Friday, March 30, 2007

Providing the Poor with $ Incentives to Take Care of Themselves

People seem to respond to financial incentives so let's pay the poor for getting medical checkups, atteding parent-teacher conferences and getting a job. That's what New York City is about to do. Will this program be effective? Will it have unintended consequences? At a minimum, it will allow some social scientist to write a nice evaluation study. Will the poor move to New York City to qualify for this program? They would need to find an expensive apartment.

We know that such incentives for the poor are in vogue.
Economists such as Roland Fryer ( are running experiments to see if student performance improves if they are provided with different short run incentives. Forget love of learning and expectations of long run payouts, this is about an IPOD now!

While Marx might rue the “commodification” of day to day life, if such incentives get people to change their behavior can this be bad?

On a slightly different subject, Gary Becker does a great job discusses some related issues on "commodification" of good deeds

New York Times
March 30, 2007
New York City to Reward Poor for Doing Right Thing

Seeking new solutions to New York’s vexingly high poverty rates, the city is moving ahead with an ambitious experiment that will pay poor families up to $5,000 a year to meet goals like attending parent-teacher conferences, going for a medical checkup or holding down a full-time job, Mayor Michael R. Bloomberg said yesterday.
Under the program, which is based on a similar effort in Mexico, parents would receive payments every two months for family members meeting any of a series of criteria. The payments could range from $25 for exemplary attendance in elementary school to $300 for a high score on an important exam, city officials said.
The officials said the program was the first of its kind in the country.
The project, first announced in the fall. was scheduled to begin as a pilot program in September with 2,500 randomly selected families whose progress will be tracked against another 2,500 randomly selected families who will not get the rewards. Officials planned to draw the families from six of the poorest communities in Manhattan, Brooklyn and the Bronx.
To be eligible, families must have at least one child entering fourth, seventh or ninth grade and a household income of 130 percent or less of the federal poverty level, which equals roughly $20,000 for a single parent with two children.
The city has already raised $42 million of the $50 million needed to cover the initial program’s cost from private sources, including Mr. Bloomberg. If it proves successful, the mayor said, the city will attempt to create a permanent program financed by the government.
Likening the payments, known as conditional cash transfers, to tax incentives that steer people of greater means toward property ownership, Mr. Bloomberg said that the approach was intended to help struggling families who often focus on basic daily survival make better long-term decisions and break generational cycles of poverty and dependence.
“In the private sector, financial incentives encourage actions that are good for the company: working harder, hitting sales targets or landing more clients,” the mayor said in an announcement at a health services center in Brownsville, Brooklyn.
“In the public sector, we believe that financial incentives will encourage actions that are good for the city and its families: higher attendance in schools, more parental involvement in education and better career skills.”
Since Mr. Bloomberg outlined the plan last fall, reaction among antipoverty experts and advocates has been mixed, with some hailing it as an innovative approach that could become a powerful model for the rest of the country and ultimately win the support of the federal government.
Indeed, the program is being financed by several high-profile organizations, including the Rockefeller, Starr and Robin Hood Foundations, as well as the Open Society Institute and the insurance and financial firm American International Group.
The Rockefeller and Starr Foundations are donating $10 million each, while the Open Society Institute is giving $5 million and A.I.G. is donating $2 million. A spokeswoman for the Robin Hood Foundation did not return calls or an e-mail message, and Mr. Bloomberg’s spokesman, Stu Loeser, declined to say how much the mayor contributed.
Some antipoverty advocates have bristled at what they see as the condescending notion that poor people need to be told how to raise their families. Others have focused on the broader economic issues at play.
“It is encouraging that the mayor believes there’s a public role for addressing intergenerational poverty, inequality and economic mobility,” said Margy Waller, a former Clinton administration adviser who is a co-founder of Inclusion, a research and policy group based in Washington.
“What is troubling is the focus on personal behavior as the solution to what is at least in part a problem of the economy,” she said. “Given what we know about the growth of low-wage jobs and the shrinking of the middle class, it will be, in fact, impossible to bring more people into the middle class unless we improve the labor market as well.”
A similar concern seems to have emerged with Mexico’s program, known as Oportunidades, which is now 10 years old, has a budget of more than $3 billion a year and covers nearly one-fourth of all Mexicans.
Intended to replace the food subsidies that had dominated much of Mexico’s antipoverty efforts, the program offers cash stipends to families to keep their children in school and take them for regular checkups. Parents must also attend regular talks on issues including health, nutrition and family planning.
Outside evaluations have found that the program has been successful in raising school attendance and nutrition levels and that the percentage of Mexicans living in extreme poverty has fallen.
Still, there are questions about how much more effective the program can be in lifting large numbers of people permanently out of poverty, in part because jobs are lacking.
In January, Santiago Levy, one of the program’s creators and a former undersecretary of finance in Mexico, said at the Brookings Institution in Washington that even if the program were 100 percent effective, it alone could not solve the problem.
“Now’s he’s out with a high school degree, a healthy man: Is he going to get a job or migrate to the U.S.?” he said.
But others see cause for optimism in the results of Mexico’s program and similar ones in other Latin American countries. In Nicaragua, for example, primary school enrollment rates grew to 90 percent from 68 percent; in Colombia, secondary school enrollment in urban areas rose to 78 percent from 64 percent, said Laura Rawlings, a World Bank specialist who has studied the programs, which she said are active or being created in nearly 20 countries.
The idea to try the program in New York has its roots in the broad attack on poverty that Mr. Bloomberg has made a high-profile cause for his second term. Roughly one in five New Yorkers lives in poverty, according to the Community Service Society of New York.
In keeping with the administration’s emphasis on outcomes, city officials say they will closely monitor the test group’s progress against that of the control group with the help of M.D.R.C., a nonprofit policy research organization involved in the program’s design.
All 5,000 families will be asked to agree to participate in the program before knowing which group they are in, said Gordon Berlin, the president of M.D.R.C., and those not receiving benefits will be paid a nominal fee to submit to monitoring and surveys, he said.
Officials expect that some of the control families will inevitably drop out, but Mr. Berlin said that in conducting similar experiments in the past, he had found that most were willing to participate even without the benefits because they were informed that it would help guide a government policy decision in which they had a stake.
The families receiving the benefits will be given a list of goals they are expected to meet, as well as the values assigned to them. They will also get a “passport” for documenting the completion of tasks that are not automatically reported elsewhere, said Linda I. Gibbs, the deputy mayor overseeing the effort.
The city is working with state and federal officials, Ms. Gibbs said, to make sure that families do not lose other benefits because of the grants.
Elisabeth Malkin contributed reporting from Mexico City.

Thursday, March 29, 2007

Greening Cities through Pricing Parking

UCLA plays good basketball and great social science. In today's New York Times, my colleague Don Shoup makes the plausible case that properly pricing scarce resources (urban parking) could offer many big city "green" benefits. Don has convinced me. His basic story revolves around cheap guys like me circling different blocks searching for a meter parking spot. In this process, we congest the roads, pollute the air and waste our time. A more efficient solution would be market prices for parking.

In private conversations with Don, he has also stressed to me the importance of relaxing housing laws in California that require apartment complexes to provide a certain number of parking spots free. For example, a 100 unit compex may have to offer 150 parking spots (I'm making up this latter number). The net effect of such fixed proportion rules is to limit infill development because the parking spots cannot be obtained. A better model would be to unbundle the parking from the apartment. Don Trumps would be free to choose if they want to build 50 units without parking spots and 50 units with parking spots. This would yield a 100 unit building with 50 spots. Such a building would self select people who use public transit.

New York Times
March 29, 2007
Op-Ed Contributor
Gone Parkin’
Los Angeles

MOST people view traffic with a mixture of rage and resignation: rage because congestion wastes valuable time, resignation because, well, what can anyone do about it? People have places to go, after all; congestion seems inevitable.

But a surprising amount of traffic isn’t caused by people who are on their way somewhere. Rather, it is caused by those who have already arrived. Streets are clogged, in part, by drivers searching for a place to park.

Several studies have found that cruising for curb parking generates about 30 percent of the traffic in central business districts. In a recent survey conducted by Bruce Schaller in the SoHo district in Manhattan, 28 percent of drivers interviewed while they were stopped at traffic lights said they were searching for curb parking. A similar study conducted by Transportation Alternatives in the Park Slope neighborhood in Brooklyn found that 45 percent of drivers were cruising.

When my students and I studied cruising for parking in a 15-block business district in Los Angeles, we found the average cruising time was 3.3 minutes, and the average cruising distance half a mile (about 2.5 times around the block). This may not sound like much, but with 470 parking meters in the district, and a turnover rate for curb parking of 17 cars per space per day, 8,000 cars park at the curb each weekday. Even a small amount of cruising time for each car adds up to a lot of traffic.

Over the course of a year, the search for curb parking in this 15-block district created about 950,000 excess vehicle miles of travel — equivalent to 38 trips around the earth, or four trips to the moon. And here’s another inconvenient truth about underpriced curb parking: cruising those 950,000 miles wastes 47,000 gallons of gas and produces 730 tons of the greenhouse gas carbon dioxide. If all this happens in one small business district, imagine the cumulative effect of all cruising in the United States.

What causes this astonishing waste? As is often the case, the prices are wrong. A national study of downtown parking found that the average price of curb parking is only 20 percent that of parking in a garage, giving drivers a strong incentive to cruise. As George Costanza once said on “Seinfeld”: “My father never paid for parking, my mother, my brother, nobody. ... It’s like going to a prostitute. Why should I pay when, if I apply myself, maybe I could get it for free?”

Like George Costanza, drivers often compare parking at the curb to parking in a garage and decide that the price of garage parking is too high. But the truth is that the price of curb parking is too low. Underpriced curb spaces are like rent-controlled apartments: hard to find and, once you do, crazy to give up. This increases the time costs (and therefore the congestion and pollution costs) of cruising.

And, like rent-controlled apartments, underpriced curb spaces go to the lucky more often than they do to the deserving. While the car owner with good timing can enjoy his space free or cheaply for hours or days, others who are late for a meeting or a job interview are left to circle the block, making themselves — and other drivers — miserable. The solution is to set the right price for curb parking.

