Economics Commons^™

Sweating The Energy Bill: Extreme Weather, Poor Households, And The Energy Spending Gap, Jacqueline M. Doremus, Irene Jacqz, Sarah Johnston

Economics

We estimate the relationship between temperature and energy spending for both low and higher-income U.S. households. We find both groups respond similarly (in percentage terms) to moderate temperatures, but low-income households’ energy spending is half as responsive to extreme temperatures. Consistent with low-income households cutting back on necessities to afford their energy bills, we find similar disparities in the food spending response to extreme temperature. These results suggest adaptation to extreme weather, such as air conditioning use, is prohibitively costly for households experiencing poverty.

Birds Of A Feather Lockdown Together: Mutual Bird-Human Benefits During A Global Pandemic, Michael Brock, Jacqueline Doremus, Liqing Li

Economics

Feeding backyard wildlife has impure public good characteristics - it provides satisfaction to humans, both private and public, while also improving bird populations. We document a surge in human interest in connecting with wild birds during lockdowns in response to the Covid-19 pandemic. Using an event-study design, we find large increases in bird engagement began soon after the start of the COVID-19 lockdowns in Spring 2020. Responses were stronger for areas with more bird species. Investments appear sustained, beginning first with bird feeders, then seed and finally baths. Beyond bird survival, bird feeding can potentially enhance humans' connection to nature …

The Effects Of Recreational Cannabis Access On Labor Markets: Evidence From Colorado, Avinandan Chakraborty, Jacqueline Doremus, Sarah Stith

Economics

Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well as through other industries such as manufacturing, leisure, and hospitality. However, this increase in labor demand may vary substantially across counties within a state as most states with legal recreational canna-bis allow individual counties to ban commercial cannabis sales. Meanwhile, labor supply may change through positive and negative effects from cannabis use. Using county-level Colorado data from 2011 to 2018 and exploiting variation across counties in the existence and timing of the start of dispensary sales, we test for …

Import Restrictions By Eco-Certification: Quantity Effects On Tropical Timber Production, Matthew T. Cole, Jacqueline M. Doremus, Stephen F. Hamilton

Economics

Eco-certification standards are increasingly used by industrial countries to restrict imports of foreign goods produced using unsustainable practices. Import restrictions on eco-certified goods limit the trade of goods to the home country, but also serve to segment global demand into separate regions for conventional goods and certified goods, altering market structure and equilibrium prices in a manner that can work against sustainability goals. In this paper, we examine the effect of recent import restrictions in the US, EU, Canada, and Japan that require tropical timber products produced in Central Africa to be eco-certified. Using panel data of timber production in …

How Does Eco-Label Competition Affect Environmental Benefits? The Case Of Central Africa’S Forests, Jacqueline M. Doremus

Economics

Increasingly, non-governmental organization (NGO) and industry eco-labels compete. Environmental benefits may increase or decrease with entry by an industry label, depending on the shape of consumers’ willingness to pay and the shape of the distribution of forest compliance costs. Using geospatial data from forests in Cameroon and Gabon to proxy for compliance costs, I test whether lower compliance cost forests are more likely to participate in stricter labels. Next, I use a semi-nonparametric estimator to estimate parameters for willingness to pay and the distribution of forest compliance costs to calculate benefits with and without label competition. I find that, in …

Off-Label Use Of Recreational Cannabis: Acid Reflux In Colorado, Jacqueline M. Doremus, Sarah S. Stith, Jacob M. Vigil

Economics

Medical cannabis access has been shown to affect clinical health outcomes and health care spending. Unlike medical access, which requires a doctor's recommendation for treatment and only applies to the limited conditions approved under the state's medical cannabis program, recreational access makes cannabis available over-the-counter (OTC). This may create additional benefits through off-label cannabis use to treat unlisted conditions, such as acid reflux, which affects two out of three Americans. Using the roll out of recreational dispensaries in Colorado in 2014, we estimate the change in retailers' market share of antacid medications using a difference-in-differences design. Antacid market share decreases …

Spatial And Temporal Variation Of Offshore Wind Power And Its Values Along The Central California Coast, Yi-Hui Wang, Ryan K. Walter, Crow White, Matthew D. Kehrli, Stephen F. Hamilton, Patrick H. Soper, Benjamin I. Ruttenberg

