Singapore to LA on Singapore Airlines is an easy 16 hour trip. I had never been on an airplane with only Business Class seats. Classy! I slept three hours on the plane and arrived in LA at 6pm. Stayed up until 9pm and then slept until morning and now I am fine. My journey around the world is now complete and all I have left is dirty laundry and some great memories.
As I skimmed through my emails this morning, I saw a new NBER paper by MIT's great economist Robert Pindyck called the "Climate Dilemma".
Here is a paragraph he writes about climate change adaptation.
"Third, climate change will occur slowly, so that there is considerable potential for
adaptation. In the case of agriculture, we have already seen this in the U.S. during the 19
th century as settlers moved west and had to adapt crops to new and very different climatic
conditions. (The recent book edited by Libecap and Steckel (2011) provides several detailed
examples of this kind of adaptation.) Flooding is a potential hazard of climate change if sea
levels rise substantially, but here, too, we have seen adaptation in the past (with the dikes of
Holland perhaps the best-known example). This does not mean, however, that adaptation will
eliminate the impact of climate change – it is simply another complicating factor that makes it
very difficult to estimate any kind of loss function."
Notice his implicit optimism in the first half of the paragraph then the implicit shrug of his shoulders in the last sentence. To my surprise, he is unwilling to really explore this issue. I agree with his last sentence but it is a lazy sentence for a great economist to write down. What do the words "complicating factor" mean? I have never stated that adaptation will eliminate the impact of climate change but I have argued that capitalism offers an evolutionary means for mitigating its greatest impacts and this is crucial in a world of rising GHG emissions.
In the next sentence he writes;
"It may be that the relationship between temperature and the economy is not just
something we don’t know, but something that we cannot know, at least for the time horizon
relevant to the design and evaluation of climate policy."
I agree with this. It is not a structural relationship --- through new investments and learning the reduced form relationship between temperature and the economy will become flatter over time! For example, Greenstone is doing work right now in India that the relationship between extreme heat exposure and death rates is dampening over time indicating that adaptation is taking place. This "slope" at any point in time is not a structural parameter (i.e is not a law of physics). That's adaptation and no theorist can model this evolutionary process except to conclude that adaptation progress will continue to take place. The key question is how to set up incentives and "rules of the game" that accelerate this learning and experimentation process.
Are Economists Useful? Evidence from Amazon
My old friend and co-author Pat Bajari is building an economics research shop at Amazon. This looks like its a very good job and I'm thinking of applying for this junior position. I bet it pays well and Pat would be a great boss (take it from me!). If a major for profit firm is investing in economics, this reveals something good about our field.
Amazon
Economist
Amazon
Seattle - United States
Job Description
Amazon.com strives to be Earth's most customer-centric company where people can find and discover anything they want to buy online. We hire the world's brightest minds, offering them a fast paced, technologically sophisticated and friendly work environment.
Economists at Amazon will be expected to work directly with chief economist Patrick Bajari and senior management on key business problems faced in retail, international retail, cloud computing, third party merchants, search, Kindle and operations. Amazon economists will apply the frontier of economic thinking to market design, pricing, forecasting, online advertising and other areas. You will build econometric models, using our world class data systems, and apply economic theory to solve business problems in a fast moving environment. In addition, economists at Amazon will be expected to maintain an independent and active research agenda, publishing in leading academic journals.
Salaries will be competitive and will include equity compensation.
Basic Qualifications
PhD in Economics or anticipating completion of a PhD Economics by Aug 2012
Preferred Qualifications
Two to three years of experience in private consulting, government, or in academic research
Strong background in econometrics, industrial organization, economic theory, and quantitative methods
Ability to work in a fast-paced business environment
Strong research track record
Effective verbal and written communication skills
Amazon.com strives to be Earth's most customer-centric company where people can find and discover anything they want to buy online. We hire the world's brightest minds, offering them a fast paced, technologically sophisticated and friendly work environment.
