Environmental and Urban Economics

I have taught my undergraduates that a non-profit foundation that engages in cost minimization will have more $ to allocate to its core missions such as improving LDC public health or reducing U.S poverty.  This would suggest that such entities have incentives to respond to market signals.  At the same time, there are principal-agent models that predict that those who run foundations and non-profits will engage in empire building and use their information advantage (i.e that the principal (the Board of Directors) cannot easily monitor what the foundation does all day) to pursue their own agenda.  The same questions arise for research universities.

The NY Times has published an interesting piece about Exxon and its shifting position on climate change.  I want to discuss one section of the article.  Here is a direct quote:

Ultimately, the cap-and-trade bill was unsuccessful, passing the House in 2009, but failing to reach the Senate floor. The bill died for many reasons, including a struggling economy. But intense lobbying against the bill by energy companies, including Exxon, had an effect.

There was a time at the University of Chicago when investment in human capital was viewed as a "good thing".  Robert Lucas wrote down models where it was the key to long run economic growth.  Gary Becker, Sherwin Rosen, and Jim Heckman wrote down micro models of optimal investment in such capital. In these models, there were no "negative externalities" associated with human capital investment.

Cong Sun, Siqi Zheng and I have just published a good paper  that studies how households combine public goods (clean air) with private goods (air filters and masks) to produce "household goods" such as safety and comfort.  Our paper adds to Gary Becker's Household Production Function approach.  The figure below was cut from the paper because we did a bad job explaining it to the reviewers but in this blog I will try again to explain it.

The NY Times has published a thoughtful book review of a book written by a Yale Professor.

Many economists have trouble publishing their personal histories of their own economic thought. Since, I run this blog, I have accepted the following entry for publication and I will soon make an interesting point.  At Hamilton College in Spring 1988, I wrote my undergraduate thesis on a mild extension of Robert Lucas's famous empirical Phillips Curve work.     In fall 1988, I entered the University of Chicago's PHD program and had the brief opportunity to tell Dr. Lucas about my new work.

Yesterday, I had the opportunity to talk to John Batchelor for 15 minutes on his radio show about my  Climatopolis work.  He likes my recent PERC publication: Climatopolis Revisited.    I argue that rich, educated cities can handle all of the challenges posed by climate change.  This adaptation will not be costless but through rational expectations and risk aversion, we will build a new set of robust and resilient structures such that urbanites will continue to thrive (think of Singapore today).

My Christmas Gift for all young economists is a free .pdf copy of my new book Introduction to Empirical Microeconomics.     This book is written for college Freshmen but I think that all economics students can benefit from reading it.  I have tried to take the "big ideas" that I learned from  the University of Chicago's greats (Gary Becker, Jim Heckman and Sherwin Rosen) and write down a set of empirical problems.  I argue that economists are detectives.

As the world urbanizes and faces more severe climate change, what will we eat?  It appears that we will have a lot of marijuana to smoke but what will we have to eat?  An interesting panel just convened at Harvard to discuss this but no economists were invited.    Permit me to make several points.

1.  Nations that drop their tariffs and quotas on agricultural imports will more easily adapt. Yes, these pro-competition actions will hurt domestic farmers but they will help urban consumers.

The City of Boston has published a forward looking and optimistic vision for how it will invest to protect itself from the emerging challenges of climate change.   This doesn't surprise me.  Boston is rich and educated and it has strong incentives to adapt (given its coastal location).   As I have said since 2010, urbanization will help us to adapt to climate change.  Read this six year old document. I'm proud that it was ahead of its time.