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Articles 1 - 30 of 40
Full-Text Articles in Political Economy
Global Climate Policy Will Have Net Benefits Larger Than Anyone Thinks (And Welfare Gains, Strangely, Are Likely To Be Much Larger Yet), Philip E. Graves
Global Climate Policy Will Have Net Benefits Larger Than Anyone Thinks (And Welfare Gains, Strangely, Are Likely To Be Much Larger Yet), Philip E. Graves
PHILIP E GRAVES
As with other public goods lacking strong special interest support, global climate policy suffers from two serious theoretical flaws. The first is failure to endogenize the labor-leisure decision when conducting benefit-cost analysis. Recognition that income generated will not remain the same pre-and-post policy results in downward bias in benefit estimation. Much more importantly, there will generally be free riding in input markets in addition to the well-known output demand revelation problem. Since even households with very high marginal values cannot individually increment public goods, too little income will be generated and too much of the income that is generated will …
Implications Of Global Warming: Two Eras, Philip E. Graves
Implications Of Global Warming: Two Eras, Philip E. Graves
PHILIP E GRAVES
The purpose of the present paper is to attempt to gain insights into the implications of global warming that is anticipated in the future. In attempting to think about really long-term regional implications, it seems naïve to look at global warming without thinking about long-standing trends in other variables that would be expected to interact with climate change over time. I envision two quite different “eras,” a first filled with considerable danger of both economic and environmental collapse. But—if humanity survives the first period—a second period of great promise for humanity and the global ecosystem is likely to take place. …
A Note On Monitoring Costs And Voter Fraud, Philip E. Graves, Robert L. Sexton, Gary Galles
A Note On Monitoring Costs And Voter Fraud, Philip E. Graves, Robert L. Sexton, Gary Galles
PHILIP E GRAVES
Election fraud can threaten democracy if many ineligible people are allowed to vote. The usual policy prescription is to increase monitoring cost. However, this is very costly. This paper proposes a more cost effective strategy: substitute tougher and consistent statutes across states against voter fraud.
The Critical Difference Between Republicans/Conservatives And Democrats/Liberals, Philip E. Graves
The Critical Difference Between Republicans/Conservatives And Democrats/Liberals, Philip E. Graves
PHILIP E GRAVES
There are, of course, a great many specific differences between the political positions of the two dominant political parties in America. After an introductory section characterizing those, section two suggests that the demarcation of critical importance between the parties relates to how they view the income distribution. Those self-identifying as Republican/Conservative tend to view the income distribution as an artifact of a host of individual work/leisure decisions with little policy relevance; those characterizing themselves as Democrat/Liberal tend to view the income distribution as a pure public good—in this view, private sector outcomes are expected to provide a non-optimally small amount …
The Hedonic Method Of Valuing Environmental Policies And Quality, Philip E. Graves
The Hedonic Method Of Valuing Environmental Policies And Quality, Philip E. Graves
PHILIP E GRAVES
Benefit-cost analysts attempt to compare two states of the world, the status quo and a state in which a policy having benefits and costs is being contemplated. For environmental policies, this comparison is greatly complicated by the difficulty in inferring the values that individuals place on an increment to environmental quality. Unlike ordinary private goods, environmental goods are not directly exchanged in markets with observable prices. In this chapter, the hedonic approach to inferring the benefits of an environmental policy is examined.
Benefit-Cost Analysis Of Enviromental Projects: A Plethora Of Biases Understating Net Benefits, Philip E. Graves
Benefit-Cost Analysis Of Enviromental Projects: A Plethora Of Biases Understating Net Benefits, Philip E. Graves
PHILIP E GRAVES
There are many reasons to suspect that benefit-cost analysis applied to environmental policies will result in policy decisions that will reject those environmental policies. The important question, of course, is whether those rejections are based on proper science. The present paper explores sources of bias in the methods used to evaluate environmental policy in the United States, although most of the arguments translate immediately to decision-making in other countries. There are some “big picture” considerations that have gone unrecognized, and there are numerous more minor, yet cumulatively important, technical details that point to potentially large biases against acceptance on benefit-cost …
Appropriate Fiscal Policy Over The Business Cycle: Proper Stimulus Policies Can Work, Philip E. Graves
Appropriate Fiscal Policy Over The Business Cycle: Proper Stimulus Policies Can Work, Philip E. Graves
PHILIP E GRAVES
Fiscal policy has become quite controversial in the post-Keynesian era, the debate over the Obama stimulus package being a contentious recent example. Some pundits go so far as to take the position that macroeconomic theory has failed to meaningfully progress in terms of providing useful recommendations for policy-makers, particularly in times of recession. Others take the laissez-faire view that policy reactions to the business cycle do not help in a rational expectations world and indeed do harm by increasing uncertainty. Still others, while not necessarily viewing themselves as in any sense ―Keynesian,‖ have a nagging feeling that sometimes doing nothing …
Environmental Valuation: The Sum Of Specific Damages Approach, Philip E. Graves
Environmental Valuation: The Sum Of Specific Damages Approach, Philip E. Graves
PHILIP E GRAVES
There is no abstract for this book chapter.
