Here is the video of my May 21st 2015 Keynote at a Drexel University conference on sustainability.  Here is the video of my May 26th 2015 talk about China at the LSE.

It is growing cheaper for "Benevolent Big Brother" to watch you.  Cops will have body cameras, Amtrak train engineers will be on "candid camera".  Cars are video taped at EZ Pass access points.   Would Professors give better lectures if Deans could randomly sample video of our lectures?  (I post all of my lectures on line as a commitment technology forcing me to actually function).  Drones will patrol  the skies collecting all sorts of information that used to provide "information rents" to those who already knew it. For example, Apps that tell you the shortest routes to get from A to B chip away at the gains that local cognoscenti had.   Tourist trap restaurants will have to serve better food at lower prices as their Yelp ratings will reveal their scam.    As information technology reduces asymmetries of information, where will the largest efficiency gains be achieved?    Here is an important paper on this topic. 

To celebrate my return to the LSE, I'm giving away free copies of my revised e-Book on Tuesday and Wednesday.  While the book ususally sells for $1, I will drop the price to $0.  The "bang per buck" will be quite high if you click on the right icon!  This is your chance to learn some environmental and urban economics.

Today, I'm at Drexel University speaking at this sustainability event  and Tuesday I return to the LSE to talk about my China research.     Yesterday, I learned a good lesson about Uber. You never know who you are going to meet.  A Hollywood Movie Star drove me to the airport.  Those of you who are fans of the Texas Chain Saw Massacre may remember LeatherFace.  

The City of Los Angeles is raising its minimum wage to $15 an hour.    Do David Neumark and David Card agree on the consequences of this well intended policy?  Neumark's papers on this subject are listed here.   Card's research on this subject is available here.   The current minimum wage is $9 so a 66% increase is not "marginal".  How will partial equilibrium modelers evaluate the effects of a policy that we have never seen before?  Will structural modelers claim that they can predict the consequences?

Are micro economists useful in predicting the consequences of new policies?  The new $15 minimum wage poses a test of our value and it poses a test of standard neo-classical economics.

A first step a researcher would need to grapple with is to be explicit about which jobs in the City currently pay less than $15 per hour.  For each of these jobs, will employers hire less labor when they must pay $15 per hour?   If employers must pay for health benefits also, some bosses may choose to hire fewer workers and ask them to work longer shifts (to hold total hours supplied constant).  This would reduce the fixed cost of paying health benefits because fewer workers would be hired.

Will firms now take fewer chances hiring workers who appear to be marginal in terms of cognitive and non-cognitive skills?  Recall that a profit maximizing firm hires until the marginal value of hiring a worker equals the marginal cost. If the marginal cost is now higher because of the minimum wage then firms will screen out the least productive low "marginal value" workers.  This will effect people who have been in prison and other groups who are viewed as potentially low productivity.

Will firms stop reporting taxes and create more informal jobs whose payments are in cash and are not observed by the tax system?  The minimum wage can't bind if there is "no job" because it has vanished into the black market.

Will progressive economists argue that the minimum wage will pay for itself due to efficiency wage theory that workers who are not better paid will exert more effort and this will raise their marginal product?

For small businesses whose profit margins are cut, how will their families be affected?  Who starts small businesses in Los Angeles?    Again, what types of firms in what industries hire low skill workers?  How will they adapt to now facing a 66% price increase for labor?    Will they become family firms that just hire family members and then pay them with equity in the firm?

The only way to answer these questions would be to have a Census of Los Angeles employers and to explicitly model their labor demand choices before and after the new policy.  Such research would have to figure out what substitution possibilities such firms can engage in --- in the short term and the medium term.  Will LA's firms hire more robots to replace the low skill guys?


UPDATE: I just received this message.  I do not agree with its core claim.  These guys need to take a course in Econ 101.