To prevent shortages, some cities have begun to adjust their meter rates (using trial and error) to produce about an 85 percent occupancy rate for curb parking. The prices vary by location and the time of day. Drivers can usually find a vacant curb space near their destination, and the search time is zero. Cities can adjust the price of curb parking in response to demand to keep roughly one out of every eight spaces vacant throughout the day. Right-priced curb parking can eliminate cruising.

The balance between the varying demand for parking and the fixed supply of curb spaces is the Goldilocks Principle of parking prices: the price is too high if too many spaces are vacant, and too low if no spaces are vacant. But when only a few spaces are vacant, the price is just right, and everyone will see that curb parking is both well used and readily available.

Beyond the transportation and environmental benefits, performance-based prices for curb parking can yield ample revenue. If the city uses a share of this money for added public services on the metered streets, residents and local merchants will be more willing to support charging the right price for curb parking. These funds can be used to clean and maintain sidewalks, plant trees, improve lighting, remove graffiti, bury utility wires and provide other public improvements. Returning the meter revenue generated by a district to the district can persuade residents, merchants and property owners to support right-priced curb parking.

Redwood City, Calif., for example, sets its downtown meter rates to achieve an 85 percent occupancy rate for curb parking (the rates vary by location and time of day, depending on demand). Because the city returns the revenue to pay for added public services in the metered district, the downtown area will receive an estimated $1 million a year for increased police protection and cleaner sidewalks.

The Redwood City merchants and property owners all supported the new policy when they learned what the meter revenue would help pay for, and the City Council adopted it unanimously. Performance-based prices create a few curb vacancies so visitors can easily find a space, the added revenue pays to improve public services, and the improved public services create political support for the performance-based prices.

If cities want to reduce congestion, clean the air, save energy, reduce greenhouse gas emissions and improve neighborhoods — and do it all quickly — they should charge the right price for curb parking, and spend the resulting revenue to improve local public services.

Getting that price right will do a world of good.

Donald Shoup, a professor of urban planning at the University of California, Los Angeles, is the author of “The High Cost of Free Parking.”

Wednesday, March 28, 2007

UCLA Antropologists Study What Disgusts Us

What grosses you out? Why does it? Do you simply state that you derive negative utility from something? Buy why? Researchers at UCLA offer some answers.


UCLA Anthropologist Studies Evolution’s Disgusting Side

Behind every wave of disgust that comes your way may be a biological imperative much greater than the urge to lose your lunch, according to a growing body of research by a UCLA anthropologist.

“The reason we experience disgust today is that the response protected our ancestors,” said Dan Fessler, associate professor of anthropology and director of UCLA’s Center for Behavior, Evolution, and Culture. “The emotion allowed our ancestors to survive long enough to produce offspring, who in turn passed the same sensitivities on to us.”

Across a series of subtle and ingenious studies, Fessler has managed to illuminate the ways in which disgust may have served to protect our ancestors during such biologically precarious situations as pregnancy and to maximize the likelihood of our forbears’ reproduction when they were at their most fertile.

Fessler’s research also illustrates how the emotional response that helped our ancestors may not serve us as well today and may actually promote xenophobia, sexual prejudices and a range of other irrational reactions.

“We often respond to today’s world with yesterday’s adaptations,” Fessler said. “That’s why, for instance, we’re more afraid of snakes than cars, even though we’re much more likely to die today as a result of an encounter with a car than a reptile.”

Fessler will present his findings at 2 p.m. on Friday, March 30, as part of a three-day conference at UCLA on new research concerning emotions. The event, “Seven Dimensions of Emotion: Integrating Biological, Clinical and Cultural Perspectives on Fear, Disgust, Love, Grief, Anger, Empathy and Hope,” which runs Friday through Sunday, March 30–April 1, will include 40 scholars from around the world. The conference will be held in Korn Hall at the UCLA Anderson School of Management and is sponsored by UCLA and the Foundation for Psychocultural Research.

Fessler’s research helps shed light on why some body parts universally draw more “ewwwws” than others. In one study, Fessler asked 400 participants to imagine 20 different transplant operations and to rate them according to the level of disgust they elicited.

Half of the transplant organs were appendages — like tongues and genitalia — that routinely come into direct contact with the outside world and are therefore more susceptible to infection and damage. The other half were located inside the body — like the spleen and heart — and much less under an individual’s control, especially with regard to protecting from infection and damage.

“If disgust protected our ancestors from pathogens, the emotion would have had the most utility in protecting parts of the body that interact most with the environment such as appendages,” Fessler said. “Our ancestors would not have enjoyed the same advantage from disgust reactions with regard to protecting internal organs. So they benefited from focusing disgust reactions on the parts of the body that are on the outside and interface with the world around us.”

True to Fessler’s theory, participants considered the idea of transplanting appendages more disgusting than the idea of transplanting internal organs. Tongues, genitalia and anuses ranked the most disgusting, while hips, kidneys and arteries turned the fewest stomachs.

“The disgust we feel when we consider individual body parts reflects an adaptive goal of avoiding the transfer of pathogens,” Fessler said.

The same logic appears to be behind some of the queasiness experienced by women during the first trimester of pregnancy, when an infusion of hormones lowers the immune system to keep it from fighting the “foreign” genetic material taking shape in the womb. Because the consequences of infection are also greatest for the fetus during this period, Fessler reasoned that natural selection may have armed pregnant women with an emotional response that helped compensate for their suppressed immune system.

To test the theory, Fessler gathered 496 healthy pregnant women between the ages of 18 and 50 and had them consider 32 potentially stomach-turning scenarios, including “a 30-year-old man who seeks sexual relationships with 80-year-old women,” “walking barefoot on concrete and step(ping) on an earthworm,” “someone accidentally stick(ing) a fish hook through his finger” and “maggots on a piece of meat in an outdoor garbage pail.”

But before asking the expecting women to rank how disgusting they found these scenarios, he asked a series of questions designed to determine whether they were experiencing morning sickness.

In keeping with Fessler’s theory, women in their first trimester scored much higher across the board in disgust sensitivity than their counterparts in the second and third trimesters. But when Fessler controlled the study for morning sickness, the response only held for disgusting scenarios involving food, such as the maggot example.

“A lot of the diseases that are most dangerous are food-borne, but our ancestors could not afford to be picky all the time about what they ate,” Fessler said. “Natural selection may have helped compensate for the greater susceptibility to disease during this risky point in pregnancy by increasing the urge to be picky about food, however much additional foraging that required. That the sensitivity seems to lift as the risk of disease and infection diminish is consistent with the view of disgust as protection against pathogens.”

Fessler’s research also suggests that at least some xenophobia may have its roots in the same vulnerable trimester. Together with colleagues, he asked 206 healthy American pregnant women between the ages of 18 and 42 to read two essays — one obviously written by a foreigner critical of the United States and another by a patriotic American citizen. He then asked the pregnant women to rate how interested they were in meeting and working with the authors. Pregnant women in their first trimester were much less likely to express an interest in meeting the foreigner than those in their second and third trimesters.

“Since the need for assistance from any other human being increases with pregnancy, the response doesn’t make sense unless you consider outsiders as carriers of disease and infection,” he said. “We suspect that, around the world, cultures have discovered that an easy way to elicit prejudice toward outsiders is to associate them with illness. Because emotional reactions that protect against disease are elevated during the first trimester, xenophobia comes along for the ride and is similarly increased early in pregnancy.”

Women also appear to feel increased disgust toward certain forms of sexual behavior during the time in their menstrual cycle when they are most likely to become pregnant. Fessler administered the same standardized disgust scale that he used with pregnant women to 307 women between the ages of 18 and 45. In addition to the scenario about sex between couples separated by great spans of age, the disgust scale included scenarios involving incest and bestiality. Around the time of ovulation, women consistently rated these sexual activities as more disgusting than did women at other points in their menstrual cycle.

“Since women have been shown to be the most interested in sex and new experiences when they are the most fertile, their disgust reactions toward unusual forms of sexual behavior during ovulation don’t make sense except when considered in the context of reproductive fitness,” Fessler said. “These are sexual activities that either would not result in conception or — in the case of incest and sex with older people — were less likely to result in conception of healthy children, so women who were more disgusted by them during ovulation would be more likely to reproduce and to have healthy children.”



Tuesday, March 27, 2007

Some Comments on "Freaks and Geeks"

In the April 2nd 2007 issue of the New Republic, Noam Scheiber has written a long piece titled "Freaks and Geeks". All academic economists should read this piece because it raises a host of issues concerning where academic economics is going.

Is modern economics "too cute"? Would we, in aggregate, be making more progress on fundamental questions if we stuck to the core issues highlighted in any 1st year graduate sequence at a TOP 20 department?

My mother has called me a sociologist and I haven't been insulted by her implicit claim that my work's questions sometimes wander far from the standard fare served up in a 1st year graduate sequence.

The Scheiber article poses the rhetorical question of whether economics is tipping too far in the direction of being too clever. It hints that "real science" is a time intensive process where researchers work for years to become the master of one very small niche while modern applied micro economists feel no guilt positing theories on any subject even those far from our core training such as whether TV watching causes autism.

Permit me to fight back. Where is the real prestige in modern economics? Structural IO is not a "cute" field. Industrial Organization economists writing down structural models of different industries are being tenured with a single digit number of publications. They are in extremely high demand and the discrete choice tools in these fields have been successfully exported to urban economics and environmental economics.

More and more "cute economists" are moving to business schools where they are tenured in applied micro slots. Such individuals are "free to choose". They are smart enough to pursue structural IO if they had wanted to. It is true that "natural experiments" are fun and relatively easy to do but economists are patient people with rational expectations and have an incentive to recognize that there is a cost of pursuing the "easy path". The New Republic article hints that too many young economists are being "seduced by the dark side" of the easy path.

I wonder if this claim is true. If 25 year old PHD student economists want to become well respected academic economists, and they take a look at the skill set that leading economics departments are hiring in then they have every incentive to pursue the "hard stuff".

The article misses that there is comparative advantage in modern economics. Not everyone aspires to be a structural guy, this is part of the reason that this small elite crew is paid so well. Not everyone has the ability to compete with these guys.