Economists at Amazon will be expected to work directly with chief economist Patrick Bajari and senior management on key business problems faced in retail, international retail, cloud computing, third party merchants, search, Kindle and operations. Amazon economists will apply the frontier of economic thinking to market design, pricing, forecasting, online advertising and other areas. You will build econometric models, using our world class data systems, and apply economic theory to solve business problems in a fast moving environment. In addition, economists at Amazon will be expected to maintain an independent and active research agenda, publishing in leading academic journals.
Salaries will be competitive and will include equity compensation.
Basic Qualifications
PhD in Economics or anticipating completion of a PhD Economics by Aug 2012
Preferred Qualifications
Two to three years of experience in private consulting, government, or in academic research
Strong background in econometrics, industrial organization, economic theory, and quantitative methods
Ability to work in a fast-paced business environment
Strong research track record
Effective verbal and written communication skills
Some Thoughts About Singapore
I return to the U.S today after a one month absence. I have been to 5 major cities in Europe and Singapore over the last 30 days. We started in Budapest where I made several new friends with economists at the Central European University. I had a great time giving a plenary talk as part of the GDN Conference. From Budapest, we took a nice train to Vienna. We toured two of the Emperor's palaces. He lived well.. We took another train to Salzburg, Austria. We enjoyed the old city and made two great day trips to Germany. One took us to a great lake where Hitler used to vacation and the other brought us to a cable car that took us up into a snowy mountain. While I was in shorts, my blubber allowed me to thrive in my colder future. From Austria, we crossed into Munich and lived quite well for 4 days. We ate, and toured and walked. From there, my family went back to LA and I went east flying over Pakistan and Kabul to land in Singapore. While in Singapore, I was happy to see the posting of my Reason TV video. My Reason TV talk appears to be popular (85% of people like it). Thousands of folks are watching it and this gives me some hope that the basic ideas in my book will receive some attention. Greens must be willing to think about the benefits of free markets.
Turning to Singapore. I have had a great 6 days here. I sense that the smart government leaders seek to build a "green city" to compete with Hong Kong. The people are polite and kind. I was amazed by the Marina Bay Sands hotel. It is really classy. There is a great shopping mall next to it and there is a new park to walk around next door. At night, there are fireworks and a laser show. On the 57th floor of the building there is a huge outdoor swimming pool with a view of the entire Singapore CBD. Very cool!
I enjoyed taking taxis on roads featuring congestion pricing. There was very little road congestion. The food was outstanding. It was hot and humid but I adapted by eating less and drinking more water. I walked around for about an hour each day (going to the botanical gardens and the new bay gardens) so I wasn't merely hiding out in air conditioned rooms.
I made many new friends at the National University of Singapore. Bernard Yeung, the Dean of NUS Business School, was kind enough to meet with me and we had a great talk. After I gave a seminar on "Sustainability" for the NUS Business School's Strategy Department, Sea-Jin Chang took me out for a great Thai dinner.
NUS is a major research university which is growing. Such growth offers a very different impression than what I'm used to at the shrinking University of California. I am pro-growth! For a 46 year old, it was exciting and rejuvenating to talk to a large number of junior scholars who are doing interesting things. These folks know my work and several of them are working on related topics with an Asian focus. Folks who know me know that I'm very enthusiastic about active scholars and try to help them. I have made many friends at the NUS Business School, Real Estate Department and Economics Department and am making plans to return here often. NUS has also made a big investment in sustainability research and this of course fascinates me.
The conference that Yongheng Deng and Yuming Fu organized was great fun and strong papers were presented. My co-author Siqi Zheng was there and we got a lot of work done. Last night I attended a great dinner that kicks off the AsRES & AREUA 2012 Real Estate meetings. It was great to meet so many real estate scholars from Asia. Professor Deng is building one of the world's top real estate research institutes.
Now, I sit in the business class lounge by myself and think about what awaits in LA. I'm eager to see my family but there will laundry to wash and referee reports to write and several deadlines loom.
Turning to Singapore. I have had a great 6 days here. I sense that the smart government leaders seek to build a "green city" to compete with Hong Kong. The people are polite and kind. I was amazed by the Marina Bay Sands hotel. It is really classy. There is a great shopping mall next to it and there is a new park to walk around next door. At night, there are fireworks and a laser show. On the 57th floor of the building there is a huge outdoor swimming pool with a view of the entire Singapore CBD. Very cool!
