At $2 a gallon, should I stop writing papers about the Prius? I don't think so. You wouldn't want to read my papers about the financial crisis. I am a fan of creative destruction and would ask the Obama Administration to sit back and let the chips land where they land. But, they wouldn't listen to me. I vote for decentralizing power rather than having Washington D.C seize it. So, permit me to keep writing about the Prius.


Dear colleagues,

I recently published a new article in The B.E. Journal of Economic Analysis & Policy (Contributions), and thought you might enjoy reading it. You are invited to download the full text at no charge from the journal's website; feel free to forward this along to any other colleagues who may be interested.

Kahn, Matthew E. and Vaughn, Ryan K. (2009) "Green Market
Geography: The Spatial Clustering of Hybrid Vehicles and
LEED Registered Buildings," The B.E. Journal of Economic
Analysis & Policy: Vol. 9 : Iss. 2 (Contributions), Article
2. DOI: 10.2202/1935-1682.2030 Available at:
http://www.bepress.com/bejeap/vol9/iss2/art2

This paper uses zip code level data to investigate the spatial distribution of two major "green" products. Using data from California, we document where hybrid vehicles cluster within the state. Using data for the entire nation, we study where LEED registered buildings cluster. By creating a novel measure of community environmentalism based on revealed preference political data, we document that green products cluster in environmentalist communities.

To receive email alerts of other articles in The B.E. Journal of Economic Analysis & Policy, sign up at http://www.bepress.com/bejeap.

Every sunday morning, we go to the Beverly Hills farmer's market. This is the only driving we do each week (4 miles round trip). At this market, I wonder if famous Hollywood types are walking past me and I don't recognize them. As I waited on line at the Bakery stand, the woman in front of me told the merchant how great he is on TV. She then explained to her son that he is a stuntman on the TV show "PrisonBreak". I took a closer look at this guy and he does look like the lead actor on that show. Every week, I talk to him and buy $20 worth of stuff but I never knew that I was talking to a star. He told me that he does get paid more for more difficult stunts (Adam Smith and Sherwin Rosen would be happy) and he has said no to doing some stunts.

Dora and I are hoping that some Hollywood bigshot will want to take our book Heroes and Cowards and turn it into a movie. Now I have learned that I should simply hand out free copies of this book at the farmer's market.

Spring Break means different things to faculty and students. Since I can't remember what it was like to be a student, I will focus on what faculty do on Spring break. We took our charming son to Joshua Tree National Park . I was counting lizards and spotting a variety of cactus types.
Since we don't own a television, we use our night time at Motels to catch up on what everyone else is watching. My 7 year old and I bonded over Caddyshack. My wife didn't want him watching Goodfellas. In Caddyshack, Rodney was a very funny guy but Chevy Chase is over-rated. My son rooted for the gopher. This morning we watched the History channel where we learned about the history of the potato chip.


Now we are back in West LA. There are many papers I hope to finish this spring so I'm hiding. Nothing personal but when I feel the urge to write and be productive --- I have to ride this wave while it lasts. You won't be able to find me for the next 10 weeks! I keep getting requests from people to do this and that. I'm starting to see why older guys get grumpy. I'm getting grumpy.

I can smell summer time. It was 80 degrees here and it felt like a summer day. If you are looking for something interesting to read you won't find it here. But, let me point you in the right direction; try this Some Arithmetic on the Carbon Footprint of a Burger

Larry Summers generates a lot of media attention. I know that he has an impressive head but does all of this attention displace coverage of other productive economists?





Dear Reader, I would ask you to contrast Dr. Summers with these two micro economists.



Paying more, getting less from prisons

By Steven Raphael and Michael A. Stoll

What is the optimal level of incarceration? The simple answer is something like: The same amount as there are criminals. The real answer is: the level that provides California the best social outcomes overall.

Crime rates are down, and yet prisons are more crowded than ever. The number of people imprisoned has more than doubled over the past decades. The Bureau of Justice Statistics reports that in 2008, there were more than 1.5 million people in federal and state prisons, up from about 320,000 in 1980; the equivalent figures for California were 165,000 in 2008 and about 38,000 in 1980.

The costs are staggering. The recently passed 2009-10 California Budget allocates $9.6 billion to the Department of Corrections and Rehabilitation, much higher than the $6 billion budgeted for the University of California and the California State Universities combined. Of this amount, $5.4 billion is slated for adult corrections, and with about 165,000 adults incarcerated in state prisons in California, this amounts to a cost of about $32,000 to incarcerate one prisoner per year, much more than the annual tuitions at UC or CSU.

Many are now opposing the growth in imprisonment on the grounds that the costs far outweigh their potential crime-reducing benefits. They point to evidence suggesting that the crime-abating effects of increasing incarceration have declined as the incarceration rate has reached new levels.

As we have expanded the scope of offenses punishable with imprisonment, we are incarcerating increasingly less dangerous offenders, thus reducing the marginal benefits in terms of crime reduction associated with further increases. And then there are the collateral damages, including an erosion of family and community stability among certain demographic groups, depressed labor market opportunities for ex-offenders, and accelerated transmission of communicable diseases such as AIDS among inmates and their nonincarcerated partners.

