Climate Change Adaptation and Big Data
The New Yorker Magazine tells an optimistic story about how "Big Data" will help farmers cope with climate change and climate risk. In a nutshell what the article argues is an analogy; Baseball's Billy Bean (think Moneyball) is to Baseball what Jeffrey Hamlin is to farming. Both use analytics to achieve efficiency increases given limited resources. Human ingenuity increases our productivity and helps us to adapt. This is the Climatopolis logic and this is how Jeffrey Hamlin will grow rich and you will still have food on your table to eat. Elizabeth Kolbert should read her own magazine!
Redistribution in Cities: The Case of Mayor De Blasio
While Google doesn't have it recorded, roughly 15 years ago, Ed Glaeser, Jordan Rappaport and I wrote a paper titled "Redistribution in Cities". With the election of the new progressive mayor of NYC, this paper merits a second look. Using data from the Census of Governments, we studied the determinants of which cities spend the most on health, and welfare. A New York City version of the paper is published here. Our work focused on the simple idea of product differentiation and substitutes. A progressive mayor can redistribute if the tax base can't flee. Are there other cities in the United States that are "close substitutes" in the minds of the 1% for New York City? If Woody Allen and Mia and "their" son are willing to move to Philly, then Mayor De Blasio won't be able to raise taxes much without learning about the Laffer Curve. If NYC is a monopolist then he will be able to tax his golden goose without experience a revenue drop.
An Unusual Day in My UCLA Environmental Economics Class
I've been a professor for 20 years now so I'm seldom surprised by what goes on in the classroom. Today was funny. If you click here and go to the November 4th 2013 lecture, you will first hear me say some crazed stuff about negative externalities and the case of undergraduates kissing at Stanford and spreading infectious disease. You will then listen to several sets of my students giving excellent presentations on "green products". I asked the students to answer the following;
Select a company that you believe produces a “green product”. Answer the following questions using Google research,
1. What environmental externality is mitigated by consuming the product you chose versus consuming a “conventional” alternative?
2. Are consumers willing to pay a price premium for this product?
3. Would your product be sold if there was no government to offer it special subsidies or other incentives?
4. Are you optimistic that sales for the product you picked will rise over time? Why
If you watch the video, you will see some of my excellent students present their findings from their homework assignment. Undergraduates do not get enough practice with public speaking. This 120 person class gives them a large audience and I thought my students did a great job.
At the end of class today , one of my students approached me and told me that I remind him of his grandfather! He told me that his grandfather is very smart and quite opinionated. I've reached an age (47) where I am certainly willing to be compared to a grandpa. This young man was kind enough to give me a copy of his grandfather's recent book. Robert V. Wills has written a book titled "A View from the Hill" Trading the Courtroom for the Ivory Tower. I am going to read it right now and here is its Amazon link.
Select a company that you believe produces a “green product”. Answer the following questions using Google research,
1. What environmental externality is mitigated by consuming the product you chose versus consuming a “conventional” alternative?
2. Are consumers willing to pay a price premium for this product?
3. Would your product be sold if there was no government to offer it special subsidies or other incentives?
4. Are you optimistic that sales for the product you picked will rise over time? Why
If you watch the video, you will see some of my excellent students present their findings from their homework assignment. Undergraduates do not get enough practice with public speaking. This 120 person class gives them a large audience and I thought my students did a great job.
At the end of class today , one of my students approached me and told me that I remind him of his grandfather! He told me that his grandfather is very smart and quite opinionated. I've reached an age (47) where I am certainly willing to be compared to a grandpa. This young man was kind enough to give me a copy of his grandfather's recent book. Robert V. Wills has written a book titled "A View from the Hill" Trading the Courtroom for the Ivory Tower. I am going to read it right now and here is its Amazon link.
Houston Apartment Up For Sale
I received word this weekend that the Houston apartment complex is up for sale. In fact, we already have two offers for it. Unfortunately, I'm not allowed to discuss any details at this time, but after any sale completes, I'll talk about them. The property was just appraised at between $13.2 million and $14.5 million. We bought it for around $12 million back in 2008.
