Wind turbines and coastal recreation demand

We examine the impact of coastal wind turbines on local coastal tourism and recreation for residents of the northeastern coastal counties in North Carolina. A combination of telephone and web survey data are used to assess the impact of coastal wind farms on trip behavior and site choice. Most of the respondents to our telephone survey claim to support offshore wind energy development, and independent survey data suggest that the observed levels of support may be indicative of the broader population in this region. Overall, we find very little impact of coastal wind turbines on aggregate recreational visitation; loss in annual consumer surplus associated with wide spread wind development in the coastal zone is insignificant at $17 (or about 1.5% of annual consumer surplus). Results suggest that NC local coastal tourists are averse to wind farms in the near-shore zone; average compensating variation for wind farms one mile from the shore is estimated at $55 per household. On average, we find no evidence of aversion to wind farms 4 miles out in the ocean, or for wind farms located in coastal estuaries. For all wind farm scenarios, we find evidence of preference heterogeneity—some respondents find this appealing while others find it aversive.     

Are Korean consumers willing to pay a tax for a mandatory BSE testing programme?

The outbreaks of mad cow disease (BSE) have significantly increased the demand for food safety programs in the Korean beef market. Two issues that are getting much attention are about whether Korea should implement mandatory testing of slaughtered domestic cattle for BSE and whether consumers are willing to pay a tax for the programme. No study, however, has examined consumers’ willingness to pay (WTP) a tax for a BSE testing programme. We conducted a contingent valuation (CV) study using a double-bounded dichotomous choice approach to estimate Korean consumers’ valuation for a mandatory BSE testing programme on slaughtered domestic cattle that are 21 months or older. Our results show that the sample-population adjusted mean estimate of WTP a tax per year is 4482 KRW (US $4.01) per household. This suggests that Korean consumers have a strong preference for a mandatory testing of domestic cattle for BSE. This study also found that Korean consumers’ WTP for the programme is greater than estimated implementation costs of the programme. These results imply that implementing a mandatory BSE testing programme in Korea could confer positive consumer welfare.     

A bioeconomic view of the transition to agriculture: a comment

Abstract Arthur Robson (2010) presents an ingenious model to explain why the standard of living apparently fell during the Neolithic transition from hunter‐gathering to agriculture. His demonstration relies on a production function that has a strong property with regard to technical change. This note shows how Robson’s result can be obtained using a more familiar set of restrictions on technical change. Under these restrictions, an improvement in technology will cause parents to invest less per child and the standard of living will fall.     

THE MORTALITY COST OF EXPENDITURES

This paper updates the mortality cost of expenditures, which has relevance to a broad range of policies, including regulations, wars, and COVID‐19 restrictions. Because changes in income lead to changes in mortality risk, health investments costing more per life saved than a threshold cost‐per‐life‐saved cutoff level are expected to increase mortality risk. This article discusses the mechanisms driving this relationship and provides recent empirical support. The 2019 cost‐per‐life‐saved cutoff level at which expenditures increase mortality risk has a lower bound of $83.1 million and an upper bound of $133.8 million, with a midpoint of $108.5 million. (JEL D61, I18, J17, K32)     

Rethinking real-time electricity pricing

Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. This paper evaluates the first program to expose residential consumers to hourly real-time pricing (RTP). I find that enrolled households are statistically significantly price elastic and that consumers responded by conserving energy during peak hours, but remarkably did not increase average consumption during off-peak times. The program increased consumer surplus by $10 per household per year. While this is only one to two percent of electricity costs, it illustrates a potential additional benefit from investment in retail Smart Grid applications, including the advanced electricity meters required to observe a household’s hourly consumption.     

RETURNS TO DEBT AND EQUITY IN FARM PRODUCER ORGANIZATIONS

While the capital structure irrelevance proposition is the point of departure in corporate finance, it is unknown if debt‐or‐equity decisions matter to farm producer organizations. To inform decisions of capital acquisition, a panel study is conducted to estimate the relationships of different types of debt (current, long‐term) and equity (allocated, unallocated) to the financial performance of 707 farm producer organizations in the United States during the 2005–2011 period. Using 3,120 observations, the panel analysis indicates net sales in period t is increased by $1.97, $9.59, and $4.01 with an addition of $1 in current debt, allocated equity, or unallocated equity in period t_‐1. Furthermore, the magnitude of the positive relationship of an additional dollar of allocated (unallocated) equity to net income is estimated at $0.32 ($0.14). We thus reject the notion managers and directors of farm producer organizations should decide to use debt or equity with a coin toss.     

Compensating variation consumer's surplus via succesive approximations

Many economists agree that the best measure of consumer's surplus is the compensating Variation Consumer's surplus (CVCS). Howerver, Because the compensated demand function is not observable, there are problems in using this measure in emperical applications. There are ways around this limitations that work well under certain circumstances, However, until now there has been no solution that always works well. We introduce a sucessive approximations method of calculating compensating variation consumer’s surplus using data from the ordinary demand curve. In doing so we numerically identify the compensated demand fuction over the price interval involved. This procedure can be made extremely ‘small’. We also use our method to calculate CVCS for three applications in the literature where Marshallian surplus was reported.     

