I am happy to read that UCLA has swapped out its diesel buses and now purchased clean buses (from China's BYD) but the entire fleet consists of 16 buses.  This article ignores the fact that probably 75% of UCLA's employee transport miles commuting to campus take place in private vehicles.   These vehicles emit CO2 on each trip.  I know a thing or two about bus economics because I wrote this paper.    The article quotes  Renee Fortier  .  

I bet that she doesn't remember a meeting she had with me back in February of 2007.  I was a brand new UCLA Professor and I entered her office and made the following presentation.   I said to her;

"Using UCLA Administrative data, we can geocode where every UCLA worker lives and thus calculate the mileage distance to campus. If such workers go to campus 5 days a week (an upper bound for faculty), then they drive this distance 10 times a week.  If you know what cars each person parks in the UCLA parking lot, then you know each vehicle's miles per gallon and thus can calculate each UCLA car commuter's annual carbon dioxide emissions.

Since UCLA salaries are in the public domain, we can look up each person's salary and the department they work at UCLA and then run the following linear regression;

Annual Carbon Footprint from work commuting 
=  Department Fixed effects +  B*UCLA Salary   + U

Of course, if you don't park in the parking lots, I would assume that you use public transit and we would assign such a person a very low carbon footprint.

In this regression, B would be the income effect on carbon production and the department fixed effects would allow me to test whether Anderson School faculty have a larger carbon footprint than Institute of the Environment faculty and Sociologists (note that this controls for salary!!!).

She listened to me and then told me that her office didn't collect data on what cars different people park in the parking lot.   My impression was that she thought that I was nuts. 

Do you see that I was ahead of my time?

My approach would have lead to a much more accurate picture of whether UCLA really is "carbon neutral" because the regression I presented above could be estimated each year to see if the B is converging to zero (think of Tesla diffusion) and if the department fixed effects were converging over time (i.e Anderson faculty buying Prius and Tesla).

I tell this story in late 2016 because this example highlights a problem with UCLA.  My idea represented a smart use of "Big Data" before the excitement about big data and administrative records became mainstream but UCLA wouldn't use the gold mine it was sitting on to do something new.

Times change.  USC Football is now ranked below both its College (#15) and its Economics Department (#24 based on REPEC productivity measures).    The WSJ ranking places USC where it deserves to be.   I have taught USC undergraduates for 3 semesters now and I will testify under oath that my students are just as good as the students I taught at Columbia in the 1990s and better than my UCLA students in recent years.  I taught for 3 years at Harvard and Stanford.   Yes, Harvard and Stanford have a small right tail of exceptional geniuses but these schools explicitly want to be "well rounded" and reject countless talented students as they strive to create their niche eco-systems.  Schools such as USC have benefited from the rising challenge of being admitted to the Ivy League.  There is a cross-elasticity here such that USC is attracting great, motivated students. This will nudge the faculty to try harder in the undergraduate classroom.  As the Director of Undergraduate Studies in USC Economics, I am spending my time to improve our program to meet the talents and ambitious of our students.      For example, we will be launching our new Internet Journal soon.  It will be good, nerdy and challenging.  You won't think of OJ and Pete Carroll as you read it.

Harvard's Ken Rogoff appears to embrace a Keynesian demand side view arguing that China's economy is slowing and that this will drag down the growth of the rest of the world's economy.   While he may be right in the short run, I disagree with his medium term view.  China is making an enormous investment in human capital, skill and R&D research.  While its manufacturing machine (think of steel production) may slow, the new Chinese economy will bear a closer resemblance to what takes place in Silicon Valley.   My question for Dr. Rogoff would ask "What do you view is the engine of long run economic growth?"  How could a human capital focused economy go wrong?   I believe that China's investment in cities and human capital will together lead to sharp economic growth with much lower environmental externalities.  

