Friday, February 29, 2008

Harvard's Upcoming Environmental Conference will Praise Center Cities

Who says that Boston is a sleepy, gray town? While my wife and I have voted for sunshine over snow, others have stayed and appear to be wide awake. Permit me to quote a co-author:

"Next week, a conference jointly sponsored by the Harvard Center for the Environment, Rappaport Institute, and Mayor Thomas Menino's office will explore the phenomenon of green cities. As we face the prospect of climate change encouraged by vast quantities of man-made greenhouse gases, we should rethink those decisions that lead to more energy consumption and carbon dioxide emissions. Is it wise for American development to be so concentrated in low-density, car-oriented, energy-intensive suburbs?"

If you demand correct attribution of quotes, then please look here
Glaeser on The Environmental Benefits of Cities

I must admit that this topic interest me. Ed Glaeser and I are working on this topic right now and the paper will be good!

Wednesday, February 27, 2008

Baby Boomer Environmentalism: Birth Cohort versus Age versus Calendar Year Effects

Most economists have fond memories of applied labor classes where the professor would teach the following detective puzzle. If a 45 year old in calendar year 2008 buys a Prius, what have we learned about the relative importance of birth cohort effects, calendar year effects versus age effects in determining car demand?

The answer to the riddle revolves around the following exciting arithmetic.

In 2008, a person who is 45 years old was born in 1963. So there are 3 different factors potentially driving behavior;

1. Being 45 years old (the age effect)
2. Having been born in 1963 (the birth cohort effect)
3. Living in 2008 (the calendar year effect) ---

The trouble is the identity that 2008 - 45 = 1963.
so at a point in time you can't tease out all 3 effects' impact.

This is frustrating because one can tell plausible stories of the role of all 3 in determining important consumer behavior. Now that this boring lecture is over, please read my recent media quote to see a funny example in the real world.

Greens and the Summer of Love

Rust Belt Cities as Consumer Cities: Does Providence Rhode Island = Paris?

Urban Economists continue to debate the future of the Rust Belt. Ed Glaeser has earned much praise from upstate New Yorkers for his "kind words" about Buffalo's fate. See

Other economists have also highlighted the challenges that cold Rust Belt cities face. Bruce Sacerdote paper on the Rust Belt

The New York Times is becoming a more optimistic newspaper. Perhaps the end isn't near afterall. What I find interesting about this Booster piece about Providence Rhode Island is the synergies between Brown University and Providence. Brown is becoming a more serious research university at the same time that Providence is improving. Which way does the causality go? Is it now easier for Brown to recruit star faculty like Ken Chay because it is a "consumer city"? Or as Brown has grown richer it is investing more in the city and being a good neighbor? Yale for years has had to wrestle with this issue of "playing nice".

The bigger issue here is the role that major Universities play in helping a city's image and its actual day to day quality of life in terms of culture, restaurants, book stores, young people walking around and nerds. Richard Florida's thesis on the creative class may be partially at work here but the true "exogenous" institution drawing the creative through a social multiplier effect is the major university.

If this thesis is wrong, then you name a fun , hip city that doesn't have a great university. I can think of downtown San Francisco as one counter-example but Berkeley is close.

February 27, 2008
Square Feet

Providence Begins to See Its Future Around the Corner

PROVIDENCE, R.I. — This is a city of 25 diverse neighborhoods, many with distinctive New England character, but it is Downcity that is the urban core and the city’s historical heart.

Downcity is centered on Westminster Street, an urban thoroughfare lined with a cohesive ensemble of 18th- and 19th-century neo-Classical-style and Italianate mercantile buildings, made of brick, limestone and cast iron.

Until the middle of the 20th century, it was a vibrant shopping district, perhaps the most prominent in the state, whose residents used to talk about going “downcity” rather than “downtown.” It offered chic clothing shops, jewelers, tailors, salons and a number of local department stores: Shepard’s, Peerless and Gladdings.

But once the venerable tenants left, the buildings were vacant for years. Today, different kinds of stores are opening here. Cheese shops, design stores and restaurants are setting up in these stately buildings, hoping first-floor retail spaces will capture the attention of new residents in the area.

There has long been talk of a renaissance in Downcity, which covers a 36-block area, about a quarter mile long and a third of a mile wide, and progress has been made.

“In 1990, you could have thrown a bowling ball down Westminster Street,” said Thomas Deller, director of planning and development for the city and executive director of the Providence Redevelopment Agency.

“Everything in Downcity continues to evolve,” he said. “What happens in good city planning is the ability to keep a pulse of what’s happening, to make sure that the plan is clear about what you want to achieve.” He added: “Here’s a city that has figured it out.”

Arnold B. Chace, 60, owner, president and chief executive of Cornish Associates, a real estate development firm, has been a seminal figure in the redevelopment of Downcity.

Today, there are residential lofts, a bookstore, a cafe, a college library, stores, a wine shop, restaurants, arts organizations, theater companies and a hotel in Downcity. Many occupy buildings owned by Cornish.

According to Mr. Chace, Cornish Associates has acquired eight buildings since 1991, paying as little as $3 to $10 a square foot. To date, his company has committed $80 million to restore them.

As Mr. Chace, who is known as Buff, tells it, his interest in Downcity dates to a day in 1991 when he was looking at buildings that had been foreclosed, accompanied by his twins, who were then 7 years old. “I was explaining to them about what had happened here, and my daughter asked me, ‘Why don’t you do something about it?’ ” Mr. Chace said.

That elicited a response. “The very heart of our city was in disrepair, and I became committed to rebuilding that heart,” he said.

He helped to persuade the mayor, Vincent Cianci, and the Providence Foundation, a nonprofit group that works on redevelopment, to sponsor a five-day program in 1991 to analyze the downtown and develop a master plan to revitalize its core. A leading participant was the architect and New Urbanism advocate Andrés Duany.

There were two more such planning sessions involving Mr. Duany, in 1994 and 2005, and a master plan was adopted by the city after the 1994 meeting.

For the revitalization of Downcity, Mr. Chace has been guided by the principles laid out in the plan: walkable streets; continuous retailing, with no offices on ground floors; and mixed use.

But the effort to attract retailers was undercut when the huge Providence Place Mall, with about 1.3 million square feet and 170 stores, including Nordstrom and Macy’s, opened about a half-mile away in August 1999.

Cornish Associates shifted its focus to housing. It has created 196 loft apartments by renovating the eight buildings. About 95 percent of the apartments are occupied, roughly a fifth by artists. The lofts range from 550 to 2,700 square feet and rent for $500 to $3,000 a month.

None of this could have happened without significant tax credits. “It took a major effort, changes in zoning, and getting legislation passed to make this work,” Mr. Deller said. Federal and state historic tax credits return 20 and 30 percent of the total rehabilitation expenses respectively to the developer of a project in a historic district.

In 1999, additional incentives to attract artists were passed, including a proposal pushed by Mr. Cianci that artwork created in the district would not be subject to sales tax, nor would artists be subject to state income tax.

Three universities — the University of Rhode Island, Rhode Island School of Design, and Johnson & Wales — own property in Downcity. There are also a number of arts organizations, including the Trinity Repertory Company, the Providence Performing Arts Center and the Black Repertory Theater.

AS220, a nonprofit artist group, currently owns and operates two buildings. Umberto Crenca founded the group at 220 Weybosset Street in 1985; the name, short for Artist Space 220, is supposed to evoke P. S. 1, the contemporary art center in Queens.

He began in a single room, but in 1993, Lucie Searle, a developer, assisted the organization in buying a 22,000-square-foot- building for $400,000. A second building was bought in 2005 using tax credits. AS220 is about to buy its third building for more than $1 million.

Retail spaces have been slower to fill, and this is a problem in Downcity. “Critical mass must be created for an infrastructure of services to come in,” Mr. Chace said, citing dry cleaners, groceries and drugstores as the kinds of businesses that are needed.

In 2003, Mr. Chace offered extraordinary leases to his first retail tenants. “I allowed tenants to enter deals without rent, and I took a percentage of sales,” he said. He now lists annual asking rents of around $20 a square foot. At Providence Place Mall, the annual rents are about $75 or $80 a square foot.

The attractive rents have helped attract independent shop owners. Heejun Arms, 38, opened Elsa Arms, a store selling designer clothing, one year ago on Westminster Street. She was drawn to the high ceilings. “I couldn’t find this anywhere else,” Ms. Arms said.

George Germon and Johanne Killeen, prominent Providence chefs who own the restaurant Al Forno, which has operated for 28 years in another part of the city, are about to create a new venture in Downcity. Their restaurant-wine bar, called Tini, is to open in April.

Michael Corso, 37, who has worked for Cornish Associates, opened Tazza Caffe in late 2003, signing a 10-year lease. His goal was to create a European style neighborhood espresso bar. “We have a dynamic bunch coming in here: artists, professionals, politicians,” he said.