Physics

The analysis of the spatiotemporal variability of wind power remains limited during the planning stage of an offshore wind farm. This study provides a framework to investigate how offshore wind power varies along the Central California Coast over diurnal and seasonal time scales, which is critical for reliability and functionality of the grid system. We find that offshore wind power in this region peaks during evening hours across all seasons and maximizes in spring and summer. The timing of peak offshore wind power production better aligns with that of peak demand across California than solar and land-based wind power production, …

Using Recreational Cannabis To Treat Insomnia: Evidence From Over-The-Counter Sleep Aid Sales In Colorado, Jacqueline M. Doremus, Sarah S. Stith, Jacob M. Vigil

Economics

This study seeks to understand whether people substitute between recreational cannabis and conventional over-the-counter (OTC) sleep medications. UPC-level grocery store scanner data in a multivariable panel regression design were used to compare the change in the monthly market share of sleep aids with varying dispensary-based recreational cannabis access (existence, sales, and count) in Colorado counties between 12/2013 and 12/2014. We measured annually-differenced market shares for sleep aids as a portion of the overall OTC medication market, thus accounting for store-level demand shifts in OTC medication markets and seasonality, and used the monthly changes in stores’ sleep aid market share to …

Unintended Impacts From Forest Certification: Evidence From Indigenous Aka Households In Congo, Jacqueline M. Doremus

Economics

Does Forest Stewardship Council (FSC) certification of “responsible” commercial forestry change nutrition, health and wealth for indigenous peoples, like the Aka of the Congo Basin? Using hand-collected data from the boundary of a certified and an uncertified forest in the Republic of Congo five years after certification, I compare nutrition, health, and wealth using questions that are locally salient and survey timing designed to reach seminomadic hunter-gatherers. Though I only observe outcomes after certification, using a spatial regression discontinuity design I find suggestive evidence that activities to satisfy forest certification may cause increased food insecurity and illness frequency for Aka …

Simpler Is Better: Predicting Consumer Vehicle Purchases In The Short Run, Jacqueline M. Doremus, Gloria Helfand, Changzheng Liu, Marie Donahue, Ari Kahan, Michael Shelby

Economics

When agencies such as the US Environmental Protection Agency (EPA) establish future greenhouse gas emissions standards for new vehicles, forecasting future vehicle purchases due to changes in fuel economy and prices provides insight into regulatory impacts. We compare predictions from a nested logit model independently developed for US EPA to a simple model where past market share predicts future market share using data from model years 2008, 2010, and 2016. The simple model outperforms the nested logit model for all goodness-of-prediction measures for both prediction years. Including changes in vehicle price and fuel economy increases bias in forecasted market shares. …

Calpoly 2015 Transportation Survey Report, William Riggs

City and Regional Planning Studios and Projects

In the spring of 2015, City & Regional Planning faculty conducted a campus-wide transportation survey as part of work on the campus Climate Action Plan. The survey represented spring 2014 commutes and was issued to a sample of full and part-time CalPoly faculty, staff, students and auxiliaries with assistance from Facilities Services and the Vice President for Administration and Finance.

The total number of responses was 3,961, roughly 17% of the entire campus population of roughly 23,000. Unsurprisingly, the majority of respondents were students, totaling 68.6%, while the rest were made up of faculty, staff, and visitors. Results are significant …

A Comment On Christofferson, Jacobs, And Ornthanalia (2012), "Dynamic Jump Intensities And Risk Premiums: Evidence From S&P 500 Returns And Options", Garland Durham, John Geweke, Pulak Ghosh

Finance

No abstract provided.

Improving Asset Price Prediction When All Models Are False, Garland Durham, John Geweke

Finance

This study considers three alternative sources of information about volatility potentially useful in predicting daily asset returns: daily returns, intraday returns, and option prices. For each source of information the study begins with several alternative models, and then works from the premise that all of these models are false to construct a single improved predictive distribution for daily S&P 500 index returns. The prediction probabilities of the optimal pool exceed those of the conventional models by as much as 5.29%. The optimal pools place substantial weight on models using each of the three sources of information about volatility.

