intergenerational equity and sustainability abstract this paper explores the limitations of conventional economic analysis of intergenerational problems and examines some of the alternatives suggested in the literature it is argued that proper consideration of future generations has at least three requirements first when future costs and benefits are considered it should be taken into account that they are to be enjoyed by different generations second the sustainability requirement should be adopted this represents an equity commitment to the future and implies the recognition that future generations have the right to nondeteriorated ecological and economic capacity the paper studies the ways in which the recognition of these rights might be incorporated into economic evaluation and management third an appropriate institutional network to enforce the recognition of these rights in decision making processes should be constituted its design and necessary functions are also analyzed

cost benefit assessment of energy efficiency investments accounting for future resources savings and risks in the australian residential sector this article focuses on the impact of the discount rate on cost benefit assessment of investment options for residential building efficiency an integrated thermal modeling life cycle costing approach is applied to an extensive sample of dominant house designs for australian conditions the relative significance of predicted thermal performance and the applied discount rate on the present value of energy savings from alternative investment scenarios is investigated costs and benefits are also evaluated at the economy wide scale including carbon pricing considerations and for a test case household faced with alternative investment options at the point of construction the influence of the applied discount rate on produced cost benefit calculations is investigated as is the interaction between critical cost benefit input parameters findings support that the discounting framework is the primary driver of difference in estimates about costs and benefits of higher standards of efficiency in the residential sector results demonstrate that agreement on a low discount rate based on sustainability principals would prioritise those projects with significant environmental benefits

state lottery adoptions as policy innovations an event history analysis two types of explanations of state government innovation have been proposed internal determinants models which posit that the factors causing a state government to innovate are political economic and social characteristics of a state and regional diffusion models which point toward the role of policy adoptions by neighboring states in prompting a state to adopt we show that the two are conceptually compatible relying on mohr s theory of organizational innovation then we develop and test a unified explanation of state lottery adoptions reflecting both internal and regional influences the empirical results provide a great degree of support for mohr s theory for the empirical analysis we rely on event history analysis a form of pooled cross sectional time series analysis which we believe may be useful in a wide variety of subfields of political science event history analysis may be able to explain important forms of political behavior by individuals organizations or governments even if they occur only rarely

rationalizing hyperbolic discounting abstract we show that if agents are uncertain about their discount rates it may be rational for them to discount the distant future hyperbolically rather than exponentially our findings thus may rationalize a common observation in experimental work which indicates that people discount the future at hyperbolic rates we show that under some assumptions uncertainty over hazard rates may lead to non constant discounting but not imply dynamically inconsistent behavior under other assumptions uncertainty over discount rates can lead to dynamically inconsistent behavior like violating planned consumption profiles by bringing consumption forward

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

accounting technologies and sustainability assessment models abstract within ecological economics there is recognition of the need for new approaches to decision making to support sustainable development initiatives there is an increasing acknowledgement of the limitations of cost benefit analysis approaches as a measure of the un sustainability of organizational activities these are viewed as particularly inappropriate within the participatory settings that sustainable development proponents seek to foster they also fail to deal with the highly contested nature of sustainable development discourse in contemporary pluralist democracies while advances have been made in the field of multi criteria decision making there is still a relative dearth of versatile models that accommodate monetization in a way that recognizes the limits of calculative technologies this article introduces readers to developments within the accounting discipline designed to support sustainable development decision making and evaluation in particular it proposes sustainability assessment models as a viable alternative to cost benefit analysis sustainability assessment models are based on an inter disciplinary approach that recognizes the need for accountings that facilitate more participatory forms of decision making and accountability as such they address many of the weaknesses in current approaches to cost benefit analysis the authors first experiences with sustainability assessment models were with bp and the united kingdom oil and gas sector where models were developed as a means of making previously external costs more central to organizational decision making later work has included exploration of a range of decision making situations in private and public sector organizations in both the united kingdom and new zealand this has involved more explicit attention to plural values and issues of participation dialogue and democracy