I enjoyed taking taxis on roads featuring congestion pricing. There was very little road congestion. The food was outstanding. It was hot and humid but I adapted by eating less and drinking more water. I walked around for about an hour each day (going to the botanical gardens and the new bay gardens) so I wasn't merely hiding out in air conditioned rooms.
I made many new friends at the National University of Singapore. Bernard Yeung, the Dean of NUS Business School, was kind enough to meet with me and we had a great talk. After I gave a seminar on "Sustainability" for the NUS Business School's Strategy Department, Sea-Jin Chang took me out for a great Thai dinner.
NUS is a major research university which is growing. Such growth offers a very different impression than what I'm used to at the shrinking University of California. I am pro-growth! For a 46 year old, it was exciting and rejuvenating to talk to a large number of junior scholars who are doing interesting things. These folks know my work and several of them are working on related topics with an Asian focus. Folks who know me know that I'm very enthusiastic about active scholars and try to help them. I have made many friends at the NUS Business School, Real Estate Department and Economics Department and am making plans to return here often. NUS has also made a big investment in sustainability research and this of course fascinates me.
The conference that Yongheng Deng and Yuming Fu organized was great fun and strong papers were presented. My co-author Siqi Zheng was there and we got a lot of work done. Last night I attended a great dinner that kicks off the AsRES & AREUA 2012 Real Estate meetings. It was great to meet so many real estate scholars from Asia. Professor Deng is building one of the world's top real estate research institutes.
Now, I sit in the business class lounge by myself and think about what awaits in LA. I'm eager to see my family but there will laundry to wash and referee reports to write and several deadlines loom.
Investing in Public Mega-Projects During a Time of Deep Fiscal Deficits
You have to respect the courage of California's state leaders to make a major long term investment in high speed rail during a time of deep and ongoing fiscal deficits at the local, state and national level. The NY Times reports here. I must admit that I side with the Republicans on this issue. Peter Gordon's recent blog post eloquently traces out the issues. I would like to add a few points.
1. How much will this high speed rail really cost? This is a random variable that the current governor will not be around to know the final answer. I may never learn the answer either!
2. A high speed rail train will offer some externality benefits. Has any economist quantified these? How much less traffic congestion will there be? How much less GHG emissions will there be? What is the social benefits of these increments? Could these benefits add up to match the billions of dollars of costs?
3. Who will really enjoy the benefits of HSR? The answer is geographical locations that are currently far from San Fran and LA that will now become suburbs of these cities. You should buy land now in the areas where the train will stop. You will be the winner from HSR.
4. How much Federal $ will California collect to pay for this train?
Note that each of these simple points are unknowns. But, when add up the uncertainty here you'd have to be a real risk lover to justify this project. Everyone in California should have to watch the Simpsons' Monorail episode one more time.
1. How much will this high speed rail really cost? This is a random variable that the current governor will not be around to know the final answer. I may never learn the answer either!
2. A high speed rail train will offer some externality benefits. Has any economist quantified these? How much less traffic congestion will there be? How much less GHG emissions will there be? What is the social benefits of these increments? Could these benefits add up to match the billions of dollars of costs?
3. Who will really enjoy the benefits of HSR? The answer is geographical locations that are currently far from San Fran and LA that will now become suburbs of these cities. You should buy land now in the areas where the train will stop. You will be the winner from HSR.
4. How much Federal $ will California collect to pay for this train?
Note that each of these simple points are unknowns. But, when add up the uncertainty here you'd have to be a real risk lover to justify this project. Everyone in California should have to watch the Simpsons' Monorail episode one more time.
My Reason TV Debut on Climate Change Adaptation and the Benefits of Free Markets
I am having a great time in Singapore and plan to return soon. I will have more to blog about on this topic soon but here I link to my Reason TV video of my talk about capitalism and climate change adaptation. The talk was filmed in my living room a few months ago.
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