What should become of such clever people who aren't cut out to be formal game theorists or structural IO people? Would Scheiber have them go into consulting? My own preference would be that well trained NBER style applied micro people go "interdisciplinary" and try to work with softer social scientists in other fields to help them estimate more convincing empirical designs for measuring treatment effects and establishing plausible causality results.

Economic theorists continue to command great respect in our field and earn some of
the highest paychecks in St. Louis and its greater vicinity. The incentives are
right in modern economics to keep working on hard problems.

Critics such as Scheiber would need to convince me that there has been a "misallocation" of talent as individual economists choose what problems to work on.

Steve Levitt has achieved the best of both worlds. He has generated new knowledge
on many different subjects and has been able to communicate his findings broadly.
Young people everywhere have an increased interest in economics due to Levitt. Some of these young people will opt into doing game theory and structural IO but only they will make this choice for themselves.

If Levitt had chosen to work on "serious" topics using "serious" methods, would he have made a bigger breakthrough? I can't answer that question but Scheiber seems to be saying that the answer is yes.

My bottom line is a chicago one; "what is the market failure here?" Why isn't the equilibrium in our field a pareto optimum?

The "Magic Formula" for Being Admitted at UCLA?

Admissions officers at elite schools have a hard job. Usually, economists model people as if they solve calculus problems. We have taught generations of students that consumer choices in markets can be modeled as if a person maximizes utility subject to a budget constraint where the consumer knows her utility function and knows how market goods affect her utility (so cake directly makes you happy but it also makes you fat and you recognize these tradeoffs in making your best choice).

What objective function do UCLA's admissions committee optimize? Every school wants to be excellent and diverse but how do you "operationalize" these vague words? Do you accept only nerds, only jocks? Of course not, but how do you do the marginal analysis to achieve the "optimum"?

A cynic might wonder if there is a principal/agent problem in admissions committees. Suppose that Kahn is on the admissions committee and that I want to accept only students who are shorter than me because I like to be taller than anyone else; would this make UCLA excellent as I pursue my own private goals? How does UCLA evaluate its admissions' committee? It is easier to evaluate its basketball coach!

Should the UCLA admissions committee simply throw out students who are clearly below the admissions line and then randomize in choosing who is accepted? As an economist, I might vote for this system if there was a "re-sale" market where accepted students could sell their admissions slot to another student who was above the cutoff line but randomly denied admissions.

Here is the LA Times inside look at this issue;

Ticket to UCLA rides on bigger picture
A rare peek into the new 'holistic' admissions process shows that personal factors are no longer reviewed separately from academics.
By Rebecca Trounson, Times Staff Writer
March 27, 2007

Bruin applicant No. 1 had an A-minus average at a good high school. His transcript showed numerous honors and accelerated classes, and his SAT score was 2040 of 2400. He was an athlete and clearly engaged at his high school and his church.

In his essays, he wrote movingly about his family and its influence on his life and choices.

But did he have what it took to become a UCLA freshman?

A group of admissions readers was asked to answer that question in December, when it met to be trained for a difficult task: choosing about 11,800 students for admission to the fall freshman class from the nearly 51,000 who applied.

Many high school students across the country are awaiting decisions from UCLA this week and are more uncertain than ever of what to expect.

The university announced in September that it was making a major shift in the way it accepted freshmen, switching to a more "holistic" approach in which all available information about a student could be considered at the same time by admissions readers. Previously, UCLA applicants' files were divided by academic and personal areas and read by separate reviewers.

UCLA officials said the change, which takes effect for the fall entering class, would be fairer to all applicants, helping readers see them and their achievements in context. And it would make admission to UCLA more like that of other elite schools, including UC Berkeley and much of the Ivy League.

The change was made after figures, released last summer, showed that only about 100 African American students, or about 2% of the freshman class, would enroll at UCLA for the current academic year. The number, the lowest in more than 30 years, prompted UCLA leaders to declare an admissions crisis and push for the new system. But under Proposition 209, the state's 1996 voter-approved ban on affirmative action, the university cannot consider race in its admissions decisions.

In a relatively rare window into University of California admissions, a process that students, parents and even some UC leaders have called opaque and confusing, UCLA granted a reporter permission to sit in on two training sessions for admissions readers in December.

Because much of the process was new this year, all UCLA readers, including veterans, underwent 12 hours of training, divided into a full-day session and an afternoon follow-up. After the training, readers were asked to rate several sets of sample applications, which were then checked against pre-scored controls. Officials said 156 readers were certified.

Admissions Director Vu Tran told readers they would be ranking applications on a 6-point scale, from those that would merit 1 — "emphatically recommend for admission" — to 5 — "recommend deny." There is also a score of 2.5, because the distinction between 2 and 3 is often the toughest for readers to make.

Each application would be scored by two readers. If the scores were more than a point apart, the application would be assessed again, this time by a senior staff member.

Applicants would be admitted in rank order, 1s, then 2s and so on, up to UCLA's admissions target of 11,800, which officials say will ultimately yield a class of about 4,700.

"You shouldn't feel the pressure," said Rosa M. Pimentel, an assistant admissions director who has been part of the process at UCLA since 1983, when she was a student staffer. "By yourself, you're not going to be the one that actually gets that student in or denies that person."

Readers would be balancing many more factors than before, however. Grades, test scores and other academic measures should still be given the greatest weight, but reviewers also were asked to keep in mind the overall picture of the student's background, using information from all parts of the file.

For instance, if there were a stretch of poor grades in an otherwise stellar record, was there an explanation? Maybe it's because of a family crisis or even "senioritis"? Or were there circumstances, such as a need to work or baby-sit younger siblings, that could have kept an applicant from achieving the grades and extracurricular activities that impress admissions officers?

Or maybe a student was very focused on a single area — music or sports, for example — and although terrific at that, the student might not have the variety of activities typical of most who apply.

Any of these applicants, at least in theory, might be worthy of admission. "We're looking for all kinds of students at UCLA," Pimentel said. "We really want students who are likely to contribute to the intellectual and cultural vitality of the campus."

What about diversity, a reader asked?

Pimentel answered without hesitation. UCLA, like other top schools, was looking for a range of personal backgrounds and experiences in each freshman class, she said. Socioeconomic diversity was a plus. But, she cautioned, race could not be part of the equation.

In addition, she said, readers should never make up their minds about a student until they had read the entire file. "You can say, 'I don't see the spark. I don't see the spunk,' and then you get to the essay and you say, 'Wow!' " she said.

Pimentel then turned to the half a dozen sample cases, including Bruin No. 1, that the readers had been asked to score. These were applications by real students, though not from the current year and with their names blocked out.

Readers around the table discussed Bruin No. 1, with most saying they had given this student a score of 3: "acceptable" for admission but not exceptional.

The student's grades had dipped in his junior year — not a good thing. He seemed like a good, steady kid, a reader said, but had focused his essays too much on his parents and not enough on who he was and what he cared about.

Pimentel and a second admissions staffer, Annie Huerta, said the group was on target. When the application was taken in context, Bruin No 1 was a 3, acceptable but barely.

Bruin No. 2 had a B-plus average, low test scores and fewer honors and Advanced Placement classes than most UCLA applicants. And nothing else in her record seemed to grab anyone. She would be a 4, most readers agreed, "qualified" but not recommended for admission.

Bruin No. 3 had extraordinary grades in a very tough program and a 2360 SAT score. She was bilingual, had taken community college courses her senior year and appeared to have led most groups she was involved in, including a political club and an academic team. She had a history of community service, and for her application, she wrote eloquent essays that gave additional detail about her life and activities.

"This just seems like a phenomenal applicant, very distinctive," said Esther Walling, who is a veteran college counselor at Jefferson High School in Los Angeles and is in her second year as a UCLA reader. Nearly everyone agreed: This one was a 1.

As the session wore on, thorny questions arose. What about a student who had a competitive, though not extraordinary, academic and leadership record but had multiple disadvantages compared with most kids? One parent was dead, the other was unemployed and the family lived far from his school, making it tough for him to take part in many extracurricular activities.

Given his record and his family circumstances — and under the holistic approach — he was a 2, most agreed. He would also be a candidate for a new procedure this year called supplemental review, the admissions officials said. This extra step is for students on the edge of admission, but whose applications are missing some key information or show very challenging circumstances.

In such cases, the applicant would be sent a questionnaire that requests more information.

And what about cases in which the essays were so sophisticated that they raise questions about who had written them? Readers should look at the grades and scores in English and writing and consider any obvious discrepancy. But in most cases, the student should be given the benefit of the doubt, the trainers said.

There were more cases and more tips. Be wary of sob stories, but try to recognize when a student has genuine difficulties. Look for "passion" in an applicant's file, as well as evidence of values and ethics. Look for leadership, but know that not every student could be first in everything.

Overall, the trainers said, readers should search for those students who could succeed at UCLA and would bring something special, perhaps indefinable, to the campus.

By the end of the sessions, that seemed easier to spot.

UCLA officials say they can't yet predict what effect the admissions changes are likely to have on the fall freshman class but believe the process will be fairer for all concerned. Many in the community and on campus will be scrutinizing and dissecting the outcome.

Several readers interviewed during and after the training said they thought the changes were positive, although a few said they thought too much emphasis was still placed on grades and test scores.

"I'd like to see it equally weighted with the academics, and the activities and community involvement," said Walling, of Jefferson High. "But it's much better this year. You know much more about where the kids are coming from."




Grading scale

Admissions readers were instructed to rank applicants from 1 to 5. They also had the option of giving a score of 2.5, because choosing between 2 and 3 can be difficult. Here are what the scores mean:

1: Emphatically recommend for admission. This score should be given to truly outstanding applicants the reader would emphatically endorse. About 5% of the total applicant pool should receive this score.

2: Strongly recommend for admission. About 10% of applicants should get this score.

2.5: Recommend for admission. About 10% of the pool should receive this.

3: Acceptable for admission. About 15% should get this.

4: Qualified. About 50% should receive this.

5: Recommend deny. These are applicants the reader cannot say with confidence could succeed at UCLA. About 10% of all applicants should receive this score.


Source: UCLA admissions office

Los Angeles Times

Monday, March 26, 2007

Adaptation to Climate Change? Evidence from Arizona

This is an interesting case study highlighting how a specific geographical area has been affected by recent climate patterns. In this town in Southern Arizona, the temperature is rising and this has triggered fires and bug invasions.