Dr. Rogoff could go chat with his colleague Richard Freeman. Here is the abstract of a recent Freeman paper;

In the past two decades China leaped from bit player in global science and engineering (S&E) to become the world's largest source of S&E graduates and the second largest spender on R&D and second largest producer of scientific papers. As a latecomer to modern science and engineering, China trailed the US and other advanced countries in the quality of its universities and research but was improving both through the mid-2010s. This paper presents evidence that China's leap benefited greatly from the country's positive response to global opportunities to educate many of its best and brightest overseas and from the deep educational and research links it developed with the US. The findings suggest that global mobility of people and ideas allowed China to reach the scientific and technological frontier much faster and more efficiently.

The writers for the NY Times are a consistent bunch.  In the Book Review section today, there is a short discussion by Kim Tingley reviewing a new book called Eruption by Steve Olson.   See if you can spot the "behavioral economics" mindset that we are fools who are ignorant of the risks we have imposed on ourselves.  The book author and the reviewer are concerned that  "we don't know that we don't know" what climate change will do to us in the future.   The author and the reviewer view themselves as wiser than the rest of us as they sit on Mount Olympus and ponder the fate of the common man (think of Homer Simpson).  

To a Ph.D. economist, they are stating a hypothesis that should require evidence to test.  Are we blissfully ignorant of the risks we now face?  With the NY Times making this claim every single day, could this claim be true?  Is Kim Tingley claiming that nobody processes the information in this newspaper?  Or is Tingley concerned that the "deniers" deny this truth and they are doomed?   Specific is terrific.  With this prelude, let's read Tingley's piece;


Kim Tingley is a contributing writer for The New York Times Magazine.

91% of America?  Olson may not have read my Death Toll from Natural Disasters paper.  Economic growth protects us from such disasters.  This website suggests that 40,000 people have died in the U.S from natural disasters over the 116 year period 1900 to 2016.    This is a tiny total in a nation with 330 million people.  Contrast this risk with driving risk.

On an annual basis, roughly 40,000 people die each year in car crashes.   The good news is that this death rate is falling but this highlights that risk exposure is not as high as what the "doom and gloomers" claim it to be.

First, a disclaimer.  I ride the Expo Line from Westwood to USC several days a week.   This Line extension to the beach cost over  1.5 billion dollars.    The new ridership numbers suggest that the monthly ridership has increased by 13,000 since the opening of the extension (which goes from Culver city to Santa Monica).   Roughly 45,000 trips are being taken on the Expo Line each day. Let's be generous and round that up 16 million trips per year.  Let's assume the system lives for 50 years. Let's set the interest rate at 0% so there is no opportunity cost to the $1.5 billion sunk investment.   What is the average $ benefit a rider (such as me) would need to gain in $ per trip for this investment to pass a cost/benefit test?

If the increase in daily ridership of 13,000 is solely caused by the train extension then 365*13000 = 5 million annual new rides are taking place because of the train extension.

Take 1.5 billion and divide by (5 million*50) and this yields;  $6.3 per trip.  

Keep in mind that this estimate does not include the operating cost to keep this new segment of the train operating, nor does it value the opportunity cost of the funds.  The $1.5 billion at a 5% interest rate could have created a flow of $75 million dollars a year for something else.


I thank David King for helping me get my units straight here!

Ellen Barry has written an excellent piece that would leave Marx and Engels scratching their heads.  In Bangalore, India young rural women are moving to the big city to work in the factories.  The article sketches a highly optimistic arc that these women enjoy great improvements in their quality of life as they celebrate their independence and their ability to earn and learn.  The article also hints at an active urban marriage market far from their rural parents' supervision.

The economics of boycotts is pretty straightforward.  Customers who vote with their pocketbook and choose not to purchase a product can reduce the profits of their target if there is a consensus to boycott the "bad guy". If there is a neutral economic agent who does not have a taste for dealing out such punishment (think of China purchasing resources from the "bad guy") then the boycott won't harm the "bad guy".  This is a prelude to discussing this NY Times Opinion Piece on the weak launch of Don Trump's new hotel in Washington DC.   She argues that Trump's hotel is losing $ because of his Presidential campaign. Her argument is that people don't want to be seen at the Trump hotel because this would be an implicit endorsement of his candidacy.

Professor Mark Curtis of Wake Forest University has written a kind, fair and balanced review of my new China and pollution book.

