offset carbon emissions or pay a price premium for avoiding them a cross country analysis of motives for climate protection activities abstractthis article contributes to the economic literature on pure and impure public goods by considering two alternatives for contributing to the public good climate protection offsetting carbon emissions from conventional consumption or paying higher prices for climate friendly products we empirically examine a wide range of motives and their impact on individuals choice in favour of these two alternatives relying on data from representative international surveys our results indicate that environmental awareness warm glow motives and the desire to set a good example have the most robust effects on both climate protection activities in germany and the united states however some motives differ considerably between both alternatives and the two countries a green identity enhances the willingness to pay a price premium for climate friendly goods or services in germany while social norms seem to be of much higher relevance in the united states our results further suggest that the choice of climate

an economic theory of self control the concept of self control is incorporated in a theory of individual intertemporal choice by modeling the individual as an organization the individual at a point in time is assumed to be both a farsighted planner and a myopic doer the resulting conflict is seen to be fundamentally similar to the agency conflict between the owners and managers of a firm both individuals and firms use the same techniques to mitigate the problems which the conflicts create this paper stresses the implications of this agency model and discusses as applications the effect of pensions on saving saving and the timing of income flows and individual discount rates

measuring values for environmental resources under uncertainty abstract the relationship between conventional hicksian measures of the benefits from changes in environmental amenities under certainty and corresponding measures of valuation when the conditions of access to an uncertain environmental resource are changed is considered the analysis utilizes a contingent commodity framework with the assumption of state dependent preferences the findings suggest that the valuation of these changes will depend upon the availability of fair markets for diversifying risk moreover conventional measures of compensating or equivalent surplus will not necessarily bound the individual s valuation of a change in access to an uncertain environmental resource

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

measuring the impacts of teachers ii teacher value added and student outcomes in adulthood abstract are teachers impacts on students test scores value added a good measure of their quality this question has sparked debate partly because of a lack of evidence on whether high value ad

how teachers unions affect education production this study helps to explain why measured school inputs appear to have little effect on student outcomes particularly for cohorts educated since 1960 teachers unionization can explain how public schools simultaneously can have more generous inputs and worse student performance using panel data on united states school districts i identify the effect of teachers unionization through differences in the timing of collective bargaining especially timing determined by the passage of state laws that facilitate teachers unionization i find that teachers unions increase school inputs but reduce productivity sufficiently to have a negative overall effect on student performance union effects are magnified where schools have market power

valuing environmental commodities some recent experiments a general model of consumer behavior is proposed to assess six recent experiments that have attempted to reveal preferences for environmental goals each experiment used a mix of both the techniques and the theory of demand for non market commodities and each was designed to estimate a non market attitude associated with the environment and to analyze potential biases in the techniques the six cases show some consistency in results the linkage within the contingent market between the environmental attribute institutional setting and the bidding instrument must be realistic and accepted by the respondent to avoid biased results possibly the most important result is the replication of results using a traditional property value study and a contingent bidding approach all evidence obtained to date suggests that hedonic studies of property values or wages travel costs and survey techniques all yield values well one order of magnitude in accuracy 41 references 2 tables

embracing morals in economics the role of internal moral constraints in a market economy abstract economists who adhere to the assumptions of homo economicus typically focus on altering external constraints through laws or regulations as the means of eliminating bad behavior reaching the optimal solution is simply a matter of having government adjust the price of unwanted behavior through punishments or fines but adam smith highlighted the importance of another type of constraint the internal moral constraint in recent years behavioral experimental and other economists have documented that people often do not act according the assumptions of the homo economicus model and instead appear to incorporate moral constraints into their decision making process in light of this growing body of research this article argues that many economists have placed too much emphasis on external constraints and that more emphasis should be placed on internal moral constraints after discussing possible sources of internal moral constraints the paper describes how these constraints can help strengthen cooperation in the short and long run

are workers paid their marginal products status is like coase s social costs a reciprocal phenomenon given that one person s gain in status can occur only at the expense of a loss in status for others and that workers are free to choose their coworkers it follows that the competitive wage structure within a firm must be one in which individual wage differences understate individual differences in marginal products the purpose of this paper is to examine a variety of empirical evidence that relates to this proposition about the firm s internal wage structure the paper is organized as follows section i briefly summarizes the theoretical considerations that govern competitive wage determination when status matters to people and firms are viewed as voluntary associations of workers section ii then confronts the predictions of section i by examining pay and productivity schedules for a group of sales occupations for which these schedules are relatively easily observed section ii also examines the relationship between wages and productivity for a sample of university professors an occupation in which individual productivity differences are for a variety of obvious reasons relatively more difficult to measure all of the evidence examined is consistent with the hypothesis that within firms wage rates vary substantially less than do individual productivity values section iii discusses additional observations and evidence that bear on this same hypothesis it suggests that the implicit market for status may strongly influence the ways in which firms are organized to carry out the tasks they perform section iv concludes by considering the claim that egalitarian internal wage structures arise because of equity considerations it argues that the concept of equity appears very closely linked to the concept of status and suggests a strategy for assigning monetaty value to the equity considerations that so often dominate public policy decisions