David N. Cicilline, the current mayor, is optimistic about Downcity. “People are living here for the first time in a long time,” he said.

Mr. Crenca, the artist, notes there is more to be done, however. “We are at a very critical juncture,” he said. “Others need to step up to the plate.”

Monday, February 25, 2008

A Columbia University Undergraduate's Views on Sustainability

Can the old learn from the young? As a younger man, I worked at Columbia University and had the opportunity to teach some very gifted students. This one student makes some good points. The "Big" issue here is what is a "green" lifestyle? How do we know it when we see it?

Sustainability Beyond ‘Green Chic’ and Solar Panels
By Julie DeVries

Created 02/24/2008 - 8:52pm

When I was in high school in New Hampshire, the Environmental Action Committee, of which I was a part, hosted a guest who went by the name of “Sunweaver.” His beard was long and scraggly, and he wore a Dr. Seuss-shaped hat of rainbow colors. I liked him immediately, not only for his comical appearance, but also for his effortless idealism. When he was not traveling the country on his solar electric bus, he was selling renewable energy systems out of his “energy showroom” in Northwood, New Hampshire. He told us that he routinely saw customers with inefficient appliances looking for a quick and flashy fix in alternative energy. Sunweaver told these people that they must first conserve—change their ordinary appliances to efficient ones, change their light bulbs to compact fluorescents, and change their lifestyles by cutting down on consumption and waste. When they had completed these tasks, if they so wished, they could come back and buy a solar panel.

Sunweaver would be ridiculed in New York City. He would probably be referred to as a crazy hippy with no economic sense. And while it is true that we do not all have to drive a solar electric bus around the country and wear rainbow hats to live sustainably, Sunweaver’s message should not be abandoned just because we don’t support his lifestyle.

Lately, as the reality of global climate change has become universally accepted, green is in fashion. The candidates for the 2008 presidential elections play up the environmental and the economical wonders of “green-collar jobs.” Many magazines have taken to writing issues like Vanity Fair’s “Green Issue,” which features celebrities and their flashy renewable energy-powered mansions. The sales of organic food, Prius hybrid cars, and solar panels are at an all-time high. But in this green-crazed country, one must stop and wonder: does a Prius plus a bag of Pirate’s Booty really equal sustainability?

Buying goods labeled “environmentally friendly” does not necessarily insure that you are helping the earth—in reality, finding the best way to live a sustainable lifestyle in a specific area is quite complex. For example, the effectiveness of a solar panel depends on the orientation of the home and the amount of sunlight the area receives. In all seasonal areas of the United States, it is more cost-effective to replace old appliances with energy-efficient ones at about $100 per appliance than it is to buy a solar panel, which generally costs a couple thousand dollars, depending on the size of the home. Unfortunately, many Americans choose to buy solar panels anyway because they are conspicuous and “green chic.”

Similarly, buying a Prius is not always the right path. It is important to remember that every new Prius bought is a new Prius made, and making new cars takes energy and therefore burns fossil fuels, which release more carbon dioxide into the atmosphere. It makes much more sense to take an old diesel car and run it on biodiesel, which can be made from renewable sources like vegetable oil and emits 60 percent less carbon dioxide than a regular engine. Using biodiesel takes more commitment than buying a new Prius, however, for biodiesel stations are still hard to come by and, although the oil is simple to make at home, using homemade fuel usually interferes with the warranty. Even if you cannot make the commitment to biodiesel, it is important to keep in mind while making any purchase that buying new goods is generally worse for the earth than recycling old ones.

I am not advocating a lifestyle in which Americans all live in tents by candlelight wearing their grandparents’ hand-me-downs. I strongly believe that conservation does not mean the eradication of human culture. Medicine, art, and education are the very things that conservationists are trying to save—if we destroy the planet, humans and their culture will cease to exist.

No, I am simply suggesting that we take a look at the solutions for climate change and separate those that actually remove carbon dioxide from the atmosphere from those that make people feel fashionably green. Fixing climate change and other environmental issues may result in renewable energy, but renewable energy will never support the unnecessarily lavish lifestyles that Americans lead today. The complexities of conservation might seem insurmountable, but saving the planet really starts with simple changes, changes that are much too slow in coming to this country. Turn off the lights when you leave the room, change all your light bulbs to compact fluorescents, get a power strip and turn it off when it is not in use, take the stairs, take shorter showers, and be aware and informed about the way you live and the impact it has on your planet and your future. You don’t have to be Sunweaver to minimize your emissions, and you don’t have to be able to afford a solar panel—you just have to care.

The author is a Columbia College first-year. She is an EcoRep.


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Saturday, February 23, 2008

Ranking Universities on a New Criteria: The Carbon Footprint

We know that Harvard has the largest endowment in the U.S and that Princeton has the largest endowment per student and we know that UCLA has the most charming Professors, but which university has the smallest carbon per-capita footprint of all? Which school is being the best "global citizen"? With everyone talking about "carbon footprints", here are a couple of links.

Which Universities will be willing to take costly actions to reduce their carbon footprint? similar to Gary Becker's model of discrimination, will universities take some of their endowment income and allocate it to being a "moral company"? Or do they anticipate that with carbon pricing on the horizon that pre-emption is simply good business that also appeals to politically active students?

I am quite impressed by what UC Berkeley has put together here in its analysis of itself. I haven't read through the report yet but I would like to know whether they discuss the marginal cost of different CO2 reduction strategies. For example, at UCLA I have suggested that nobody drive to work by car but instead we give everyone rollerskates. What is the marginal cost (including lost time and accidents) from this suggestion?

UC Berkeley CO2 Footprint Trends

Boston's Big Dig: 15 Billion Dollars Worth of Pleasure?

Urban green space is a scarce commodity. At some expense, Boston has increased its supply. Was this money well spent? Who are the real winners from this public investment? The city is "greener" and a little less congested because of it. Center city land owners will enjoy a windfall and tourists may have a better walk before they go to Legal Seafood for lunch. Myself? I moved from Boston to Los Angeles and I will only gain from the "existence value".

February 24, 2008
Boston Has High Hopes Now That the Dig Is Done

BOSTON — In the gloom of winter, it is hard to see potential amid the strips of brown grass and pavement that lie where this city’s hulking elevated highway used to be.

But with the $15 billion construction project known as the Big Dig officially over as of last month, the promised transformation of downtown Boston — not just its traffic patterns but also its look, its feel, its very essence — finally seems within reach.

Expectations are high, and for good reason. The Big Dig drained not only public coffers but also the psyche of Boston as it replaced the traffic-choked highway with sleek tunnels over nearly two decades. The construction forced hellish traffic jams and proved faulty, with the new tunnels springing hundreds of leaks and worse. Four workers died during the construction, and in 2006, concrete ceiling panels in one tunnel collapsed and killed a woman in a car.

Where the highway used to be is now a milelong green space with benches, fountains and fledgling trees ready to welcome pedestrians come spring. Where the highway cut off waterfront neighborhoods from the rest of the city, there is now a clear view to Boston Harbor, the Italian North End, the New England Aquarium and the wharfs that surround it.

Yet problems persist. The Big Dig was one of the most expensive public works projects in the nation’s history, and money for finishing touches is scarce. The real estate downturn has threatened development along the corridor, and the new parks, skinny and hemmed in by busy three-lane surface roads, present their own hurdles.

Lackluster fund-raising and other obstacles have stalled plans for four new buildings along the greenway — a museum, a cultural center, a visitors center and a Y.M.C.A. — and a glassed-in garden planned for its southern tip has been scrapped.

While the project was a godsend for drivers — a study by the Massachusetts Turnpike Authority found it cut the average trip through Boston to 2.8 minutes from 19.5 — residents are looking to the $100 million worth of aesthetic changes for more proof the agony was worth it. Advocates of the project, meanwhile, are pleading for more patience.

“Everything is so supercharged around this project,” said Anthony Flint, director of public affairs for the Lincoln Institute of Land Policy, a research group in Cambridge. “But it’s a delicate balance. You want to think of this as the signature space of Boston, but at the same time you have to allow it to evolve.”

That evolution has definitely begun.

Along the new park space, called the Rose Fitzgerald Kennedy Greenway, buildings that long ago sealed off windows overlooking the highway are reopening them. New housing, shops and offices are in the works. One former warehouse has been renamed Greenway Place Condominiums, with luxury lofts that start around $800,000.

“It’s going to be way better, I think, than anything I dreamed of,” said Frederick Salvucci, a former Massachusetts transportation secretary who helped conceive of the Big Dig in the 1970s and championed it through multiple delays and cost overruns.

Mr. Salvucci and others hope the new corridor, replacing what he called “a big ugly slash in the city,” will eventually rival cherished public spaces like Las Ramblas in Barcelona and the Embarcadero in San Francisco.

