Measurement error in imputation procedures

We study how estimators that are used to impute consumption in survey data are inconsistent due to measurement error in consumption. Previous research suggests instrumenting consumption to overcome this problem. We show that, if additional regressors are present, then instrumenting consumption may still produce inconsistent estimators due to the likely correlation between additional regressors and measurement error. On the other hand, low correlations between additional regressors and instruments may reduce bias due to measurement error. We apply our findings by revisiting recent research that imputes consumption data from the CEX to the PSID.     

Unsustainable timber harvesting, deforestation and the role of certification

Deforestation is a major environmental issue, while demand for timber products increases rapidly in the developing world. One can thus wonder whether forest harvesting is sustainable worldwide, or if demand for timber products is fulfilled with the products from deforestation. Our panel data analysis shows that countries where timber harvesting is more important tend to experience larger deforestation rates than others, giving the intuition that forest harvesting is generally not sustainable. We also show that timber certification is negatively related to deforestation and thus seems to be a good indicator of harvesting sustainability.     

Correcting for the endogeneity of pro-environment behavioral choices in contingent valuation

In contingent valuation studies, observed behavioral choices often enter as independent variables in the willingness to pay function. However, these variables may be endogenously determined when the error term in the behavioral model is correlated with the error term in the willingness to pay model. We investigate the effects of correcting for the endogeneity of a variable, namely membership status in environmental organizations that proxies unobservable characteristics of the respondents. Jointly modeling the membership variable and the willingness to pay response yields an estimate for the effect of the former that contradicts previous findings but is intuitive and agrees with theoretical expectations.     

Resource abundance and economic growth in the United States

It is a common assumption that regions within the same country converge to approximately the same steady-state income levels. The so-called absolute convergence hypothesis focuses on initial income levels to account for the variability in income growth among regions. Empirical data seem to support the absolute convergence hypothesis for US states, but the data also show that natural resource abundance is a significant negative determinant of growth. We find that natural resource abundance decreases investment, schooling, openness, and R&D expenditure and increases corruption, and we show that these effects can fully explain the negative effect of natural resource abundance on growth.     

The market for bushmeat: Colobus Satanas on Bioko Island

Species conservation is an important issue worldwide. The market for monkeys consumed as food on Bioko Island, Equatorial Guinea, is modeled as a bargaining game. The bargaining set-up leads to the conclusion that black colobus are being over-hunted. Using daily data an empirical density is fit to the price-quantity pairs resulting from exchange between buyers and retailers. The density provides support for the bargaining model. Quantile regressions are also fit to the data. The median quantile indicates buyers have greater bargaining power than retailers. Knowing who has bargaining power aids in the design of policy to reduce bushmeat hunting. Strategic elasticities are constructed from the quantiles. Given the harvest rate of monkeys and the elasticity estimates, the monkeys of Bioko Island are under considerable pressure.     

A proposal for social pricing of water supply in Côte d'Ivoire

We consider the design of a nonlinear social tariff for residential water in Côte d'Ivoire, which is a case of a monopolistic private operator supplying a population of heterogeneous consumers. The proposed optimal tariff includes an initial “social” block with a low unit price, and higher consumption blocks with a monopoly pricing rule. This optimal nonlinear tariff is calibrated using econometric estimates of a panel-data residential water demand equation. Welfare changes associated with moving from the actual tariff to approximations of the optimal pricing system are computed under different tariff scenarios. We find that gains in consumer welfare would outweigh losses in producer surplus in a majority of Ivorian local communities.     

Instrumental variables estimation with partially missing instruments

This paper shows that instrumental variables estimators currently in use, require strong but neglected auxiliary assumptions to be consistent in situations with partially missing instruments. We introduce an alternative instrumental variables estimator that does not require auxiliary assumptions.     

A cautionary note on computing conditional from unconditional correlations

We show that some care is needed when inferring true unconditional correlations from observed conditional correlations, which is a frequent problem in empirical finance and elsewhere. We give a general formula for the relationship between the two and demonstrate its importance in the context of the bivariate t-distribution.     

The effect of climate change on optimal wetlands and waterfowl management in Western Canada

Warmer temperatures and a decrease in precipitation in the 21st century could severely deplete wetlands in the prairie pothole region of western Canada. In this study, we employ linear regression analysis to determine the casual effect of climate change on wetlands in this region, with temperature, precipitation and the standardized precipitation index (SPI) used to predict the effect of potential climate change on wetlands. We then use a waterfowl-wetlands bioeconomic model to solve for socially optimal levels of duck harvests and wetlands retention under current climate conditions and various climate change scenarios. The model maximizes benefits to hunters plus the amenity values of ducks to non hunters and the non-market ecosystem benefits of wetlands. Results indicate that climate change could decrease wetlands by between 7 and 47%, and that the optimal number of wetlands to retain could decrease by as much as 38% from the baseline climate.     

Evaluation of the Reggio approach to early education

We evaluate the Reggio Approach using non-experimental data on individuals from the cities of Reggio Emilia, Parma and Padova belonging to one of five age cohorts: ages 50, 40, 30, 18, and 6 as of 2012. The treated were exposed to municipally offered infant-toddler (ages 0–3) and preschool (ages 3–6) programs in Reggio Emilia. The control group either did not receive formal childcare or were exposed to programs offered by municipal systems (outside of Reggio Emilia), or by state or religious systems (in all three cities). We exploit the city-cohort structure of the data to estimate treatment effects using three strategies: difference-in-differences, matching, and matched-difference-in-differences. Most positive and significant effects are generated from comparisons of the treated with individuals who did not receive formal childcare. Relative to not receiving formal care, the Reggio Approach significantly boosts outcomes related to employment, socio-emotional skills, high school graduation, participation in elections, and obesity. Comparisons with individuals exposed to alternative forms of childcare do not yield strong patterns of positive and significant effects. This suggests that differences between the Reggio Approach and other alternatives are not sufficiently large to result in significant differences in outcomes. This interpretation is supported by a survey we conduct, which documents increasing similarities in the administrative and pedagogical practices of childcare systems in the three cities over time.     

Now, whose schools are really better (or weaker) than Germany's? A multiple testing approach

Using PIRLS (Progress in International Reading Literacy Study) data, we investigate which countries' schools can be classified as significantly better or weaker than Germany's as regards the reading literacy of primary school children. The ‘standard’ approach is to conduct separate tests for each country relative to the reference country (Germany) and to reject the null of equally good schools for all those countries whose p-value satisfies p_i ? 0.05. We demonstrate that this approach ignores the multiple testing nature of the problem and thus overstates differences between schooling systems by producing unwarranted rejections of the null. We employ various multiple testing techniques to remedy this problem. The results suggest that the ‘standard’ approach may overstate the number of significantly different countries by up to 30%.     

Health care expenditure and economic growth: Quantile panel-type analysis

This study uses international total health care expenditure data of 31 countries from 1986 to 2007 for exploring the causality between an increase in health care expenditure and economic growth. The empirical procedure is divided into two parts. The first is the panel regression analysis and the second is the quantile regression analysis. The estimation of the panel regression reveals that, expenditure growth will stimulate economic growth; however, economic growth will reduce expenditure growth. With regard to the estimation of quantile regression, when economic growth is quantile, in countries with low level of growth, the influence of expenditure growth on economic growth is different. In countries with medium and high levels of economic growth, the influence of expenditure growth on economic growth is positive; when health care expenditure growth is quantile, the influence of economic growth on expenditure growth is more different.