the effects of school spending on educational and economic outcomes evidence from school finance reforms since the coleman report many have questioned whether public school spending affects student outcomes the school finance reforms that began in the early 1970s and accelerated in the 1980s caused dramatic changes to the structure of k 12 education spending in the united states to study the effect of these school finance reform induced changes in public school spending on long run adult outcomes we link school spending and school finance reform data to detailed nationally representative data on children born between 1955 and 1985 and followed through 2011 we use the timing of the passage of court mandated reforms and their associated type of funding formula change as exogenous shifters of school spending and we compare the adult outcomes of cohorts that were differentially exposed to school finance reforms depending on place and year of birth event study and instrumental variable models reveal that a 10 increase in per pupil spending each year for all 12 years of public school leads to 0 31 more completed years of education about 7 higher wages and a 3 2 percentage point reduction in the annual incidence of adult poverty effects are much more pronounced for children from low income families exogenous spending increases were associated with notable improvements in measured school inputs including reductions in student to teacher ratios increases in teacher salaries and longer school years jel codes j10 i20 h7

valuing amenity resources under uncertainty does the existence of fair contingent claims markets matter abstract alternative welfare measures are evaluated as measures of the value of change in access conditions for environmental resources and it is shown that traditional hicksian surplus estimates systematically underestimate benefits it is further argued that the existence of fair contingent claims markets is a peripheral consideration in benefit estimation that state dependent payments present no significant collection obstacles not already encountered in state independent payment schemes and that risk neutral social decision making requires state dependent benefit measures for situations involving individual risk these findings imply that future research should focus on developing theoretical bounds between the expected value of state dependent benefit measures and conventional measures and that contingent valuations techniques need to be extended to measure contingent payment possibilities for changes in uncertain access conditions to environmental resources

adam smith and the prisoners dilemma in ordinary life we engage in many transactions with other people in which there is potential profit for both parties from some kind of cheating normally we do not see much of this cheating i have no doubt that the merchant will put in the package the merchandise which i buy or which i ordered even though if he put in something else cheaper it is quite dubious that i would be able to win a lawsuit on my part if i decide i did not like the product and returned it with the remark that it was defective having first damaged it so that it is indeed defective i could get a gain neither i nor the merchant worries particularly about this kind of behavior although the merchant worries more than i do for reasons that will become plain below if we worried about it we would both take precautions with the result that socially we would be worse off by the cost of these precautions we have here what appears to be a prisoners dilemma matrix but the two parties are behaving cooperatively what adam smith called the discipline of continuous dealings takes care of the matter the point of this article is to work out adam smith s insight in the terminology of a modern game theory we shall see that smith was right and there are some cases indeed practically very important cases where what appears to be a prisoners dilemma in fact leads to cooperative behavior consider the prisoners dilemma game shown in figure i it is orthodox that if a and b are playing a single turn of this particular game they will end up in the lower right hand corner with a net loss of one dollar each if we go from a single game to a long series of games played by the same players however there is no agreed upon solution experimental evidence seems to indicate that the players play a mixed strategy with some cooperative plays and some noncooperative plays and the mixture can be modified by changing the payoffs 2 all of these situations are simplifications of the real world and it is a point of this article to suggest that if we make the game more like many real world

public choice and the economic analysis of anarchy a survey public choice economists began studying anarchy in the 1970s since then the amount of research on anarchy has burgeoned this article surveys the important public choice contributions to the economics of anarchy following early public choice economists many economists are researching how individuals interact without government from non public interested explanations of the creation of government to historical studies of internalizing externalities under anarchy public choice scholars are arriving at a more realistic perspective of human interaction with and without government although the economics of politics receives more attention the economics of anarchy is an important area of research in public choice

interdependent preferences and the competitive wage structure this article shows by example that when workers care about relative income and are free to choose their coworkers the equilibrium distribution of wages within firms must be less dispersed than the corresponding distribution of marginal products an implicit market for within firm status is shown to produce welfare gains by sorting workers among firms in accordance with how much they are willing to pay for high rank the resulting equilibrium pareto dominates allocations in which each worker is paid his marginal product