The city considered it a major victory when, in 1991, the state decided that 75 percent of the land created as a result of the Big Dig must be left as open space. But while the greenway is divided into four parks totaling 10.5 acres, all are limited in design and function because they are built over tunnels and surrounded by traffic.

The southernmost park, bordering Chinatown, has a red gateway at its entrance, fan-shaped paving stones and bamboo plantings. The next, which greets commuters arriving at South Station, was supposed to have the glassed-in garden but now will be regular garden space with little pavement.

The next parcel, facing the aquarium, has a circular plaza, a large fountain and tall glass lights that glow purple at night. And the northernmost park, connecting downtown with the North End’s famous restaurants, has tables, chairs and a long, bench-lined pergola that will be covered with vines. More than 1,300 trees have been planted along the greenway.

The Rose Fitzgerald Kennedy Greenway Conservancy, a nonprofit group created to oversee the greenway, is raising money for its upkeep and considering what kind of activities would best suit the space. Summertime festivals for children, morning yoga classes and organized walks through the parks are likely.

Jerold Kayden, a professor of urban planning and design at Harvard, said that the parks lacked boldness and creativity and that the corridor remained “an urban void.” It might have been more interesting, Professor Kayden said, to leave the highway intact as an elevated park like the planned High Line, formerly a railway, on the West Side of Manhattan.

“One would be hard-pressed to say this is a creative, cohesive, singular public space that will redefine the city of Boston,” he said. “And that is too bad, when you have that much space.”

Others say the space merely needs to evolve, and that in time, the greenway and the development that rises alongside it will have the same impact that filling in the Back Bay — formerly tidewater flats along the Charles River, now one of Boston’s most upscale neighborhoods — did more than a century ago.

“I think you’ll see these spaces realizing the same kind of historic contribution that the Boston Common and the Public Garden have made,” said Richard Dimino, president of A Better City, a business group that has closely monitored the Big Dig. “But I don’t think we’re there yet.”

Some who live and work along the greenway are worried they will be priced out by the upscale development. In Chinatown, others say that a planned 27-story residential tower will threaten their neighborhood’s character. And some vendors at the Haymarket, a hectic, scruffy produce market, are worried they will no longer be welcome.

But Alan Caparella, whose family has owned Mother Anna’s in the North End for 70 years, said the greenway was a boon for the restaurant, which borders it.

“People are finally starting to come back into the city that wouldn’t come in here five, six, eight years ago because of the Big Dig,” Mr. Caparella said. “Now, if you go out on the patio on a nice summer day, you’re looking at a beautiful skyline. Before, we were looking at construction. You couldn’t open the doors. We’d open the door for half an hour and see dust settle on the bar and the glasses and the white tablecloths.”

He added: “Now I’m looking at park. I’m looking out the window right now at people walking back and forth to City Hall and Faneuil Hall, and we’re right in the middle of it.”

Thursday, February 21, 2008

A Return to Macro-Economics

I entered the University of Chicago in 1988 intending to become a macroeconomist. I quickly transitioned to another field of study called applied micro. But, I always respected the Chicago Macro Stars. Starting today, I have a new favorite macro-economist. Forget my Chicago days of Lucas and Prescott, Charles Plosser is back. We were taught his real business cycle stuff and those Rochester hits are still somewhere in the back of my mind. Now that he is a voice of reason in Big Ben Bernanke's War Cabinet, I really like what he is saying. As a Los Angeles renter with some cash in the bank, I am a personal fan of higher interest rates. It looks to me that the Philadelphia Fed's President is going to slow down Keynesian Ben and help me out.

New York Times today

"Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia, echoed that view, saying in a speech that “we cannot be confident that a slow-growing economy in early 2008 will by itself reduce inflation.”

“As we learned from the experience of the 1970s,” Mr. Plosser added, “once the public loses confidence in the Fed’s commitment to price stability, it is very costly to the economy for the Fed to regain that confidence.”

In a telephone interview, Mr. Plosser explained that the Fed seemed to be making progress against inflation in the first half of 2007 but he started to become more worried during the second half.

“Since the summer almost all of the measures of inflation that we look at have begun to accelerate again, and in some cases pretty sharply,” Mr. Plosser said. “Perhaps the inflationary pressures are more broad-based than just energy.”"

So, I'm encouraged that the Fed may worry about its "stagflation" enough to slowdown the interest rate convergence to zero. This will help to achieve my goal of lowering home prices.

Given that this is supposed to be an environmental blog, I thought I would post this link --- it is pretty interesting stuff;
The Causes and Consequences of the Demand for Green Lawns

If we could get away from the social norm of everyone wanting a green lawn then we could save some natural resources. Where did this norm come from? How do we get rid of a "bad norm"? Where are the evolutionary theorists when we need one?

Monday, February 18, 2008

Are Economists Too Optimistic About the Future?

Will your grandchildren have a higher quality of life than we do? Most economists would say yes to this. Would most ecologists say no? Are the two answers linked? If the "capitalist" economists help to convince the rest of the world "don't worry, be happy" does this raise the likelihood of ecological disaster? Here is a website that blames the Chicago Boys for some of the challenges we face.
Some Peak Oil Doom and Gloom

Why do I post this? I'm a "two handed" intellectual and I'm sometimes willing to listen to positions that I don't believe in. Plus , it is funny!

Encouraging Costly Participation in International Environmental Agreements

In a global deal on limiting greenhouse gases, we need all the major nations (including China, India and the U.S) to participate. While an economist will start to babble about participation constraints and then will declare that he will solve a pareto problem subject to these incentive compatability constraints --- what does this actually mean? How do you get to "yes"? We all know that if there was such a "Kyoto Greenhouse" deal, then the "magic" of incentives would encourage short run substitution and long run innovation and the carbon intensity of the world economy would fall sharply.

This dude at MIT is at least trying to think about the participation issue. The problem with this guy's thesis is he doesn't ask whether his carrots and sticks mechanism is credible. Who will be the world's environmental cop patrolling the beat and punishing those who have been naughty? Does he believe that the Jedi Order from Star Wars will flyin to make things right? Who are the norm enforcers in this case?

Will China use its military power to enforce world environmental compliance?

So to repeat my point, I'm worried about cheap talk here and a lack of credible threats. In the subgame once a nation has emitted too much, who will deal out the enforcement? Won't there be a free rider problem at that point; anticipating that in the subgame that a polluter won't be punished encourages more ex-ante pollution and this dude's optimistic vision unravels.

My punchline; The world needs Arnold S to run the United Nations with a Green Uzi aimed at all "evil".

MIT expert: How to toughen up environmental treaties

Sarah H. Wright, News Office
February 16, 2008

The Kyoto Protocol is one of more than 100 global environmental treaties negotiated over the past 40 years to address pollution, fisheries management, ocean dumping and other problems. But according to MIT Professor Lawrence Susskind, an expert in resolving complex environmental disputes, few of the agreements have done more than slow the pace of ecological damage, due to lack of ratification by key countries, insufficient enforcement and inadequate financial support.

To give the pacts bite--not just bark--Susskind is proposing a series of reforms that include economic penalties for countries that fail to meet the treaties' targets. Susskind will outline a program to make global environmental treaties more effective and treaty-makers more accountable in a presentation Saturday, Feb. 16, at the annual meeting of the American Association for the Advancement of Science (AAAS) in Boston.

The reforms he has in mind include engaging civil societies, not just governments, in drafting and enforcing global environmental treaties; offering incentives for countries that ratify treaties and comply with their terms; and establishing more meaningful timetables and targets, along with economic penalties.

Penalties for non-compliance with environmental treaties should hit nations hard--in their pocketbooks, says Susskind.

"All the multilateral banks and lending institutions, the World Trade Organization and the UN agencies should require compliance with global environmental treaty provisions as a prerequisite for loans or participation in any of their activities," he will urge in his AAAS talk.

Susskind, the Ford Professor of Urban and Environmental Planning at MIT, will draw in part from his own experience working with the G-77 on the Climate Change Convention. He has published 20 books including "Environmental Diplomacy" (Oxford), "Transboundary Environmental Negotiation" (Jossey-Bass), and the award-winning "Consensus Building Handbook" (Sage).

Susskind will also participate in an AAAS panel on global knowledge and information to be held Sunday, Feb. 17. He will present a strategy for resolving information conflicts.

Susskind is head of MIT's Environmental Policy and Planning Group and co-director of the MIT-USGS Science Impact Collaborative ( As founder of the Consensus Building Institute (, a not-for-profit organization that provides dispute resolution services in complicated public policy disputes around the world, Susskind has helped to mediate more than 50 environmental disputes and worked with a variety of UN agencies.

Sunday, February 17, 2008

"Green" Products in the News

It appears that the media is devoting more and more attention to environmental issues. What has been displaced? Flattering articles about economists and the fascinating lives we live? Or perhaps another article about Bernanke's Keynesian adventures or Larry Summers' charm?

Here are two interesting environmental pieces in the news.