This New York Times article hints at an evil trend suggesting that unsuspecting new Sun Belt migrants are locating in fire zones and are at risk to burn in their houses as new fires erupt from heat and wild land.

The simple economics solution here is for insurance companies to only offer house fire insurance if homes are made out of certain materials that are less likely to burn and to take precautions to reduce the risk of fire. If insurance companies don't anticipate that they will receive a government bailout in bad states of the world, then they would have an incentive to do their homework and figure out what types of housing materials and structures have the highest probability of burning down in this Arizona environment. Facing this differential insurance pricing structure, new home developers would have an incentive to build types of homes that would be less likely to burndown and the New York Times' "doomsday" scenario would be less likely to happen.

It is interesting that the New York Times is trying to educate the urban elite in Cambridge, New York City and other big cities how climate change will affect "real" people in at risk areas. I appreciated this education!

March 27, 2007
Heat Invades Cool Heights Over Arizona Desert

SUMMERHAVEN, Ariz. — High above the desert floor, this little alpine town has long served as a natural air-conditioned retreat for people in Tucson, one of the so-called sky islands of southern Arizona. When it is 105 degrees in the city, it is at least 20 degrees cooler up here near the 9,157-foot summit of Mount Lemmon.

But for the past 10 years or so, things have been unraveling. Winter snows melt away earlier, longtime residents say, making for an erratic season at the nearby ski resort, the most southern in the nation.

Legions of predatory insects have taken to the forest that mantles the upper mountain, killing trees weakened by record heat. And in 2003, a fire burned for a month, destroying much of the town and scarring more than 87,000 acres. The next year, another fire swept over 32,000 acres.

“Nature is confused,” said Debbie Fagan, who moved here 25 years ago after crossing the country in pursuit of the perfect place to live. “We used to have four seasons. Now we have two. I love this place dearly, and this is very hard for me to watch.”

The American Southwest has been warming for nearly 30 years, according to records that date to the late 19th century. And the region is in the midst of an eight-year drought. Both developments could be within the range of natural events.

But what has convinced many scientists that the current spate of higher temperatures is not just another swing in the weather has been the near collapse of the sky islands and other high, formerly green havens that poke above the desert.

Fire has always been a part of Western ecology, particularly when the land is parched. But since the late 1980s, the size and reach of the fires have far exceeded times of earlier droughts. And the culprit, according to several recent studies, is higher temperatures tearing at a fabric of life that dates to the last ice age.

“A lot of people think climate change and the ecological repercussions are 50 years away,” said Thomas W. Swetnam, director of the Laboratory of Tree-Ring Research at the University of Arizona in Tucson. “But it’s happening now in the West. The data is telling us that we are in the middle of one of the first big indicators of climate change impacts in the continental United States.”

And it comes at a time when millions of Americans are moving to these places. Since 1990, more than eight million homes have been built in Western areas that foresters call “the urban-wild land” interface, also the focus of recent federal firefighting efforts.

The fear is that what happened to Summerhaven is a taste of things to come. As heat-stressed ecosystems provide fuel at the edges of new homes, catastrophic fires could become the new normal. Dr. Swetnam compares it to new developments in hurricane-prone areas in the Southeast.

Others say the projections are overly alarmist, and note that fuel buildup is a legacy of fire repression, not necessarily higher temperatures. They also say the higher reaches of the West may simply be evolving into less alpine settings, and could resemble life that exists at lower elevations.

Still, there is a broad consensus that much of the West is warmer than it has been since record keeping began, and that changes are happening quickly, particularly in places like the sky islands.

“The West has warmed more than any other place in the United States outside Alaska,” said Jonathan T. Overpeck, a University of Arizona scientist and co-author of the recent draft by the Intergovernmental Panel on Climate Change, released last month in Paris.

A trip up to any one of the 27 sky islands shows the ravages of heat on the land. The forests are splotched with a rusty tinge, as trees die from beetle infestation. Frogs with a 10,000-year-old pedigree have all but disappeared. One of the sky islands is the world’s only habitat for the Mount Graham red squirrel, an endangered species down to its last 100 or so animals.

For the squirrel, the frog and other species that have retreated ever higher, there may be no place left to go.

“As the climate warms, these species on top of the sky islands are literally getting pushed off into space,” Dr. Overpeck said.

The Coronado National Forest, which includes Mount Lemmon and Mount Graham, lists 28 threatened or endangered species. Heat has greatly diminished the web of life that these creatures depend on, and they “have not evolved to tolerate these new conditions,” Forest Service officials wrote in a report on the declining health of the sky islands.

For people moving to the breezy pines to escape desert heat, the fires that swept through places like Summerhaven can be terrifying. Fire comes much earlier, and much later, in the season.

“You can tell the weather is changing,” said Michael Stanley, head of the water district here, which lost two-thirds of its customers after the fire. “The snow melts earlier. The fires are big. It makes life very interesting.”

On her regular hikes around Mount Lemmon, Ms. Fagan has noticed many changes. She recently saw a type of rattlesnake that usually lives in the lowlands, and — while hiking over snow — was surrounded by gnats.

“I’m standing on snow while swatting away gnats,” she said. “I said, ‘Oh my God, what are these guys doing out in the winter?’ ”

Last year, wildfires burned nearly 10 million acres in the United States — a record, surpassing the previous year. The Forest Service has become the fire service, devoting 42 percent of its budget to fire suppression last year — more than triple what it was in 1991.

The current drought is not nearly as bad as the one in the 1950s, or one in the mid-16th century, but it has caused a huge forest die-off.

The only difference this time around is higher temperatures, said David D. Breshears, co-author of a study published by the National Academy of Sciences on the subject.

The increased heat, Dr. Breshears believes, is the tipping point — stressing ecosystems in the Southwest so quickly that they are vulnerable to prolonged beetle infestation and catastrophic fires.

“The changes are so big, and happening so fast,” Dr. Breshears said. “We saw it happen all the way up the elevation grade and across the region.”

Dr. Swetnam, who said he used to be skeptical about some of the projections on Western landscape changes, came to a different conclusion after studying fires. Since the mid-1980s, about seven times more federal land has burned than in the previous time frame, he found, and the fire season has been extended by more than two months.

Dr. Swetnam laments the loss of areas unique to the Southwest.

“The sky islands have existed since the Pleistocene,” he said, “and now with these huge fires you stand to lose some unique species.”

All of which should be a caution to people moving to reaches of the desert prone to dramatic change.

“The Chamber of Commerce doesn’t like people like me saying things like this, but large parts of the arid Southwest are not going to be very nice places to live,” Dr. Swetnam said.

Here at Summerhaven, Ms. Fagan, who lost her home and gift shop to the fire, is staying put, even though she knows — firsthand — about the changes under way on the sky island where she built a business and raised her two boys. She made her last mortgage payment on her house a few months before the fire took it.

“We lost 90 percent of our community and two-thirds of our mountain to fire,” she said recent one warm morning. “There may be nothing left to burn. But I can’t ever leave this place. I love it too much.”

Sunday, March 25, 2007

Does Day Care "Cause" Kids to Act Bad? A Case Study Highlighting the Importance of Heterogeneous Treatment Effects

People seem to believe that social scientists can estimate treatment effects. Is day care "bad" for children? This New York Times article seems to say that "yes, a little bit" based on a giant expensive study. It doesn't appear that there was any random assignment of childrent into different treatments so maybe we should think a little bit about the selection process of how parents choose a "treatment" for their precious children.

I recognize that this isn't the "econometrics blog" but sometimes I like to wander to other subfields of economics. At the University of Chicago, I trained in labor economics and spent a lot of time in classes taught by the giants of this field so humor me for a minute here.

What types of parents send their kids into Day Care?

A. There is no grandparent who lives near by
B. The mother works full time
C. The family's permanent income is not high enough to afford a nanny

While there certainly are many Hilary Clintons (i.e power moms who earn a high salary), people who fit
this profile may have lower permanent incomes than households where there is a hedge
fund dad and a mom who stays home with the kids. This alone could explain the
observed negative "day care" treatment effect.

One issue that I am confused about in this article below relates to "essential heterogeneity". Parents have private information about their 3 year old's talents and personality. If a mom recognizes that she has a gifted child, is she more or less likely to stay home and work with the kid? If gifted children are less likely to
be sent to pre-school (learning begets learning, skill begets skill) as their parents
want to invest more in them, then this would also tend to generate the finding
that "day care" is bad for kids when the truth is that selection is generating this
fact rather than treatment.

It could be the case that an ungifted kid may be more likely to keep a mom home
as she attempts to help this child to "catch up"? In this case the selection would
go in the opposite way and day care would appear to lead to "better" children later in life.

March 26, 2007
Poor Behavior Is Linked to Time in Day Care

A much-anticipated report from the largest and longest-running study of American child care has found that keeping a preschooler in a day care center for a year or more increased the likelihood that the child would become disruptive in class — and that the effect persisted through the sixth grade.

The effect was slight, and well within the normal range for healthy children, the researchers found. And as expected, parents’ guidance and their genes had by far the strongest influence on how children behaved.

But the finding held up regardless of the child’s sex or family income, and regardless of the quality of the day care center. With more than two million American preschoolers attending day care, the increased disruptiveness very likely contributes to the load on teachers who must manage large classrooms, the authors argue.

On the positive side, they also found that time spent in high-quality day care centers was correlated with higher vocabulary scores through elementary school.

The research, being reported today as part of the federally financed Study of Early Child Care and Youth Development, tracked more than 1,300 children in various arrangements, including staying home with a parent; being cared for by a nanny or a relative; or attending a large day care center. Once the subjects reached school, the study used teacher ratings of each child to assess behaviors like interrupting class, teasing and bullying.

The findings are certain to feed a long-running debate over day care, experts say.

“I have accused the study authors of doing everything they could to make this negative finding go away, but they couldn’t do it,” said Sharon Landesman Ramey, director of the Georgetown University Center on Health and Education. “They knew this would be disturbing news for parents, but at some point, if that’s what you’re finding, then you have to report it.”

The debate reached a high pitch in the late 1980s, during the so-called day care wars, when social scientists questioned whether it was better for mothers to work or stay home. Day care workers and their clients, mostly working parents, argued that it was the quality of the care that mattered, not the setting. But the new report affirms similar results from several smaller studies in the past decade suggesting that setting does matter.