Environmental impact of household activity in Spain

The objective of this paper is to analyse the environmental impacts of the Spanish economy by way of water and atmospheric pollution on the basis of a Spanish Accounting Matrix for 1999. Only households were taken as an exogenous account. The pollution measures are estimated for seven categories of pollution: three atmospheric pollutants (CO₂, NO_x and SO_x) and four indicators for water (waste water, nitrogen, metals and biological oxygen demand (BOD)). The environmental data base was obtained from the Spanish Statistical Institute.The analysis reveals that pollution in Spain is closely linked to food production, energy, extractive industries and paper manufacturing. We show that services, taken as a whole, are major polluters, though this is due to the volume of household expenditure they represent rather than their pollution potential as such. We also show that the Spanish economy avoids a great deal of pollution by importing inputs, which pollute where they are produced. Finally, the study also provides per capita pollution values for the aforementioned seven pollutants.     

Social Security and personal saving: 1971 and beyond

Feldstein (1996, 1974) reported that Social Security in the U.S.A. reduced personal saving (“saving”) in 1992 (1971) by $416 ($61) billion. I reestimate his life-cycle consumption specification using data from the latest NIPA revision, correct his calculations, and find that the implied reduction in 1992 (1971) saving is now $280 ($22) billion, 48% (16%) of actual net private saving, with a standard error of $114 ($14) billion. If structural breaks around WWII and the 1972 Social Security amendments (which raised real per capita SSW by 22%) are allowed, and the market value of Treasury debt included in the specification, the reduction in 1971 and 1992 saving attributable to Social Security is at most 0.55 times its standard error, and 12% of net private saving. I then reestimate the preferred specification of Coates and Humphreys (1999), allowing for these structural breaks and relaxing other restrictions. The implied effect of Social Security on saving is again statistically zero. First version received: September 2000/Final version received: September 2001 RID="*" ID="*"  I thank Les Oxley for pointing out that correcting for AR(1) residuals is not a categorical imperative but a cultural relative, in which case common factor restrictions are crucial.     

Household behavior and individual autonomy: an extended Lindahl mechanism

We present a comprehensive model of household economic decision covering both full cooperation and noncooperation as well as semi-cooperative cases, varying with income distribution and a parameter vector $\theta $ representing degrees of individual autonomy with respect to the public goods. In this model, the concept of “household $\theta $ -equilibrium” is introduced through the reformulation of the Lindahl equilibrium for Nash implementation and its extension to semi-cooperation. Existence is proved and some generic properties derived. An example is given to illustrate. An important benefit of this approach is to allow for a compact and unified investigation of the testable (local) restrictions of household demand. A particular decomposition of the pseudo-Slutsky matrix is derived and the testability of the various models discussed.     

REPEAL OF PROHIBITION: A BENEFIT‐COST ANALYSIS

In spite of an estimated increase in annual alcohol‐related motor vehicle costs of $2.767 billion (1947 dollars), the net social benefit of repeal of alcohol Prohibition amounts to $432 million per annum in 1934–1937, about 0.33% of gross domestic product. Total benefits of $3.25 billion consist primarily of increased consumer and producer surplus, tax revenues, and reduced criminal violence costs. A Monte Carlo simulation shows the probability of negative net benefits is 16%. The estimated price elasticity of demand for spirits, beer, and wine are –.60, ?.56, and –.51 respectively, which is consistent with the modern literature. (JEL D61, I18, K420, I120)     

Some Hicksian and Marshallian consumer's surplus estimates in discrete choice

This note describes the theory and practice of applying the Hicksian approach to cost-benefit analysis to discrete choice models. It illustrates the technique with numerical estimates of Hicksian and Marshallian consumer's surplus measures based on computer simulations using real-world data.     

Correcting Market Failure Due to Interdependent Preferences: When Is Piecemeal Policy Possible?

Allowing for general utility interdependence and agent heterogeneity, we characterize taxes that will generate first best solutions in markets. We show the equivalence of tax corrections derived from the Marshallian and compensated demand approaches. Next we analyze the conditions that are required for the market failure to be corrected by: (1) specific indirect ad valorem taxes on commodities, (2) the same proportional tax rate on every commodity, and (3) a proportional income tax rate on each individual. The conditions are related to the restrictions necessary to have H synthetic consumers without externalities who replicate behavior of individuals with externalities.     

Annual costs of tumor necrosis factor inhibitors using real-world data in a commercially insured population in the United States

Abstract

Objective:

To calculate annual cost per treated patient of tumor necrosis factor (TNF) inhibitors etanercept, adalimumab, and infliximab for common approved indications, based on actual TNF-inhibitor use in clinical practice.

Methods:

Adults with ≥1 claim for etanercept, adalimumab, or infliximab between January 2005 and March 2009 were identified from the IMS LifeLink? Health Plan Claims Database. Patients new to therapy or continuing therapy (i.e., a prior claim for a TNF-inhibitor) were analyzed separately. Included patients had been enrolled from 180 days before the first TNF-inhibitor claim (index date) through 360 days after the index date and had a diagnosis during the pre-index period for rheumatoid arthritis, psoriasis, psoriatic arthritis, or ankylosing spondylitis. Patients with Crohn’s disease, ulcerative colitis, or juvenile idiopathic arthritis were excluded. Annual costs were calculated using wholesale acquisition costs for the TNF-inhibitor and Medicare Physician Fee Schedule for drug administration. Costs from restarting or switching TNF-inhibitor therapy during the first year were included.