Benefit-Cost Analysis Of Environmental Projects: A Plethora Of Systematic Biases, Philip E. Graves
Benefit-Cost Analysis Of Environmental Projects: A Plethora Of Systematic Biases, Philip E. Graves
PHILIP E GRAVES
There are many reasons to suspect that benefit-cost analysis applied to environmental policies will result in policy decisions that will reject those environmental policies. The important question, of course, is whether those rejections are based on proper science. The present paper explores sources of bias in the methods used to evaluate environmental policy in the United States, although most of the arguments translate immediately to decision-making in other countries. There are some “big picture” considerations that have gone unrecognized, and there are numerous more minor, yet cumulatively important, technical details that point to potentially large biases against acceptance on benefit-cost …
The Hedonic Method: Value Of Statistical Life, Wage Compensation Property Value Compensation, Philip E. Graves
The Hedonic Method: Value Of Statistical Life, Wage Compensation Property Value Compensation, Philip E. Graves
PHILIP E GRAVES
There is no abstract for this book chapter.
A Note On The Valuation Of Collective Goods: Overlooked Input Market Free Riding For Non-Individually Incrementable Goods, Philip E. Graves
A Note On The Valuation Of Collective Goods: Overlooked Input Market Free Riding For Non-Individually Incrementable Goods, Philip E. Graves
PHILIP E GRAVES
For at least fifty years economists have argued that vertically-aggregated marginal willingness to pay, when set equal to marginal provision cost, will result in optimal public good provision levels. This methodological approach would be expected to yield an exact analog, in terms of optimal levels of public good provision, to efficient provision of private goods in a perfect market setting. There is, however, a potentially serious flaw in the approach as actually practiced, since initial incomes are implicitly–and wrongly–taken to be optimal. From a given income, the output demand revelation problem has long been recognized–that there will be difficulty inferring …
The Simple Analytics Of The Wta-Wtp Disparity For Public Goods, Philip E. Graves
The Simple Analytics Of The Wta-Wtp Disparity For Public Goods, Philip E. Graves
PHILIP E GRAVES
A robust finding in economics is that decision-makers often exhibit a much smaller dollar willingness to pay (WTP) for an item than the minimum amount that they claim to be willing to accept (WTA) to part with it. The spread between these two numbers is particularly large for public goods, raising serious public policy concerns regarding which number, if either, is appropriate for valuing such goods. A number of explanations for this phenomenon have been advanced, each perhaps of relevance in particular settings, with little consensus being achieved as to whether any explanation satisfactorily resolves the problem. A traditional utility …
A Note On The "Union Effect" In Vsl Studies, Philip E. Graves
A Note On The "Union Effect" In Vsl Studies, Philip E. Graves
PHILIP E GRAVES
Viscusi and Aldy (2003) observe that “most studies of the U.S. labor market find that union affiliation is positively correlated with a greater wage-risk tradeoff while international evidence is much more mixed.” They provide several arguments as to why the risk premium might be higher for union members (marginal versus average worker preference, the quasi-public good nature of workplace safety, and better safety information for the unionized). An alternative explanation–concentration of union membership in undesirable locations–can account for both the apparent higher risk premium in union jobs in the United States and the failure to find that gap in the …
Voodoo Multipliers Revisited: Public Policy For Recessions And Boomtimes, Philip E. Graves
Voodoo Multipliers Revisited: Public Policy For Recessions And Boomtimes, Philip E. Graves
PHILIP E GRAVES
There is no abstract for this brief column.