reconciling sustainability and discounting in cost benefit analysis a methodological proposal abstract the incorporation of the intergenerational equity objective has rendered the traditional cost benefit analysis cba approach obsolete for the evaluation of projects presenting an important number of environmental externalities and for those whose impacts extend throughout a long period of time based on the assumption that applying a discount rate rewards current consumption and therefore that it is only possible to introduce a certain intergenerational equity in a cost benefit analysis in this work we propose an approach to discounting based on a different rationale for tangible and intangible effects we designed two indicators of environmental profitability a the intergenerational transfer amount ita which quantifies in monetary units what the current generation is willing to pass on future generations when an environmental restoration project is carried out and b the critical environmental rate cer measures the implicit environmental profitability these concepts were tested through an empirical case study pertaining to the assessment of an erosion control project in the southeast of spain the results yield traditional profitability indicators that are higher and probably closer to the real values set by the contemporary society the information provided by the environmental profitability indicators proposed renders more transparency to the quantification of the levels of intergenerational equity applied thereby facilitating the difficult reconciliation of the cba technique with the objective of sustainability

the role of economic and policy variables in energy efficient retrofitting assessment a stochastic life cycle costing methodology abstract energy saving is a major policy objective worldwide and in the eu in particular evaluating the convenience of energy efficient investments however is complex this paper aims to apply stochastic life cycle costing to assess the economic value of energy efficient building retrofitting investments the proposed approach investigates how macroeconomic variables affect such an evaluation by explicitly taking into account their interdependent stochastic nature consequently the economic evaluation of an investment is itself stochastic thus expressing both its expected value and its inherent uncertainty and risk on this basis an illustrative case study is presented where alternative designs of the energy saving intervention are compared and a sensitivity analysis performed to identify the determinants of the lcc outcome and of its variability in terms of policy implications a tool providing a sounder evaluation of the convenience of such investments can suggest when and to what extent incentives may be appropriate to facilitate these investments and what possible financial instruments could be put forward in order to reduce the associated risk

the evolution of hyperbolic discounting implications for truly social valuation of the future abstract we explore the standard expected utility model and alternatives to it we then examine the behavioral and neurological evidence for hyperbolic discounting we discuss evidence related to the neurological and behavioral evolution of discounting in non human animals and in humans we explore new findings about the importance of sociality in human behavior and the implications for truly social time preference finally we discuss the implications of the neurological evidence on discounting for social environmental valuation in particular the implications for very long run decisions such as those involved in climate change mitigation and biodiversity preservation

valuing the future recent advances in social discounting the perplexing issue of discounting prescriptive economics requires that unless there are very good reasons to the contrary economic policy should be based on the principle that individuals preferences should count indeed the entire body of welfare economics centres round the formal identity of the statement x prefers a to b and the statement x has higher welfare in a rather than b this combination of a seemingly innocuous and democratic value judgement preferences should count and a formal definition about the meaning of welfare improvement involves many complications the entire history of policy analysis focuses on those complications whose preferences should count over what time period what constitutes a legitimate attenuation of the basic value judgement one of the problem areas concerns timediscounting the process whereby society places a lower value on a future gain or loss than on the same gain or loss occurring now the rationale for time discounting follows logically from the basic value judgement of welfare economics if people s preferences count and if people prefer now to the future those preferences must be integrated into social policy formulation time discounting is thus universal in economic analysis but it remains as it always has controversial the controversy has a parallel in another form of discounting spatial discounting when translated into economic terms the ethical principle

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

slipping into and out of poverty the dynamics of spells this paper examines the dynamics of poverty previous analyses have examined either fluctuations in the male heads earnings or the frequency of poverty periods over a fixed time frame our approach depends on a definition of spells of poverty using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty the methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads earnings while 60 percent of the spells end when the heads earnings increase thus researchers must focus on household formation decisions and on the behavior of secondary family members there has been a dramatic resurgence recently of discussion of the underclass the discussion is reminiscent of debates about poverty during the 1960s when the notions of a culture of poverty particularly as popularized by michael harrington s other america 1962 dominated both intellectual and policy thinking the idea of an underclass seems inconsistent however with much of the research on the dynamics of poverty during the 1970s that research using new longitudinal data seemed to show that the bulk of the poor were poor for only a few years the research also showed that the poor were a very heterogeneous group including a small minority of persistently poor the persistence of poverty is of interest both for understanding the phenomenon and for developing policy claims about dependency and separate life styles among the poor rest on assumptions about the long term nature of poverty questions

