TALL TREES, PEOPLE, AND POLITICS: THE OPPORTUNITY COSTS OF THE REDWOOD NATIONAL PARK

Because individuals in the marketplace directly face opportunity costs, they must balance marginal costs against marginal benefits. In contrast, in politics, the opportunity costs facing decision makers are diluted. Estimates of the social costs of various public programs are generally understated, while the estimates of social benefits are exaggerated
This paper places the establishment and expansion of the Redwood National Park within this framework and analyzes it as a public investment decision. It is shown that in the initial creation of the Redwood National Park in 1968, the costs of land acquisition and employment loss were underestimated, while the projections for gains in tourism were excessive. Despite the opposition of local landowners and residents, the Park was further expanded 10 years later in 1978. There was again a misstatement of costs and benefits and also the creation of an expensive new entitlement program to defuse the opposition of labor
The experience with the redwood National Park illustrates the results of the political process, which allows decision makers to internalize benefits and externalize costs. Emotion and rhetoric tend to displace a careful weighing of marginal costs and benefits     

Workplace drug prevention programs: does zero tolerance work?

Current drug policy in the US military mandates frequent random drug testing of service members and dismissal of those who test positive for illegal drugs. This article analyses the economic costs and benefits of this zero tolerance policy as applied in the US Navy. Program effects consist of the actual number of detected users and the predicted number of deterred potential users. Productivity losses imposed by drug users are based on reported annual workdays lost due to drug use in the Navy. The productivity losses avoided by deterring and detecting users constitute program benefits. Program costs include the cost of replacing service members who are dismissed under the zero tolerance policy. Net benefits are sensitive to three key parameters?–?the deterrence effect, replacement cost, and productivity losses due to drug use. The results show that net benefits are negative for most plausible values of the key parameters.     

The impact of downward social information on contribution decisions

In this paper we study the effect of downward social information in contribution decisions to fund public goods. We describe the results of a field experiment run in conjunction with the fundraising campaigns of a public radio station. Renewing members are presented with social information (information about another donor’s contribution) which is either above or below their previous (last year’s) contribution. We find that respondents change their contribution in the direction of the social information; increasing their contribution when the social information is above their previous contribution, and decreasing their contribution when the social information is below. We hypothesize about the psychological motivations that may cause the results and test these hypotheses by comparing the relative size of the upward and downward shifts. These results improve our understanding of cooperation in public good provision and suggest differential costs and benefits to fundraisers in providing social information.      

国家重点研发计划资助项目空间分布研究与启示

国家重点研发计划是我国支持重大社会公益性研究、重大科学问题、重大共性关键技术和产品研发的重要渠道。一个地区获得国家重点研发计划资助强度体现了该地区承接国家重大科技项目的能力,有利于推动科技创新与区域经济社会发展紧密结合。以2016-2018年国家重点研发计划资助项目为研究对象,利用GIS工具和空间分析方法,从区域、省际、城市3个空间尺度分析项目分布情况,总结项目空间分布特征,使用固定效应模型进行回归分析。结果发现,R&D经费投入强度、R&D人员全时当量、高等学校数、CPCI-S收录论文数、地区生产总值、人均地区生产总值等因素与地区获得国家重点研发计划资助正相关,并由此得出相应启示。     

Estimating the public economic consequences of introducing varenicline smoking cessation therapy in South Korea using a fiscal analytic framework

Background and aims: Smoking gives rise to many cross-sectorial public costs and benefits for government. Costs arise from increased healthcare spending and work-related social benefits, while smoking itself provides significant revenue for government from tobacco taxes. To better understand the public economic impact of smoking and smoking cessation therapies, this study developed a government perspective framework for assessing smoking-attributable morbidity and mortality and associated public costs. This framework includes changes in lifetime tax revenue and health costs, as well as changes in tobacco tax revenue, from fewer smokers.

Methods: A modified generational accounting framework was developed to assess relationships between smoking-attributable morbidity and mortality and public economic consequences of smoking, including lifetime tax revenue gains/losses, government social transfers, and health spending. Based on the current prevalence of smoking in South Korean males, a cohort model was developed for smokers, former-smokers, and never-smokers. The model simulated the lifetime discounted fiscal transfers for different age cohorts in 5 year age bands, and the return on investment (ROI) from smoking cessation therapy.

