Environmental and Urban Economics

In December 2016, I wrote a short Amazon book on the economics of revealed preference.  I wrote this book after teaching "Econ 101" at USC.

Now that 2017 is wrapping up it might interest some people to hear why I choose to work on some research questions.  For each paper I published in 2017, I offer a few "big picture" comments to explain what questions motivated the research.

2017 Articles

Jerch, Rhiannon & Kahn, Matthew E.

The recent Los Angeles fires have been quite scary.  When I'm scared, I start to run new regressions.  I take daily PM2.5 air pollution data from the EPA and keep the subset of observations for the following states; California, Arizona and Nevada.  I use data from the years 2000 to 2017.

The Repec competition continues.  I do not believe that Martin Browning is part of our cohort. 

1993

Repec has informed me that my rankings "peers" are:

Similarly ranked authors

These peers are ranked around you and are listed in random order: Gert G.

Under the pending Trump Tax Plan, Universities whose endowments are above $500,000 per student will face an endowment income tax of 1% a year.  A $7 billion dollar school would pay roughly $10 million dollars in cash (that's a lot of Assistant professors slots).

Given California's high taxes on those who are well paid, such individuals keep 45% of each dollar they earn.  If such a person lived in Texas, he might keep 60% of each dollar earned.   President Trump's new tax proposal will further raise the tax price of living in California.

At USC Economics,  I (in my role as department Chair) have a busy schedule. We are hiring new faculty, creating new curriculum and engaging in fundraising.  Each day brings new challenges and new opportunities.

This new NBER paper looks quite interesting.  Suppose that I am an inventor and I create a blood test that correctly detects your probability of having cancer .5 years from now.  For my test to accurately predict your future risk probability, a trained nurse must administer the blood sampling.

Sherwin Rosen was one of the greatest University of Chicago economists.

The NY Times challenges the Coase Theorem today without ever mentioning Coase.  Several examples are given of "neighbors going to war against each other" over low stakes stuff.   To an economist, the puzzle here is why isn't there more "peace and love"?  The fight didn't have to occur.

This report card suggests that I need to invest more time in the quality of my Ph.D. students.

For those who wonder if a Department Chairman can get some work done, here is the introduction of my new paper that I will present at the Hoover Institution on 11/8/2017.

Urban Climate Change Adaptation and Local Real Estate Markets

Matthew E.

Michael Greenstone has written an excellent piece about how climate change is likely to affect marathon races and the runners.  While the headline hints at "doom and gloom", the real meat of the article is highly optimistic about our ability to adapt to this outdoor stress.

The WSJ has published a great piece highlighting the wonders of free markets.  In the recent past, U.S manufacturers and consumers sent their waste to China.  China took this combination of useful elements and garbage and extracted some reusable materials such as steel.

Science Magazine has published an interesting blurb about a Demography piece that claims that China's One Child Policy reduced this nation's total population by a billion people.

I am very pleased to welcome Amazon's recruiters to USC Economics.  Our talented graduate students are eager to speak to this amazing firm.   I just bought a book by Eli Broad on Amazon last night.

The NY Times has published an excellent piece on the unintended consequences of pay for performance incentives introduced at Chinese universities.  This type of "Freakonomics" highlights several issues in modern economics.

Michael Bloomberg understands the Coase Theorem.  He has proposed to buy and then shut down some coal fired power plants.   Read Haarstad's 2012 JPE paper on this general topic of environmentalists purchasing coal and leaving it in the ground.  Note that this approach isn't a takings.

I have now completed my first two months as the Chair of USC Economics.   It is my impression that the University of Southern California fascinates outsiders.  People know that Los Angeles is a wonderful sunny city. People know that USC is a private university raising a large amount of money.

Could a silver lining of the damage caused by Hurricane Maria be that migration from Puerto Rico to more productive places in the continental U.S accelerates?   While the popular media is discussing the challenge caused by "climate refugees", I have argued in the past that migrants are self interest

Here is a very nice article  on the "small ball" of building up resilience to climate change.   The interesting empirical question is what % of home owners will be as reasonable as Michele Nilsen?   Since 2010, I have been arguing that this is how we will adapt.

The methodology  yields this ranking.

Top 20

1. Harvard

2. Columbia

3. MIT

3. Stanford

5. Duke

6. Yale

7. Caltech

8. Penn

9. Princeton

10. Cornell

11. Brown

11. UChicago

11. WashU

14. Rice

15. Northwestern

15. USC

17. Dartmouth

17. Johns Hopkins

19. Emory

20.

Given the recent discussion about women's opportunities in Silicon Valley and in academic economics, I took a look at my own record.  I have published six books.  I wrote 4 by myself and 2 with co-authors.  Both of my co-authors (Dora Costa) and (Siqi Zheng) are women.

The USC Daily Trojan has published an article that I like.  I moved from UCLA to USC because I saw the private university's momentum and ambition.  My department's goal is to be as good as our football team.  The University aspires to be Stanford.

Erin Mansur and I have a well cited 2013 JPUBE paper documenting that energy intensive firms cluster where energy prices are low (the paper has several other ideas!).  Siqi Zheng, Jianfeng Wu and Weizeng Sun and I have a 2017 JUE paper studying China's industrial parks.

As I read the NYT and WSJ, I see similar stories that the Big Data Smart Phone era reduced the suffering caused by Hurricanes Harvey and Irma as people used their phones to "trade with each other" such that private first responders saved many people.

On my twitter feed today, I stumbled across this very interesting (and depressing) post by Claudia Sahm. MIT's great Peter Temin wrote this piece about "culture" 20 years ago.   He discusses Alberto Bisin's early work on culture.

Dating at least back to Dennis Carlton's 1983 RESTAT paper,   economists have written down an indirect profit equation that measures a given firm's profit if it locates in a given geographic area such as Chicago or Nashville.  Suppose there are 87 of these different locations.

Amazon will soon choose a new location for building its 2nd headquarters.  Chicago may be chosen.  The winning city will receive an influx of high paying jobs and this will boost housing prices, human capital, restaurant demand and tax revenues.  Cities are competing by offering tax breaks.

Dr Krugman tweeted this.   I am not smart enough to completely see his thoughts embodied in these 140 characters but I am going to try because this raises a fundamental issue in urban economics.  Below, I reproduce his cross-U.S city graph of log population density as a function of log population.

At 8pm on a weekday, I'm usually home with my family but last night I participated in our "opening day" of the USC Undergraduate Economics Association.

In a previous post, I wrote about Harvey and I have also done a radio interview about the local economics of disasters.    The key point to keep in mind here is the importance of protecting life in the face of a severe disaster.

Perhaps I should move to Oklahoma?   I had a great talk with Trent England in this radio segment.   We spoke about urban quality of life and the free market's role in improving our quality of life during a time of increased climate risk.

Here are some questions that I do not know the answer to:   How much economic damage will Hurricane Harvey cause?  Given that 11 trillion gallons of rain have fallen on Houston, will Houston's long run economy be injured? How quickly do modern cities bounce back from natural disasters?

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