1. Michael Specter’s piece ‘Big Foot’ from the February 25th issue of The New Yorker on newsstands tomorrow. In Measuring Carbon Emissions, It’s Easy to Confuse Morality and Science.

2. Today's New York Times asks the right question. In this age of "green products", how do we know a green product when we see one? This new lightbulb conserves on energy consumption but when it dies the mercury contained in it may leak out. In the absence of an energineering fix, this could pose a disposal issue. On net, how "green" is this product?

February 17, 2008
That Newfangled Light Bulb
Across the world, consumers are being urged to stop buying outdated incandescent light bulbs and switch to new spiral fluorescent bulbs, which use about 25 percent of the energy and last 10 times longer. In Britain, there is a Ban the Bulb movement. China is encouraging the change. And the United States Congress has set new energy efficiency standards that will make Edison’s magical invention obsolete by the year 2014.
Now, the question is how to dispose of these compact fluorescent bulbs once they break or quit working.
Unlike traditional light bulbs, each of these spiral bulbs has a tiny bit of a dangerous toxin — around five milligrams of mercury. And although one dot of mercury might not seem so bad, almost 300 million compact fluorescents were sold in the United States last year. That is already a lot of mercury to throw in the trash, and the amounts will grow ever larger in coming years.
Businesses and government recyclers need to start working on more efficient ways to deal with that added mercury. Ellen Silbergeld, a professor of environmental health at Johns Hopkins University in Baltimore, is raising the cry about the moment when millions of these light bulbs start landing in landfills or incinerators all at once. The pig in the waste pipeline, she calls it.
Even when warned, public officials are never great at planning. The Environmental Protection Agency now focuses mostly on the disposal of one bulb at a time. If you break a fluorescent bulb, there is no need to call in the hazmat team, the agency says. Just clean it up quickly with paper (no vacuuming or brooms), keep the kids away and open the window for a 15-minute douse of fresh air. Tuck the debris into a plastic sack and, if there is no special recycling nearby, discard it in the regular trash.
Interestingly, one of the main reasons to use these bulbs is that when they cut down on energy use, they also cut down on mercury emissions from power plants. And even with their mercury innards, these bulbs are still better for the environment than the old ones.
For all that good, the dangers are real and growing. It is time to find more efficient ways of recycling these fluorescents or, better yet, to invent light bulbs that don’t leave a toxic hangover.

Saturday, February 16, 2008

Rated PG-13 in Westwood, Los Angeles

UCLA's Westwood is usually a pretty intellectual place. But as I walked back to my house close to Westwood Village, I walked past a bar sign claiming that Playboy Playmates were there celebrating the NBA All-Star Game. There was also a radio station's truck parked outside and a guy who sounded a like a DJ yelling into cell phone in a radio voice kind of way that the was the bar to be at this afternoon. Since I am a social scientist, I wanted to see what was going on in there. I looked into the bar and saw three young ladies with platinum hair. They were surrounded by a bunch of dudes. I pointed out this excitement to my wife but then my six year old son asked what was going on in there and at that point we decided to go home.

If you want more details on this good clean fun go here --- Excitement in Westwood, Los Angeles

As exciting as Harvard Square was, I don't remember such thrills in Cambridge, MA.

Friday, February 15, 2008

A Blogger Trying To Provide Public Goods

Some bloggers have suggested that one beneficial role that bloggers offer is helping readers to economize on search costs. We (the bloggers) have an edge at finding interesting nuggets that appear on random places on the Internet. We then point you to such good stuff. You reward us by raising our sitecount.

So, on the day before my 42nd birthday, permit me to offer two such pieces of silver.

Have you ever wondered why Exxon rents out that space on the New York Times editorial page? I actually read their AD yesterday on the future of energy and I was intrigued. I would suggest that you read this:

I'm going to use the data graphs in an environmental economics lecture soon.

After reading the Harvard Crimson this morning, I was pointed to this other article:

It appears that Ed Glaeser and I are now writing on similar topics as Popular Science Magazine. Maybe next, I'll take on Mad Magazine's writers in a similar competition.

Tuesday, February 12, 2008

New UCLA Research Finds that "love puts blinders on people"

Economists can certainly learn from other branches of social science. The eHarmony dating service has not offered me the opportunity to run a field experiment. What would my experiment be? I would take all of the male economics bloggers (we appear to be 99% male) and randomly assign us to the treatment group --- who would have to read some entries from our blogs to our dates and the control group --- they would not have to read any blog entries and test whether the blog "treatment" raises the probability of going on a second date. If you reject this design, maybe you prefer this ...

'Hotties' not so hot when you're in love
UCLA-eHarmony study finds love feelings reduce appeal of potential rivals

As if inspiring countless songs and poems and an international holiday weren't enough, love now is being credited with a truly amazing power: the ability to resist temptation.

In an experiment with college students in long-term relationships, researchers at UCLA and the online dating service eHarmony found that asking coeds to reflect on the love they felt for their boyfriends or girlfriends blunted the appeal of especially attractive members of the opposite sex.

"Feeling love for your romantic partner appears to make everybody else less attractive, and the emotion appears to work in very specific ways by in enabling you to push thoughts of that tempting other out of your mind," said Gian Gonzaga, an eHarmony research scientist and lead author of the study, which appears in the current issue of the journal Evolution and Human Behavior.

"It's almost like love puts blinders on people," said co-author Martie Haselton, an associate professor of psychology and communication studies at UCLA.

With their research, Gonzaga and Haselton believe they have glimpsed the biological imperative behind the emotion that makes people feel all gushy and do silly things.

"Popular culture may mix romantic love up with sexual desire, but from an evolutionary perspective, romantic love fulfills a different function," Haselton said. "Love is a commitment device, which has evolved to make us identify and stick with a long-term mate long enough to raise a child. Our ancestors who had this ability were more successful in raising their offspring to maturity, so the adaptation got passed along to us."

The researchers invited 120 heterosexual undergraduates in committed relationships to pore over photographs of attractive members of the opposite sex.

"We got the photos from Hot or Not," Haselton said, referring to the popular dating Web site, "and we only downloaded the hot ones."

From the dozens of photos at their disposal, the undergrads were asked to identify the member of the opposite sex to whom they felt most physically attracted.

The researchers then asked each undergraduate to compose an essay on one of three subjects: the time they felt the most love for their current romantic partner, the time they felt the most sexual desire for their current romantic partner, or anything they wanted to write about. The third group acted as a control group.

"Basically, these students were reliving an intense moment of love or an intense moment of sexual desire for their partner," said Gonzaga, who oversees an observational laboratory at eHarmony's Pasadena headquarters that conducts research in interpersonal chemistry and long-term relationship building.

While writing, the undergraduates were instructed to put the attractive other out of their mind. If they nevertheless happened to think of the hottie, they were asked to put a check in the margin of their essays every time they did so. Later, they were asked to list the hottie's attributes.

Undergraduates who reflected on the love they felt for their romantic partner were six times less likely than the control group, and more than four times less likely than the group that wrote about their sexual desire for their partner, to think of the hottie. On average, undergraduates in the love group thought of the tempting other once every two pages, compared with more than twice a page for the desire group and almost four times a page for the control group.

"People in the love group found it easy to push an attractive other out of their mind even though we made those thoughts tempting," said Haselton, who is affiliated with UCLA's Center for Behavior, Evolution and Culture.

In fact, conventional wisdom holds that when people are instructed to not think of something, a "rebound effect" occurs, causing the taboo thought to present itself even more frequently than it otherwise would.

Not only were the undergraduates in the love group less likely to think of the attractive others, but they had a much tougher time later recalling the hottie's appeal. On average, students from the love group remembered about two-thirds as many attractive features — such as bulging muscles or a low-cut blouse — as the students in the desire and control groups. And what members of the love group did remember of the hotties was less likely to be an attractive feature than a sort of general, identifying characteristic like the location where the photo was shot or the color of an article of the hottie's clothing.

"These people could remember the color of a shirt or whether the photo was taken in New York, but they didn't remember anything tempting about the person," Gonzaga said. "It's not like their overall memory was impaired; it's as if they had selectively screened out things that would make them think about the how attractive the alternative was."

The findings are consistent with past research, which has shown that people in romantic relationships rate potential others as less attractive than their uncommitted counterparts. Research has also shown that when shown photos of attractive members of the opposite sex, people in romantic relationships tend to spend less time looking at the photos than noncommitted people.

"Earlier studies didn't examine whether love was driving the pattern," Haselton said. "It could be that people who end up in relationships might be the people who don't look at others. This is the first direct causal evidence between feeling love and defending a relationship from external threats."

Overall, reliving a loving moment with a romantic partner helped blunt the allure of a potential threat to the relationship.

"One of the biggest threats to a relationship is an attractive alternative to your loved one — or that attractive woman at work or the hot guy you meet in the bar," Gonzaga said. "In subtle ways that you might not even notice, the gushy feelings you get when you think of your partner help you fend off these threats."

