Environmental and Urban Economics

USC didn't win the Rose Bowl this year.  USC has been in the news recently.  Despite these setbacks, USC Economics is building up a real strong department.  To give our PHD program a boost (or at least a laugh), I am teaching 6 micro theory lectures this fall.  I will teach our new students how Gary Becker and Sherwin Rosen thought about the world.    A free copy of my notes is available here.

This is not romantic but it captures some economic logic.

Question:   Risk Smoothing Through the Family vs. The Market

You consume only pizza and you live for at most T years.   

If your consumption of pizza each year ever falls below 4, then you die because of starvation.  

You have no access to financial markets or savings. You receive an endowment of pizza each

year that is iid distributed N(6,1).

The NY Times has published a piece about a new NBER Working Paper that finds that the average judge appointed by a Republican issues more stringent sentences against African-Americans than the average judge appointed by a Democrat.  Since such judges are randomly assigned to cases, this result is interpreted as a "treatment effect" (rather than as a "selection effect").

Such research cannot answer "why" this fact is a fact.

Given this point, let me turn to a more subtle issue.

San Francisco, New York, Boston, Los Angeles, Seattle, and Portland are booming.  Such areas offer great opportunities for our best young minds.  These progressive cities limit housing supply and this limits population growth, causes suburbanization, and contributes to sky high local real estate prices.  Moretti's local multiplier effect hypothesis posits that the booming local economy creates local opportunity for middle class people.

We all know that other places are not doing well.

Brad Plumer reports that Alaska's political leaders are crafting plans to reduce the state's GHG emissions.   The piece does not explain "why" these leaders are taking this action.  The piece names a few coastal parts of the state that are at risk of sea level rise and this could certainly occur.  But, Alaska's actions have no impact on local sea level rise. Local sea level rise is determined by global GHG emissions.

A new law in California will require that every new home built starting in 2020 must have solar panels.   I have studied the housing price premium commanded by solar homes in this and this paper.

Who is this new law binding for?  There are homes that would not have installed solar panels in the absence of the law.  This is the "marginal set".

An energy economist will ask the following questions;

1.

Back in 2012, I had the opportunity to speak to Gary Becker.  I asked him about the real effects of higher taxes on human capital acquisition in the modern Internet economy.