H.I.V. infections is about one-fifth that in the four southern states, the authors said.

About 75 percent of the estimated 5.1 million Indians with H.I.V. live in the four southern states, Andhra Pradesh, Karnataka, Maharashtra and Tamil Nadu.