Backed by 35 years of clinical and empirical research, eHarmony is one of the most popular online relationship services and is dedicated to building the relationships of both singles and married couples. The company was founded by relationship expert, best-selling author and clinical psychologist Dr. Neil Clark Warren.

UCLA is California's largest university, with an enrollment of nearly 37,000 undergraduate and graduate students. The UCLA College of Letters and Science and the university's 11 professional schools feature renowned faculty and offer more than 300 degree programs and majors. UCLA is a national and international leader in the breadth and quality of its academic, research, health care, cultural, continuing education and athletic programs. Four alumni and five faculty have been awarded the Nobel Prize.

Monday, February 11, 2008

No Dudes on the Bus in Mexico City: A Case of "Positive Discrimination"?

There are single sex colleges and bathrooms so I guess it makes sense to have single sex buses. This New York Times article focuses on a cost of urban density. In a city filled with anomie, there are potential gropers lurking and they know that they are unlikely to be caught in the act by any cop. In response to this quality of life threat, Mexico City has introduced "all women's" buses. The article claims that the presence of men on the bus reduces a women's expected quality of life on a bus ride in Mexico City. The women do not pay more for the "all women's bus" and they receive a "win-win" of less expected harrassment and a greater probability of getting a seat conditional that the bus shows up.

Women are quoted below that hint that the old system introduced "adverse selection" in terms of what types of guys rode the bus. Transport economists would say that bus riders are likely to poorer than the average person due to the value of time and the full cost of commuting by different modes but transport economists have not taken a stand on the morality of the average bus rider.

February 11, 2008
Mexico City Journal
On Single-Sex Buses, Relief From Unwanted Contact

MEXICO CITY — Body-to-body contact is inescapable on Mexico City’s crowded public transportation system. Get on a train or a bus during rush hour and a man in a business suit may have his arm resting against your shoulder, a woman toting a bulky shopping bag may have her back pressed against your flank, and a teenager listening to an iPod may tap his sneaker all over your newly shined left shoe.

But many women complain that not all the contact is incidental. Among the 22 million passengers who use the bus and subway system daily, women say, are lecherous men taking advantage of the cheek-to-jowl conditions to leer and grope and then quietly disappear.

“There are good men in Mexico, but they’re not the ones on public transport,” said Mariana Vasquez, 30, who waited to board a bus recently on her way to a job interview at a law firm. “They try to touch you. They don’t give you a seat. Where are the gentlemen?”

One place they are not is on new women-only buses that Mexico City began running in January to reduce the harassment. With pink placards and insistent drivers who growl at any man who tries to step aboard, the buses are quickly becoming a hit among women.

“Woo-hoo!” bellowed Catalina Garduño the other day as man after man was turned away from the bus she was riding. Her outbursts animated the other women on board, who joined in the celebration. As they rolled along Paseo de la Reforma on their way home from work, the atmosphere resembled a ladies’ night on wheels.

Their relief reached beyond their escape from being accosted physically.

“We don’t get paid as much as they, yet we work just as hard,” said Ms. Garduño, a saleswoman. “We are tired of their machismo. We don’t feel sorry for them at all.”

A few rows back, Abigail Llanes, 21, expressed a similar sentiment.

“We get to sit now,” she said, beaming. “It’s great.”

As complaints of harassment have grown, Mexico has experimented over the years with various remedies. Some subway cars have been reserved for women. Some buses allow women, disabled people and those with children to use designated entrances at the front. But the new buses may be the boldest approach so far.

Men’s reactions run the gamut. Some declare the program discriminatory. Some curse at the bus drivers who leave them standing at the curb.

Plenty of men, though, say they endorse the idea.

“We have no respect,” Adolfo Flores, 30, a law student, said of the unseemly way many men treat women.

Mr. Flores was getting his shoes shined as buses passed by behind him. The shoeshine man, Esteban Hernández, 57, piped in with his own theory about the groping.

“We have the animal instinct,” he said, smiling. Touching a woman, he said, “is a way of showing masculinity — it’s very bad.”

Just how bad the abuse problem — which is raised by women in cities the world over — has become in Mexico is difficult to say. Last year, just seven women lodged official complaints of harassment on Mexico City’s buses. There are more reports of sexual incidents on the subways, with roughly one a day filed with the authorities. But Mexican officials believe those figures do not reflect the full extent of the problem.

“Most women don’t report what happens to them,” said Ariadna Montiel, who directs the public bus system, noting that as a young architecture student years ago she traveled by public transportation and experienced the harassment firsthand. “I know it’s a serious problem.”

Ms. Montiel said she had no intention of neglecting men. “We have to guarantee that all users are taken care of,” she said, adding that coed buses roll along in close proximity to the women’s buses to ensure that nobody is waiting too long.

Passengers say the atmosphere aboard women’s buses is entirely different. As the buses become more popular, and crowded, some women politely offer their seats to others. And, they say, the lechers are gone.

Still, the experiment cannot solve the underlying problem of how the sexes interact in the metropolis. Only four of the city’s bus routes have women-only buses. That number will rise to 15 in the months ahead, but coed buses will remain the rule in most areas.

To complement the single-sex buses, the Institute of Women in Mexico City, a government body that promotes opportunities for women, is pushing a public education campaign to make clear to men that inappropriate touching is illegal. In March, a new ordinance will make it easier to prosecute those found harassing women in public places.

“This is not against men,” insisted Martha Lucia Micher Camarena, the institute’s director general. “This is positive discrimination that responds to the demands of women. And it’s also for men because it protects their daughters, sisters and mothers.”

Sunday, February 10, 2008

Research Ideas from the New York Times Style Section?

Most self respecting economists might admit that their thoughts were influenced by what they read in the New York Times' News or business sections. But, can the Sunday Style section teach us anything? Now, you may remember this from the May 1998 Style Section of the Times;

Today's lead article in the Style Section is actually quite close to a paper that Ed Glaeser and I are now writing. Maybe I should ask Alex Williams to ghost write the paper for us.

February 10, 2008
Don’t Let the Green Grass Fool You

AS a suburban environmentalist, Mike Tidwell, 45, of Takoma Park, Md., always felt like a walking contradiction.

Though he had quit his job as a journalist to work for environmental nonprofit organizations, Mr. Tidwell viewed suburbs (his own hometown is just outside of Washington) as places built “to defy nature,” he said, giving everyone “their own little kingdom of grass and space” — not to mention 3,000-square-foot houses, heated swimming pools and hulking S.U.V.’s.

For years, Mr. Tidwell led an environmental campaign, one with few followers. In 2002, he started a neighborhood cooperative to buy and distribute organically fertilized corn kernels to burn in pellet stoves (a lower-emissions alternative to traditional fuel-oil boilers). At first, the cooperative consisted of just him and three other residents.

But lately, after the release of Al Gore’s “Inconvenient Truth” and last summer’s Live Earth concerts, his corn collective has ballooned to more than 70 members, some coming from more distant Maryland suburbs like Bethesda and Silver Spring. The group even built a 25-foot-tall cylindrical granary, holding 22 tons of corn, in a small lot belonging to Takoma Park.

Attitudes, Mr. Tidwell said, changed, too.

“In the American suburbs, people are suddenly literate in the language of carbon emissions and carbon footprints,” he said. “I’m hearing it in most mainstream places.”

Last summer, Mr. Tidwell attended a picnic where, he said, a guest had brought a plate of kiwi fruit imported from New Zealand. “This very nonhippie, not-environmental-cliché-type woman I heard asking another person, ‘I wonder what the carbon budget of these kiwis are?’ ” he said. “I was just astonished.”

If the United States is ever to reduce its carbon emissions, suburbanites — that is, roughly half of all Americans, said William H. Frey, a demographer at the Brookings Institution — are going to have to play a big role. And lately, they are trying.

Since 2005, the mayors of hundreds of suburban communities across America have pledged to meet or even beat the emissions goals set by the Kyoto Protocol, a treaty to reduce greenhouse emissions.

In November, Levittown, N.Y., the model postwar suburb, declared its intentions to cut carbon emissions by 10 percent this year. And a few suburban pioneers are choosing solar heating for their pools, clotheslines for their backyard, or hybrid cars for their commute.

But the problem with suburbs, many environmentalists say, is not an issue of light bulbs. In the end, the very things that make suburban life attractive — the lush lawns, spacious houses and three-car garages — also disproportionally contribute to global warming. Suburban life, these environmentalists argue, is simply not sustainable.

“The very essence of the post-Second World War America suburb militates against ‘greening,’ ” said Thomas J. Sugrue, a professor of history and sociology at the University of Pennsylvania. “Given the almost complete dependency of suburbanites on the car, it’s an uphill battle.”

Cities, for their part, have been trumpeting their green credentials. Mayor Michael R. Bloomberg of New York has made much of his plan to reduce carbon emissions 30 percent by 2030. (Already, the average denizen of New York City produces 7.1 metric tons of greenhouse gases each year, according to statistics compiled for the city government, compared with 24.5 metric tons for the average American.)