the value of school facility investments evidence from a dynamic regression discontinuity design author s cellini stephanie riegg ferreira fernando rothstein jesse abstract despite extensive public infrastructure spending surprisingly little is known about its economic return in this paper we estimate the value of school facility investments using housing markets standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing prices our research design isolates exogenous variation in investments by comparing school districts where referenda on bond issues targeted to fund capital expenditures passed and failed by narrow margins we extend this traditional regression discontinuity approach to identify the dynamic treatment effects of bond authorization on local housing prices student achievement and district composition our results indicate that california school districts underinvest in school facilities passing a referendum causes immediate sizable increases in home prices implying a willingness to pay on the part of marginal homebuyers of 1 50 or more for each 1 of capital spending these effects do not appear to be driven by changes in the income or racial composition of homeowners and the impact on test scores appears to explain only a small portion of the total housing price effect c 2010 by the president and fellows of harvard college and the massachusetts institute of technology

the failure of input based schooling policies in an effort to improve the quality of schools governments around the world have dramatically increased the resources devoted to them by concentrating on inputs and ignoring the incentives within schools the resources have yielded little in the way of general improvement in student achievement this paper provides a review of the us and international evidence on the effectiveness of such input policies it then contrasts the impact of resources with that of variations in teacher quality that are not systematically related to school resources finally alternative performance incentive policies are described

the american high school graduation rate trends and levels abstract this paper applies a unified methodology to multiple data sets to estimate both the levels and trends in u s high school graduation rates we establish that a the true rate is substantially lower than widely used measures b it peaked in the early 1970s c majority minority differentials are substantial and have not converged for 35 years d lower post 1970 rates are not solely due to increasing immigrant and minority populations e our findings explain part of the slowdown in college attendance and rising college wage premiums and f widening graduation differentials by gender help explain increasing male female college attendance gaps

non prisoner s dilemma abstract all prisoner s dilemma experiments pre select contestants prevents them from communicating and changing partners in the middle of things this brief experiment changes all three of these conditions and gets a very high degree of cooperation

how does your kindergarten classroom affect your earnings evidence from project star in project star 11 571 students in tennessee and their teachers were randomly assigned to classrooms within their schools from kindergarten to third grade this article evaluates the long term impacts of star by linking the experimental data to administrative records we first demonstrate that kindergarten test scores are highly correlated with outcomes such as earnings at age 27 college attendance home ownership and retirement savings we then document four sets of experimental impacts first students in small classes are significantly more likely to attend college and exhibit improvements on other outcomes class size does not have a significant effect on earnings at age 27 but this effect is imprecisely estimated second students who had a more experienced teacher in kindergarten have higher earnings third an analysis of variance reveals significant classroom effects on earnings students who were randomly assigned to higher quality classrooms in grades k 3 as measured by classmates end of class test scores have higher earnings college attendance rates and other outcomes finally the effects of class quality fade out on test scores in later grades but gains in noncognitive measures persist

economic performance through time prize lecture to the memory of alfred nobel december 9 1993 this abstract was borrowed from another version of this item

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

on the evaluation of government programs to reduce environmental risk this paper attempts to identify the correct benefit measure for a government project which might reduce the subjective probability of an environmental risk to health the evaluation of government projects whose costs or benefits are uncertain occupies a considerable literature including arrow and lind fisher and graham the value of reducing the probability of an adverse state outcome has been examined by cook and graham and more recently by gallagher and smith in the latter two papers it was assumed that the individual at risk had access to perfect insurance or contingent claims markets in such a perfect world the value of reducing the probability of an adverse state could be bounded by measures which cook and graham referred to as ransom and compensation and which gallagher and smith show to correspond to the more traditional hicksian notions of compensating and equivalent variation if the assumption of perfect contingent claims markets does not hold it is not possible to set upper and lower bounds on the value of reducing the probability of an adverse state while general forms of health insurance are available to individuals at risk from an environmental hazard specific policies do not allow for the continuous adjustment reallocation of wealth assumed to occur when the individual has access to perfect markets in the next section a more plausible model is constructed it assumes that the individual has a finite set of self protective actions which he or she may take in response to a risk to future health in addition the government may undertake a project to reduce the risk to health it is assumed that both the selfprotective action and the government project have the ability to influence the subjective personal probability of the future states continued good health or ill health there are three major conclusions which emerge from this model a the value of the government project is an option price graham which may be zero or positive if positive the benefits from the project may take the form of cost savings risk probability reduction or both b the value of the government project is dependent on the set of self protective actions and may change as new actions become available or the effectiveness of existing actions is reassessed by the individual c the method of contingent valuation in theory would appear capable of eliciting the proper option price estimates for the project s value to the individual it is even possible to distinguish between the value attributable to cost savings and risk reduction in the next section i present the model and demonstrate the above conclusions in the final section an assessment is made of the in

