Has some economist who works on corruption studied spatial patterns in electricity access in developing country cities? This NY Times piece about Iraq was funny and interesting. The world agrees that Katie Couric is cute! But, here is the key quote:
"The ministry says that electricity is improving, and some residents agree, especially those who live near ministry offices. Murtada Khassim, who sells cologne and bars of soap from a wooden cart near another billboard of Ms. Couric’s smiling face, and who lives in an apartment nearby, said he had had 10 straight hours of power the previous night, a substantial improvement from last summer, when most residents had just a few hours each day."
This merits some GIS research!
Suburban Sprawl Has a Causal Effect on Basketball Skills
This long NY Times sports piece takes you on a tour of outdoor b-ball in NYC. The author observes that suburban kids are better pure shooters than urban kids and argues that this is a causal treatment effect! Here is the quote:
"The city’s busy, congested courts have influenced the style of play that takes place on them. For instance, I haven’t run across many pure shooters, but I have encountered a lot of athletes with wicked ball-handling skills. My theory is that because the courts here are so packed with players, there is not enough time or space to practice jump shots.
That is why so many shooters, I suspect, are cornfed boys from the Midwest and prep schoolers from the suburbs: the country and sprawl quarantine them, and they have nothing to do but practice fundamentals by their lonesome.
In the city, amid swarms of young men and women, you practice ball handling, playing keep-away 21 — the one-on-everybody-else game."
This is a funny example of the causal effects of suburbanization. I have worked on this topic in the case of greenhouse gas emissions but not in the case of basketball skills!
An Excellent Review Paper Focused on The Economics of Climate Change Adaptation
RFF's Carolyn Kousky has written an excellent paper on what we know about the economics of climate change adaptation. I would have liked to have seen more discussion of endogenous innovation in anticipation of the opportunities and challenges that climate change will pose but perhaps Carolyn will work on that question in the future. For teachers of environmental economics who wrestle with how to teach the "economics of climate change" and don't want to present Integrated Assessment Models, this piece offers a valuable teaching tool. It highlights the many adjustment margins. Putting on my urban economics hat, I would have also liked to have seen her have more a of a discussion about the spatial aspects to climate change and how our thinking about adaptation changes when we acknowledge that locations differ with respect to how they will be affected by climate change. This introduces migration of firms and households into the discussion and forms the basis for my Climatopolis book.
Green City Tradeoffs: Nice Trees or Consistent Power Supply
During the recent heat wave in Washington D.C. there was a powerful set of thunderstorms that knocked down trees and they knocked down power lines leaving more than a million people without power. The Economist reports that the culprit are suburbanites who oppose tree pruning. The claim is that if the trees had a good haircut then there would be less risk of these trimmed down trees knocking down power lines. So, the greens face an interesting tradeoff. If the suburbs remain "green" and leafy then there is higher risk of low probability nasty power loss. How costly to the local aesthetics is the "tree pruning and trimming"?
Tree pruning is a simple example of climate change adaptation. Several of those who comment on the The Economist's piece are surprised that the local power company hasn't learned its lesson from previous storms. As we learn from the recent heat wave, electricity is valuable stuff for coping with extreme heat. We seek air conditioning and refrigeration and entertainment and electricity serves up all three. The role that electricity consumption plays in insulating us from extreme temperature risk is an under-studied subject. Environmentalists immediately jump to voicing concern that the power will be generated with fossil fuels and thus exacerbate climate change risk. Given our current mix of how we generate power (and our reliance on coal and natural gas), they are correct but as renewable's share of total generation increases this concern recedes.
Tree pruning is a simple example of climate change adaptation. Several of those who comment on the The Economist's piece are surprised that the local power company hasn't learned its lesson from previous storms. As we learn from the recent heat wave, electricity is valuable stuff for coping with extreme heat. We seek air conditioning and refrigeration and entertainment and electricity serves up all three. The role that electricity consumption plays in insulating us from extreme temperature risk is an under-studied subject. Environmentalists immediately jump to voicing concern that the power will be generated with fossil fuels and thus exacerbate climate change risk. Given our current mix of how we generate power (and our reliance on coal and natural gas), they are correct but as renewable's share of total generation increases this concern recedes.
LIBOR Economics: UCLA's Connan Snider and Thomas Youle Were Ahead of Their Time
Have you ever written a paper and a few years later the world figures out that you were making a very important point? While my own answer to this is "no", my colleague Connan Snider can say "yes". Here is an old draft of his LIBOR paper titled; "Does the LIBOR Reflect Banks' Borrowing Costs?"
Here is their Abstract:
The London Interbank Off ered Rate (Libor) is a vital benchmark interest rate to which
hundreds of trillions of dollars of fi nancial contracts are tied. Recently observers have raised
concerns that the Libor may not accurately reflect average bank borrowing costs, it's ostensible
target. In this paper we provide two types of evidence that this is the case. We first show
that bank quotes in the Libor survey are di cult to rationalize by observable cost measures,
including a given bank's quotes in other currency panels. Our second type of evidence is based
on a simple model of bank quote choices in the Libor survey. The model predicts that if banks
have incentives to a ffect the rate (as opposed to simply reporting costs), we should see bunching
of quotes around particular points and no such bunching in the absence of these incentives. We
show that there is strong evidence of the predicted bunching behavior in the data. Finally, we
present suggestive evidence that several banks have large portfolio exposures to the Libor and
have recently pro fitted from the rapid descent of the Libor. We conjecture that these exposures
may be the source of misreporting incentives.
Did Barclay's read this paper and act upon these ideas or did Snider anticipate and uncover a whole financial intrigue? The economist as detective. This is financial "Freakonomics" taking place at UCLA. Two cheers for Snider and Youle! Past reviewers of their paper should re-read their reports!
Here is their Abstract:
The London Interbank Off ered Rate (Libor) is a vital benchmark interest rate to which
hundreds of trillions of dollars of fi nancial contracts are tied. Recently observers have raised
concerns that the Libor may not accurately reflect average bank borrowing costs, it's ostensible
target. In this paper we provide two types of evidence that this is the case. We first show
that bank quotes in the Libor survey are di cult to rationalize by observable cost measures,
including a given bank's quotes in other currency panels. Our second type of evidence is based
on a simple model of bank quote choices in the Libor survey. The model predicts that if banks
have incentives to a ffect the rate (as opposed to simply reporting costs), we should see bunching
of quotes around particular points and no such bunching in the absence of these incentives. We
show that there is strong evidence of the predicted bunching behavior in the data. Finally, we
present suggestive evidence that several banks have large portfolio exposures to the Libor and
have recently pro fitted from the rapid descent of the Libor. We conjecture that these exposures
may be the source of misreporting incentives.
Did Barclay's read this paper and act upon these ideas or did Snider anticipate and uncover a whole financial intrigue? The economist as detective. This is financial "Freakonomics" taking place at UCLA. Two cheers for Snider and Youle! Past reviewers of their paper should re-read their reports!
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