Results: Former smokers are estimated to generate higher lifetime earnings and direct tax revenues and lower lifetime healthcare costs due to the reduction of smoking-attributable mortality and morbidity compared to smokers, even after accounting for reduced tobacco taxes paid. Based on the costs of public investments in varenicline, this study estimated a ROI from 1.4–1.7, depending on treatment age, with higher ROI in younger cohorts, with an average ROI of 1.6 for those aged less than 65.

Conclusions: This analysis suggests that reductions in smoking can generate positive public economic benefits for government, even after accounting for lost tobacco tax revenues. The results described here are likely applicable to countries having similar underlying smoking prevalence, comparable taxation rates, and social benefit protection provided to individuals with smoking-related conditions.     

Reorganizing School Lunch for a More Just and Sustainable Food System in the US

Public school lunch programs in the United States are contested political terrains shaped by government agencies, civil society activists, and agri-food companies. The particular organization of these programs has consequences for public health, social justice, and ecological sustainability. This contribution draws on political economy, critical food studies, and feminist economics to analyze the US National School Lunch Program, one of the world's oldest and largest government-sponsored school lunch programs. It makes visible the social and environmental costs of the “heat-and-serve” economy, where widely used metrics consider only the speed and volume of service as productive work. This study demonstrates that such a narrow understanding of the labor of lunch devalues care and undercuts the potential for school food provisioning to promote ecological and feminist goals. Further, it proposes a “high road” alternative and outlines an agenda for reorganizing school food provisioning to maximize care in all its dimensions.     

The fiscal consequences of public health investments in disease-modifying therapies for the treatment of multiple sclerosis in Sweden

Abstract

Background and aims: The economic consequences of multiple sclerosis (MS) are broader than those observed within the health system. The progressive nature suggests that people will not be able to live a normal productive life and will gradually require public benefits to maintain living standards. This study investigates the public economic impact of MS and how investments in disease-modifying therapies (DMTs) influence the lifetime costs to government attributed to changes in lifetime tax revenue and disability benefits based on improved health status linked to delayed disease progression.

Methods: Disease progression rates from previous MS Markov cohort models were applied to interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab using a public economic framework. The established relationship between expanded disability status scale and work-force participation, annual earnings, and disability rates for each DMT were applied. Subsequently, we assessed the effect of DMTs on discounted governmental costs consisting of health service costs, social insurance and disability costs, and changes in lifetime tax revenues.

Results: Fiscal benefits attributed to informal care and community services savings for interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab were SEK340,387, SEK486,837, SEK257,330, and SEK958,852 compared to placebo, respectively. Tax revenue gains linked to changes in lifetime productivity for interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab were estimated to be SEK27,474, SEK39,659, SEK21,661, and SEK75,809, with combined fiscal benefits of cost savings and tax revenue increases of SEK410,039, SEK596,592, SEK326,939, and SEK1,208,023, respectively.

Conclusion: The analysis described here illustrates the broader public economic benefits for government attributed to changes in disease status. The lifetime social insurance transfer costs were highest in non-treated patients, and lower social insurance costs were demonstrated with DMTs. These findings suggest that focusing cost-effectiveness analysis only on health costs will likely underestimate the value of DMTs.     

Social context,financial stakes and hypothetical bias: an induced value referendum experiment

This article investigates the effect of social context in an induced value, public good referendum experiment. In a split-sample treatment, social context is simulated by requiring participants to potentially have to disclose their vote to the group (voting disclosure) across both hypothetical and real settings. The experimental design also varies the cost (a coercive tax), and includes an uncertain level of benefit from the public good. The design allows investigation of the role of social context in both hypothetical and real referenda and its interaction with changes in the financial stakes involved (costs and potential benefits). Results show evidence of hypothetical bias, but also a social context effect that occurs in both real and hypothetical settings. This social context effect is larger than the effect of hypothetical bias, but is muted by the magnitude of costs and potential benefits. Hypothetical cases are also shown to be more prone to the social context effect.     

A SOBER LOOK AT THE COSTS OF INTOXICATION

Advocates of increased government regulation of intoxicating substances often cite the "social cost" of such goods. A close examination of studies that calculate the social cost of intoxication reveals a variety of recurring methodological errors. These studies do not clearly distinguish external costs from private costs. They do not systematically compare the costs associated with the regulation of intoxicant use with the costs of intoxicant consumption, nor do they even estimate the social benefits associated with intoxication or compare them with the social costs. Unless these problems are addressed, social cost calculation will be dismissed as a tool for political lobbying.     