“This study makes it clear that it is not just quality that matters,” said Jay Belsky, one of the study’s principal authors, who helped set off the debate in 1986 with a paper suggesting that nonparental child care could cause developmental problems. Dr. Belsky was then at Pennsylvania State University and has since moved to the University of London.

That the troublesome behaviors lasted through at least sixth grade, he said, should raise a broader question: “So what happens in classrooms, schools, playgrounds and communities when more and more children, at younger and younger ages, spend more and more time in centers, many that are indisputably of limited quality?”

Others experts were quick to question the results. The researchers could not randomly assign children to one kind of care or another; parents chose the kind of care that suited them. That meant there was no control group, so determining cause and effect was not possible. And some said that measures of day care quality left out important things.

The study did not take into account employee turnover, a reality in many day care centers that can have a negative effect on children, said Marci Young, deputy director of the Center for the Child Care Workforce, which represents day care workers. Most employees are “egregiously underpaid and have no benefits,” Ms. Young said, and when they leave for other work, “children experience this as a loss, and that does have an effect on them.”

The study, a $200 million project financed by the National Institute of Child Health and Human Development, recruited families in 10 cities from hospitals, after mothers gave birth. The researchers regularly contacted the mothers to find out where their children were being cared for, and visited those caregivers to see how attentive and how skilled they were with the youngsters.

In 2001, the authors reported that children who spent most of their day in care not provided by a parent were more likely to be disruptive in kindergarten. But this effect soon vanished for all but those children who spent a significant amount of time in day care centers.

Every year spent in such centers for at least 10 hours per week was associated with a 1 percent higher score on a standardized assessment of problem behaviors completed by teachers, said Dr. Margaret Burchinal, a co-author of the study and a psychologist at the University of North Carolina.

The Children’s Defense Fund estimates that 2.3 million American children under age 5 are in day care centers, many starting as toddlers and continuing until they enter kindergarten. Some 4.8 million are cared for by a relative or a nanny, and 3.3 million are at home with their parents.

The study was not designed to explain why time in day care could lead to more disruptive behavior later on. The authors and other experts argue that preschool peer groups probably influence children in different ways from one-on-one attention. In large groups of youngsters, disruption can be as contagious as silliness, studies have found, while children can be calmed by just the sight of their own mother.

“What the findings tell me is that we need to pay as much attention to children’s social and emotional development as we do to their cognitive, academic development, especially when they are together in groups,” said Ellen Galinsky, president of the Families and Work Institute, a nonprofit research group.

Loudell Robb, program director of the Rosemount Center in Washington, which cares for 147 children ages 5 and under at its main center and in homes, said she was not surprised that some children might have trouble making the transition from day care to school.

“At least our philosophy here is that children are given choices, to work alone or in a group, to move around,” Ms. Robb said. “By first or second grade, they’re expected to sit still for long periods, to form lines, not to talk to friends when they want to; their time is far more teacher-directed.”

And as parents in the thick of it know all too well, the stress of juggling chores, work and young children does not help. “It’s not an easy ride,” Ms. Robb said, “and you can see that here at drop-off time and in the evening when kids are picked up.”

The continuing research project began in 1991. The investigators have financing to follow the same children into high school, and are proposing to follow some into their 20s.

Saturday, March 24, 2007

Bargain Real Estate in Los Angeles?

The New York Times has discovered an arbitrage opportunity in Los Angeles real estate and was kind enough to report about it in today's paper. I hope the business section begins offering stock tips! This booster article focuses on the "low" prices in the NELA area of Los Angeles and the easy access to downtown but for some strange reason it doesn't discuss the disadvantages of living in this general area.

I have some questions;

1. how many people in Los Angeles work downtown? Kobe works at the Staples Center 41 days a year but he is in the minority. How many people travel to the Los Angeles commute downtown for cultural and shopping opportunities? To be blunt, what is the advantage of being close to downtown?

2. How far is NELA from the beach? How often do "NELA residents" actually go to the beach? The article tries to imply that the West L.A price premium is driven by the desire among upper middle class shlubs to spot celebrities. Perhaps a more satisfying explanation of the West side price premia is proximity to the beach, cooler summer days, and cleaner air.

I would have liked to have seen this reporter quantify these 3 aspects of living in NELA. I can't tell what is the real purpose of this section of the Times. Is it like a high school guidance counselor providing advice to people who don't know what college to apply to? Or is it geared toward middle class intellectuals who want to believe that they can live as well as the rich (even though they are not rich) because perfect substitutes exist (to Beverly Hills) if they can just get the information about these places?

March 25, 2007
National Perspectives
Northeast Los Angeles: Ready for a Close-Up


A PSYCHOLOGICAL barrier still exists among home buyers here. Downtown is the center of an east-west divide, with the established and famous Hollywood Hills the hub of desirability to the west. To the east, there is a historic hilly area. If Angelenos know about it at all, they generally consider it a less attractive part of town.

But as real estate prices have risen sharply over the last five years, home buyers have been migrating east to discover a group of neighborhoods known collectively as Northeast Los Angeles, or NELA. They are being enticed by Victorian homes dating to the 1890s, Craftsman and Mission Revival homes from the turn of the 20th century and newly desirable midcentury homes, designed with an orientation toward the outdoors.

Eagle Rock, Mount Washington and Highland Park — with a total population of 82,000, according to the 2000 census — are three of the better-known NELA neighborhoods. They are all within Los Angeles proper, in the northeast hills, which were first settled in the late 1800s. And despite rising prices, most houses there are still relatively affordable compared with similar homes in West Los Angeles.

“A $450,000 house in NELA would cost $750,000 in West Los Angeles,” said Bob Taylor, founder of Bob Taylor Properties, who has been a broker in NELA for 27 years. “And it only takes 15 minutes to get downtown from here. In West Los Angeles, it could take 30 minutes or more.” Creative types who work in the film and television industry enjoy close proximity to major studios, like Warner Brothers and Universal. And then there are the views.

“The sunsets are absolutely spectacular,” said David Spancer, who with his wife, Apryl Lundsten, fell in love with a midcentury modern home that sits high in the hills of Eagle Rock. Their 2,100-square-foot house with three bedrooms and two and a half baths cost $495,000 in 2003. Built in 1966, the house still has much of its original detailing, as well as a built-in bar and stools, a barbecue and rotisserie, and a large old-fashioned Chambers refrigerator that still hums along. There’s also a built-in can-opener and coffee maker.

But the real treat is a 1,500-square-foot west-facing balcony that runs the length of the house, offering views from the Pacific Ocean to the Hollywood Hills on a clear day. “And most of my work is at Universal Studios, which is only a 20-minute drive,” Mr. Spancer said, standing on the balcony on a 75-degree February day.

Mr. Spancer is a script coordinator, while Ms. Lundsten is a longtime radio journalist who recently started a podcasting business, L.A. PodSquad. Along with commercial work, she and a business partner produce a regular podcast called Eagle Rock Talk, featuring many of the neighborhood’s new business owners.

“It’s nice to be part of a community that’s coming alive,” she said while giving a tour of the commercial district, where a smattering of cafes, restaurants and boutiques have opened to meet the demand of new homeowners in the area.

Blue Heeler Imports is one such boutique, opened by Shannon Bedell, who lives in Mount Washington. Ms. Bedell did well during the Internet boom, and she was able to buy her Mount Washington home in 1999 for $375,000, along with two lots next door for an additional $80,000. Having lived in Australia for a bit, Ms. Bedell decided to open a boutique featuring Australian products.

“I looked for eight months all over West Los Angeles for a retail space, but I finally decided that Eagle Rock was an up-and-coming commercial district,” Ms. Bedell said. “I’ve definitely noticed an influx of industry people shopping at my store, and it feels good to invest in my own community.”

Not to mention that it is a much easier commute from Ms. Bedell’s 1,500-square-foot two-bedroom Spanish Mission-style home, built in the 1930s, which she shares with Shawn Bishop, a photographer with an even easier commute — to the second bedroom, where he keeps his photo lab and office.

But once again, it is the outdoor space that steals the show. Ms. Bedell’s 1,200-square-foot split-level balcony — reached from different parts of the house by five sets of French doors and shaded by old-growth trees — overlooks the hills of Mount Washington, which could be mistaken for Tuscany.

Community activists credit a strong historic preservation movement for stabilizing NELA, especially in the 1970s, when Highland Park — which sits in a valley between Mount Washington and Eagle Rock — began to experience gang problems and disinvestment.

Charles J. Fisher, a historian who grew up in Mount Washington, married in the early 1980s and moved into a Craftsman home built in 1908 in Highland Park. He immediately noticed that because the area had high-density zoning, developers were buying historical Craftsman and Mission Revival homes, tearing them down and building cheap apartment buildings.

With some other concerned residents, Mr. Fisher founded the Highland Park Heritage Trust, which succeeded in getting a historic-preservation overlay zone for much of Highland Park in 1994. The city planning department has instituted an approval process for modifying historic homes within the zone.

But it wasn’t until the more recent real estate boom that people from outside the area began to discover the housing stock.

“The overlay literally ground the crazy development to a halt,” Mr. Fisher said. “But what’s been happening now, people are moving into the homes and fixing them up. At the time we were fighting for the historic overlay, the real estate market was in a slump. Our biggest ally was the poor economy, when there wasn’t a building boom going on. Otherwise, there would have been a lot more opposition from developers. So when the real estate values skyrocketed more recently, developers went looking elsewhere. We got lucky.”

That is not to say that prices have not gone up. For the ZIP code 90041 (Eagle Rock), the highest and lowest prices paid this year were $1.2 million and $400,000, with a median of $579,500, according to Multiple Listing Service figures provided by Mr. Taylor. In 2001, that ZIP code’s median was $246,000.

Even in Highland Park, which is thought of more as an entry-level home buyer’s market, prices have gone up considerably. For its ZIP code, 90042, the highest price paid this year was $655,000 and the lowest $366,000, with a median price of $487,500. In 2001 the median price was $182,000.