Results:

A total of 27,704 patients (11,528 new, 16,176 continuing) had claims for etanercept, adalimumab, or infliximab, most commonly (65%) for treatment of rheumatoid arthritis. The most commonly used agent was etanercept (14,777 patients; 53%), followed by adalimumab (6862 patients; 25%) and infliximab (6065 patients; 22%). Annual cost per treated patient was etanercept $14,873, adalimumab $17,766, and infliximab $21,256 across all indications. Annual cost per treated patient by disease was (etanercept/adalimumab/infliximab): rheumatoid arthritis ($14,314/$17,700/$20,390), psoriasis ($17,182/$17,682/$23,935), psoriatic arthritis ($15,030/$18,483/$24,974), and ankylosing spondylitis ($14,254/$16,925/$23,056). New and continuing patients showed similar results, with etanercept having the lowest costs.

Limitations:

This analysis is limited to three TNF-inhibitors and a US managed-care population.

Conclusions:

Based on this analysis of real-world use of TNF-inhibitors among patients in nationwide clinical practice settings, the annual TNF-inhibitor cost per treated patient was lowest for etanercept across all indications.     

An assessment of two environmental and economic benefits of ‘Cash for Clunkers’

This research aims to provide a more comprehensive, life cycle accounting of two categories of environmental and economic benefits associated with the $3 billion US “Cash for Clunkers” vehicle scrappage program. First, using a life cycle emissions methodology developed in Lenski et al. (2010), we find that about 29,000 metric tons of criteria pollutant emissions were avoided, for a benefit of about $23 million; avoided carbon dioxide emissions, by comparison, provided a benefit worth $90 million. Second, we compare the market value of scrapped vehicles to the rebates provided, calculating the consumer surplus or “gift” to participants to be up to $2 billion (about $2000 to $3000 per vehicle). This is significantly more than offered in previous vehicle scrappage programs, and suggests opportunities to get more environmental and economic “bang for the buck.” Finally, these two categories of benefits are found to be heavily concentrated geographically around urban centers. About 2% of US counties (50 counties) received 50% and 30% of the aggregate benefits from avoided criteria pollutant emissions and consumer surplus from the rebates, respectively.     

Differences in episode-based care costs for multidetector computed tomographic coronary angiography versus myocardial perfusion imaging for the diagnosis of coronary artery disease

Abstract

Background: Multidetector computed tomography (MDCT) is a novel method for diagnosis and prognosis of coronary artery disease (CAD). The opportunity costs that favour MDCT over other CAD diagnostic methods is currently unknown.

Methods: This study used an episodes of care cost model based on epidemiologic and economic data evaluating individuals without known CAD undergoing MDCT or myocardial perfusion scintigraphy (MPS). It was a multicenter retrospective database review of medical and pharmacy-related claims linked by episodes of care from 2002 to 2005. CAD-related episodes of care costs were examined 1-year downstream for patients after initial MDCT that were matched to patients who underwent MPS.

Results: After adjustment for patient factors, 1-year total CAD-related episodes of care costs for MDCT were 16.4% lower than MPS, by an average of $682 (95% confidence interval $14, $1,350) per patient. While costs per CAD-related episode were similar between MDCT and MPS groups ($4,284 vs. $4,277, p=0.08).

Conclusions: Patients without known CAD who undergo MDCT as an initial diagnostic test, compared to MPS, incurred fewer CAD-related episodes of care and lower overall CAD-related costs.     

Groundwater management under heterogeneous land tenure arrangements

We develop a groundwater extraction model that considers the Marshallian inefficiency associated with sharecropping and use data from Pakistan to simulate the impact of an open access regime and of optimal management on groundwater extractions, the state of the aquifer, and annual net benefits through time. We also evaluate a price instrument as a mechanism of inducing optimal extractions. Under both open access and optimal management, we observe notable differences in groundwater extractions and the water table level between the tenure model (which considers the behavior of both owner cultivators and sharecroppers) and the baseline model (which includes the behavior of only owner cultivators). We also find a modest difference in the aggregate net benefits generated by the two models. The results offer new insights—vis-à-vis land tenure heterogeneity—into the evaluation of more effective policies for groundwater management and aquifer sustainability.     

Remittances,transaction costs,and informality

Recorded workers' remittances to developing countries reached $167 billion in 2005, bringing increasing attention to these flows as a potential tool for development. In this paper, we explore the determinants of remittances and their associated transaction costs. We find that recorded remittances depend positively on the stock of migrants and negatively on transfer costs and exchange rate restrictions. In turn, transfer costs are lower when financial systems are more developed and exchange rates less volatile. The negative impact of transactions costs on remittances suggests that migrants either refrain from sending money home or else remit through informal channels when costs are high. We provide evidence from household surveys supportive of a sizeable informal sector.