Patterns of multi-agent land conservation: Crowding in/out,agglomeration, and policy

Private agents make large contributions to networks of conserved land, but little is known about how private agents’ decisions might be altered by government actions. This paper explores the impact of public conservation and public policy on the quantity and configuration of private land conservation and the extent to which the social optimum is reached. Because land conservation benefits often have thresholds and spatial characteristics, we consider the impact of different land conservation benefit functions on the patterns of conservation created by the interaction of private and public agents. We find that public conservation crowds private conservation in or out depending on whether marginal conservation benefits increase or decrease with total acreage, and crowding out is mitigated by the presence of budget constraints. We show how land conservation agents might interact strategically in space depending on preferences over fragmentation, and we explore that spatial strategic interaction in a case with a regional land trust and a case with hot-spot parcels. We identify when government policies, such as agglomeration bonuses and mitigating coordination costs, are most likely to increase the social benefits provided by private land conservation agents.     

THE OPPORTUNITY COSTS OF REDWOOD NATIONAL PARK: COMMENT AND ELABORATION

In a recent issue of this journal, Walker (1984) emphasized the need for good economic analysis in public evaluation of national park expansions. We support this but would like to show that a possible reason the economic analysis referred to in Walker's paper was ignored may be the very narrow way in which his analysis was performed. In particular, the opportunity cost per visitor day of Redwood National Park may have been overstated by a factor of 10 by implying the sole benefits of the park expansion were associated with only 10 percent of the park's use days. More importantly, substantial literature on off-site economic benefits arising from preservation of natural environments is completely ignored. Since the legal purpose of the national parks is not solely related to recreation, this omission reflects a large error in the analysis. This paper's purpose is to apply sensitivity analysis to the opportunity costs per visitor day and illustrate some policy analysis tools commonly used by natural-resource economists, in and out of government, for evaluating the economic efficiency benefits of preserving unique natural environments. Applying these tools indicates the cost of Redwood National Park may have been as low as 90 cents per household in the United States.     

PUBLIC–PRIVATE PARTNERSHIP TO DEVELOP TECHNOLOGY INFRASTRUCTURE: A CASE STUDY OF THE ECONOMIC RETURNS OF DNA DIAGNOSTICS

This paper presents a quantitative case analysis of one US Advanced Technology Program (ATP) public–private partnership that advanced the technology infrastructure of molecular diagnostics, resulting in substantial downstream economic and public health benefits. Biotechnology R&D is generally characterized by technologies requiring substantial investments in time, money, and effort to develop and sustain concepts through long incubation times. Public sponsorship of a partnership between two companies who would have not otherwise collaborated, Affymetrix and Molecular Dynamics, accelerated the development of DNA microarrays and DNA sequencing technologies and induced innovation at competitor firms. Public sponsorship of private-company research accelerated the completion of the Human Genome Project and improved both the quality and rapidity with which the biotechnology industry and medical science acquire genetic information. Counterfactual scenarios were used to quantify net public benefits by estimating the hypothetical costs of achieving the same outcomes as using the processes and technologies the ATP-cofunded innovations superseded.     

Membership in citizen groups

We analyze the coordination problem of agents deciding to join a group that uses membership revenues to provide a discrete public good and excludable benefits. The public good and the benefits are jointly produced, so that benefits are valued only if the group succeeds in providing the public good. With asymmetric information about the cost of provision, the static membership game admits a unique equilibrium and we characterize the optimal membership fee. We show that heterogeneity in valuations for the excludable benefits is always detrimental to the group. However, in a dynamic contest in which heterogeneity arises endogenously (returning members receive additional seniority benefits at the expense of junior members), we show that, in the ex-ante optimal contract, offering seniority benefits is beneficial for the group, despite the heterogeneity in valuations created.     

