Inflation at Siena

Time to start a price index for Siena faculty and staff.

Last year:
dining hall meals -- $4
basketball season tix -- $114

This year:
dining hall meals -- $5
basketball season tix -- $148

Let's do 20 meals and 1 ticket, giving the price of the market basket

Last year: $194
This year: $248

Normalizing last year to a price level of 100, this year's level is 128.

Ouch.

NY Times Toxic water discharge violoations

I'll be interested to learn more about the database put together by the NY Times on violations of wastewater discharge permits.

On using space

From Yglesisas:

Green space and public space are good things, but they’re really only good if the spaces are usable and used in practice by the people who live and work in the area.

OK. Green space, public space are not synonymous with open space. Clearly I'm an advocate for green public spaces.

Propaganda and Farmers Markets

Want some arguments for avoiding Farmers Markets and settling for the grocery store?

A handy list appeared yesterday in a blog from the local paper, all guaranteed to push the right buttons. Too bad there was no information or thought involved:

10 things your farmer’s market won’t tell you
July 15, 2009 at 11:48 am by
Sarah Diodato


I’ve only been blogging about the topic of saving money for a few months, but I’ve already learned a great deal about how important it is to many consumers that they have access to fresh, locally grown food. Most of what I hear is very positive about local farmer’s markets.
However, Smart Money has list of 10 things you should know:

It comes out of your taxes. Many are supported by your tax dollars, even if you don’t shop there.

It’ll cost more. However, because it’s fresh, hasn’t been transported thousands of miles, and has been allowed to ripen on the vine, it will probably taste better.

Even though they say it’s local, it may not be after all. Some farmers buy produce wholesale and tell the consumer it’s from their land.
....

Check out the comments, including mine:

It would be helpful if the article provided information rather than simply playing on emotions.

To take the first point: “It comes out of your taxes. Many are supported by your tax dollars, even if you don’t shop there.”

What information would actually be helpful here? One might ask:

* How much of my “big box” purchase is subsidized, compared to my farmers market purchase? (We do know that the majority of farm subsidies are received by the very largest growers, hence we might suspect that farmers markets receive LESS assistance when everything is added up.)

* What tax dollars and income are created when I shop at a farmers market rather than a chain? (That is, how does your spending “multiply” in additional spending around the community? The answer depends on where you shop, and, not surprisingly a small local grower will reuse your dollars within the community more than just about anyone else.) I’ll leave alone the remaining nine talking points.

A discussion of the Waxman-Markley cap and trade bill.

Check out this commentary on the House passed climate change bill.

A tutorial is here.

More on health care

Mankiw once again finds an interesting story, but gets it all wrong:

This chart from Andrew Biggs "shows spending on veterinary care, which I pulled from the Consumer Expenditure Survey, and national health expenditures (for people) from the National Income and Product Accounts.... the rate of growth of spending from 1984 to 2006 wasn’t all that different—and in both cases, spending
grew faster than the rate of economic growth. As new technologies are developed for humans, we adopt them for Bowser and Fifi—because we can afford to and we think it’s worth it."

So, veterinary care (I feel OK about markets working well here) sees rapidly increasing spending --- starting from a very low level. No doubt marginal benefits are very high because we didn't do much beyond vaccinations and palliative care in the past.

Human health care sees the same spending escalation. But here marginal benefits (normalized for spending) have to be much lower because we started (1984!) from a relatively high standard of care already.

So either we're spending too little on pets, or too much on people. And messed up markets somewhere would be the explanation. Care to guess where?

Oh yes ... the Mankiw thinks an explanation for the 250% increase is "growing incomes." Except median household incomes haven't grown.

Student engagement and campus design

It's the season to add dorm space. Maybe it can be done in a way which enhances engagment and connections. We'll see.

Here's my contribution.

Why health care markets fail

Thoughts on why your a priori beliefs might be that health care markets would fail:

 

1. Individuals are not wired to deal rationally with risk. To some extent we manage this through insurance. But think about how they operate:

 

Low probability in the short run (at least for younger individuals). Think about what we do for

auto insurance: the state requires you have it in order to drive a vehicle.

 

home insurance: the holder of your mortgage requires it.

 

How many people would in fact choose not to purchase auto or home insurance if not forced to?

Now think about very high probablity events in the long run (but only for a relatively short period at the end of life).

We deal with other high probability long run needs through a variety of forced or strongly encouraged "voluntary" systems: that would be social security and pension/defined contribution plans, respectively.

 

Conclusion: not very much insurance coverage is "voluntary."

 

2. Lots of medical care is predictable, and thus can't be insured. That is, costs can't be spread out across individuals by insurance. For example, keeping a type I diabetic going is simply going to cost a whole lot. There are really only two options (for the situation of an average income individual):

the individual does not receive significant amounts of care and dies young.

 

society subsidizes care through forced contributions from everyone else.

 There is little way that private insurance can reasonably address this situation.