The recent expansion of the prison system has mostly been fueled by incarcerating marginal offenders, or those charged with lesser offenses. But incarcerating these marginal offenders comes at great cost. These costs not only include the expenses associated with policing and adjudicating the offense, building and maintaining prisons and supervising prisoners. They also include, among other factors, that prison itself could heighten one's propensity to offend, especially for first-time offenders charged with lesser offenses, that children of the incarcerated and formerly incarcerated are more likely to commit crimes and go to prison, and that society loses through the lost productivity and taxes because of the lowered employment and earnings of the formerly incarcerated.

How did we get to this point? More than 80 percent of the increase in imprisonment over the past three decades was driven by policy changes in sentencing and enforcement. Only about 20 percent of the increase is due to increased criminality. The combination of procedural and substantive sentencing reforms over the past two decades including, among others, minimum mandatory sentencing, truth in sentencing and stiffer punishments for those convicted of certain drug crimes, drove much of the increase in imprisonment.

Restoring judicial discretion in sentencing and removal of mandatory sentencing on drug crimes would go a long way toward improving the situation. California, which has some of the strictest parole terms in the nation, also sends a large percentage back to prison by way of technical violations of parole terms.

Incarceration isn't the only way to prevent crime, and alternatives can provide just as much bang for the buck. Preschool enrichment strategies, other educational options and crime-diversion programs are more socially attractive and cost-effective than our current reliance on incarceration. With these, we can get the same or better crime-fighting benefits while expending much less on direct and collateral costs of imprisonment. California would also benefit from increased tax payments and restitution, as well as increased child-support payments from those who would have gone on to prison instead.

Continuing to support existing incarceration policies makes no sense from either a social justice perspective or a cost-benefit analysis.

Raphael, acting dean and professor at the Goldman School of Public Policy at the University of California Berkeley, and Stoll, chairman and professor of public policy at the School of Public Affairs at the University of California Los Angeles, are the editors of “Do Prisons Make Us Safer?” published by the Russell Sage Foundation.

Are economists deep thinkers? In case recent events have made you doubt it, here is example A. Consider Marty Weitzman's new paper

In my humble opinion, the dudes of economics write too many sports papers. Would women journal editors accept these? But, this week's Sports Illustrated reports evidence that will thrill behavioral economists and annoy Milton Friedman and his other bald intellectual grandchildren.

This Sports Illustrated article focuses on pro athletes who were paid millions of dollars but are now bankrupt. The article hints that these guys do not abide by the permanent income hypothesis. They over-consume out of current income. They trust too many friends and partners with their money and they hang out with too many young ladies who want a share of their winnings. Ex-Post , the athletes have regrets and wish that they had met with a financial planner at the start of their career and given up some of their financial freedom in return for a smoother consumption stream.

One story here is that the typical pro athlete doesn't have much education and low-education guys are on average more likely to act "behavioral". Randomly assigned talent and a large amount of $, they are impatient and front load their pleasure. Once the party is over and their capital stock is now zero, they wish they could hit the reset button. Perhaps, they have followed their dynamic utility maximizing path given their rate of patience?

The average home near UCLA sells for $1.3 million dollars. This blog claims that the average home in Detroit is priced at $13,000. So, one can trade 1 Westwood house for 100 Detroit homes. Is this a good deal? Could climate change make this a good deal by the year 2100?

Larry Summers and Ben Bernanke and the rest of the smart Government economists owe us answers to this short multiple choice test. How will we balance this budget? A. carbon tax revenue, B. higher progressive taxes C. China will buy more low interest rate USA bonds , D. inflation, E. unexpected economic growth translating into more tax revenue. F. Scale down the government "Big Push" on all of its new social dimensions. Hint, there could be more than 1 correct answer here.



Source: NY Times

I know that gas is cheap now and the economy is in recession. Despite these facts, it is still interesting to know where are the "green" geographical clusters of areas where people are buying hybrids.

In this piece (written for a popular audience), I "name names" providing "green consumer city" rankings for cities within Los Angeles County and Orange County. Malibu does pretty well! Such "green consumer" clusters provide a purchasing power base for attracting green businesses and represent guinea pigs who will be willing to buy the first generation of new green (unproven) products. Society needs such guinea pigs.

Here is the LA Times Blog writeup.

Here is the UCLA press release.

I was told that some newspaper reporters said that "we already knew this". While there is some truth to this claim, it creates a dangerous situation for ambitious academics. It suggests that we can only make the newspaper if we say something "wild and crazy" or if we work on topics that are wild and crazy. Do we want to encourage such extremism?

Here is our interview from last night when Dora and I were interviewed on Australian National Radio. I thought that this was a high quality interview. We did a good job explaining why our book is interesting and what it is actually about.

You won't hear from me for at least two days because I will be up at UC Berkeley hanging out with old friends and talking about energy.