In this uncertain age, I admire both economists and journalists who acknowledge that we know that we don't know certain risks that we face.  Such humility leads to better public policy.  With this preamble, read the following lead sentences from this Opinion Piece about SUNY's admissions process in the New York Times.

A DIRECT QUOTE

"Colleges that ask about criminal convictions on their applications frighten away untold numbers of students who could succeed academically and who present no risk to campus safety. Fortunately, the trustees of the 64-campus State University of New York did the right thing last week when they voted to remove the felony question from admissions applications. Colleges elsewhere in the country would do well to follow this example."

So, do you see this clause;  "who present no risk to campus safety".

So, the NY Times is making a very strong and testable claim about conditional probabilities;

probability(student at SUNY commits a felony who has never previously committed a felony)  =
probability(student at SUNY commits a felony conditional that he has previously committed a felony) = 0  

For those who know probability, the Times is claiming that the unconditional probability equals the conditional probability -- or in English that there is no predictive information in knowing that a student has a felony record for predicting a future felony.

Most people would think that due to unobserved heterogeneity that those who have previously committed a felony will be more likely to commit one in the future.

I also find the "no risk" to campus safety to be an overly strong (and lacking in humility) statement.

Do the NY Times Opinion Editors work side by side with those with criminal convictions?  Does the NY Times ask applicants to report their incarceration experience?

I understand that in this age of anxiety over income inequality that we want to give everyone a second chance but what risks are you willing to impose on others as you strive to meet this goal and how large are these risks?  The NY Times says that the risk is "zero" but how does it know this?  Will it post a bond to pay future victims if their probability forecast turns out to be too low?

This blog post will expand on my recent blog post on breaking the political gridlock over carbon pricing.  As I have explained before, liberals and conservatives disagree over the "property right" concerning whether we have the right to produce GHG emissions for a price of $0.  Conservatives say "yes" and Liberals say no and they want to use collective action to increase the price of carbon dioxide per ton to $35 and to let people know that this price will rise over time.  In my peer reviewed research, I have documented that Conservatives vote against this proposed policy. Recently, Michael Greenstone has argued based on survey data that many liberals are willing to pay a fair bit for Carbon pricing to be introduced.

So, here I will propose a mutually beneficial trade.

Let the average liberal produce 4 tons of CO2 per year because lives a "green lifestyle" while the average conservative produces 20 tons of CO2 per year as he drives, eats meat, lives in a big house and air conditions and lives in a state where power is produced using fossil fuels. While I'm making up these numbers here, Glaeser and I measure these carbon footprints in this paper.

So, at a new tax of $35 a ton; the average liberal will be exposed to a tax of $140 per year while the average conservative will be exposed to a tax of $700 per year.  Given that most conservatives don't prioritize battling climate change, it is obvious why they oppose carbon pricing and why their politicians fight so hard to block carbon pricing.

If Liberals greatly fear climate change, then each Liberal could write a check for $725 each year (given this examples numbers) and this would provide an incentive for the Conservatives to no longer block the carbon pricing.  Each of them gains $25.   I recognize that there are workers in the fossil fuel industry (coal miners) who would need a larger transfer to buy their support.  A more detailed analysis would focus on what is the minimum transfer to achieve the needed votes to pass a carbon bill in the House and Senate.

Why would Liberals be willing to pay?   The Liberals achieve their goal of carbon pricing but this isn't a "free lunch" for them. They must pay the conservatives for the property right to stop blocking the regulation.  I recognize that as of right now that Liberals haven't made this offer because they are focusing their efforts on "seizing the property right" of enacting the carbon price without compensating the polluters. So, my point is that the political fight is over property rights.  Smart liberals should stop fighting this fight and acknowledge that the polluters have the property rights and now make a mutually beneficial $ offer.

This example is a case of the private provision of public goods.  Would the liberals free ride and pretend that they are Conservatives?  Well that would be interesting.

So, my point is that Michael Greenstone has argued that a certain large segment of the population is willing to pay a lot to stop climate change. Let's create a market mechanism that allows them to pay this money and let's make progress in fighting this ambiguous threat.