MARKETS AND THE ENVIRONMENT: A CRITICAL REAPPRAISAL

The environmental problem is no different from any other economic problem. The basic problem is scarcity. Wants are unlimited while resources are limited. Once we recognize our inability to satisfy all of our ecological wants, how do we decide which wants we will satisfy? Most efforts to address environmental concerns have used political institutions to answer this question and to devise policy responses. Environmental concerns have been addressed in the same manner that socialist nations sought to address broader economic concerns. This paper argues that such policies cannot succeed in the environmental realm any better than they did in the broader economic realm. Whether the political approach chosen relies on command-and-control or “market-based” mechanisms (eco-taxes or eco-quotas) matters little in resolving government's inability to prioritize. The dispersed nature and enormity of information needed to prioritize risks and the inability of government to create the rich system of incentives necessary to mobilize human ingenuity renders effective government controls infeasible. This paper argues for greater attention to environmental problems but concludes that we can better address environmental quality by integrating ecological resources into the economy via ecological privatization. This property rights approach to environmental policy—“free market environmentalism”—may entice more economists to address the important environmental questions and devise more appropriate solutions.     

THE FUTURE IN CONSUMER EDUCATION

A model of the household enterprise is examined in the light of significant socio-economic trends and the uncertainties these produce. The implications of the growth of the household-enterprise sector of the economy is examined for relationships between consumers and industry. The case is argued for a shift in the emphasis of consumer education from consumer technology to an awareness of alternative futures.     

An analysis of experimental buying behavior

Consumer innovators have been studied in depth by marketing analysts; however, these early buyers may not be a homogenous group with respect to purchase patterns. This research indicates that some early buyers are experimenters and that they can be distinguished from adopters of certain procery products in terms of shopping strategies, shopping awareness, and demand for product newness.     

The measurement and trend of inequality: An amendment to a basic revision

A variety of revisions and adjustments to our standard measures of inequality have been proposed in recent years. This note corrects a serious error in that work which could reverse conclusions in instances of great inequality.     

The Attraction of Home Ownership

George Sternlieb argues convincingly that rental housing is likely to remain in somewhat short supply in the immediate future with some loosening at a later date. All of this is premised on no significant change in current construction and market trends. On the other hand, a change in national housing policy and sharing equity advantages with tenants could produce significant increases in rental units.     

Productivity in manufacturing and the length of the working day: evidence from the 1880 census of manufactures

Using micro-level data from the 1880 Census of Manufacturing, we estimate the elasticity of annual output with respect to the length of the working day. Holding labor and capital inputs constant and controlling for days of operation per month and months per year, this elasticity was positive but less than one, indicating diminishing returns. We also find diminishing returns to days per month and months per year, but these elasticities were significantly larger. Thus, decreases in daily hours coupled with an offsetting rise in annual days of operation would increase productive efficiency—precisely the kinds of changes then actually taking place.     

THE RESPONSE OF FORWARD EXCHANGE RATES TO INTEREST RATE FORECASTING ERRORS

This paper examines the effects of interest rate news on changes in forward foreign exchange rates. Virtually none of the errors in forecasting forward exchange rates are explained by interest rate forecasting errors. The results are consistent with a conjecture that the forward exchange rate is not an estimate of the expected spot exchange rate.