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

unemployment and crime is there a connection a panel of swedish counties over the years 1988 1999 is used to study the effects of unemployment on property crime rates the period under study is characterized by turbulence in the labor market the variation in unemployment rates was unprecedented in the latter part of the century hence the data provide a unique opportunity to examine unemployment effects according to the theory of economics of crime increased unemployment rates lead to higher property crime rates a fixed effects model is estimated to investigate this hypothesis the model includes time and county specific effects and a number of economic and socio demographic variables to control for unobservables and covariates the results show that unemployment had a positive and significant effect on some property crimes burglary car theft and bike theft

discounting and distributional considerations in the context of global warming the economics of global warming is reviewed with special emphasis on how the cost depends on the discount rate and on how costs in poor and rich regions are aggregated into a global cost estimate both of these factors depend on the assumptions made concerning the underlying utility and welfare functions it is common to aggregate welfare gains and losses across generations and countries as if the utility of money were constant but it is not if we assume that a e co2 equivalent dlubling implies costs equal to 1 5 of the income in both high and low income countries a pure rate of time preference equal to zero and a utility function which is logarithmic in income then the marginal cost of co2 emissions is estimated at 260 590 usd ton c for a time horizon in the range 300 1000 years an estimate which is large enough to justify significant reductions of co2 emissions on purely economic grounds the estimate is approximately 50 100 times larger than the estimate made by nordhaus in his dice model and the difference is almost completely due to the choice of discount rate and the weight given to the costs in the developing world as well as a more accurate model of the carbon cycle finally the sensitivity of the marginal cost estimate with respect to several parameters is analyzed

zero discounting can compensate future generations for climate damage abstract in cost benefit analysis of climate policy there are two main approaches to discounting each with implications conflicting with our moral intuitions thus discounted utilitarianism implies that we hardly need to protect future generations against climate change while classical utilitarianism implies that we should reduce our consumption across the board to benefit future generations the insolubility of the debate derives from the fact that both classical and discounted utilitarianism permit only a single discount rate for all consequences occurring in the same future year while our intuitions clearly do distinguish between consequences depending on whether we cause adverse effects on other people s interests and violate their rights most people share the moral intuition that we ought to refrain from harming others and ought to compensate them if we were unable to prevent harm to regain a reflective equilibrium between such deontological intuitions and economic theory there is a need to accept different discount rates for different situations a zero consumption discount rate in the case of cost benefit analysis of measures to prevent wrongful harm to future generations and standard discounting in all other cases applying a zero consumption discount rate means that future generations are automatically largely compensated for climate damage that remains unmitigated

inequality and crime this paper considers the relationship between inequality and crime using data from urban counties the behavior of property and violent crime are quite different inequality has no effect on property crime but a strong and robust impact on violent crime with an elasticity above 0 5 by contrast poverty and police activity have significant effects on property crime but little on violent crime property crime is well explained by the economic theory of crime while violent crime is better explained by strain and social disorganization theories

toward a comprehensive model of welfare exits the case of afdc pressures to reform the welfare system in the united states give rise to a need for improved information about individual welfare recipients using data from the survey of income and program participation and event history analysis this paper profiles the probabilistic tendencies of conditions associated with welfare exits the joint influences of policy economic conditions and individual circumstances and characteristics are considered in an attempt to build a comprehensive model of program turnover

social discounting under uncertainty a cross country comparison recent research suggests that social cost benefit analysis should be conducted with a declining discount rate for instance newell and pizer discounting the distant future how much do uncertain rates increase valuations j environ econ manage 46 2003 52 71 show that the us certainty equivalent discount rate declines through time using a simple autoregressive model of us interest rates this paper extends that line of research estimating both autoregressive and regime switching models of real interest rates to determine certainty equivalent discount rates in australia canada germany and the uk it is found that the regime switching model is a better model of past interest rate behavior for all four countries this model tends to produce a more rapid decline in certainty equivalent discount rates the paper provides applications to the economics of climate change and nuclear power