adaptation and the option value of uncertain environmental resources abstract just as ecology has benefited from the economic theory of optimization economics can benefit from the ecological theory of adaptation we examine the impact of short term non genetic adaptive self protection on the values individuals attach to uncertain prospective environmental resources we demonstrate that collective provision of reductions in supply uncertainty does not necessitate a positive option value given that uncertainty is influenced by the individual s ability to adapt through self protection we conclude that the total value of reducing the supply uncertainty of a natural resource is reflected in both the individual s option price payments for collective provision and in his willingness to pay for adaptation through self protection by ignoring adaptive self protection traditional benefit cost analysis has systematically underestimated the total value of environmental resources that are characterized by uncertain supplies

do federal grants boost school spending evidence from title i abstract one of the federal government s main elementary and secondary education programs is title i which allocates money for compensatory education to school districts based on child poverty i use sharp changes in per pupil grant amounts surrounding the release of decennial census data to identify effects of title i on state and local education revenue and how much the program ultimately increases spending by recipient school districts i find that state and local revenue efforts initially are unaffected by title i changes but that local governments substantially and significantly crowd out changes in title i within in a 3 year period

teacher pay and school productivity exploiting wage regulation abstract the impact of teacher pay on school productivity is a central concern for governments worldwide yet evidence is mixed in this paper we exploit a feature of teacher labour markets to determine the impact of teacher wages teacher wages are commonly set in a manner that results in flat wages across heterogeneous labour markets this creates an exogenous gap between the outside labour market and inside regulated wage for teachers we use the centralised wage regulation of teachers in england to examine the effect of pay on school performance we use data on over 3000 schools containing around 200 000 teachers who educate around half a million children per year we find that teachers respond to pay a ten percent shock to the wage gap between local labour market and teacher wages results in an average loss of around 2 in average school performance in the key exams taken at the end of compulsory schooling in england

if homo economicus could choose his own utility function would he want one with a conscience reply in my model of the evolution of honesty 1 i assumed the existence of a signal a blush perhaps extreme values of which served to identify some individuals as being honest with certainty joseph harrington notes that without this assumption honest individuals have difficulty invading a population initially dominated by defectors for readers who do not wish to work through the algebra in his comment the argument is easily summarized in nontechnical terms suppose two honest mutants a and b arrive in an uncountably large population consisting entirely of dishonest persons and suppose that the probability that an honest person exhibits an intense blush is say 0 999 while the corresponding probability for everyone else is only 0 001 when a sees an intense blush on the face of b what will then be his estimate of the probability that b is honest assuming that a knows the laws of elementary probability and corrects for the base rate of honest persons in the population it will be zero when virtually everyone in the population is dishonest even a person with an intense blush will be pegged as dishonest provided that even the smallest fraction of dishonest persons also shows an intense blush with

investing in schools capital spending facility conditions and student achievement abstract public investments in repairs modernization and construction of schools cost billions however little is known about the nature of school facility investments whether it actually changes the physical condition of public schools and the subsequent causal impacts on student achievement we study the achievement effects of nearly 1400 capital campaigns initiated and financed by local school districts comparing districts where school capital bonds were either narrowly approved or defeated by district voters overall we find little evidence that these school capital campaigns improve student achievement event study analysis focused on the students actually affected by large campus renovations also generates very precise zero estimates of achievement effects thus u s school capital campaigns financed by local districts the predominant method through which facility investments are made may be a limited tool for realizing substantial gains in student achievement or closing achievement gaps

school district operational spending and student outcomes evidence from tax elections in seven states abstract we use close tax elections to estimate the impact of school district funding increases on operational spending and student outcomes across seven states districts with passing levies directed new revenue toward support services and instructor salaries but did not increase teacher staffing levels these districts eventually realized gains in student achievement and attainment our preferred estimates imply that increasing operational spending by 1000 per pupil increased test scores by approximately 0 15 of a standard deviation and graduation rates by approximately 9 percentage points there is some evidence of diminishing returns as these effects are driven by districts below the median in spending per pupil based on research linking academic outcomes to earnings we conclude that these spending increases were likely cost effective

valuing changes in health risks a comparison of alternative measures essential to efficient provision of health safety and the environment is correct valuation of risks to human health in a world of scarcity difficult decisions concerning tradeoffs between health and other desirables are unavoidable in this paper we develop a model of health investment under uncertainty which yields a general expression for values of changes in risks to human health the preference based values of morbidity risks and mortality risks are ex ante dollar equivalents of changes in expected utility associated with risk changes the preference based values are related to two alternative measures costs of illness and preventive expenditures which are thought to be lower bounds on the value of risk reductions we demonstrate that these alternative measures are not even special cases of the more general measure and that the size relationships among the three measures are complex also we derive the relationship between the willingness to pay for risk changes and the consumer surpluses associated with health changes which occur with certainty the next section contains a brief review of the approaches to valuing changes in health