• 16881_RicePaddy.1.21_000017042226XSmall

    Breaking An Environmental Law

    Jan 21 • Behavioral Economics, Demand, Supply, and Markets, Developing Economies, Environment, Government, Households, Innovation, Macroeconomic Measurement, Regulation, Thinking Economically • 683 Views

    Asked by the Pew Center for the People and the Press to rank 21 issues in terms of their significance, global warming was #21. Similarly pessimistic about climate change initiatives, one researcher asked, “How can one seriously suggest that the village kid in India should give up her hopes of prosperity, education, and health care today, in order to prevent rising ocean levels many years down the road?”

    What can an environmentalist do?

    Maybe… connect current economic benefit to future climate results. Then, the iron law of climate policy is no longer an obstacle.

    Described in the NY Times, a recent Science article suggests 14 policies that would have a beneficial economic impact now and also diminish the future global warming that the paper’s authors predict. One proposal would involve farmers in developing nations draining rice paddies more frequently to increase their yield while simultaneously reducing methane emissions.

    Described in “Climate Pragmatism,” climate and health care concerns converged in a 2009 Congressional proposal for reducing black carbon soot. Two of the bill’s sponsors were environmentalists while a third sponsor questioned climate change but wanted the health benefits of cleaner air. 

    The Economic Lesson

    Edwin Mansfield, a University of Pennsylvania economist (1930-1967) who studied the impact of innovation concluded that smaller innovations such as new industrial thread had a much greater social rate of return than products and processes that sound more dramatic. Recent suggestions to mitigate global warming also imply that “less is more.”

    An Economic Question: How might rice paddy drainage be comparable to the smaller innovations that Dr. Manfield said were so effective?

    No Comments on Breaking An Environmental Law

    Read More
  • 19th Century Urban Transport Was An Environmental Problem

    An Environmental Law

    Jan 20 • Behavioral Economics, Demand, Supply, and Markets, Developing Economies, Environment, Macroeconomic Measurement, Regulation, Thinking Economically • 470 Views

    Asked if they want lower gasoline taxes that make more driving affordable, people typically say, “Yes.” Told that the only electricity for a village in India is from coal-fired plants, most people will say it’s okay.

    When making decisions about driving and electricity, we tend to observe the iron law of climate policy. Choosing between economic growth and reducing emissions, we take growth. Or, as a Chinese climate negotiator said during a Peking University speech, “I cannot accept someone from a developed nation having more right than me to consume energy…We do not want to pollute as they [the Americans] did, but we have the right to pursue a better life.” Correspondingly, The Economist asked people in the U.S. how much they would be willing to spend, per household, per year, on a climate bill. While $80 got majority support, $170 did not, and, at $770, opposition was overwhelming.

    As The Climate Fix author, University of Colorado professor Roger A. Pielke said, “The iron law of climate policy says that even if people are willing to bear some costs to reduce emissions, they are willing to go only so far.”

    How then to break the “iron law?” We will look at proposals tomorrow.

    The Economic Lesson

    Entering the realm of behavioral economics, science writer Jonah Lehrer suggests that we are less willing to select alternatives that provide short term loss and long term gratification. His example, in How We Decide, was people’s credit card excesses and how “…our emotions…tend to overvalue immediate gains (like a new pair of shoes) at the cost of future expenses (high interest rates).

    An Economic Question: How does Jonah Lehrer’s credit card example relate to climate change policy?

    No Comments on An Environmental Law

    Read More
  • India's UID Program Uses Fingerprints and Iris Scans

    Identity Checks

    Jan 19 • Developing Economies, Economic History, Government, Households, Labor, Macroeconomic Measurement • 582 Views

    Opening a savings account? You need to confirm your identity. Enrolling for Social Security or Medicare? They check your credentials.

    But what if you cannot prove who you are?

    Signing up for India’s Unique Identity (UID) program has enabled many millions of Indian citizens to pass an identity check for the first time. Described by the Economist, from the top down, the program is building a biometric data base. From the bottom up, so far, it has empowered more than 110 million people. Rising by 20 million a month, the numbers represent people getting eye and finger scans in municipalities across the country.

    With the scan, you can prove that you are you.  

    As a result, people can engage in financial transactions that previously had been impossible. Welfare payments can no longer be stolen with fake IDs. Cash can be placed into bank accounts. People can save and write checks and get credit. They can apply for jobs more efficiently.

