As an academic, I guess it's easy for me to side with the academics, but it really makes sense. A ton of studies on soda, for example (as cited in the first paper above) find that taxes accomplish little as far as discouraging consumption. Too many other factors (habits, convenience, lack of alternatives) affect the take-home price for a small increase to be effective. Further, soda companies are powerful: the city of Baltimore considered a tax last year, but a heavy blitz of anti-"grocery tax" ads hit the airwaves and the proposal died quickly. Economists certainly believe in getting things done by modifying incentives, which a tax would certainly do, but we also believe in doing reality checks to see what we could actually expect. Unfortunately these consumption habits are a tough nut to crack.
Thursday, July 28, 2011
This ground is pretty well-trodden, but a few new projects are calling attention to it once again. Gordon Rausser and Linda Thurstrom have written a working paper summarizing the published links between food taxes and health. They conclude that for a tax to have a significant effect, the tax would have to be large, since food consumption is inelastic. However, there may be distributional effects, so they call for studies looking at the effects of taxes on different subgroups, such as those in ill health, the poor, and different age groups. On the other hand, in Sunday's New York Times, Mark Bittman came to the opposite conclusion: he wants a little less conversation and a little more action. He calls for an increase in taxes to promote health. Michael Roberts has a nice reflection on the subject (can't find a permalink so you'll have to scroll down).
Wednesday, July 27, 2011
Driving from DC to Baltimore today I was listening to CSPAN radio, and one Republican caller was irate about government waste. "Do you want to know where your government dollars are going? Just go to GRANTS.GOV and type in the word bat: b-a-t. They are spending hundreds of thousands of dollars on bats in Colorado! This is ridiculous!" Well, Science Magazine says that bats protect the country's agriculture to the tune of about $23 billion per year, and they're under siege from the White Nose virus and from increasing use of wind turbines. What is the government thinking, trying to spend a few hundred thousand to save a few billion? Freakin' government crazies. Next thing you know they'll be saving we need to invest in roads and bridges and things to save a few trillion per year more (click here for HuffPo version), though I admit that a report by the society of Civil Engineers is probably not the least biased source of information on the topic....
Just got back from the Agricultural & Applied Economics Association meetings in Pittsburgh. That probably sounds terrifically dull to most of you, but I had a great time! One opportunity I enjoyed was a chance to talk with several of my colleagues down at the University of Maryland. Prof. Lichtenberg of Maryland's Agricultural and Resource Economics department told me about this report he and two other professors in the department put together almost 10 years ago on chicken farming and the Chesapeake. A quick search also turned up this paper by his co-author Dr. Doug Parker and another paper the two did jointly. I haven't yet read those works (so I don't know how much they overlap) but it sounds like they show that the chicken waste has more value as fertilizer than to any other use, and that if implemented correctly, the waste need not pollute the Bay. However, a report issued yesterday by the Pew Charitable Trust comes to some different conclusions. One complicating factor is that the another possible use, energy generation, is pretty appealing in this state. Marylanders had the highest average monthly bill for energy of any state. Hopefully in my Resources class we can parse the issues and figure out how the positions relate.
Thursday, July 14, 2011
I'm not sure exactly how the new regulations compare to the old, or for that matter to the Union of Concerned Scientists' new recommendations, but it's good to see organizations doing their jobs. Contrast this with Japan, where four months after the disaster all the government can come up with is, "Maybe we shouldn't increase nuclear power so much after all." For all the criticism government takes in this country, it's good to see that sometimes it actually does a pretty good job.
Wednesday, July 13, 2011
Sunday, July 10, 2011
This is what I was waiting for: New York seems to have found a good balance between allowing development of the natural gas industry and protecting the environment. I'm not sure whether this pays due attention to the flaws in industrial accounting that were described a few weeks ago or the set of estimates that has natural gas extraction releasing a lot more methane than had been previously thought (though flaws in that study continue to appear). Still, a nice, hopeful step forward: intelligent regulation.