But housing costs still seem reasonable, compared with West Los Angeles. And some west-Angeleno types are moving in. Mr. Taylor said he had recently sold a 3,000-square-foot Craftsman home on a hill and surrounded by 18,000 square feet of land, with a guest apartment over a three-car garage, for $849,000 to an actress whom he asked, for privacy reasons, not to identify.

“You still don’t see too many recognizable actresses looking in Highland Park,” Mr. Taylor said. “But that house on that much land would be a couple million in West Los Angeles. And you probably wouldn’t get the views.”

Thursday, March 22, 2007

One Household's Attempt to Have a Small Ecological Footprint

Are you as "virtuous" as this family? A year without toliet paper? It would be interesting to have a real doctor examine this family to look at their physical health at the end of their experiment. Are they getting proper nuitrition facing their self imposed restrictions? Are they living in a hygenic setting? Are they imposing any long run costs on themselves by offering to be "guinea pigs"? --- as they teach us that we can live ourlives without the day to day capitalist products we seem to "need" so badly.

Experimentation is a good thing and I will read their book at the end of their experiment.

New York Times
March 22, 2007
The Year Without Toilet Paper

DINNER was the usual affair on Thursday night in Apartment 9F in an elegant prewar on Lower Fifth Avenue. There was shredded cabbage with fruit-scrap vinegar; mashed parsnips and yellow carrots with local butter and fresh thyme; a terrific frittata; then homemade yogurt with honey and thyme tea, eaten under the greenish flickering light cast by two beeswax candles and a fluorescent bulb.

A sour odor hovered oh-so-slightly in the air, the faint tang, not wholly unpleasant, that is the mark of the home composter. Isabella Beavan, age 2, staggered around the neo-Modern furniture — the Eames chairs, the brown velvet couch, the Lucite lamps and the steel cafe table upon which dinner was set — her silhouette greatly amplified by her organic cotton diapers in their enormous boiled-wool, snap-front cover.

A visitor avoided the bathroom because she knew she would find no toilet paper there.

Meanwhile, Joseph, the liveried elevator man who works nights in the building, drove his wood-paneled, 1920s-era vehicle up and down its chute, unconcerned that the couple in 9F had not used his services in four months. “I’ve noticed,” Joseph said later with a shrug and no further comment. (He declined to give his last name. “I’ve got enough problems,” he said.)

Welcome to Walden Pond, Fifth Avenue style. Isabella’s parents, Colin Beavan, 43, a writer of historical nonfiction, and Michelle Conlin, 39, a senior writer at Business Week, are four months into a yearlong lifestyle experiment they call No Impact. Its rules are evolving, as Mr. Beavan will tell you, but to date include eating only food (organically) grown within a 250-mile radius of Manhattan; (mostly) no shopping for anything except said food; producing no trash (except compost, see above); using no paper; and, most intriguingly, using no carbon-fueled transportation.

Mr. Beavan, who has written one book about the origins of forensic detective work and another about D-Day, said he was ready for a new subject, hoping to tread more lightly on the planet and maybe be an inspiration to others in the process.

Also, he needed a new book project and the No Impact year was the only one of four possibilities his agent thought would sell. This being 2007, Mr. Beavan is showcasing No Impact in a blog ( laced with links and testimonials from New Environmentalist authorities like His agent did indeed secure him a book deal, with Farrar, Straus & Giroux, and he and his family are being tailed by Laura Gabbert, a documentary filmmaker and Ms. Conlin’s best friend.

Why there may be a public appetite for the Colin-Beavan family doings has a lot to do with the very personal, very urban face of environmentalism these days. Thoreau left home for the woods to make his point (and secure his own book deal); Mr. Beavan and Ms. Conlin and others like them aren’t budging from their bricks-and-mortar, haut-bourgeois nests.

Mr. Beavan looks to groups like the Compacters (, a collection of nonshoppers that began in San Francisco, and the 100 Mile Diet folks ( and, a Vancouver couple who spent a year eating from within 100 miles of their apartment, for tips and inspiration. But there are hundreds of other light-footed, young abstainers with a diarist urge: it is not news that this shopping-averse, carbon-footprint-reducing, city-dwelling generation likes to blog (the paperless, public diary form). They have seen “An Inconvenient Truth”; they would like to tell you how it makes them feel. If Al Gore is their Rachel Carson, blogalogs like Treehugger, and are their Whole Earth catalogs.

Andrew Kirk, an environmental history professor at the University of Nevada, Las Vegas, whose new book, “Counterculture Green: The Whole Earth Catalog and American Environmentalism,” will be published by University Press of Kansas in September, is reminded of environmentalism’s last big bubble, in the 1970s, long before Ronald Reagan pulled federal funding for alternative fuel technologies (and his speechwriters made fun of the spotted owl and its liberal protectors, a deft feat of propaganda that set the movement back decades). Those were the days when Stewart Brand and his Whole Earth writers, Mr. Kirk said, “focused on a brand of environmentalism that kept people in the picture.”

“That’s the thing about this current wave of environmentalism,” he continued. “It’s not about, how do we protect some abstract pristine space? It’s what can real people do in their home or office or whatever. It’s also very urban. It’s a critical twist in the old wilderness adage: Leave only footprints, take only photographs. But how do you translate that into Manhattan?”

With equals parts grace and calamity, it appears. Washed down with a big draught of engaging palaver.

Before No Impact — this is a phrase that comes up a lot — Ms. Conlin and Mr. Beavan were living a near parody of urban professional life. Ms. Conlin, who bought this apartment in 1999 when she was still single, used the stove so infrequently (as in, never, she said) that Con Edison called to find out if it was broken. (Mr. Beavan, now the family cook, questioned whether she had yet to turn it on. Ms. Conlin ignored him.)

In this household, food was something you dialed for.

“We would wake up and call ‘the man,’ ” Ms. Conlin said, “and he would bring us two newspapers and coffee in Styrofoam cups. Sometimes we’d call two men, and get bagels from Bagel Bob’s. For lunch I’d find myself at Wendy’s, with a Dunkin’ Donuts chaser. Isabella would point to guys on bikes and cry: ‘The man! The man!’ ”

Since November, Mr. Beavan and Isabella have been hewing closely, most particularly in a dietary way, to a 19th-century life. Mr. Beavan has a single-edge razor he has learned to use (it was a gift from his father). He has also learned to cook quite tastily from a limited regional menu — right now that means lots of apples and root vegetables, stored in the unplugged freezer — hashing out compromises. Spices are out but salt is exempt, Mr. Beavan said, because homemade bread “is awful without salt; salt stops the yeast action.” Mr. Beavan is baking his own, with wheat grown locally and a sour dough “mother” fermenting stinkily in his cupboard. He is also finding good sources at the nearby Union Square Greenmarket (like Ronnybrook Farm Dairy, which sells milk in reusable glass bottles). The 250-mile rule, by the way, reflects the longest distance a farmer can drive in and out of the city in one day, Mr. Beavan said.

Olive oil and vinegar are out; they used the last dregs of their bottle of balsamic vinegar last week, Mr. Beavan said, producing a moment of stunned silence while a visitor thought about life without those staples. Still, Mr. Beavan’s homemade fruit-scrap vinegar has a satisfying bite.

The television, a flat-screen, high-definition 46-incher, is long gone. Saturday night charades are in. Mr. Beavan likes to talk about social glue — community building — as a natural byproduct of No Impact. The (fluorescent) lights are still on, and so is the stove. Mr. Beavan, who has a Ph.D. in applied physics, has not yet figured out a carbon-fuel-free power alternative that will run up here on the ninth floor, though he does subscribe to Con Ed’s Green Power program, for which he pays a premium, and which adds a measure of wind and hydro power to the old coal and nuclear grid.

The dishwasher is off, along with the microwave, the coffee machine and the food processor. Planes, trains, automobiles and that elevator are out, but the family is still doing laundry in the washing machines in the basement of the building. (Consider the ramifications of no-elevator living in a vertical city: one day recently, when Frankie the dog had digestive problems, Mr. Beavan, who takes Isabella to day care — six flights of stairs in a building six blocks away — and writes at the Writers Room on Astor Place — 12 flights of stairs, also six blocks away — estimated that by nightfall he had climbed 115 flights of stairs.) And they have not had the heart to take away the vacuum from their cleaning lady, who comes weekly (this week they took away her paper towels).

Until three weeks ago, however, Ms. Conlin was following her “high-fructose corn syrup ways,” meaning double espressos and pastries administered daily. “Giving up the coffee was like crashing down from a crystal meth addiction,” she said. “I had to leave work and go to bed for 24 hours.”

Toothpaste is baking soda (a box makes trash, to be sure, but of a better quality than a metal tube), but Ms. Conlin is still wearing the lipstick she gets from a friend who works at Lancôme, as well as moisturizers from Fresh and Kiehl’s. When the bottles, tubes and jars are empty, Mr. Beavan has promised her homemade, rules-appropriate substitutes. (Nothing is a substitute for toilet paper, by the way; think of bowls of water and lots of air drying.)

Yet since the beginning of No Impact, and to the amusement of her colleagues at Business Week, Ms. Conlin has been scootering to her office on 49th Street each day, bringing a Mason jar filled with greenhouse greens, cheese and her husband’s bread for lunch, along with her own napkin and cutlery. She has taken a bit of ribbing: “All progress is carbon fueled,” jeered one office mate.

Ms. Conlin, acknowledging that she sees her husband as No Impact Man and herself as simply inside his experiment, said she saw “An Inconvenient Truth” in an air-conditioned movie theater last summer. “It was like, ‘J’accuse!’ ” she said. “I just felt like everything I did in my life was contributing to a system that was really problematic.” Borrowing a phrase from her husband, she continued, “If I was a student, I would march against myself.”

While Ms. Conlin is clearly more than just a good sport — giving up toilet paper seems a fairly profound gesture of commitment — she did describe, in loving detail, a serious shopping binge that predated No Impact and made the whole thing doable, she said. “It was my last hurrah,” she explained.

It included two pairs of calf-high Chloe boots (one of which was paid for, she said, with her mother’s bingo winnings) and added up to two weeks’ salary, after taxes and her 401(k) contribution.

The bingo windfall points to a loophole in No Impact: the Conlin-Beavan household does accept presents. When Mr. Beavan’s father saw Ms. Conlin scootering without gloves he sent her a pair. And allowances can be made for the occasional thrift shop purchase. For Isabella’s birthday on Feb. 25, her family wandered the East Village and ended up at Jane’s Exchange, where she chose a pair of ballet slippers as her gift.

