Environmental and Urban Economics

These are exciting days to be an environmental economist.  Here I would like to offer three recent examples of new research that I find interesting and I didn't even write any of these papers!

Paper #1:   Studies the economic costs of states adopting a Renewable Portfolio Standard for electricity power generation.  As states such as California embrace aggressive (33% RPS!) standards, how much more costly will it be for power generators to supply power? How risky will such wind and solar reliance be?  These guys present a rigorous framework for studying this issue and show there better be significant learning by doing effects for renewable power generators in order for this policy to not have serious unintended consequences.

In today's NY Times, Rob Stavins and I are both quoted in this piece about California's continued effort to launch a serious carbon cap and trade program as part of its ambitious AB32 legislation.   I would love to see this effort succeed but I would like to focus on a slightly different point here.

We all agree that ideas are public goods and that learning offers positive spillover externalites to society.

My wife was kind enough to point out this great letter in today's NY Times Magazine.   Permit me to quote it in full:

"In Andrew Goldman’s interview of Larry Summers, my colleague Joseph Stiglitz is cited for saying Summers ignores arguments that he doesn’t like. I have disagreed with Summers on several issues, but I have always found him ready to debate my views, even at Columbia, when, on the celebration of my 75th birthday, he took on me, Paul Krugman and others.

This article discusses one of the major questions in social science;  is Brentwood or Beverly Hills the right place for a Los Angeles celebrity to live?  I live in neither area so I can objectively write about this hot button issue.   The NY Times author wants to tell a "tipping point" story focused on the tragedy of the commons.  Apparently, public streets are public property and enterprising business people are sponsoring tours of celebrity streets such as this one.

UCLA is still in session and I've been teaching 2 courses this quarter. My undergraduates yawn in class and some of my MBA students wonder what in the heck I am talking about.  I am feeling the effects of aging.   I used to be one of the great teachers but now I hear Bruce Springsteen's song Glory Days (have passed me by) as I look into my students eyes.    Fortunately, I can still write a few serious papers and yell at a few of my loyal Ph.D. students or I would really feel worthless.

Is a penny only a penny?  We see firms pricing products for $9.99 to avoid "double digits" or $99.99 to avoid a "triple digit" price tag.    These firms must believe that consumers see a "jump" between the price of $9.99 and $10 and that consumers will be less likely to buy the "expensive" product even if it costs just 1 penny more.   In this new NBER paper, Lacetera, Pope and Sydnor have managed to access a 22 million observation used car data set and they document a very funny new fact.

There are plenty of exciting popular economics books being released each month.  An author faces the challenge of how you "stay relevant" when you face such high quality competition.    Here is my most recent effort.    Permit me to preview a few of my quotes about Climatopolis;

"My starting point is that we have to be honest that we have collectively chosen to run a dangerous experiment.

As Baby Boomers age, their aggregate demand for products will create new markets for innovators.  Acemoglu and Linn (2004)  have anticipated future news stories such as this one.  I believe that the same dynamic will unfold in the case of climate change adaptation.  Billions of people will be seeking strategies to help them cope with climate change and the best ideas in the market will rise to the surface and deliver.

Is Chicago the last bastion of rational planning?   I don't think so.  Self interest will nudge even those who don't work in Hyde Park to anticipate how climate change will affect their lives.  Chicago has paid some consultants to provide a crystal ball study of how their city is likely to be affected.   As new infrastructure decisions are made, the consulting report will provide useful hints for how to make irreversible investments that the city won't regret in the year 2070.