discounting of long term costs what would future generations prefer us to do decisions with intergenerational consequences may leave future generations worse off i e not be pareto optimal if costs and benefits are not discounted correctly we point out that this happens if the conventional social discount rate is applied to intergenerational costs with that rate the justification of intergenerational costs benefits of a project are invested and the proceeds can cover future costs leads to an inconsistency over the long term eventually the supposed benefits of any project become larger than the entire gnp the conventional approach commits an error by treating the time preference component of the discount rate as if it represented creation of wealth while it really involves only redistribution the time horizon of the redistribution is limited by the duration of market transactions especially loans thus we recommend a two step discounting procedure with the conventional social discount rate for the short term about 30 years and the growth rate of the economy for the long term data for gnp per capita growth in the us the uk france germany japan and the soviet union since the industrial revolution combined with data for net economic welfare per capita suggest an intergenerational discount rate in the range of 1 to 2 for practical application the rate at which costs and benefits will grow over time is just as important as the discount rate only the difference between these two rates matters for many environmental costs these rates may be close to each other during the next few generations this implies that some of the uncertainty in the prediction of rates cancels and one can treat the problem as if the effective rate were close to zero the consequence for costs such as global warming or nuclear power can be very significant the valuation can increase by more than an order of magnitude compared to values based on conventional discounting

empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting the derivation of the correct discount rate for intergenerational projects in cost benefit analysis is particularly contentious public choice has resulted in lower discretionary exponential discount rates for many intergenerational projects in britain and the usa this is shown to be strong indirect evidence that the true social discount rate may be a hyperbolic rather than an exponential function there is also empirical evidence for this hypothesis the hyperbolic nature of discounting is also a standard finding in the behavioural sciences for intergenerational time frames hyperbolic discount rates should be employed together with exponential discount rates in cost benefit sensitivity analyses

how much crime reduction does the marginal prisoner buy abstractwe estimate the effect of changes in incarceration rates on changes in crime rates using state level panel data we develop an instrument for future changes in incarceration rates based on the theoretically predicted dynamic adjustment path of the aggregate incarceration rate in response to a shock to prison entrance or exit transition probabilities given that incarceration rates adjust to permanent changes in behavior with a dynamic lag one can identify variation in incarceration rates that is not contaminated by contemporary changes in criminal behavior for the period 1978 2004 we find crime prison elasticities that are considerably larger than those implied by ordinary least squares estimates we also present results for two subperiods 1978 90 and 1991 2004 our instrumental variables estimates for the earlier period suggest relatively large crime prison effects for the later time period however the effects of changes in incarceration rates on crime rates are much smaller

why the far distant future should be discounted at its lowest possible rate abstract a critical feature of the distant future is currently unresolvable uncertainty about what will then be the appropriate rate of return on capital to use for discounting this paper shows that there is a well defined sense in which the lowest possible interest rate should be used for discounting the far distant future part of any investment project some implications are discussed for evaluating long term environmental projects or activities like measures to mitigate the possible effects of global climate change

the political economy of state medicaid policy we develop and test a market based model to explain variations in states welfare medicine policy decisions the empirical results support the model of state policy outputs indicating that states spending efforts for welfare medicine are most sensitive to the supply of services within their borders we learn in addition that spending effort declines with demand for services indicating that the states spending the highest proportions of total personal income for the program are those who need it most and can afford it least measures of political system development affect spending effort positively and significantly suggesting that ideology diversity of interests and administrative professionalism increase states welfare efforts

inequality and growth in the united states evidence from a new state level panel of income inequality measures i introduction rising income inequality in the united states over the past quarter century is well documented see e g gottschalk 1997 krueger 2003 levy and murnane 1992 piketty and saez 2003 whether and by how much this change in inequality is associated with a change in economic performance is an important question yet recent empirical work has been largely inconclusive positive relationships between income inequality and economic growth have been found by partridge 1997 2005 using a panel of states and by forbes 2000 using a panel of countries empirical work by panizza 2002 and quah 2001 however has found little or no stable relationship between inequality and growth the results appear to be extremely sensitive to the econometric specification additionally barro 2000 has found evidence that the relationship is nonlinear with inequality being positively related to growth among wealthier countries like the united states but negatively related to growth among low income countries much of this recent empirical literature was initiated by the important work of deininger and squire 1996 who constructed a large cross national panel of inequality measures containing several time series observations for each nation spaced over multiple decades a parallel empirical literature also emerged using u s state level data with income inequality measures typically spaced at 10 yr intervals see e g panizza 2002 partridge 1997 2005 both the state level and the cross national empirical literatures benefited by exploiting the more advanced panel data econometrics afforded by the large n small t panel dimensions in this paper we offer a new more comprehensive panel of state level income inequality measures and use this panel to reevaluate the empirical inequality growth relationship 1 this panel has the unique feature of being large in both n and t with annual observations of the 48 contiguous states for the entirety of the postwar period 1945 2004 for nearly all the states in the panel the share of income held by the top decile experienced a prolonged period of stability after world war ii followed by a substantial increase during the 1980s and 1990s these state level trends appear to closely replicate the overall trends in aggregate u s inequality found by piketty and saez 2003 exploiting the large and balanced size of our inequality panel we explore the long run relationship between inequality and growth via three alternative dynamic panel error correction estimators the fixed effects fe estimator the mean group mg estimator of pesaran and smith 1995 and the pooled mg estimator of pesaran shin and smith 1999 the greater homogeneity of state level data helps mitigate the difficulty in adequately capturing structural differences across international panels of earlier studies such as forbes 2000 and barro 2000 corruption levels labor market flexibility tax neutrality tradition of entrepreneurship and many other factors are only poorly measured if at all barro 2000 1011 and these sources of heterogeneity are much more likely to contribute to omitted variable bias across countries than across states the results from our analysis indicate that the long run relationship between the top decile share of income and economic growth is positive in nature moreover an evaluation of several alternative income inequality measures suggests that this positive relationship is driven primarily by the concentration of income in the upper end of the income distribution the structure of the paper is as follows section ii presents the new panel of annual state level inequality measures and includes an important discussion of its key limitations section iii then offers an empirical investigation on the impact of income inequality on the growth rate of real income per capita finally section iv offers a brief set of conclusions