    However, in addition to identity, aren’t we talking about economic growth?

    Maybe, we can even say that the Indian program resembles the onset of Social Security during the 1930s. Yes, the U.S. program was a social safety net. But also, didn’t we secure a fundamental source of proving our identity?

    The Economic Lesson

    The Indian UID has been successful because of the appropriate incentives. Employees of the private firm implementing the program are given sign-up quotas and then receive their pay when UID numbers are issued. So, instead of an inefficient massive government bureaucracy stumbling, as the program’s agents, the private sector is achieving success.

    An Economic Question: How do people in the U.S. prove their identity?

    No Comments on Identity Checks

    Read More
  • justice...scale...16871_scale

    Schools, Budget Cuts, and Music

    Jan 18 • Government, Labor, Thinking Economically • 606 Views

    By Mira Korber, guest blogger.

    The story is familiar. With a tight economy and insufficient funds, public schools have to cut back. Music, physical education, and language classes are the first to go. And along with the classes go the teachers; since 2008, over 294,000 teaching positions have evaporated.

    While some believe retaining core classes — English, History, Math — is more important than a substantial music program, studies show that kids who study the arts actually have greater success in academic fields including reading and writing.

    In fact, global music programs, such as the famous “El Sistema” in Venezuela, have shown their music students have a drop-out rate of 7% versus the national 25%.

    This doesn’t solve the global music education vs. budget problem. But it does show that the opportunity cost of cutting music classes could be high.

    The Economic Lesson

    When you make a decision, you always give something up, which is otherwise known as your opportunity cost. With budget cuts already in place and more on the way, school boards have to choose what stays in school and what doesn’t. When a school board makes a decision, there’s always some kind of trade-off. For example:

    Eliminate music teachers and keep the same number of math teachers to avoid larger classes. Use older editions of textbooks to keep teachers of any subject employed.

    Yet in terms of long-run consequences, cutting music classes may have negative effects on students’ academic success.

    An Economic Question: Do you think it is possible to balance the arts with an economically viable school budget?


    No Comments on Schools, Budget Cuts, and Music

    Read More
  • 16867_musiclock..1.17_000006292531XSmall

    There’s No Such Thing as Free Music…

    Jan 17 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Innovation • 532 Views

    By Mira Korber, guest blogger.

    You are a young musician on the brink of your professional career. Graduation is in May, orchestra auditions are around the corner, and where do you go to begin preparing? The IMSLP, of course.

    The what? The “International Music Score Library Project” (IMSLP) is the largest, open source, wiki-style website to which anyone can upload public domain sheet music and recordings. It’s the easiest, fastest, and cheapest (free!) source of downloadable scores — and while originally little known, is now considered the ultimate online musician’s resource. With over 150,000 scores and 7,000 recordings, it’s easy to see why.

    What’s the catch? IMSLP scores are in the public domain, therefore violate no copyright laws, but sometimes the site finds itself in a sticky intellectual property and publishing rights situation. With everything public — from uploading to managing the sheet music — the site is “crowd-sourced,” according to the founder, conservatory graduate and Harvard law student, Edward Guo.

    But the site’s history reflects copyright struggles with music publishing companies, who say IMSLP damages their hard-copy music sales. This article (from 2007) describes the IMSLP battle with Universal Edition, which successfully demanded the site be taken down due to copyright infringements in Europe but not in Canada, Guo’s home country.

    Eight months later, after volunteers perused all scores for copyright offense, the site was up and running again — until 2011, when the Music Publishers Association forced closure of IMSLP for one day. However, it is again accessible to all musicians seeking public domain scores; even professionals are using the site’s resources for their performances.

    And in an age of struggling orchestras, free parts are certainly welcome.

    The Economic Lesson

    “There is no such thing as free lunch” (TINSTAAFL) refers to hidden costs associated with something that may appear “free,” just like the music on IMSLP. Anything, from downloadable sheet music to a relaxing park costs someone something. Therefore, when considering something that appears “free,” remember there is always an opportunity cost, or sacrifice, made to access it. Even though IMSLP provides resources for the social good, its founder may pay the price in legal copyright hassle, and music companies in sales they lose.

    No Comments on There’s No Such Thing as Free Music…

    Read More