A Note On The Design Of Experiments Involving Public Goods, Philip E. Graves
A Note On The Design Of Experiments Involving Public Goods, Philip E. Graves
PHILIP E GRAVES
Concern about potential free riding in the provision of public goods has a long history. More recently, experimental economists have turned their attention to the conditions under which free riding would be expected to occur. A model of free riding is provided here which demonstrates that existing experimental approaches fail to explore a potentially important real-world dimension of free riding. In a cash-in-advance economy, free riding becomes a two-stage problem, while existing experiments only address the second stage. That is, one would expect households with high demands for public goods relative to private goods to generate less income than households …
If The Large Wta-Wtp Gap For Public Goods Is Real (And There Are Good Reasons To Think So) Conventional Welfare Measures Are Simply Incorrect, Philip E. Graves
If The Large Wta-Wtp Gap For Public Goods Is Real (And There Are Good Reasons To Think So) Conventional Welfare Measures Are Simply Incorrect, Philip E. Graves
PHILIP E GRAVES
A robust finding in economics is that decision-makers often exhibit a much smaller dollar willingness to pay (WTP) for an item than the minimum amount that they claim to be willing to accept (WTA) to part with it. The spread between these two numbers is particularly large for public goods, raising serious public policy concerns regarding which number, if either, is appropriate for valuing such goods. A traditional utility maximizing model is presented here that predicts–as both measures are currently calculated–that WTA will exceed WTP, quite plausibly by a substantial amount for public goods. Moreover, it is shown here that …
The Wta-Wtp Gap And Welfare Measures For Public Goods, Philip E. Graves
The Wta-Wtp Gap And Welfare Measures For Public Goods, Philip E. Graves
PHILIP E GRAVES
A robust finding in experimental economics is that decision-makers often exhibit a much smaller dollar willingness to pay (WTP) for an item than the minimum amount that they claim to be willing to accept (WTA) to part with it. The spread between these two numbers is particularly large for public goods, raising serious public policy concerns regarding which number, if either, is appropriate for valuing such goods. A number of explanations for this phenomenon have been advanced, each perhaps of relevance in particular settings, with little consensus being achieved as to whether any explanation satisfactorily resolves the problem. The traditional …
Economic Growth And Business Cycles: The Labor Supply Decision With Two Types Of Technological Progress, Philip E. Graves
Economic Growth And Business Cycles: The Labor Supply Decision With Two Types Of Technological Progress, Philip E. Graves
PHILIP E GRAVES
An informal model is described that leads to multiple macroeconomic equilibria as a consequence of random variation in the relative amounts of technological change for new and existing goods. The novel observation is that the rate of introduction and market penetration of new goods vis-a-vis technological advance for existing goods importantly affects the labor supply decision. A relatively rapid influx of new goods will generally increase labor supply, while relatively more technological advance for existing goods will reduce labor supply to the market. These impacts are seen to provide insights into Rostow's stages of growth. Short run variations in the …
Predicting Life Expectancy: A Cross-Country Empirical Analysis, Audrey B. Hendricks, Philip E. Graves
Predicting Life Expectancy: A Cross-Country Empirical Analysis, Audrey B. Hendricks, Philip E. Graves
PHILIP E GRAVES
Most economic research on life expectancy focuses on building forecasting models using mortality trends or constructing parameter life expectancy models with samples of individuals. We here provide a cross-sectional model of life expectancy, using a comprehensive worldwide sample, which analyses the impact of country level variables on average life expectancy. The model variants suggest robustly that proxies for technology, education, disposable income and healthcare all have a significant and positive effect on country variation in average life expectancy, at all income levels. A proxy for the health risks/epidemics factor is significantly negative. This analysis provides information of use to governments, …
An Implementable Institutional Reform That Transfers Control Of Government Spending Levels From Politicians To Voters, Philip E. Graves
An Implementable Institutional Reform That Transfers Control Of Government Spending Levels From Politicians To Voters, Philip E. Graves
PHILIP E GRAVES
Elected representatives have little incentive to pursue the interests of those electing them once they are elected. This well-known principle-agent problem leads, in a variety of theories of government, to non-optimally large levels of government expenditure. An implication is that budgetary rules are seen as necessary to constrain politicians' tax and spending behavior. Popular among such constraints are various Balanced Budget Amendment proposals. These approaches, however, are shown here to have serious limitations, including failure to address the central concern of spending level. An alternative approach is advanced here that relies on a Coase-like mechanism that transfers control of government …
Optimal Public Goods Provision: Implications Of Endogenizing The Labor/Leisure Choice, Nicholas E. Flores, Philip E. Graves
Optimal Public Goods Provision: Implications Of Endogenizing The Labor/Leisure Choice, Nicholas E. Flores, Philip E. Graves
PHILIP E GRAVES
Conventional analysis of public goods provision aggregates individual willingness to pay while treating income as exogenous, ignoring the fact that we generate income to allow us to purchase utility-generating goods. We explore the implications of endogenizing the lahor-leisure decision by explicitly considering leisure demand in a model of public goods provision. We consider benefit analysis of public goods provision and find that increments of the public good will generally be under-valued using conventional analysis while decrements to the public good (rare in public good settings) will be overvalued (JELC91,D61,Q5I)
New Entry And The Rate Of Return To Education: The Case Of Registered Nurses, Surrey Walton, Philip E. Graves, Robert L. Sexton
New Entry And The Rate Of Return To Education: The Case Of Registered Nurses, Surrey Walton, Philip E. Graves, Robert L. Sexton
PHILIP E GRAVES
In the 1970's, the percentage of high school graduates completing RN training increased with little change in the rate of return to training. During the 1980's this percentage declined, despite large increases in the rate of return. The national data employed here examine long-run trends (with emphasis on the 1970's and 1980's) in financial incentives and entry into the nursing profession and suggest that broader professional career opportunities in the 1980's exerted a large impact vis-a-vis the 1970's, among other factors. Rates of return remain high in the 1990's with modest signs of the market stabilizing. Successful policies to ensure …
Environmental Perceptions And Environmental Reality: When More Is Less, Philip E. Graves
Environmental Perceptions And Environmental Reality: When More Is Less, Philip E. Graves
PHILIP E GRAVES
There is no abstract for this article.
