Wednesday, December 15, 2010
Economics: making tough choices
I'm finally done with giving grades and it's time for me to turn my attention to preparing for next semester, when I'll be teaching Resource Economics. That class starts off by looking at tough choices, and there's a great example of that in today's NYT. Water in California is scarce and most likely getting scarcer. So how can they balance the needs of their population for water for household use, with the needs of an endangered species of fish, with the demands of one of the country's most productive agricultural regions? The job of an economist is to sort these things out based on the estimated benefits of all of these uses: where will the marginal impact of lost water be felt the least? Of course, in this case and many others economists really aren't called upon: the stakes are high enough that no one wants a (relatively!) objective analysis. That's when politics takes over, for better or for worse.