Climate Change and the Food Supply
The NY Times has a lead article saying that the IPCC says that climate change will reduce the food supply during a time of global population and income growth and this will lead to higher prices for food and hence increased starvation risk for the world's very poor.
Suppose that everything the IPCC says will happen will indeed happen (and the reported price effect actually looks quite small but let's pretend that the reporter got the magnitude of the effect wrong). What happens next? To predict true doom and gloom, you need to believe the following;
1. Under new climate conditions, farming cannot be productive in current cold places such as Russia and Canada that will now have warmer winters. Instead, farming remains where it currently is and just dries up in the heat and drought.
2. Human ingenuity and new GMO entrepreneurs will not figure out ways to increase agricultural yields.
3. People's tastes for foods are such that we are unable or unwilling to substitute to varieties that can be grown under new climate conditions.
4. The world's very poor do not enjoy the growth miracle that has lifted hundreds of millions of people out of poverty in China and in many parts of Africa so that they do not have the income to buy foods at higher prices.
5. The world's engineers do not figure out ways to recycle water and to enhance our stocks of key agricultural inputs.
6. Global population growth continues to rise sharply.
7. Consumers in the rich nations (who are increasingly obese) do not respond to price incentives by reducing their consumption and allowing others in the rest of the world to eat these calories.
8. Shifting global demographics such as the aging of the world's population doesn't reduce the average number of calories that a person eats each year.
50 years from now readers of this blog will see me write a post on November 2nd 2063 highlighting that each of these 8 claims is proven to be false.
Since the IPCC is dominated by non-economists, basic economic ideas such investment under uncertainty and rational expectations do not enter the predictive models these scientists supply. Implicit in IPCC research is a mass behavioral economics vision of myopia. In the real world, self interested people form their best guesses of the future and reports such as the NY Times article today help to guarantee that their pessimistic predictions never occur. As I explain in Climatopolis and repeat in points #2 and #5 above, expectations of future scarcity create necessary conditions for entrepreneurs to smell big profits and this is the start of averting doom.
Suppose that everything the IPCC says will happen will indeed happen (and the reported price effect actually looks quite small but let's pretend that the reporter got the magnitude of the effect wrong). What happens next? To predict true doom and gloom, you need to believe the following;
1. Under new climate conditions, farming cannot be productive in current cold places such as Russia and Canada that will now have warmer winters. Instead, farming remains where it currently is and just dries up in the heat and drought.
2. Human ingenuity and new GMO entrepreneurs will not figure out ways to increase agricultural yields.
3. People's tastes for foods are such that we are unable or unwilling to substitute to varieties that can be grown under new climate conditions.
4. The world's very poor do not enjoy the growth miracle that has lifted hundreds of millions of people out of poverty in China and in many parts of Africa so that they do not have the income to buy foods at higher prices.
5. The world's engineers do not figure out ways to recycle water and to enhance our stocks of key agricultural inputs.
6. Global population growth continues to rise sharply.
7. Consumers in the rich nations (who are increasingly obese) do not respond to price incentives by reducing their consumption and allowing others in the rest of the world to eat these calories.
8. Shifting global demographics such as the aging of the world's population doesn't reduce the average number of calories that a person eats each year.
50 years from now readers of this blog will see me write a post on November 2nd 2063 highlighting that each of these 8 claims is proven to be false.
Since the IPCC is dominated by non-economists, basic economic ideas such investment under uncertainty and rational expectations do not enter the predictive models these scientists supply. Implicit in IPCC research is a mass behavioral economics vision of myopia. In the real world, self interested people form their best guesses of the future and reports such as the NY Times article today help to guarantee that their pessimistic predictions never occur. As I explain in Climatopolis and repeat in points #2 and #5 above, expectations of future scarcity create necessary conditions for entrepreneurs to smell big profits and this is the start of averting doom.
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