By clicking here, you can download all of the lecture notes, filmed videos, notes, homeworks and readings for my fall 2013 Undergraduate Environmental Economics class at UCLA.  Roughly 116 students will receive a grade.  That's a big class and I didn't have a graduate Teaching Assistant to help me.  One receives no extra "credit" for teaching such a big class.  Instead, there are more papers to grade, and more administrative emails to read.  The only glory of teaching such a big class is that the law of large numbers guarantees that I can identify some students who really want to excel and understand why the subject matter is exciting.   There were many seniors in the class this quarter who appear to be more focused on their job search than on the core material that I find so interesting.

The NY Times would make King Solomon blush.  On the front page today is a story from Los Angeles' West Hollywood neighborhood.   This tolerant community (located six miles east of my UCLA neighborhood) is feeding the homeless.  When offered a "free lunch", many homeless are showing up to eat and they are hanging out before the meal and after the meal.   People who own homes in the neighborhood feel under siege and threatened not knowing which homeless may pose a danger to their own families.   The article hints that local home owners want the feeding to occur indoors or at some isolated area and then for buses to take the homeless away from their community.   Such an endeavor would raise the cost of providing for the homeless. It is no accident that the current system has evolved the way it has.  So, do the local property owners have rights? Or did the relatively low price they paid for their homes reflect the present discounted expected value that homeless people could be fed nearby?  

The larger issue here revolves around the uses of public land when perceived negative externalities exists.  Does the Coase theorem apply?  Where should a homeless feeding occur?  Should UCLA's School of Public Health use its campus to provide these meals and health care?    Who should pay to provide these services? What are the responsibilities of the homeless in return for receiving free food?  

This blog post is a product endorsement.  No more taxi cabs for me.  Uber is now my Los Angeles car service company.   My wife, son and I have all downloaded their App which provides you with a map of how minutes away is its closest car.  You select its type (I suggest the Lincoln Towncar) and wait for your limo to pull up to the curb. No cash is needed because you have prepaid.   I pay a few dollars more as an extra tip.  The NY Times even mentioned the company today on its front page when discussing the hipster gentrification of San Fran.   This is a classy car service.

In Econ 101, we teach that U.S dollars (not backed by gold) will be accepted as payment because the seller expects that somebody else will accept payment with the currency.   Where does this expectation come from?  What would chip away at this "confidence" in holding cash?  The short answer is expected inflation.  With Bitcoins, the producers are promising to mint a finite set and thus commit to no hyperinflation.   This will create value if there is demand for these coins.   Who will demand them?  In the structural IO literature, experts on cars estimate models of the demand for one make (say a BMW) versus another (say a Prius).  If the BMW and the Prius are close substitutes then all else equal --- a price rise for the BMW reduces its market share and increases the Prius' market share.    Companies compete on quality and pricing.  In the case of bitcoins, how will these coins compete?  Quality is one dimensional --- do people believe the currency will be redeemable for goods at a "good" ratio in the future?  

The difference between bitcoins and cars is that bitcoins represent a platform good.  If we all co-ordinate and use bitcoins rather than Peercoins, then there is a social positive externality.  Why?  A person who has an endowment of Peercoins and wants to buy something whose price is listed in bitcoins would need to exchange the Peercoins for dollars and then trade the dollars for bitcoins and then buy the object.  This extra set of transaction costs (measured in time and markups) would lead to distortions in the trading of the actual goods.  This suggests that the market economy would be stronger if there is a weeding out so that only one "bitcoin" survives the competition with other currencies threatening to enter if a hyperinflation takes place (this is the "optimal currency area").

An interesting game theory issue arises here of multiple equilibria concerning which brands of money will survive the competition. How will these different currencies compete against each other? The wild volatility of their prices suggests that traders are puzzled about the fundamentals here.  What are small initial moves a nascent currency can make (for example signing up Larry Summers or Bernanke to be on their board of directors) that would instill long run confidence?  

Finally, what is the social value of this competition?  The world has the $, the RMB and the Euro and all the other currencies, what is the social marginal product of introducing a "new good" to this set?  How would Jerry Hausman estimate the consumer surplus from this new product?

Soon, I will go to the University of Chicago and the University of Wisconsin-Madison to present a new paper of mine.    I went to the UW-Madison webpage to see what's going on at that Department and I read through this newsletter.  UWM has made the wise decision to appoint an economist as Chancellor (Rebecca Blank) and to appoint an economist as Dean of Social Sciences (Karl Scholz).  This is an interesting experiment that West Coast public universities should think about implementing.  Are economists good at efficiently allocating scarce resources? Are they benevolent planners?  We will find out but I predict that UW-M will become an even stronger university due to these wise management choices.

We know that we shouldn't drink and drive but should economists drink and lecture?   On Wednesday November 20th, I ran a field experiment.   I was given the opportunity to speak to a large number of Emeritus faculty members of UCLA.  I was the after dinner speaker and roughly 80 people remained to listen to my talk.  I focused on my 2014 book on pollution progress in China.  This is joint work with Professor Siqi Zheng of Tsinghua University.   The book is under contract with the University of Chicago Press.    Here is the audio of my discussion.

It looks to me that the President is showing the Chicago economists (Lars, Gene and Grace) his collection of JPE journals.  The third Nobel Laureate is hiding out in back.

The market will price this output.

Here is a novel ranking of U.S "smart colleges".  Why is UCLA ranked #61?  Note that UCSD is #23, UC Berkeley is #31 and USC is also ranked #31.     There is a question of whether the sampled population is representative of all students at each school but this is an interesting approach.  I also don't fully understand how the authors collapse the five Lumosity Brain Areas: Speed, Attention, Flexibility, Memory and
Problem Solving into a single index. Do they simply average them?

While I am not a good physicist, I have great hopes that my son will be.   As a regular reader of the NY Post, I'd like to share one physics lesson for you.  In high school football, what happens when a 400 pound running back collides with a 110 pound defensive back?