What did Medicare do? The initial impact of Medicare on mortality and out of pocket medical spending

We study the impact of the introduction of one of the major pillars of the social insurance system in the United States: the introduction of Medicare in 1965. Our results suggest that, in its first 10 years, the establishment of universal health insurance for the elderly had no discernible impact on elderly mortality. However, we find a substantial reduction in the elderly's exposure to out of pocket medical expenditure risk. Specifically, we estimate that the introduction of Medicare was associated with a 40% decline in out of pocket spending for the top quartile of the out of pocket spending distribution. A stylized expected utility framework suggests that the welfare gains from such reductions in risk exposure alone may be sufficient to cover almost two-fifths of the costs of Medicare. These findings underscore the importance of considering the direct insurance benefits from public health insurance programs, in addition to any indirect benefits from an effect on health.     

THE TAX REFORM ACT OF 1986: CONCENTRATED COSTS, DIFFUSE BENEFITS—AN INVERSION OF PUBLIC CHOICE

The public choice paradigm asserts the superior force of concentrated benefits over diffuse costs in the political marketplace. Vote-seeking politicians exchange favors for support to members of special interest groups, whereas the public at large places fewer demands on and have less clout with politicians. The historical evolution of the federal income tax fits the public choice paradigm. Each provision in the tax code benefits primarily a narrow interest. Little incentive exists for anyone to represent such general interests as a broad-based, low-rate, simple tax system.
The Tax Reform Act of 1986 inverted the public choice paradigm. The general interest, in the form of lower tax rates, prevailed over legions of special interests—which lost their prized deductions. The reason for this inversion lay in the power of an idea—the political and economic appeal of a low top rate. Deductions were simply worth less at lower deductible rates, and the benefits of higher after-tax income were readily apparent. A coalition of liberals seeking the abolition of special breaks for the rich and conservatives favoring the enhanced incentives in sharply lower tax rates together defeated the community of special interest groups.     

Occupation pension for public employees in the People's Republic of China: A new approach with defined benefit underpin pension plan

The State Council of the People's Republic of China announced a reformed pension plan for public employees with the occupation pension plan in January 2015, officially disclosing that the social pension systems for private and public employees will be unified. Our proposed occupation pension plan for public employees is one of the important components in transiting from a dual‐track pension system to a sustainable and unified system. We aim at providing a pension design, that is, the defined benefit (DB ) underpin pension with estimates of the costs and benefits. We have used a financial engineering approach to calculate the hedge contribution for a DB underpin hybrid pension plan benefit. We also treat pension benefit and salaries in aggregate. Therefore, we propose a stochastic and exogenous salary model. Employees’ total benefits can be determined by multiple factors, such as inflation, economic environment, and employer's preference. However, the expectation of employees’ total benefits should not be affected by the change of salary and pension benefits. Our results could facilitate the ongoing pension reform in the People's Republic of China, providing a rigorous benchmark with public policy implications as to plan design, cost estimation, as well as risk management approach.     

Private finance for public goods: social impact bonds

Social impact bonds (SIBs) attract private investment to social programs by paying a market rate of return if predefined outcome targets are met. SIBs monetize benefits of social interventions and tie pay to performance, limiting governmental control once the contract is designed. Despite policy enthusiasm across the globe, SIBs have failed to attract private market investors without substantial additional guarantees. SIBs raise questions about government’s ability to ensure broader public values. Using literature on contracting, performance management, and public private partnerships, this exploratory analysis focuses on institutional design, transaction costs, and performance measurement, outlining the opportunities and concerns SIBs present.     

Social Discount Rates from Stratospheric Ozone Control*

We develop a model of optimal project timing to infer the discount rate US residents attach to investments in stratospheric ozone preservation. In this model, the calendar date at which preservation-related benefits offset costs is shown to be an increasing function of the real social rate of time preference. Estimates of US costs and benefits associated with the original (1987) Montreal Protocol are used to determine a range of discount rates from the US control of stratospheric ozone depletion. From this example the range is about 3.0 to 8.77 per cent.     

Cost-Effectiveness Analysis in the Health Sector when There is a Private Alternative to Public Treatment

In health economics, cost-effectiveness is defined as maximizedhealth benefits for a given health budget. When there is a privatealternative to public treatments, care must be taken when usingcost-effectiveness analysis to decide what types of treatmentsshould be included in the public program. The correct benefitmeasure is in this case the sum of health benefits to thosewho would not be treated without the public alternative andthe cost savings to those who would otherwise choose privatetreatment. In the socially optimal ranking of treatments tobe included in the public health program, treatments shouldbe given higher priority the higher are costs per treatmentfor a given ratio of gross heath benefits to costs. (JEL: H42,H51, I18)