Longtime suburban residents might wonder how they suddenly became environmentally incorrect. People who moved to the suburbs in the ’50’s and ’60’s thought they were being green just by doing so, said Robert Beauregard, a professor of urban planning at Columbia University.

Then, green “just meant open space and privacy,” Professor Beauregard said. “Those Levittowns were ‘green’ because they had lawns.”

The bar is considerably higher now.

Aileen Eilert, an accountant who in lives Lisle, Ill., about 30 miles west of Chicago, recently bought a 70-foot wind turbine to install in her family’s backyard. The turbine, which cost $12,000, will generate all the household power and more; the family will trade the excess back to the local power company for credits. It should pay for itself in about 10 years, she said.

Yes, the neighbors may talk. One neighbor, she said, was skeptical, asking, “So what is this going to look like?” But most, added Ms. Eilert, 47, simply said, “If it doesn’t bother me and make noise, I don’t care.” (They may not be so easily mollified by her next campaign, to persuade neighbors to replace their lawns with vegetable and fruit gardens, in an effort to reduce the emissions involved in buying, say, strawberries from Chile.)

Alexander Lee, the 33-year-old founder of Project Laundry List, which tries to revive the use of clotheslines to save energy, has run into plenty of resistance from suburban community associations, many of which have regulations restricting them, he said.

“There are three complaints,” Mr. Lee said. “It will lower my property values. That’s what poor people do. Also, I don’t want anyone to see my underwear — what I call the ‘prudery’ objection.”

After national newspapers reported his program last spring, the number of participants jumped from 400 nationally to more than 2,000. But, Mr. Lee said, “we’re still looking at 300,000 mini-battles to change way we do things.”

Some local suburban governments are trying to make their towns greener. Many mayors from the 780 towns that have signed the United States Conference of Mayors Climate Protection Agreement — pledging to meet the Kyoto standards for carbon emissions by 2012 — hail from suburbs like Aliso Viejo, Calif., and Fair Lawn, N.J., said Glen Brand, the national director of the Sierra Club Cool Cities program.

Some participating suburbs were already pursuing aggressive emissions-control measures, even before signing the agreement. Northbrook, Ill., near Chicago, now buys credits for 4,500 megawatts of electricity from wind farms, enough to offset all the power consumed by its water utility, saving an estimated 4.9 million pounds of carbon dioxide emissions a year, said John Novinson, the Northbrook village manager. Like many other suburbs, it has also changed its traffic signals to energy-efficient L.E.D. models, and has enforced no-idling rules for motorists — including police officers.

SO far, Mr. Novinson said, residents have found the efforts to be relatively painless.

“The wind energy is costing people five cents per thousand gallons of water,” Mr. Novinson said. “It’s a nominal increase in water bills, for which we received nothing but positive comments.”

More symbolically, Nassau County officials started the Green Levittown program in the landmark suburb that was carved out of a potato field on Long Island in 1947. The initiatives are intended to persuade residents to conduct a home energy audit (at a cost of $150). The county then offers discounts rebates, and low-interest loans to anyone who switches to energy-efficient light bulbs, solar power, bio-fuels and upgraded home insulation.

Children in many schools are also being encouraged to walk or bike to school through the federal program Safe Routes to School, which has helped build bike paths, train crossing guards, and improve roadway safety in towns and suburbs around the country. (The percentage of children who walk or ride bikes has plummeted from 50 percent in 1969 to 15 percent in 2001, according to federal studies.)

A pilot program started in Marin County, north of San Francisco, in 2000, where at the time, surveys showed that 21 percent of children at nine schools surveyed either walked or rode their bikes to school. Two years later, that number was 38 percent, said Deb Hubsmith, the national director of the program.

Despite the efforts of individuals and whole communities to reduce the carbon cost of suburban life, the broad trends in American life have been moving in the opposite direction for decades. The average single-family home nearly doubled in size from 1970 to 2005, to 2,434 square feet. Americans commuting to work by car travel farther as suburbs sprawl (an average 12.1 miles in 2001, up from 8.9 miles in 1983), in vehicles whose average fuel efficiency has improved little.

It is not clear, though, that suburbs need to ratchet back to 1970. Even moderate increases in density can help significantly in curbing carbon emissions, said Lawrence D. Frank, a professor of sustainable transportation at the University of British Columbia.

In a 2004 study of the environmental impact on transportation in the Atlanta metropolitan region, Mr. Frank found that the average carbon emissions per person per workday were about 10 percent lower in neighborhoods with six to eight dwellings per acre — a typical suburban layout — than in a more spacious one with only two to four dwellings per acre, simply because people drive shorter distances in denser suburbs.

“You don’t have to live in a skyscraper,” Dr. Frank said. “You can have relatively low density and still maintain a more environmentally responsible lifestyle. You just can’t have your own Ponderosa.”

Gladwyn D’Souza, 53, a former electrical engineer who lives in suburban Belmont, Calif., moved out of a two-story 2,300-square-foot house to build a more environmentally friendly model in the same town. He relied on sustainable materials for construction: recycled concrete and glass for the kitchen countertops, doors scavenged from old houses, reclaimed timber for beams.

Because he insisted on living close to the local mass transit hub, he could find only a tiny lot, about one-tenth of an acre, within his price range. Without the ability to build out, he built up. His house is five narrow stories, and he rarely needs his car (a Prius, naturally).

“It’s about two blocks from everything — pizza, Safeway, the greenmarket,” Mr. D’Souza said.

By one view, Mr. D’Souza is a pioneer — inhabiting a microscale model of the eco-friendly, futuristic, post-automobile suburb.

By another, his home turf seems more familiar.

It’s called a city.

Consumer Heterogeneity and Consistent Market Choices

Western Europe is creating some pretty wild data sets that UCLA economists have used for some creative "freaky" research. For an example from Norway take a look at this: and now we have some funky work based on data from Finland. As discussed below, the authors were able to merge at the individual level ; data on who has received speeding tickets with data on asset portfolio allocations. All else equal, guys who get more speeding tickets trade and adjust their portfolios more than other people. The inference about the people is that "thrill seekers" drive fast and churn their portfolio's fast. This is ADD in action. This "consistency" across very different markets and behaviors is interesting.

In a very different setting, I have documented evidence of the same "consistency". In my paper

I document that in environmentalist communities ; people vote "green" and live a green day to day life and purchase green products. While people differ with respect to whether they are a green; those who are "green" voice their preferences in a variety of different markets --- This is my "consistency" point and the finance guys who are cited below are making a similar point about consistency but they are partioning people into "thrill seekers" and everyone else.

New York Times
February 10, 2008
Warning: Fast Driving May Lead to More Trading

IF you get speeding tickets, watch out: The chances are good that you will also engage in possibly dangerous investing behavior, too. That is the implication of a new study that found that individuals who receive more speeding tickets tend to churn their portfolios.

The study, “Sensation Seeking, Overconfidence and Trading Activity,” has been accepted for publication by The Journal of Finance. The authors are Mark S. Grinblatt, a finance professor at the University of California, Los Angeles, and Matti Keloharju, a finance professor at the Helsinki School of Economics. A version is at

The professors were able to find a correlation between speeding tickets and trading frequency after receiving access to several data sets of Finnish investors. Though the professors did not have access to the investors’ identities, one of these databases contained details of speeding tickets issued between mid-1997 and the end of 2001 to residents of Helsinki and surrounding areas. Another had information on the portfolios and trading records of all Finnish households from 1995 through 2002. The Finnish government also provided data on the incomes, age, marital status, gender, occupation and homeownership status of all those filing tax returns in 1998 and 1999.

These rich data sets enabled the professors to eliminate from consideration other possible causes of trading activity and focus on the distinct influence of speeding tickets. They found that, other things being equal, an investor’s portfolio turnover rate rose 11 percent after each additional speeding ticket he received. That is a surprisingly strong correlation, and is highly significant from a statistical point of view, according to the professors.

In an interview, Professor Grinblatt acknowledged that the propensity to speed did not remain constant throughout life. As people grow older, they are likely to become more conservative drivers — and, not coincidentally, to trade less often. But he stressed that he and his co-researcher controlled for factors like age when conducting their tests. So one way to interpret their findings is that, between two people of the same age, the one who gets a speeding ticket is likely to have 11 percent more turnover in his portfolio.

Why would the tendency to speed be associated with more trading? One possible factor that the professors explored was overconfidence: If a driver deludes himself into thinking that he can avoid being caught when speeding, he may also delude himself into believing he has above-average stock-picking ability.

After studying overconfidence, however, the professors concluded that it was not the source of the link. They had also been granted access to the extensive psychological tests that the Finnish armed forces administered to all men upon their induction into mandatory military service, and overconfidence was one trait these tests carefully measured. The professors found that while overconfident investors tended to trade more, the trait was not correlated with their number of speeding tickets.