the non economics of the nuclear fuel cycle an historical and discourse analysis abstract the development of commercial nuclear power seems irrational while the nature of the nuclear fuel cycle has been well known since the early days of nuclear power the problem of disposing of nuclear waste has only recently become a central area of concern and research also commercial nuclear power has probably never been truly economically competitive as it has received large subsidies it is argued that the rise of nuclear power can be understood through the use of discourse analysis where the discourse of the modernising and interventionist state is well matched to the discourse of nuclear power as offering control and modernity

on discounting and voting in a simple growth model abstract in dynamic resource allocation models the non existence of voting equilibria is a generic phenomenon due to the multi dimensionality of the choice space even if agents are heterogeneous only in their discount factors nevertheless at each point in time there may exist a median voter whose preferred instantaneous consumption rate is supported by a majority of agents based on this observation we propose an institutional setup intertemporal majority voting in a ramsey type growth model with common consumption and heterogeneous agents and show that it provides a microfoundation of the choice of the optimal consumption stream of the median agent while the corresponding intertemporal consumption stream is in general not a condorcet winner among all feasible paths its induced instantaneous consumption rates receive a majority at each point in time in the proposed intertemporal majority voting procedure we also provide a characterization of stationary voting equilibria in the case where agents may differ not only in their time preferences but also in their felicity functions

identifying the effect of unemployment on crime abstract in this paper we analyze the relationship between unemployment and crime using u s state data we estimate the effect of unemployment on the rates of seven felony offenses we control extensively for state level demographic and economic factors and estimate specifications that include state specific time trends state effects and year effects in addition we use prime defense contracts and a state specific measure of exposure to oil shocks as instruments for unemployment rates we find significantly positive effects of unemployment on property crime rates that are stable across model specifications our estimates suggest that a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate the evidence for violent crime is considerably weaker however a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates

the effect of prison population size on crime rates evidence from prison overcrowding litigation simultaneity between prisoner populations and crime rates makes it difficult to isolate the causal effect of changes in prison populations on crime to break that simultaneity this paper uses prison overcrowding litigation in a state as an instrument for changes in the prison population the resulting elasticities are two to three times greater than those of previous studies a one prisoner reduction is associated with an increase of fifteen index i crimes per year while calculations of the costs of crime are inherently uncertain it appears that the social benefits associated with crime reduction equal or exceed the social costs of incarceration for the marginal prisoner

more inequality more crime a panel cointegration analysis for the united states abstract this study employs state level panel data to examine the effect of income inequality on crime in the united states using panel cointegration techniques we find a significant negative effect of inequality on crime

income inequality and crime in the united states abstract this paper investigates the relationship between income inequality and crime results show that there is a strong and robust effect of relative income inequality on burglary effect on robbery is also strong and robust in most cases