Non-Optimal Levels Of Suburbanization, Philip E. Graves
Non-Optimal Levels Of Suburbanization, Philip E. Graves
PHILIP E GRAVES
Suburbanization has many causes, among which is the attempt to relocate to acquire a more desirable vector of local public goods. The traditional economists' procedure for valuing public goods involves vertical aggregation of marginal willingness to pay, at a given income level. This approach is flawed by failing to recognize that individuals will not work for goods that cannot be acquired individually with higher incomes. There will be a parallel input market failure any time there is a public good output market failure, thus the `given income' of the traditional valuation method is too low. Hence, traditional valuation methods result …
I Don't Know, Philip E. Graves
I Don't Know, Philip E. Graves
PHILIP E GRAVES
This is a non-fiction novel, titled I Don't Know. I is in three parts, the first economic (which will seem "liberal" to most), the second political (which will seem "conservative" to most), and the third theological (which will seem weird to most). I think you will find it a fun read, and feel free to distribute it at will.
The Bias Against New Innovations In Health Care:Value Uncertainty And Willingness To Pay, Surrey M. Walton, Philip E. Graves, Peter R. Mueser, Jay K. Dow
The Bias Against New Innovations In Health Care:Value Uncertainty And Willingness To Pay, Surrey M. Walton, Philip E. Graves, Peter R. Mueser, Jay K. Dow
PHILIP E GRAVES
This paper offers a model for the bias found in willingness-to-pay valuations against new treatments. For example, this bias provides an explanation for patient preferences that make it difficult for formularies to take treatments off their lists, even when newer treatments would appear to be clearly preferable. The appeal of the model, which is based on imperfect information, is that it is consistent with rational preferences and rational behavior by patients, which are necessary for standard models and methods related to decision theory, costeffectiveness, and efficiency.
Amenities And The Labor Earnings Function, Philip E. Graves, Robert L. Sexton
Amenities And The Labor Earnings Function, Philip E. Graves, Robert L. Sexton
PHILIP E GRAVES
Desirable locations are, other things equal, expected to be characterized by a mix of higher rents or lower wages. That is, if one area is more attractive than others, inmigration would occur, driving up the demand for land (hence raising rents) and increasing the supply of labor (hence lowering wages). The in-movement will continue until utility is the same across locations in equilibrium. Failing to hold constant amenities in the traditional earnings functions employed by labor economists will result, then, in omitted-variable bias if worker characteristics (years of schooling, union membership, and so on) are correlated with amenities. By way …
Amenities And Fringe Benefits: Omitted Variable Bias, Philip E. Graves, Robert L. Sexton, Michelle M. Arthur
Amenities And Fringe Benefits: Omitted Variable Bias, Philip E. Graves, Robert L. Sexton, Michelle M. Arthur
PHILIP E GRAVES
If labor is fairly mobile, as it is in the United States, one would expect that households would move from less desirable areas toward more desirable areas until all areas are equally desirable. The way that areas become equally desirable is through the impact of movers on wages and rents (and possibly "endogenous" disamenities, such as congestion or pollution). That is, as people move to desirable areas, they will increase the demand for land (raising rents) and increase the supply of labor (lowering wages); in equilibrium, the wage and rent "compensation" for the niceness of an area reveals, in dollar …
Union Myopia And The Taxation Of Capital, Dwight Lee, Robert L. Sexton, Philip E. Graves
Union Myopia And The Taxation Of Capital, Dwight Lee, Robert L. Sexton, Philip E. Graves
PHILIP E GRAVES
After an extensive discussion of the nature of the interactions among unions, corporations, and government, we find that government in granting privileges to workers organized into unions implicitly taxes capital formation. The result has been to lessen the attention business decisions pay to the future, to substitute excessive wages for appropriate capital investment, and to reduce the competitive vitality of major U.S. industries.
Speed Variance, Enforcement, And The Optimal Speed Limit, Philip E. Graves, Dwight Lee, Robert L. Sexton
Speed Variance, Enforcement, And The Optimal Speed Limit, Philip E. Graves, Dwight Lee, Robert L. Sexton
PHILIP E GRAVES
A model of the optimal speed limit is developed which explicitly recognizes the roles of average speed, speed variance, and the level of enforcement. An unusual result emerges, namely that a higher speed limit may be optimal when reducing the variance in highway speeds reduces accident externalities.