(The Finnish authorities devised a way of providing the results of these tests, along with the other sets of data, without divulging anyone’s identity, thereby respecting Finland’s strict privacy laws.)

The professors’ findings about overconfidence, along with results of other complex tests they conducted, led them to conclude that the correlation between speeding tickets and more frequent trading was caused by something quite different: thrill-seeking. They found that thrill seekers — those who look for a new and risky experience just for the fun of it — trade more often not because they have an inflated belief that they can beat the market, but because they find a static portfolio too boring.

DID the thrill seekers nevertheless improve their returns by trading often? No, the professors found. They found that the stocks bought by the thrill seekers fared no better, on average, than those they sold.

If anything, Professor Grinblatt said, the thrill seekers were worse off, after considering transaction costs. They “cannot justify their trading in terms of their performance,” he concluded.

The study provides yet more evidence that psychological motivations play a large role in investment decisions. The implication is that, before we initiate any trade, it’s wise to engage in some honest self-reflection about our motivations. Are we trading because there is compelling evidence supporting it, or simply because we find our long-held stocks aren’t exciting enough?

Undoubtedly, all of us would benefit from periodically asking ourselves this question, but Professor Grinblatt said that it was especially important to ask it after we’ve been pulled over for speeding.

Mark Hulbert is editor of The Hulbert Financial Digest, a service of MarketWatch. E-mail:

Monday, February 04, 2008

Las Vegas Solves The "Tragedy of the Commons"

Environmental economists have always voiced concerns about the "Tragedy of the Commons" problem. It is well recognized that in a "use it or lose it" setting, fishermen, tree cutters and other natural resource extractors have little incentive to conserve natural capital. In contrast, private property rights create incentives to think about dynamic opportunity cost. If I own a lake, I recognize that if I grab the fish today --- then I won't enjoy the gains from letting the fish multiply and perhaps selling them tomorrow when it is possible that the market price of fish will be higher (see the Jared Diamond work on the rising predictable aggregate demand for resources).

Yesterday's New York Times points out another "Tragedy of the Commons" problem that I had not thought about. The article documents that celebrities like Las Vegas and they like it for a specific reason. There is NO public property. The celebrities stay inside the casinos and hotels (which are private property) and they know that no paparazzi are lurking in the bushes (public property) to "steal" a photo of them looking ugly and plain.

I'm now thinking of switching from UCLA to University of Nevada at Las Vegas!

February 3, 2008
Playing It Safe in Las Vegas

FOR some time now, Michael Jackson and his children have lived at the Palms resort here while he records a new album in its studio.

This might not be so surprising, considering Mr. Jackson’s nomadic ways as well as the affinity that celebrities have for this city.

What is stunning, however, is that the star managed to live at the Palms for at least two months before a local gossip columnist wrote about it on Jan. 16.

How is it that the whereabouts of a tabloid target like Mr. Jackson could stay concealed for so long? Well, one might have noticed what did not happen after Norm Clarke’s article appeared in The Las Vegas Review-Journal.

No swarm of paparazzi descended upon the Palms. No enterprising photographer sneaked inside to snap Mr. Jackson heading to an elevator. No hotel guest made a cellphone video to sell to or to post on YouTube.

“Does that surprise me? Not really,” said Larry Fink, public relations director for the Palms. Citing the privacy of guests, Mr. Fink would neither confirm nor deny Mr. Jackson’s presence. “The celebrity media here is — I don’t want to say they’re well behaved — but there’s a certain level of respect between us and them,” he said.

It’s true. Despite the constant star visits and red carpet events in Las Vegas, few if any images of pantyless pop stars, married actors getting lap dances or even paparazzi mobs chasing celebutantes into limousines have appeared online or in publications.

The most notorious illicit video out of Las Vegas in recent years was last summer’s footage of an intoxicated David Hasselhoff crawling on the floor of his hotel room while trying to eat a hamburger. It was shot by his daughter and leaked by a member of his family.

Las Vegas is a city where stars can avoid the aggressive breed of stalker photographers who shadow their public events in Los Angeles and New York. At the very least, stars exert more control over their exposure. Ensconced in the protective resorts, and guarded by private security teams, the stars find the celebrity news media in Las Vegas far less invasive.

“In Vegas, I don’t have to worry about photographers waiting outside my house every day because they can’t wait outside my hotel room,” Spencer Pratt, a star of the MTV reality series “The Hills,” said in early January as he and Heidi Montag, his co-star and girlfriend, posed for photos on a red carpet on the way to an event that they were paid to attend at the Jet nightclub at the Mirage.

“When we travel here we have bodyguards, there are people with earpieces making sure there aren’t any photos we don’t want, making sure there’s no problems,” Mr. Pratt said. “I’m sure a lot of celebrities come out to Vegas because it’s like a hide-out, it’s a getaway.”

Indeed, as the city rolled into the year’s biggest betting weekend, the Super Bowl, stars aplenty were expected to be in the nightclubs and sports books. But they were not expecting to be trailed by what Robin Leach, the former host of “Lifestyles of the Rich and Famous” and the unofficial dean of the Las Vegas celebrity news media, refers to as “wild roaming packs of paparazzi.”

“All of our photographers are known to the casinos almost as if they’re registered,” said Mr. Leach, who writes the Vegas Luxe Life blog for Las Vegas Magazine. “If a photographer breaks the spirit of the unidentified terms of his access, that’s the last time he gets red carpet or nightclub privileges.”

That powerful, lingering threat is the difference between Las Vegas and other cities. The casino mega-resorts are private property. Many have private elevators, tunnels and garages for those not wishing to be seen.

The celebrity photos that do emerge from Las Vegas are generally less compelling because stars rarely go about their everyday business here, said Harvey Levin, managing editor of, which specializes in candid videos of stars driving recklessly or teetering out of nightclubs. “I don’t think Julia Roberts walks down corridors at Caesars Palace without her makeup on,” he said. “When a star goes to Caesars Palace, they tend not to go out or shop in malls. They’ll make appearances at clubs or events, but it’s much more event-driven.”

Even when celebrities do embarrass themselves here, their actions rarely receive widespread coverage. Last February, the hotel magnate Steve Wynn fell to the floor after bumping his head on a boom mike while walking a red carpet for Elizabeth Taylor’s 75th birthday party. Mr. Clarke reported the incident in his column, but no images of the fall emerged, even though many photographers were present.

“There’s more to shooting than getting someone falling down a staircase,” Robin Roth, a photographer and writer for the Web site, said in late December as she waited for Beyoncé and Jay-Z to arrive at the opening of the rap star’s new sports bar, the 40/40 Club, at the Palazzo resort. “They’re here to promote this event and that’s what we’re here to shoot. So we’re trying to get the best of them. I’m going to try to get the nicest shot of them.”

The level of control by resorts — and the acquiescence by the celebrity news media — is extensive.

One Friday in early January, a dozen photographers were ushered into the Bank nightclub at the Bellagio shortly past 11 p.m. by special elevator, ordered to stand by in a small, dark corridor and then given about five minutes to take pictures of the singer and songwriter John Legend posing before a backdrop with the Bank’s name on it.

ONCE Mr. Legend had had enough, the photographers were whisked away. The star’s entourage was seated in a V.I.P. area of the club, while a single photographer — on the club’s payroll — was allowed to shoot his birthday party for the celebrity news service WireImage.

“A publicist at one of the properties once told me he’s surprised with all the members of an entourage traveling with these stars and all the people having sex in rooms, that somebody doesn’t take a picture of an A-lister laying next to a stripper,” Mr. Clarke said. “I’m amazed I don’t get more of that, too.”

The handful of folks who actually do shrug off the yoke of the staged photo opportunities wonder where everybody else is. Preston Warner, a photographer who has sold images of Paris Hilton dancing provocatively on nightclub tabletops for five-figure sums, called the red carpet scene “mind-numbingly boring.”

“They’re standing out there for six to eight hours waiting for a celebrity to show up so 20 of them can get the same shots for their photo services,” Mr. Warner said. “I guess they do it because they’re star-struck or it’s a hobby for them.”

Even if the paparazzi aren’t out in force, what about the thousands of visitors with camera phones? Gary Morgan, chief executive of the celebrity photo service Splash News, doubts Las Vegas visitors understand the value of what they may have. “In L.A., people snap a picture and go, ‘Oh, oh, oh, I’ll give it to someone,’ ” Mr. Morgan said. “A lot of people are in Vegas to have fun, gambling and drinking, and they’re not in the mind-set.”

All this may soon change. The syndicated entertainment-news show “Extra” has opened a bureau in Las Vegas (and was the first to broadcast the video of Mr. Hasselhoff with the hamburger). In 2006 People magazine placed a full-time employee here for the first time. And, a Web-based video site devoted to celebrity news with 14 reporters and producers, made its debut last year.