assessing the economic viability of alternative water resources in water scarce regions combining economic valuation cost benefit analysis and discounting abstract this paper demonstrates a comprehensive methodology for assessing the viability of an environmental management plan that has long run economic and ecological impacts the case study under consideration is the implementation of a water resource management plan in a water scarce region of the world namely cyprus specifically this plan proposes to replenish a depleting aquifer with treated wastewater the proposed methodology first identifies the key stakeholder groups farmers and the general public who are hypothesized to derive economic values benefits from implementation of this plan and then uses stated preference methods to capture the total economic value of these benefits benefits are aggregated over the relevant populations of these stakeholder groups and weighed against the total costs of implementing the plan in a long run cost benefit analysis cba an econometrically estimated time declining trajectory of discount rates is used for the cba in order to assess the long run sustainability of the plan the results reveal that the net benefit trajectory estimated with the time declining discount rate takes one and a half to three times as long to come to a plateau compared to the constant discount rates of 3 5 and 6 emphasizing the importance of using declining discount rates and capturing the entirety of the benefits generated by such plans this methodology is particularly recommended for providing much needed information to support the implementation of the eu water framework directive which advocates the use of cba with consideration of the notion of sustainability for achieving the good water status for all european waters

do inequality unemployment and deterrence affect crime over the long run abstractdo inequality unemployment and deterrence affect crime over the long run regional studies this paper investigates the long run relationship between crime inequality unemployment and deterrence using us state level data from 1978 to 2013 the novelty is to use non stationary panels with a factor structure the results show that 1 a crime theoretical model fits the long run relationship well 2 income inequality and unemployment have a positive impact on crime whereas that of deterrence is negative 3 the effect of income inequality on crime is larger when inequality is measured on a wider population proportion and 4 property crime is generally highly sensitive to the deterrence effect of police

environmental liability law and induced technical change the role of discounting we analyse the incentives of environmental liability law for inducing progress to emission abatement technology we consider three liability rules strict liability a negligence rule with an emission norm as the due care standard and a double negligence rule which combines the emission standard with an abatement technology norm in the case of distortive discounting i e where the private discount rate deviates from the social one we show how the level of distortion influences the ranking of liability rules according to the criterion of generated social cost

valuing the future one of the most controversial areas of economics is the practice of discounting attaching a lower weight to future costs and benefits than present costs and benefits discounting appears to offend notions of sustainable development and the interests of future generations recent advances in the theory of discounting hold out strong hope that the tyranny of discounting can be avoided through the use of time varying discount rates tvdrs this paper reviews the recent rationales for tvdrs and applies the results to issues such as nuclear power and global warming control

between ostrom and nordhaus the research landscape of sustainability economics abstract we survey the emerging research area of sustainability economics through a quantitative full text analysis of peer reviewed journal publications from 1987 to 2013 to identify relevant contributions we draw on existing definitions of sustainability economics for a keyword based identification strategy a combined focus on a the human nature relationship b the long term uncertain future c normative orientation towards sustainability and d economic analysis our analysis of a random subsample of 343 relevant papers reveals that i sustainability economics is a rapidly developing research area ii while theoretical contributions shaped the area in earlier years applied work now constitutes the largest share of contributions iii the research landscape can be clustered into eleven research clusters these range from participatory governance of social ecological systems associated with the work of elinor ostrom to questions of intertemporal allocation and distribution applied to climate economics associated with the work of william nordhaus iv the research area is broad in scope and heterogeneous and there is relatively little interaction between important clusters v relevant contributions are published in more than 100 journals ten journals publish half of all contributions led by ecological economics and 40 appear in non economics journals underscoring the importance of interdisciplinary dialogue

a structural model of crime and inequality in colombia economic theory suggests that inequality should influence crime positively yet the evidence in favor of that hypothesis is weak pure cross sectional analyses show significant positive effects but cannot control for fixed effects time series and panel data point to a variety of results but few turn out being significant the hypothesis maintained in this paper is that it is a specific part of the distribution rather than the overall distribution as summarized by conventional inequality measures that is most likely to influence the rate of property crime in a given society using a simple theoretical model and panel data in seven colombian cities over a fifteen year period a structural model is proposed that permits identifying the precise segment of the population whose relative income best explains time changes in crime jel k42 d63 o15