“They cost a dollar,” Ms. Conlin said.

It was freezing cold that day, Mr. Beavan said, picking up the story. “We went into a restaurant to warm her up. We agonized about taking a cab, which we ended up not doing. I still felt like we really screwed up, though, because we ate at the restaurant.”

He said he called the 100 Mile Diet couple to confess his sin. They admitted they had cheated too, with a restaurant date, then told him, Yoda-like, “Only in strictness comes the conversion.”

Restaurants, which are mostly out in No Impact, present all sorts of challenges beyond the 250-mile food rule. “They always want to give Isabella the paper cup with the straw, and we have to send it back,” Mr. Beavan said. “We always say, ‘We’re trying not to make any trash.’ And some people get really into that and others clearly think we’re big losers.”

Living abstemiously on Lower Fifth Avenue, in what used to be Edith Wharton country, with early-21st-century accouterments like creamy, calf-high Chloe boots, may seem at best like a scene from an old-fashioned situation comedy and, at worst, an ethically murky exercise in self-promotion. On the other hand, consider this response to Mr. Beavan’s Internet post the day he and his family gave up toilet paper.

“What’s with the public display of nonimpactness?” a reader named Bruce wrote on March 7. “Getting people to read a blog on their 50-watt L.C.D. monitors and buy a bound volume of postconsumer paper and show the filmed doc in a heated/air-conditioned movie theater, etc., sounds like nonimpact man is leading to a lot of impact. And how are you going to measure your nonimpact, except in rather self-centered ways like weight loss and better sex? (Wait, maybe I should stop there.)”

Indeed. Concrete benefits are already accruing to Ms. Conlin and Mr. Beavan that may tempt others. The sea may be rising, but Ms. Conlin has lost 4 pounds and Mr. Beavan 20. It took Ms. Conlin over an hour to get home from work during the snowstorm on Friday, riding her scooter, then walking in her knee-high Wellingtons with her scooter on her back, but she claimed to be mostly exhilarated by the experience. “Rain is worse,” she said.

Perhaps the real guinea pig in this experiment is the Conlin-Beavan marriage.

“Like all writers, I’m a megalomaniac,” Mr. Beavan said cheerfully the other day. “I’m just trying to put that energy to good use.”

Wednesday, March 21, 2007

The Economics of Agglomeration

Why do cities exist? In this Internet age, why do they continue to exist? Probably, so we can step in each other's dog poop and smell other people's cigar smoke? Perhaps, there are gains to trade that are facilitated by being in tight proximity that overcome the annoying noise, smoke and foulness of cities?

The NBER has invested some $ to try to test some new hypotheses concerning the causes and consequences of agglomeration. Here is the program:

If you will be in Cambridge on Friday, you can present my paper for me. I will be to your west.

How Clean Should Water be in LDC Cities?

This blog entry below argues that urban water treatment systems are expensive in terms of upfront expenditure and ongoing expenditure. While everyone would like to have clean water for bathing and drinking, such projects are expensive. This blogger seems to be arguing that "small projects" would be better for LDC cities because government politicians on the ground are more likely to be willing to budget for them relative to enormous engineering projects that sound great on paper but create local public finance havoc in terms of budget deficits for poor LDC governments.

The U.S ran into this issue 100 years ago. See the Cutler and Miller paper
Cutler, David, and Grant Miller. 2005. “Water, Water, Everywhere: Municipal Finance and Water Supply in American Cities.” Working Paper 11096. Cambridge, Mass.: NBER (January). at

A second issue this blogger should have addressed is time consistency in cities in developing countries. If Wall Street bankroll's Cairo's new water treatment system and then expects to earn back its money through charging a high price for clean water after this irreversible investment in a water treatment system is made, will the Cairo politicians allow this dynamic contract to unfold? Or expost after the system is build, will the politicans renege on the original deal? This latter possibility represents a "takings" and the anticipation of this state of the world leads Wall Stree to not invest in the first place.

Noll, Roger, Mary M. Shirley, and Simon Cowan. 2000. “Reforming Urban Water Systems in Developing Countries.” In Economic Policy Reform: The Second Stage, NBER Volume edited by Anne O. Krueger. University of Chicago Press.

You don't have to be as smart as Ed Prescott to see the costs of the inability of urban LDC politicians to commit to respect property rights in this simple time consistency model!

March 21, 2007
All-or-nothing in water treatment?
Posted by Tracy Hart

During the World Bank's Water Week last month, one topic discussed was "Balancing Brown and Green Interests." Not everyone knew that the "brown interest" is sanitation, including wastewater treatment, and that the "green interest" is environmental sustainability. However, my real surprise was to discover the conflicting interests.

Wastewater infrastructure is a big business everywhere -- the U.S. Environmental Protection Agency estimates that the U.S. alone needs to invest roughly $140 billion over the next 20 years in wastewater treatment systems to meet water quality standards. And, while treatment of wastewater effluent seems a no-brainer...

the opportunity costs of building treatment facilities in developing countries vis-à-vis investing in other poverty alleviation interventions is substantial.

So the buzz on the smart route to wastewater management in developing countries is a "phased approach." Investment in basic or primary wastewater treatment may happen now, and stepped up secondary and tertiary treatment occurs later down the road.

Sounds like a good idea? Yes, but let's not forget that wastewater treatment must meet the local environmental standards for water quality. And that these standards are often based on western models, which most middle-income countries and cities still struggle to pay for.

So even if there is a high class wastewater treatment plant, and piped water supply and (even less likely) sewerage removal, there’s a good chance the plant might be sitting around unused due its high operations and maintenance costs.

The challenge is to reconcile environmental safeguards and environmentally sustainable agendas. While safeguards call for compliance with local environmental standards, sustainability depends on an economic valuation of the cost of untreated effluent water to in-stream (fisheries, tourism) and downstream uses (uptake by communities). Even valuing the environmental damage due to untreated wastewaters is a tricky business.

Lastly, sanitation engineers tend to plan big, coming up with long-term plans for water and sewerage connections that require a ‘big-ticket’ investment to install primary, secondary and tertiary treatment systems. But this all-or-nothing approach is expensive and often leaves municipalities with no treatment at all.

The Bank is still learning on this one. One lesson is that the toolbox for increasing access to sanitation includes not only piped sewerage to treatment plants, but also on-site sanitation, and low-tech, newer, interventions, like constructed treatment wetlands and water reuse. These lower-tech solutions are appearing again and again in the Middle East and North Africa as well as for South Asia. Again, another universal lesson is look to local solutions and support these. What do you think?

Tuesday, March 20, 2007

California as a "Lab" to test whether Immigrants Raise or Lower U.S Workers' standard of living

Immigration appears to be an important policy issue for the United States. This new research article I present below challenges the conventional wisdom that immigrants compete with incumbent citizens for scarce jobs and hence lower natives' standard of living. This author uses California as his lab.

While a clever economist can use sophisticated econometric strategies to attempt to quantify how immigration affects market prices (such as a person's wage and home price); such an approach rarely gets at the causal mechanism. Why has immigration stimulated greater demand for native workers in California?

California has unique environmental assets that draws people to live here. If immigrants lower the equilibrium price of basic day to day services that the middle class have come to expect (i.e gardening etc), then are the middle class more likely to stay in California. If this author could survey business people, how is their job creation a function of immigration? For Peri to be correct, the average business person in California must create more native jobs as immigrants enter and bid down the market wage for other jobs. It would help me to get some concrete examples of these "cross-elasticities".

Still, I find this to be an intriguing claim and perhaps politically useful for politicians heading into the 2008 campaign. So now, a pro-immigration person can point to Jane Jacobs and say that diversity fuels economic growth and cultural opportunities and this study.

Immigrants' Complementarities and Native Wages: Evidence from California

Giovanni Peri

NBER Working Paper No. 12956
Issued in March 2007

---- Abstract -----

As of 2004 California employed almost 30% of all foreign born workers in the U.S. and was the state with the largest percentage of immigrants in the labor force. It received a very large number of uneducated immigrants so that two thirds of workers with no schooling degree in California were foreign-born in 2004. If immigration harms the labor opportunities of natives, especially the least skilled ones, California was the place where these effects should have been particularly strong. But is it possible that immigrants raised the demand for California's native workers, rather than harming it? After all immigrants have different skills and tend to work in different occupations then natives and hence they may raise productivity and the demand for complementary production tasks and skills. We consider workers of different education and age as imperfectly substitutable in production and we exploit differences in immigration across these groups to infer their impact on US natives. In order to isolate the "supply-driven" variation of immigrants across skills and to identify the labor market responses of natives we use a novel instrumental variable strategy. Our estimates use migration by skill group to other U.S. states as instrument for migration to California. Migratory flows to other states, in fact, share the same "push" factors as those to California but clearly are not affected by the California-specific "pull" factors. We find that between 1960 and 2004 immigration did not produce a negative migratory response from natives. To the contrary, as immigrants were imperfect substitutes for natives with similar education and age we find that they stimulated, rather than harmed, the demand and wages of most U.S. native workers.

Sunday, March 18, 2007

Climate Change and Air Travel Delays: An Economic Research Agenda

A while back I did two hours of research to get a sense of how many hours a year did U.S air travelers lose due to bad weather at their origin or destination and how many more hours they might lose in the future if current hub patterns continued and climate change led to a higher frequency of bad weather and if the weather shocks were more severe.

My goal at the time was to write an editorial piece making the claim that if U.S citizens thought through the private costs of allowing climate change to take place that they might be more willing to accept some short run pain (i.e higher gas taxes and carbon taxes) to avoid such future costs.

This weekend's bad weather in the Northeast got me thinking again about my aborted editorial piece. Many people were stranded and unable to get home. Airports are generally pretty nasty. I do like the Denver airport but that's a rare one and I don't understand why it is so nice. It does look pretty new to me.

So, my reserach question really has two pieces to it:

1. For different types of flights across the U.S, how much time on average will delays increase as climate shocks increase?

2. How much do different people suffer (i.e how much are they willing to pay to avoid a long airport delay?) when a delay takes place?

