An Overview

MOCT-MOST: Economic Policy in Transitional Economies -  

The Use (and Abuse) of Meta-Analysis in Environmental and Natural Resource Economics: An Assessment

Motivated by the 2006 report of a Work Group appointed by the Environmental Protection Agency (EPA), this paper examines the present state of meta-analysis in environmental economics and offers recommendations for its future use. To this end we summarize and assess 140 meta-analyses from 125 published and unpublished studies, covering 17 topical categories in environmental and resource economics. First, we provide several generic meta-analysis models as reference points and discuss major estimation issues. Five econometric issues are identified as part of a complete analysis: (1) sample selection criteria; (2) basic data summary; (3) primary data heterogeneity; (4) heteroskedasticity; and (5) non-independence of multiple observations from primary studies. Second, a tabular summary is presented for the 140 meta-analyses with respect to estimation methods. Third, a narrative summary is presented for 19 meta-analyses, including the three value-of-statistical-life studies examined by the EPA Work Group and one analysis from each of 16 other categories. Fourth, we offer a set of “best practice” guidelines for future meta-analyses in this and other areas of economics. Last, the paper comments on the use of meta-analytic methods for benefit transfers of environmental values.   

The market for preferences

Learning processes are widely held to be the mechanism by whichboundedly rational agents adapt to environmental changes. Weargue that this same outcome might also be achieved by a differentmechanism, namely specialisation and the division of knowledge,which we here extend to the consumer side of the economy. Wedistinguish between high-level preferences and low-level preferencesas nested systems of rules used to solve particular choice problems.We argue that agents, while sovereign in high-level preferences,may often find it expedient to acquire, in a pseudo-market,the low-level preferences in order to make good choices whenpurchasing complex commodities about which they have littleor no experience. A market for preferences arises when environmentalcomplexity overwhelms learning possibilities and leads agentsto make use of other people's specialised knowledge and decisionrules.  

Trade and expropriation

We examine the effect of international trade on expropriation in a setting where law enforcement is costly. We show that, in general equilibrium, trade liberalization can reduce expropriation activities and have a first-order effect on the gains from trade. One interpretation of our results is that unskilled-labor abundant countries facing popular militia or rebel groups will experience amplified gains from trade, as expropriation levels and cost of enforcement decline with trade liberalization. However, the model also admits the possibility that globalization causes an increase in crime, particularly for skilled-labor abundant countries.  

Alternative perspectives on connections in economic systems

This paper explores the significance of Potts’s (2000) claim that the key difference between orthodox and heterodox economics lies in the former viewing the economy as a mathematical field in which everything is connected to everything else, and the latter viewing it as a complex system in which only some elements are connected. It focuses on the types of connections in economic systems that different economists have identified and the significance of the degree of connectivity for how economic systems function. Topics explored include separable consumer networks, separable utility functions, checklist-based decision rules, lifestyles, goodwill, the nature of business strategies and evolution.  

Lifestyle changes and the lifestyle selection process

This paper presents an analysis of barriers to the uptake of eco-friendly ways of life that is based upon an evolutionary complex systems approach to the workings of the mind and the choices that people make. It questions the effectiveness of price-based policies for promoting change and emphasizes the role of non-price factors and complementarities in choice. Inducing behaviour change may therefore require ensuring consumers’ lifestyle prerequisites are met. In the light of Hayek’s (1952) book The sensory order (Chicago: University of Chicago Press), the paper examines the systematic processes by which cognitions are formed and minds evolve, and potential for inducing changes via policy measures that aim to derail stereotypical lines of thinking. Though the paper’s theoretical perspective differs from the behavioural economics that underpins the ‘Nudge’ approach to policy, the paper’s analysis is intended to be complementary with the ‘Nudge’ approach.  

REASSESSING THE IMPACT OF BARRIERS TO CAPITAL ACCUMULATION ON INTERNATIONAL INCOME DIFFERENCES*

Can barriers to capital accumulation account for large differences in GDP per capita? We reconsider the claim that these barriers have an amplified effect on income levels in a model where both modern and traditional sector technologies are active. We show that this claim is not correct. We do find, however, that the removal of barriers to capital accumulation can cause large changes in the employment shares of labor. Thus the model can account for an important stylized fact of the development process, with labor moving from the traditional to the modern sector as income levels rise.  

Buyer behaviour in a regional thoroughbred yearling market

This paper reports the results of an hedonic pricing analysis of a regional thoroughbred auction market, adding to a literature which has been built mainly on data from elite auction markets. The main contribution of the paper is the finding that the role of the dam in affecting yearling price, elusive in the existing literature, is shown to depend primarily on information about progeny performance rather than dam performance. Additional results confirm existing knowledge about the roles of the sire, yearling sex, and yearling age, and support suspicions that race horses are consumer rather than investment goods.  

Bootstrapping Student Understanding of What is Going on in Econometrics

Econometrics is an intellectual game played by rules based on the sampling distribution concept. Most students in econometrics classes are uncomfortable because they do not know these rules and so do not understand what is going on in econometrics. This article contains some explanations for this phenomenon and suggestions for how this problem can be addressed. Instructors are encouraged to use explain-how-to-bootstrap exercises to promote student understanding of the rules of the game.