current issues in the economics of groundwater resource management the issue of groundwater management remains a practical concern in many regions throughout the world while water managers continue to grapple with the question of how to manage this resource in this article we attempt to bring the most advanced and appropriate tools to bear on the issue of resource allocation involving groundwater our objective is to demonstrate the state of the art in the literature on ways to think about this complex resource and to deal with the important economic issues emanating from its complexity we present the conceptual framework within which economists examine the elements interacting in the management of groundwater resources indicate why the role of the market is limited with respect to the price of this very complex resource and point to the mechanisms that can pull competitive groundwater price and quality graded quantity of groundwater in line with their equilibrium levels in particular we critically review economic models of groundwater use examine the potential for groundwater management discuss the difficulties encountered in the estimation of the relevant control variables of such models and identify the advantages and limitations of the instruments devised for the efficient use allocation of this resource finally we argue that devised regulatory schemes usually ignore the information and knowledge needed for their implementation and we suggest a core of conditions necessary for successful groundwater management reforms

renewable resources and economic sustainability a dynamic analysis with heterogeneous time preferences abstract in recent years there has been increasing interest in the study of economic sustainability and its relationship with natural resources this paper attempts to shed some light on the issue by taking into account the individual variations in time preferences for consumption and resource amenity we characterize the long run steady state analyze its asymptotic stability and explore the transational dynamics from any initial state the welfare implications of the optimal path are also discussed

crime inequality and unemployment in england and wales a model of crime is developed based on principles from the existing literature with some original insight the implications of the model are that income inequality and unemployment are important explanatory variables for crimes motivated by economic gain but do not offer much explanatory power for other types of crime panel data of uk regions over the years from 2002 to 2007 are then used to test these predictions the empirical results strongly support the hypothesis that crime is an economic phenomenon

the economics of enhanced landfill mining private and societal performance drivers this paper addresses the economics of enhanced landfill mining elfm both from a private point of view as well as from a society perspective the private potential is assessed using a case study for which an investment model is developed to identify the impact of a broad range of parameters on the profitability of elfm we found that especially variations in waste to energy wte efficiency electricity price co2 price wte investment and operational costs and elfm support explain the variation in economic profitability measured by the internal rate of return to overcome site specific parameters we also evaluated the regional elfm potential for the densely populated and industrial region of flanders north of belgium the total number of potential elfm sites was estimated using a 5 step procedure and a simulation tool was developed to trade off private costs and benefits the analysis shows that there is a substantial economic potential for elfm projects on the wider regional level furthermore this paper also reviews the costs and benefits from a broader perspective the carbon footprint of the case study was mapped in order to assess the project s net impact in terms of greenhouse gas emissions also the impacts of nature restoration soil remediation resource scarcity and reduced import dependence were valued so that they can be used in future social cost benefit analysis given the complex trade off between economic social and environmental issues of elfm projects we conclude that further refinement of the methodological framework and the development of the integrated decision tools supporting private and public actors are necessary

beyond homo economicus evidence from experimental economics environmental policies are generally based on a model of the human actor taken from neoclassical economic theory this paper reports on laboratory experiments suggesting weaknesses in this model and describes alternative models correcting these weaknesses one finding is that economic actors tend to be hyperbolic as opposed to exponential discounters who discount the immediate future at a higher rate than the more distant future another finding is that economic actors are not self regarding but rather in many circumstances are strong reciprocators who come to strategic interactions with a propensity to cooperate respond to cooperative behavior by maintaining or increasing cooperation and respond to free riders by retaliating against the offenders even at a personal cost and even when there is no reasonable expectation that future personal gains will flow from such retaliation we discuss some implications for policy analysis 2000 elsevier science b v all rights reserved

discount rate and the social cost of carbon dioxide a korean forecast this paper is to forecast the korean long term social discount rate of carbon dioxide sdrc and the social cost of carbon dioxide scc it is estimated using the ramsey function savings behavior

entry and exit transitions in a government transfer program the case of aid to families with dependent children this study analyzes determinants of entry and exit transitions in the aid to families with dependent children program using data from the panel study of income dynamics the principal findings are that state controlled policy parameters such as the afdc guarantee the payment received when earnings are zero and the entry income limit the income level at which families become eligible for afdc payments have a significant but asymmetric impact on these transitions in addition evidence on the relationship between wages and such transitions tends to support efforts at reducing welfare dependency through programs which raise wages

the effects of grants in aid on state and local expenditures abstract this paper develops econometric methods to estimate the effect of the piecewise linear budget constraints created by grant formulas in which the subsidy rate is not constant over expenditures e g closed end grants the methods are applied to the afdc program the results show that because of the kinked nature of the grant formula 1 the present federal formula actually increases cross state inequality in afdc benefits 2 several subsidy rates in the formula actually reduce benefits and 3 the so called flypaper effect disappears

