Environmental and Urban Economics

The Economist Magazine has published a "philosophical" piece about climate change mitigation.  I'd like to blog about a single paragraph in this piece related to the benefits of reducing global GHG emissions. A DIRECT Quote: "However, estimating these benefits means that we need to determine the value of a reduction in preventing a possible future catastrophic risk. This is a thorny task. Martin Weitzman, an economist at Harvard University, argues that the expected loss to society because of catastrophic climate change is so large that it cannot be reliably estimated."

1.

From the year 2000 to 2006, I was colleagues with Michael Klein at the Fletcher School. He and a co-author have released an important working paper that is discussed here.  Based on a Freedom of Information Request, they document that newer cohorts of Marines are scoring lower on a standardized test.  Why?  What are the implications of this trend?

I believe that a simple model from labor economics can explain the facts.

I have now figured out how to operate my office PC and how to deposit a paycheck.  At USC Econ, I've even gotten some work done.   I'm editing the proofs for my JEL review of Jeff Sachs' new book and I'm finalizing my forthcoming Princeton Press book (joint with Siqi Zheng) focused on pollution dynamics in China's cities.  As I write this, I'm listing to Led Zeppelin's The Rover. I was unable to download a strong chess program to this office PC but maybe that's a good thing.

Climate scientists continue to warn us that flood risk in coastal areas is increasing because of sea level rise. How do we adapt to this anticipated but vague threat?  The threat is vague because we don't know when and how severe and where will any specific flood occur. We are able to form some general predictions about times of the year when it rains hard. We know which areas are close to the sea.

When I was a kid, I played Stratomatic baseball. This was a precursor to Billy Beane's Moneyball.  Now that I'm no longer a kid, I have signed up for REPEC's fantasy League and below I report my initial roster (that I was assigned at random).  I find it mildly amusing that I was randomly assigned Tomas Piketty.  I will trade him.  For those who enjoy rankings, keep an eye on my team. We are called "Diesel".  (Don't ask).

Arthur Brooks' OP-ED focuses on the politics of optimism but I would prefer to recast his focus on what should be the basis of our optimism about our collective future.  In 2015, we live in a world with roughly 7.3 billion people whose life expectancy is higher than it has every been.  Educational attainment is higher than it has ever been. Urbanization both insulates us from climate shocks and facilitates trade and learning.

Jianfeng Wu, Siqi Zheng, Weizeng Sun and I have just released a new NBER paper titled "The Birth of Edge Cities in China: Measuring the Spillover Effects of Industrial Parks".

Abstract

Several Chinese cities have invested billions of dollars to construct new industrial parks. These place based investments solve the land assembly problem which allows many productive firms to co-locate close to each other.

My parents joined us in Cambridge, MA this week and on Thursday morning I met them outside the Sonesta Hotel as they were reading Paul Krugman's column titled "The MIT Gang".   My father is a cardiologist at NYU and he is aware that there was a long standing debate between Samuelson and Friedman and then there was a debate between a new generation of macro guys and Robert Lucas. He wanted to know what I thought about Krugman's piece.  

On one level, Dr. Krugman's piece is wonderful.

We are flying back to LA.  Hundreds of talented, ambitious and mostly young economists have been meeting at the Sonesta Hotel.   The week started off with environmental and urban papers and then labor studies, crime, kids and aging. Plenty of new ideas to think about.   Alan Krueger gave a great Feldstein Lecture but he needs to think some more about the implications of casey mulligan's work for his core thesis.  We also need more empirical work testing the scarring effects of unemployment.

Read Richard Freeman's and Doug Kruse's OP-ED in the New York Times today.   They argue that more companies should pay their workers with stock equity in the company. They point out that great companies such as Google and Starbucks already do this.  What they don't discuss is a simple empirical point.