In the aftermath of the Amtrak train disaster, railroad unions are demanding that a second engineer ride in each train.   This poses an interesting public policy question related to behavioral economics.  A second engineer would be costly to hire and the union would love to have more well paying union jobs.  But, a benefit of the second engineer would be that the probability of a disaster would decline.   A key question is how much would safety be improved by having "four hands on the wheel"?   It has been pointed out that train riding per mile is much safer than auto travel per mile but behavioral economists would point to Matt Rabin's law of small numbers research claiming that people overweight salient events when updating their subjective assessments of risk. If this is the case, then the union could grow rich because of this train disaster.   Why? The public will demand that the 2nd engineer be mandated as new safety policy for "risky" trains.

Will any neo-classical economists have the guts to make the claim that the 2nd engineer on the plane does not pass a cost-benefit test? In the aftermath of the 9/11 attacks was it "good policy" to have U.S Marshals flying on planes?  Did this sharply increase our safety relative to the extra costs?

I am quite interested in how policy entrepreneurs use disasters to try to nudge voters to adopt new policies that help them.  While a second engineer on the train would help the union, how much would it help the people?  How much are we willing to pay save a statistical life?

Intuitively, if there are 200 people on the train and having the 2nd engineer on the train reduces the probability of a crash by .0001 and 1% of the people on the train would die in a crash, then having the extra engineer saves 2*.0001 statistical lives per train trip.

For some economics of the rising value of a statistical life read my 2004 paper with Dora Costa.

For some research on how liberal environmentalists in the U.S Congress use environmental disasters such as Chernobyl to introduce more radical legislation, read my 2007 paper.  

The NY Times has published a long pseudo-Freudian piece about the respective legacies of Gov. Pat Brown of California and his son Gov. Jerry Brown (the current leader of California).   In a nutshell,  Pat was the leader during a time of growth and optimism.  He liked people and he wanted more people to move to California. In contrast, Jerry is a dour dude who openly declares that there are "limits to growth" and he is not afraid to say "no".  He faces constraints that his father did not face.  A structural budget deficit and the absence of rain. Is California doomed?  Of course not, but it will need to use scarce resources more efficiently.  A silver lining of the combination of bad policies (i.e low water prices and overly generous property rights to water for agriculture and the absence of water markets) combined with drought is that these circumstances nudge the people of California to take a second look at how we are currently allocating scarce resources.

80% of water is used by farmers in this state.  50% of urban water is used outside.  We face prices of less than 1/2 cent per gallon. Could we be using this scarce resource efficiently?  Some facts about agriculture.  Note that rice and alfalfa are not on this list.

Here is our production of alfalfa.  6.1 million tons per year.     It takes 135,000 gallons of water to grow one ton  of alfalfa.   If we sacrificed all of our alfalfa production (which is not one of the 10 biggest commodities for CA), each of the 40 million Californians could have an extra 20,500 gallons of water a year each (56 gallons per person per day)!   No crisis!   No limits to growth. Just simple choices.  Raise water prices and alfalfa land will be converted into a higher use activity.

Dora Costa and I have just published an urban economics piece about the trends in the geography of health inequality in major U.S cities 100 years ago.  Here is the source: AER May 2015 Papers and Proceedings piece.

Here is our Intro

Sisters meet for the first time at a Columbia University writing seminar.

Entourage and the declining influence of CAA and WMA?

Desalinization as a tool for augmenting California's water supply during drought ;  challenges posed by environmentalists

FAO Schwartz leaves 5th Avenue  --- bricks and mortar vs. the Internet

I will teach undergraduate Environmental Economics at USC this fall.  If you click here,  you will see that my class enrollment is capped at 40 students and each of my students will have already taken intermediate micro.    After having taught 120 person enviro econ classes at UCLA where roughly half the class hadn't taken principles, this will be a very good experience for me.   I will push the students to work hard and will teach an accelerated course focused on blending applied econometrics with micro theory to think about the causes and consequences of pollution.   Our textbook will be my $1 book and we will have the time (and they will have the tools) so that we can cover everything in the book.