the effects of labor markets and income inequality on crime evidence from panel data we estimate a model of crime using panel data for the u s we focus on the role of labor markets income distribution and demographics on property crime we find strong evidence that favorable labor market conditions have a significant negative effect on property crime we further test this result using sector specific wages and find that crime is most elastic with respect to wages in sectors that use low skilled labor we also find that income inequality has no significant effect on crime and that the proportion of young males in the population has a significant positive effect on crime

does better discounting lead to worse outcomes in long run decisions the dilemma of hyperbolic discounting the shortcomings of conventional discounting especially in the context of long run environmental problems have been extensively discussed in the literature recently hyperbolic discounting i e discounting at declining instead of constant discount rates has attracted a lot of interest among both scientists and politicians although there are compelling arguments for employing hyperbolic discounting there are also pitfalls which have to be pointed out in this paper i show that the problem of time inconsistency an inherent characteristics of hyperbolic discounting leads to a potential clash between economic efficiency and intergenerational equity as an example i refer to the weak progress in the controlling of greenhouse gas emissions under the kyoto protocol as the problem of time inconsistency cannot be solved on economic grounds alone there is a need for an intergenerational moral commitment

a component based approach to discounting for natural resource damage assessment abstract the paper proposes a component based approach to guide the choice of the social discount rate in natural resources damage assessment where time and discounting are key features it is a multi rate discounting scheme which draws on concepts from dual rate and time declining approaches each damage component is discounted at a component specific constant rate related to its time trajectory assuming a normatively defined declining schedule of rates as a starting reference components with longer time profiles generally represented by welfare losses are discounted at lower rates than short term damage components mainly remedial costs the rationale behind this choice is that the longer the duration of the damage component the higher the related nonincident specific uncertainty on the resource values and the more relevant the equity issues when estimating the total damage the resulting implicit average discount rate depends on the duration of each component and its relative relevance in the total damage in each moment from an operational point of view anchoring the rates to government prescriptions would support the robustness of the damage estimates in a court of law whereas the dual based environmental discount rate is based on ad hoc assumptions that are more difficult to justify

discounting the distant future how much does model selection affect the certainty equivalent rate evaluating investment with long term consequences using discount rates that decline with the time horizon declining discount rates of ddrs means that future welfare changes are of greater consequence in present value terms recent work in this area has turned towards operationalising the theory and establishing a schedule of ddrs for use in cost benefit analysis using us data we make the following points concerning this transition i model selectionhas important implications for operationalising a theory of ddrs that depends upon uncertainty ii misspecification testing naturally leads to employing models that account for changes in the interest reat generating medanism lastly we provide an analysis of the policy implications of ddrs in the context of climate change for the us and show that the use of a state space model can increase valuations by 150 compared to conventional constant discounting

crime and local inequality in south africa the authors examine the effects of local inequality on property and violent crime in south africa their findings are consistent with economic theories relating inequality to property crime and also with sociological theories that imply that inequality leads to crime in general burglary rates are 20 30 percent higher in police station jurisdictions that are the wealthiest among their neighbors suggesting that criminals travel to neighborhoods where the expected returns from burglary are highest the authors do not find evidence that inequality between racial groups fosters interpersonal conflict at the local level

why do increased arrest rates appear to reduce crime deterrence incapacitation or measurement error this paper attempts to discriminate between deterrence incapacitation and measurement error as explanations for the negative empirical relationship between arrest rates and crime measurement error cannot explain the observed patterns in the data incapacitation suggests that an increase in the arrest rate for one crime will reduces all crime rates deterrence predicts that an increase in the arrest rate for one crime will lead to a rise in other crimes as criminals substitute away from the first crime empirically deterrence appears to be the more important factor particularly for property crimes jel k42

the impact of legalized abortion on crime we offer evidence that legalized abortion has contributed significantly to recent crime reductions crime began to fall roughly eighteen years after abortion legalization the five states that allowed abortion in 1970 experienced declines earlier than the rest of the nation which legalized in 1973 with roe v wade states with high abortion rates in the 1970s and 1980s experienced greater crime reductions in the 1990s in high abortion states only arrests of those born after abortion legalization fall relative to low abortion states legalized abortion appears to account for as much as 50 percent of the recent drop in crime