“Extra” opened its bureau here, said Lisa Gregorisch-Dempsey, senior executive producer of the show, because she “got tired of having to have crews and reporters get on planes” to cover the many celebrities visiting the city. “There was this giant curtain over Vegas and nobody knew what the secret code was to get inside, but now we feel we own Las Vegas because we’re here all the time,” Ms. Gregorisch-Dempsey said.

“Extra” has a deal with the Planet Hollywood resort to run an Extra lounge in the casino, where stars can regularly stop for interviews. Although celebrities may not see this as an encroachment on their privacy, the notion of Las Vegas as a safe area may be fading slowly. In October, Ms. Hilton attended a costume party in army fatigues and flippantly said she wore the outfit to support American troops in Iraq. reported the remark, which caused a small stir.

“The celebrities are probably wandering the streets of Vegas going, ‘Man I can’t believe this is the last place on Earth where I’m not being photographed by telescopic lenses,’ ” said Peter Castro, deputy managing editor of People. “They’re probably thinking, ‘What’s the catch here?’ ”

But he predicted that this would soon be brought to a close by the public appetite for celebrity scandal. “There’s too much money in it for that to last,” he said.

Saturday, February 02, 2008

More Celebrity Spotting In West Los Angeles

I spotted Christian Slater at my son's school yesterday. In case you need a quick refresher course on your movie trivia look here --- He gave me a look that seemed to say "leave me alone nerd". So, I left him alone. He is the 3rd celebrity that I've recognized at my son's school but only one has been kind enough to talk to me. I'll give you a clue. She starred in the Godfather and in Annie Hall.

Today at the Santa Monica Farmer's Market, I spotted Lauren Hutten.
( She was talking to the pistachio seller when I barged in to buy some stuff. She looked at me and she didn't seem bugged that I recognized her. I smiled, nodded and walked away. Are these impressive social interactions with the A-List? I doubt it but my son and I like to sing that Randy Newman Song "I Love L.A".

So let's count up who I have spotted in my 12 months here;

1. Rick Foxx
2. Rick Springfield
3. Gena Davis
4. Christian Slater
5. Diane Keaton
6. Lauren Hutten
7. Lamar Odom
8. Mike Dukakis (His office is next to mine at UCLA Public Policy).

At this rate, I'll know all the key people in LA by the time I'm 85.

Friday, February 01, 2008

What Will Economists Say to Get Quoted in the New York Times?

While I haven't done a formal analysis, I've always thought that the New York Times likes to quote Harvard professors. I know that they are an excellent set of scholars but holding "quality" constant, Harvard is an outlier. In such a world of "Harvard Discrimination", non-Harvard academics either have to do something impressive or say something sufficiently strange to merit being mentioned in the Times.

Recall Gary Becker's PHD thesis --- if a group such as women are discriminated against in the labor market then the select set of women who do get promoted to partner at a law firm must be extraordinary.

With that drumroll, I now present an article in today's New York Times with a sufficiently wacky quote from myself. John Leland is a very smart guy. While his core thesis was a little off-beat, I sensed that he was looking for some intellectual "firepower" to back up his thesis. You will see that he creates some tension below ---- citing 2 academics who call his idea cute but small potatoes and then uses me to buttress his claim.

New York Times
February 1, 2008
Reporter’s Notebook
From the Housing Market to the Maternity Ward

For the first time in 35 years, America’s total fertility rate — the estimated number of children a woman will have in her lifetime — reached 2.1, the theoretical level required to maintain the country’s population, according to recent data from the National Center for Health Statistics.

Demographers caution that it is too soon to say whether the increase is a blip or a trend, or to determine its causes, which may include changes in the economy, immigration and the availability of abortion. “All this could turn around on a dime,” said Stephanie J. Ventura, chief of the reproductive statistics branch of the statistics center.

But at a time when no cocktail conversation is complete without a discussion of real estate, the boomlet raises a question that has long interested social scientists: What is the relationship between fertility and real estate?

In the wide-open mortgage climate early this decade, creative loan products allowed more people than ever to buy homes, often a precursor to having children. In 2006, the babies arrived — a reminder, perhaps, that if you build it, they will toddle.

Is real estate destiny?

“It’s something a bunch of us have been thinking about,” said Morris A. Davis, an assistant professor of real estate and urban land economics at the University of Wisconsin-Madison School of Business. “If you reduce down-payment constraints, more people can buy homes, or buy bigger homes. Does that encourage them to have more kids? I would say nobody knows.”

Social scientists have long traced a connection between housing and fertility. When homes are scarce or beyond the means of young couples, as in the 1930s, couples delay marriage or have fewer children. This tendency helps account for the relatively dismal birth rates of many developed nations, said Robert Engelman, vice president for programs at the Worldwatch Institute, an environmental research organization, and author of the forthcoming “More: Population, Nature, and What Women Want.”

“One reason there are so few children in Italy is that housing is so hard to come by,” Mr. Engelman said. “Houses are bigger in the U.S. and generally more available. That may help explain why Americans have more babies.”

Several population specialists emphasized that housing is just one influence on fertility, and difficult to tease out from other factors, like income or optimism. “If you lower the cost of housing, you’re going to lower the cost of raising a child,” said Seth Sanders, director of the Maryland Population Research Center at the University of Maryland. “But if you look at how much it costs to raise a child, only one-third of the cost is housing. So my guess is that the impact is not very large.”

But Matthew E. Kahn, an economist at the Institute of the Environment at the University of California, Los Angeles, suggested another way housing trends might be complicit in the baby boomlet of 2006. For decades, Americans have built increasingly bigger houses, even as family size declined. Bigger houses mean incentives to stay home and fructify, Mr. Kahn said.

“Those ARM-financed McMansions are in the middle of nowhere, where land is cheap,” he said, using the acronym for adjustable-rate mortgage. “That increases the time it takes to get to work, meaning it raises the cost for women to go to work. That should increase fertility.”

The 4,265,996 babies born in 2006, the most since 1961, reflect increases in birth rates for women in all parts of the country and nearly every demographic group studied — including teenagers, whose rate had dropped every year since 1991. The only decline was among girls under 15.

But that does not mean the new arrivals look like their parents’ generation. For starters, they are much more likely to be Hispanic, to live in a red state and to be part of an evangelical Christian family.

Hispanic women in 2006 gave birth at a rate corresponding to lifetime averages of 2.96 children per woman, compared with 2.11 for non-Hispanic black women and 1.86 for non-Hispanic whites. The fertility rates for Hispanic immigrants were higher than those in many of their countries of origin, including Mexico, where the rate is 2.4, according to the Pew Hispanic Center.

General birth rates were highest in Republican strongholds like Utah (94.1 births per 1,000 women), Arizona (81.6), Idaho (80.9) and Texas (78.8). They were lowest in states won by John Kerry in 2004, including Vermont (52.2), New Hampshire (53.4), Maine (54.5), Rhode Island (54.6) and Massachusetts (57). The rate in New York was 61.1, well below the national average of 68.5. The rate in New Jersey was 64.4; in Connecticut, 58.8.

The report does not include information on religion or socioeconomic status, but researchers have long linked religious observance and affiliation with higher rates of fertility, even attributing the growth of evangelical churches and decline of mainline Protestant churches to differences in fertility rates.

In a 2007 survey by the Pew Research Center, 79 percent of evangelicals said they had children, compared with 73 percent of nonevangelical Protestants and 62 percent of those who described themselves as secular. For Catholics and Protestants, the more often they attended services, the more likely they were to have children.

Ms. Ventura of the health statistics center said it was unusual that 2006 birth rates rose for both teenagers and older women. In the past, a strong economy “contributed to a decline in the teenage birth rate, because they saw they could get good jobs, so they put off childbirth,” she said. “For older people, a good economy makes them say, ‘We can afford to have another child.’ ”

With their low birth rates, Europe, Japan, China and parts of the Middle East face the burden of shrinking productive work forces and aging populations (a vicious cycle: gloomy economic prospects lead to low birth rates, which lead to gloomy economic prospects). For the United States, then, the boomlet is a healthy sign, said Michael Rendall, director of the Population Research Center at the RAND Corporation, a research group. “It’s not a huge amount, but it’s a sign in a positive direction. Timing is very important.”

Mr. Rendall considered the cohort born in 1960, at the height of the baby boom. In 2040, when that group turns 80, the people born in 2006 will be in their prime earning years, he said. “The baby boom peak will be benefiting from 34-year-olds born in 2006. They’ll be in the labor force just in time.”

The recent downturn in the economy and the housing market bodes poorly for a continued boomlet. Last year, the National Association of Home Builders reported that houses had stopped growing. Foreclosures discourage people from having children. “What could be happening now is that people will have wealth shock, and reduce need for everything, including children,” said Mr. Sanders of the Maryland Population Research Center.

Which would drive down house prices, making homes more affordable. Which could start the cycle again.