Risk-Neutral Modeling With Affine And Nonaffine Models, Garland Bennett Durham

Finance

Option prices provide a great deal of information regarding the market’s expectations of future asset price dynamics. But, the implied dynamics are under the risk-neutral measure rather than the physical measure under which the price of the underlying asset itself evolves. This article demonstrates new techniques for joint analysis of the physical and risk-neutral models using data from both the underlying asset and options. While much of the prior work in this area has focused on affine and affine-jump models because of their analytical tractability, the techniques used in this article are straightforward to apply to a broad class of …

Beyond Stochastic Volatility And Jumps In Returns And Volatility, Garland Durham, Yang-Ho Park

Finance

While a great deal of attention has been focused on stochastic volatility in stock returns, there is strong evidence suggesting that return distributions have time-varying skewness and kurtosis as well. Under the risk-neutral measure, for example, this can be seen from variation across time in the shape of Black-Scholes implied volatility smiles. This paper investigates model characteristics that are consistent with variation in the shape of return distributions using a stochastic volatility model with a regime-switching feature to allow for random changes in the parameters governing volatility of volatility, leverage effect and jump intensity. The analysis consists of two steps. …

Return, Purchase, Or Skip? Outcome, Duration, And Consumer Behavior In The Rent-To-Own Market, Michael H. Anderson, Sanjiv Jaggia

Economics

Rent-to-own (RTO) is attractive to financially distressed consumers. It allows immediate access to merchandise and an opportunity for eventually acquisition. Yet goods can be returned at any point without penalty or other adverse consequences. We use a competing risk methodology that accounts for unobserved consumer heterogeneity to study how contracts conclude, estimating the probabilities of exit— via return, purchase, or skip—and the associated durations. The estimated outcome probabilities highlight the use of the embedded return option by RTO consumers and the trade-offs and cross-subsidization implicit in the RTO contractual arrangement.We offer rational and behavioral explanations of consumer behavior in the …

Obesity And Hyperbolic Discounting: An Experimental Analysis, Timothy J. Richards, Stephen F. Hamilton

Economics

Models of rational addiction suggest that obesity is consistent with time-consistent preferences. Behavioral economists maintain that addictions such as alcoholism, smoking and over-eating represent examples of present-bias in decision making that is fundamentally irrational. In this article, conduct an experiment to test whether individual discount schedules are time-consistent and whether discount rates are higher for subjects who exhibit patterns of risky behavior. Our results show that discount functions are quasi-hyperbolic in shape, and that obesity and drinking are positively related to the discount rate. Anti-obesity policy, therefore, would be best directed to informing individuals as to the long-term implications of …

Fragmenting Forests: The Double Edge Of Effective Forest Monitoring, Andrew R. Bell, Rick L. Riolo, Jacqueline M. Doremus, Daniel G. Brown, Thomas P. Lyon, John Vandermeer, Arun Agrawal

Economics

The link between ineffective forest monitoring and forest degradation is well known. Under REDD+, monitoring stands to become more important as a means of maintaining incentive. Little attention however has been paid to the possible adverse consequences of forest monitoring. Our research develops a spatially explicit, agent-based model (ABM) of timber extraction in a Congo Basin forest concession to investigate the potential conservation impact of more effective monitoring. We modeled the building of access roads, and logging of legal timber and illegal timber, where illegal timber may be interpreted broadly to include prohibited species, smaller trees, or trees in areas …

Vertex Centralities In Input-Output Networks Reveal The Structure Of Modern Economies, Florian Blochl, Fabian J. Theis, Fernando Vega-Redondo, Eric O'N. Fisher

Economics

Input-output tables describe the flows of goods and services between the sectors of an economy. These tables can be interpreted as weighted directed networks. At the usual level of aggregation, they contain nodes with strong self-loops and are almost completely connected. We derive two measures of node centrality that are well suited for such networks. Both are based on random walks and have interpretations as the propagation of supply shocks through the economy. Random walk centrality reveals the vertices most immediately affected by a shock. Counting betweenness identifies the nodes where a shock lingers longest. The two measures differ in …

Introduction To Heckscher-Ohlin Theory: A Modern Approach, Eric O'N. Fisher

Economics

No abstract provided.

Empirical Foundations For The Resurrection Of Heckscher–Ohlin Theory, Peter Egger, Kathryn G. Marshall, Eric O'N. Fisher

Economics

We decompose the factor content of trade into Heckscher–Ohlin–Vanek trade and Ricardian trade. We measure factor content using only the United States' technology and also as Leontief advocated, using the local technology. In either case, differences in endowments are quite important in explaining the factor content of trade. If one uses raw estimated coefficients as a means of comparison, differences in endowments are ten times as important as differences in technology.

Heckscher–Ohlin Theory When Countries Have Different Technologies, Eric O'N. Fisher

Economics

Rethinking the foundations of Heckscher–Ohlin theory when countries have different technologies, this paper shows how to make the proper adjustments for international productivity differences. The central tool is a factor conversion matrix that computes the local factor content of foreign Rybczynski effects. Factor-specific productivities are a special case of these more general linear relationships.