Perhaps repeated shocks will allow Jetblue to learn how to handle its business and the costs of bad weather will be low?

One last final point. Some economists such as Mayer and Sinai have done good
work on the economics of hubbing. If climate change takes place, will airlines
engage in less hubbing? My intuition is simple. If planes can fly over most storms, doesn't it make more sense to fly direct from Boston to Denver than to risk hubbing and going from Boston to Cleveland and Cleveland to Denver? Alternatively, airlines may have to offer some really nice perks at the hub center such as free beer to keep folks like me calm and happy.

Will airlines compete on direct flights again to guarantee behavioral consumers that there is no time risk in enduring the 2 legs of the trip?

Friday, March 16, 2007

Housing Supply Regulation in Environmentalist Communities

I am fascinated by whether reading the New York Times causes people to live their lives differently. Put simply, does reading Paul Krugman's column increase your devotion to President Bush? Today's Times provides a rational expectations data point. In preparation for a USC conference in early April, I've written a paper examining housing supply regulation across California. Ed Glaeser and Bill Fischel have argued that local environmentalism is an important source of housing supply regulation. These authors are well aware that all incumbent home owners have an incentive to block new construction because such supply increases makes their "scarce" asset less valuable. The more novel environmentalist angle is that greens (due to ideology of preserving open space and the area's general character) have an extra incentive to pass "slow growth" controls in areas where they cluster.

In my empirical article, I present evidence supporting the Glaeser/Fischel claims. Today's New York Times article provides a single data point case study from Big Sur. It is really pretty there, land prices are really high and developers face tons of red tape to do business and build more houses there.

The article provides some estimates of the actual "red tape" cost but I don't know if these are real or made up.

So, a rational expectations guy would say that I anticipated that the Times would write this article and this caused me to write the paper that I now have a good draft done.

March 16, 2007
Big Changes at Big Sur


DRIVERS passing through Big Sur on Highway 1 between Los Angeles and San Francisco are inevitably awed by the duel of sea and sky played out against the rugged Santa Lucia Mountains. Indeed, the pristine slopes facing Highway 1, a designated American National Scenic Byway, are some of the most rigidly protected in the country, guarded by a phalanx of agencies that range from the Monterey County Resource Management Agency to the California Coastal Commission.

But turn down one of the dozens of private roads along the coast, and you'll discover teams of builders laying stone walls and installing hot tubs at multimillion-dollar properties, trucks full of building supplies groaning up the steep switchbacks and poles set up on the hillsides with orange plastic netting fluttering between them like Tibetan prayer flags.

There's a mini-construction boom happening in Big Sur, local real estate agents say. And, these days, more than half the homes in the region are owned by part-time residents who live mainly in Los Angeles or around San Francisco Bay.

“For the past six years we've been seeing a lot of fund managers and dot-commers coming in who want to buy a slice of heaven,” said Robert Carver, an architect whose firm, Carver & Schicketanz, specializes in Big Sur. “Contractors here have been so busy that folks are importing outside contractors, and builders from as far away as New York.”

Big Sur's epic landscapes, studded with redwood forests, hot springs and misty coves, have attracted metaphysical types for at least three generations. “It was here in Big Sur I first learned to say Amen!” the novelist Henry Miller wrote in “Big Sur and the Oranges of Hieronymus Bosch” after settling here in 1944.

Even so, more than a quarter of the properties along the coastline have changed hands the last decade, said Martha Diehl, a member of Monterey County's planning commission, altering the region's demographics. In 2005, building permit applications submitted to Monterey County were up about 50 percent from five years before.

Perhaps one of the biggest surprises for anyone who has watched how the Hamptons or Palm Beach have developed is the complete lack of large housing or even fencing around the pricey acreage being bought up by wealthy city dwellers seeking second homes. “You don't move to Big Sur if you want to host a lot of people,” said Mr. Carver, citing his clients' disinterest in Aspen-size mansions. “This has always been a place to go to for solitude.”

Peter Mullin agrees. “I read, I hike, I sit in the hot tub and watch nature in all its glory,” said Mr. Mullin, a Los Angeles-based entrepreneur who has spent the last decade converting a 30-year-old cabin into a magnificent, yet understated, weekend home.

Clinging to a rock shelf suspended between the waves and Highway 1, Mr. Mullin's retreat is an interconnected series of wood pavilions that have Asian touches — right down to a koi pond that surrounds the front entrance. Despite the spectacular construction, the place has just enough beds for Mr. Mullin and his family.

“The freewheeling hippie feeling of Big Sur has modified,” he said. “But the big swells of the sea are raining on you. And you still have to know where your candles are for the power outages. Most newcomers cherish the scenery there, and they try to blend in.”

EVEN so, the change is noticeable. “My neighbors are a lot different now than when I moved here,” said Monique Bourin, who has lived in Big Sur for 20 years. “The flower children and counterculture types who came here in the '60s and '70s without any money were suddenly sitting on top of multimillion-dollar properties, and a lot of them moved. The buy-in for a coastal plot is now around $3 million.”

Ms. Bourin, who was helped by her late husband, has spent the last two decades building a house in an isolated highland valley facing the sea. “We were hippies who were going to homestead and build our house with our own two hands,” she said, indicating a pile of lumber outside her front door, awaiting a new project. “It's been a lot of work, but I'm almost done.”

Her cedar and redwood home rises out of a ravine near Pfeiffer Beach like a vision from the Whole Earth Catalog, complete with stained-glass windows and a well-tended vegetable garden. It has solar power and a water cistern so that it's entirely self-contained, right down to an 1893 wood-burning stove salvaged from the Los Alamos, N.M., train station.

On the hills surrounding her home, sculptural modernistic dwellings that range in value from $2.5 million to $6 million are replacing the simple wooden cabins and modest bungalows that once made up most of the housing here. Orange flagging across the ravine indicates another structure about to be built on a neighboring property.

A gleaming BMW convertible parked on the dirt road in front of Ms. Bourin's homestead gives a hint to the mixed feeling she might have about all the changes going on in Big Sur; she has become a successful local real estate broker. (By the way, if her house were for sale, she said, she'd price it at $3.7 million.)

Given all the newcomers, some fear that Big Sur is becoming another Aspen or Sedona, where the wealthy have bought into the local counterculture lifestyle while indelibly altering it.

“People think of gentrification as something that happens in downtown neighborhoods,” said Chris Calott, an Albuquerque-based urban planner who has been camping in Big Sur for more than 30 years. “But now we're seeing it happen on an unprecedented scale in rural areas all over the country. The questions facing Big Sur are the same ones facing the Hamptons, Taos, Marfa and other bucolic destinations that become popular with urban elites. Can a place be considered ‘preserved' if the local store now has a fantastic imported cheese section, but you have to drive an hour to buy twine?”

Ms. Diehl, the planning commissioner, who has lived in the area for 20 years, said, “We don't want a Disney or Colonial Williamsburg Big Sur — we want to keep it real. The only people who can go through the process are people who can afford it, and that brings social costs.”

Michelle Rizzolo understands the problem well. “We can't find any place for our employees to live,” said Ms. Rizzolo, who left the kitchen of the Four Seasons in Beverly Hills to open the funky Big Sur Bakery & Restaurant on a lot she shares with a gas station tucked off a wooded knoll on Highway 1. “In fact, when we started this place, we all had to sleep on the floor of the bakery.”

Although two of the area's biggest employers, the Post Ranch Inn and the Ventana Inn & Spa, have housing for their employees, on weekday mornings workers from Salinas, an inland city an hour's drive away, are crammed in cars and trucks going south on Highway 1 to their jobs in Big Sur.

While Big Sur is changing, it isn't so easy to tear down an old cabin and build a modern house. The region has some of the country's strictest building laws, officials and contractors say, and new construction tends to be limited to existing building footprints. There are rigid standards regarding water and natural preservation.

“I usually tell clients to count on one, or even two, years between buying the property and putting the first shovel in,” said Jay Auburn, who procures building permits for Carver & Schicketanz. “You have to factor in an additional 5 to 10 percent of construction costs just for getting over the regulations.”

Two Carver & Schicketanz clients, Zachary Treadwell, a Los Angeles-based screenwriter, and his wife, Langka, recently built a 1,500-square-foot sod-roofed retreat half-buried in a windy hillside 600 feet above the Pacific and only accessible by a steep and winding private road in the narrow canyon that leads to Pfeiffer Beach. The road was only blacktopped last December. Ms. Bourin, the real estate agent, estimated that the Treadwell property would go on the market at $6 million.

As is typical with most new construction in Big Sur, not even a fence delineates where the Treadwells' land ends and public space begins. The home, a glass-and-rock cube with a stone-lined in-ground hot tub, appears Zen-like in its simplicity. Yet the effort involved in the logistics and regulatory hurdles the Treadwells had to overcome seems akin to the building of the Pyramids. Even choosing the grass for the roof was complicated.

“Some of the oak grass is considered endangered,” said Fred Ballarini, one of the naturalists hired to help shepherd the Treadwells through some 18 different presentations to the Monterey County Resource Management Agency. “We were required to replant three times the amount of the grass that was affected by the construction nearby.”

The biggest hurdle for getting a building permit is keeping new construction invisible from Highway 1 and other areas of public access. “General rule of thumb is if you can see it, you can't build it,” said Dale Ellis, director of the management agency. Hence the rise of flagging scaffolds that outline proposed construction throughout Big Sur's back roads — erected so regulators can determine the visual impact of new construction.

FOR the Treadwells, the effort has paid off. During a recent visit, coyotes and a wildcat scurried along the patio while midway to the vast horizon a line of migrating gray whales spouted like sea locomotives.

When the sun set, the glass house seemed suspended by invisible threads between the starry sky and the pounding surf below. Highway 1 and any other sign of civilization were hidden behind the hills that had merged into the night. Despite the sweeping view of the California coast, one could be the last person on earth. “All that matters is that the miraculous becomes the norm,” Henry Miller wrote — and every weekend, that possibility exists for the Treadwells and other denizens of Big Sur.

“It was a major thing, getting all the permits,” Ms. Treadwell said as her three small children played outside in the steaming hot tub. “But we knew that when we got into this, and we're fine with it. Even with all the building going on, we think the magic of this place is going to be preserved.”