Environmental and Urban Economics

Working with my friends at Fudan University, we have released a new paper on the unintended consequences of China's recent water pollution regulation.  You can read the paper here.

When it was announced that Gary Becker won the Nobel Prize in Economics, there was a press conference at the University of Chicago.  At that October 1992 conference, he stated at the start of the event that he would not answer questions related to issues far from his research (such as the 1992 Presidential Election).   I recall that he was asked a question about whether his rational addiction research would help the City of Chicago to address its drug problem.

The NY Times is creating a "green job" as it will hire a new climate change editor.  Given that Dora and I have written a recent paper on how the NY Times covered the urban mortality transition from 1890 to 1930, I will offer this important newspaper some unsolicited advice.

1. Report on "good news".   Yes, I understand that newspapers love "bad news" and this was a focus of my paper with Dora.

Paul Krugman is correct and Mr. Trump is wrong.  Quality of life has never been better in American center cities.  Of course, Mr. Trump knows that his section of Manhattan is doing great. His real estate there is worth more than ever.  From simple supply and demand, given the inelastic supply --- any price dynamics is driven by demand , thus a high price signals a high demand.  Nobody (except people with school age kids) is excited about suburban living anymore.

The LA Times has written an informative piece describing new real estate construction in downtown LA paid for and constructed by Chinese investor teams.   This piece raises several interesting economic points.  Only in the recent past, "Made in China" was viewed as a signal of low quality.  I bet that these new buildings are high quality construction produced in a cost effective way.

Imagine a scenario in which you must choose whether to invest $500,000 in a sunk investment in a new house (that will live on for 40 years and then turn to dust) overlooking a beautiful body of water.  Based  on the last 500 years of data, there is a 1% chance each decade that your house will be destroyed by flooding.  Assume you are risk neutral and you will live in your home for 40 years and the interest rate is 0%.

John Schwartz has published a front page "article" on the NY Times business page claiming that Exxon has huge problem because it owns billions of dollars of assets (oil) that will be a stranded asset in the near future.     This is an interesting claim.  He is hinting that Exxon could go bankrupt in the future and that this will have ripple effects as this company's shareholders learn that the core assets of the business are highly risky.  What here is true?

Point #1  The article editorializes.

Robert Catell has written a great OP-ED for the NY Times that captures another reason why I'm a proud Californian.   California's Air Resources Board (ARB) has a mandate to reduce the state's ambient air pollution and greenhouse gas emissions from the transportation sector.  The ARB is enacting new rules to encourage major bus entities such as the City of Los Angeles and the City of Santa Monica to run its next generation of buses on food waste.

The US government paid Iran $400 million dollars to guarantee the survival of 4 Americans.   So, my calculation suggests that the U.S government values a statistical life at $100 million.  This is a lot larger than the $7 million that is the standard number used in government cost/benefit regulation calculations.   At $100 million per life saved, many regulations will now pass a cost/benefit test.  This will expand the scope of government.