The Structure Of The American Economy, Eric O'N. Fisher, Kathryn G. Marshall

Economics

We explore the relationship between input–output accounts and the national revenue function. The generalized inverse of an economy’s technology matrix carries information relating changes in endowments with changes in outputs; its transpose relates output prices and factor prices. Our primary theoretical contribution is to derive an economy’s revenue function for an arbitrary Leontief technology. Our main empirical contribution is to compute the national revenue function for the American economy in 2003 and to describe its properties. We implement our ideas using two different models: one where all factors are mobile and another with sector-specific capital.

Why Does Tobacco-Control Spending Vary So Much Across States?, Michael L. Marlow

Economics

Although tobacco-control spending is considered an essential component of comprehensive programmes aimed at lowering smoking, substantial variation exists across states. This article examines if variation is systematically related to cross-state differences in smoking prevalence, holding other factors constant that are expected to influence spending. An econometric model is estimated which considers effects of tobacco-settlement revenues, income, unemployment, political party of the governor, state debt and smoking prevalence on tobacco-control spending in all states during 2000--2007. Estimations control for the possibility that spending and smoking prevalence are co-determined to clearly determine the causal link from prevalence to spending. Spending variation is …

Identifiability Of The Misspecified Split Hazard Models, Sanjiv Jaggia

Economics

Unlike standard models, a split population hazard model allows the exit probability to be less than one. Although conceptually attractive, split models are prone to identification problems. In the reduced form estimation of the hazard function, the influence of split may not be distinguishable from that of neglected heterogeneity. For illustration, I use Monte Carlo simulations to highlight the problem of interpreting the structural parameters of the split Weibull and the Weibull-gamma models.

Second-Best Tax Policy And Natural Resource Management In Growing Economies, Steven P. Cassou, Arantza Gorostiaga, María José Gutiérrez, Stephen F. Hamilton

Economics

This paper investigates the exploitation of environmental resources in a growing economy within a second-best fiscal policy framework. Agents derive utility from two types of consumption goods — one which relies on an environmental input and one which does not — as well as from leisure and from environmental amenity values. Property rights for the environmental resource are potentially incomplete. We connect second best policy to essential components of utility by considering the elasticity of substitution among each of the four utility arguments. The results illustrate potentially important relationships between environmental amenity values and leisure. When amenity values are complementary …

So2 Policy And Input Substitution Under Spatial Monopoly, Shelby Gerking, Stephen F. Hamilton

Economics

Following the U.S. Clean Air Act Amendments of 1990, electric utilities dramatically increased their utilization of low-sulfur coal from the Powder River Basin (PRB). Recent studies indicate that railroads hauling PRB coal exercise a substantial degree of market power and that relative price changes in the mining and transportation sectors were contributing factors to the observed pattern of input substitution. This paper asks the related question: To what extent does more stringent SO2 policy stimulate input substitution from high-sulfur coal to low-sulfur coal when railroads hauling low-sulfur coal exercise spatial monopoly power? The question underpins the effectiveness of incentive-based environmental …

Do Expenditures On Tobacco Control Decrease Smoking Prevalence?, Michael L. Marlow

Economics

Effectiveness of tobacco control programmes in reducing smoking prevalence during 2001 to 2005 is examined. Tobacco control spending is found to exert no significant effects on smoking prevalence across the 50 states. Cigarette prices are found to lower prevalence of daily smokers, but exert no effect on nondaily smoking prevalence. Several reasons are suggested for why these results might conflict with previous research. These include that most previous studies examined two states (California and Massachusetts) with long-standing tobacco control programmes and that most studies examined periods in which many of the states in their samples did not actively fund their …

The Influence Of Private School Enrollment On Public School Performance, Michael L. Marlow

Economics

School choice reform refers to changes that allow parents greater freedom to choose schools for their children. School choice reform is contentious because it fundamentally alters the environment in which public and private schools operate and could result in significant changes for both demanders and suppliers of education. This article develops a model of public education with imperfect exit to predict how private school enrollment influences performance of public schools. Empirical evidence from data on all private and public schools in California provides substantial support for the hypothesis that public school test scores are inversely related to private school enrollments …

A Partial Defense Of The Giant Squid, Sanjiv Jaggia, Satish Thosar

Economics

No abstract provided.