 

 

3. Asymmetric information. Related to (2), insurance firms are likely to have a very good idea what you will cost them in the future, but you may have much less idea. Those who are most likely to need insurance coverage of future costs are thus most likely to not have that coverage. Insurance firms will work hard to only cover low risks. This is called adverse selection, and is really the basic business plan in health insurance.

 

Most commonly talked about is the reverse of this: you know about a medical condition which an insurance company does not. This is classis moral hazard and drives up costs for everyone else (thus making insurance less available).

Why is Greg Mankiw upset about cap and trade?

We may finally get meaningful climate policy in the form of a cap and trade bill limiting carbon emissions. Because the emerging legislation will give away (rather than auctioning) maybe half of the cap, this is a perfect illustration of Mankiw's (tongue in cheek) "first law of carbon taxation":

Cap-and-trade = Carbon tax + Corporate welfare

I have yet to meet major legislation that did not include substantial corporate welfare. And giving away big portions of the cap does not change any of the environmental benefits (e.g. acid rain regulation since 1990) Yet the efficiency loving Mankiw denounces the cap and trade bill as "highly flawed." What's the deal?

Climate policy chicken littles

Krugman writes this morning about the contradiction (or hypocrisy) of chicken littles. The claim is that doing anything about climate change will make us poor, because modern economies just can't develop substitutes to fossil fuels. But these are exactly the "market can solve anything" cheerleaders.

 

A related contradiction of these free market marketers : the biggest cheerleaders of foreign intervention to "secure" oil supplies are those who profess the greatest faith in markets. Bun market economies it doesn't matter who owns oil, because it will be traded to those who have the greatest interest in paying to use it. And for better or worse, that is still us.

Nanny State vers. 2

Thacher Park is the closest substantial chunk of public land near Albany. It's signature feature is an escarpment of hundred foot tall cliffs, with a walk that descends to the cliff base, before ascending back on the last 50 feet of the historically important Indain Ladder trail.

Despite being operated by the New York State Office of Parks Recreation and Historic Preservation, most of the Indian Ladder trail (the only other easy access below the cliffs), while on state park land, is closed off to the public.

And oh yes; the rest is closed six months of the year, including Easter weekend.

So go enjoy the view from the parking lot, but don't try walking to what is truly unique about this fabulous area.

Thoughts on freebies

Skiing last weekend I chanced into FREE lift tickets. I was very happy:

* I enjoyed myself much more than I'd been anticipating. While I was in a bad mood before coming into the freebies (there was also a teenager involved ...), I was immediately relaxed and carefree afterwards.

* I felt free to stop anytime, not needing to "get my money's worth."

Neither of these sentiments seems to make much sense under standard consumer choice theory. Or at least the latter. Maybe the former is some kind of positive feedback from the unanticipated gift and hence higher consumer surplus from the trip.

If my reactions are typical (and I believe they are), how do we exploit such behavior to make better policy?

About the GOP budget "plan"

All you need to know.

1. The key philosopy: "limits the federal budget from growing faster than the family budget." I guess that's a pretty clear rejection of fiscal policy.

2. Oh yes. The blueprint budget has lots of blue print, but alas, few proposed numbers.

3. Intriguingly, it apparently proposes that the laws of supply and demand be repealed. It complains about proposed energy (carbon) taxes but calls for increased development of wind and solar:

Keeps Energy and Fuel Costs Low
Instead of taxing all energy users with a new national energy tax ... Republicans want energy independence
with increased development of all our natural resources, including
renewable energy sources, such as wind and solar.

While we're at it let's just change some basic physics as well. That could create energy independence in a big hurry.

Oil demand will go up again

More and more cars will do their thing.

Small is beautiful

Or at least cheap. So says Amory Lovins, writing in Freakonomics, on the economics of scale in power production.

Maybe my furnace should really be an electrical generator.

Siena sustainability report to BOAT

What I presented to the:

Siena College Board of Associate Trustees November 6, 2008
Notes on Campus Sustainability Efforts prepared by Dr. James Booker, Economics Dept. and Environmental Studies Dept.

Categories based on the College Sustainability Report Card
(see http://www.greenreportcard.org/ ) .

Siena accomplishments are in italics. We have a very long way to go, but lots of low hanging fruit!

Administration – actions at the administrative or trustee level.

• mission/strategic plan/capital campaign : Franciscan commitment to "reverence for all creation" => endowed chairs
• commitments to sustainability agreements:
• sponsorship of sustainability events: "Sustainability Day" and others; student Environmental Club
  

Climate & energy; green buildings

• electricity usage: substantial restraint
• fuel sources:
• heating efficiency: consumption reduced through lower T
• new construction: environmentally friendly materials used.
• cleaning agents: environmentally friendly in most buildings

Transportation - how schools promote alternative transportation options.

• pedestrian friendly initiatives:
• vehicle fleets:
• incentives for car-pooling/transit:

Food & recycling, dining services and campus recycling

• organic, local, sustainable: corn based disposable containers
• paper recycling/reuse/reduction: bins increasingly avalaible; printing reductions
• general recycling: some visibility

Investment priorities, transparency, and shareholder engagement

• holdings & proxy voting records
• socially responsible choices
• proxy voting