The New York Times has published a very good piece on urban adaptation to natural disasters.   Note its implicit optimism that New York City is making investments to make it more resilient against the next shock. In this sense, the marginal damage of a given shock declines over time due to small ball investments made by households, firms and local governments.   While the NY Times wants more Federal Aid to pay for this defense, this makes no sense.  Urban defense is a local public good while national defense is a national public good.   Make individual neighborhoods and cities pay for their own defense and the investors will make better choices.  Other people's money is too easy to spend and leads to waste.   The point the article doesn't make is the counter-factual. If NYC doesn't make these investments and if it develops a reputation for being risky and unsafe then firms and the skilled will leave and NYC would become Detroit.  This competition between cities for the mobile tax base incentivizes them to step up to address new risks such as climate change.  This was a key theme in my Climatopolis that folks have been slow to appreciate.   Competition and innovation will protect your urban family from the blows that climate change is now unleashing.

Cass Sunstein suggests that we aren't scared enough of climate change.  He should consider distinguishing public action (i.e carbon pricing) versus private action (i.e individuals and companies moving away from flood plains).   This recent WSJ article suggests that private climate adaptation is taking place just as I predicted it would in Climatopolis!   An empirical issue arises, can the wealthy who are building big houses on stilts in these risky  (but beautiful) coastal areas withstand a punch in their new housing?    I believe the answer is yes.

I was shocked that I  didn't have Internet access last night on my 4 hour flight from Chicago to Los Angeles.  Now that I have read this article I see that United is lagging far behind other airlines including Southwest.  I was ready to buy the $8 Internet access but they wouldn't sell me this product. What happened to complete markets? Can I contact Arrow or Debreu?  

Let's do some economics here. Suppose that a typical United Airplane flies 3 times a day and has 200 seats.   If everyone bought the internet package, this would yield $8*3*200 = 4800 worth of revenue a day per plane.  If the plane flies every day and the plane lives for 10 years, then assuming an interest rate of 0% this yields a present discounted value of revenue = 4800*365*10 = $17.5 million dollars.   Are you going to tell me that this investment doesn't have a positive PDV?

I realize that not everyone on board will use this product. I realize that there are fixed costs to install wifi and maybe some marginal costs but do you see my point?  You can incorporate your assumptions into my spreadsheet but the revenue stream will still be huge.   United has been concerned about its low revenue.  Read this article in the Chicago Trib.    

At the University of Chicago, photos of the entering class are taken and put up on the wall.  Here is a photo taken in early October 1988.   Economists will recognize the guy in the upper right corner but does anyone else look familiar?  Alberto Bisin,  Phil Strahan,  Erzo Luttmer, Ethan Ligon, Bernadette Minton , and Rick Flyer were also my classmates and I'm not even naming the other 70 who entered with me.  Not a bad talent pool.

Katie Couric says that her ratings are down because of this.   Rick Flyer and Sherwin Rosen investigated the long term consequences for public school teacher quality as women chose to leave the the public education sector to enter the private sector.    Dora Costa and I studied the intended consequences of this trend in our work on power couples.

Paul Krugman has written an excellent review of his first mentor's new book.  Dr. Krugman is a consistent thinker.  He devotes merely two paragraphs in his long review to climate change adaptation.   Below I supply it.

"How much harm will this do? Nordhaus draws a contrast between what he calls “managed systems”—things like agriculture and public health, which are basically human activities affected by climate—and “unmanageable systems,” like sea level, ocean acidification, and species loss. Compared with some climate writers, Nordhaus is relatively sanguine about the impact of rising temperatures on the managed systems. In fact, he summarizes studies suggesting that agricultural yields will probably rise a bit thanks to one or two degrees of warming, and declares, “It is striking how this summary of the scientific evidence contrasts with the popular rhetoric.” (You see what I mean about his role as debunker—although he concedes that the costs become serious once temperatures reach levels that on current trends they are likely to hit late this century, and much more so at temperatures likely next century.) Health impacts, too, he views as modest, at least for the warming likely this century, declaring his overall assessment “similar to that for agriculture.”

The bigger costs, Nordhaus argues, come from the unmanageable systems: rising seas, more powerful hurricanes, loss of species diversity, increasingly acidic oceans. The trouble is how to put a number on these costs—something he needs to do because, as I already suggested, his goal is to do cost-benefit analysis."

In an urbanized world with multiple sources of food supply due to international trade in agriculture, I would like to see Dr. Nordhaus and Dr. Krugman explain which of these outcomes listed above is a "knockout blow" and how does this "knockout" occur?  I would like to see these "macro economists" walk me through the micro economics of why optimizing households, firms and governments cannot adapt to these new challenges.  Physical places will suffer (i.e if we evacuate Miami) but how do different households suffer? If households are expected to suffer, doesn't that create profit opportunities for those who can solve these problems? How far does human ingenuity go in offsetting Mother Nature?   Are these Yale economists so pessimistic about human ingenuity?  What is the point of Yale if its focus isn't to solve problems?   (In this age of disclosure, I will reveal that Yale rejected my undergraduate application).

On Thursday October 24th, I gave a lecture at the Harris School at the University of Chicago co-sponsored by the Energy Policy Institute at Chicago and the Confucius Institute.  My talk was titled; "Blue Skies in China?"  You can download the relevant material here.    Today, a Forbes blogger wrote a nice piece about my remarks.  Sudden impact!   Today, I gave a talk for 180 graduates of the University of Chicago's Booth School.  This was a real estate crowd and my talk was titled; "The Future of Chicago".  I had a great time and my remarks were well received.  Somehow, I feel more appreciated in the Midwest and the Far East rather than in the West.  Can you explain that?

Yesterday I took my longest trip on Southwest Airlines as I flew 3.5 hours from Phoenix to Chicago.   I give the airline an A-.   On the plus side, we did land after a 1 hour delay and there was free TV on the flight so I caught up on my Law & Order watching as I watched the cops part of 4 different episodes (I skipped the law stuff -- given that I am  Professor at UCLA Law --- I don't need to watch that stuff).   On the plus side, the cranapple juice they serve is good.  On the "bad side", the flight was packed.  This was a flying bus with fares that are almost too cheap. I've been thinking of buying two tickets but with open seating --- someone would still sit down next to me.   I was sitting next to a young teenager who was doing her homework and chatting with her boyfriend.  The space is so tight that  I couldn't lean down to pull out my computer bag. My knees touch the seat in front of me and I live in fear of the guy in front of me reclining his seat.    For flights from LA to Oakland or Sacramento this is okay but on a longer flight this becomes tough.   I will fly back to LA on United in Economy Plus and I'm thinking of upgrading to first class.

Hurricane Sandy threw quite a punch at NYC.  This article makes a number of reasonable points but then it ends on a funny and revealing note.

I was born in Chicago. I met my wife there and I will be there on Thursday and Friday.  On Thursday, I will given this talk at the University of Chicago.   My remarks will provide some "big think" on two recent academic papers of mine including this one and this one.   The UC Energy Policy Institute didn't exist when I was a graduate student.  On Friday, I will speak at a UC Booth School of Business Real Estate Conference. My talk's title is "The Future of Chicago".   If you want to see my slides click here.   As I get older, I have learned how to give a good talk.  People tend not to sleep or text when I'm up there.  I make my points and crack my jokes and then I sit down.