Economics and Business Division Seminars
August 26th, 2015 (3:15 EH 211)
Speaker: Ralph Mastromonaco, Assistant Professor of Economics at the University of Oregon
Bio: Ralph Mastromonaco is an Assistant Professor of Economics at the University of Oregon. His research covers a variety of topics in public and environmental economics. His current research is focuses on applications and methods of non-market valuation. Additionally, he has several projects examining the impact that the hydraulic fracturing boom has had on local communities.
Topic: Measuring Neighborhood Preferences under Credit Constraints, with Edward Kung (UCLA)
Abstract: We study the biases that result from ignoring credit constraints in revealed preference models. Bias arises from three sources: 1) heterogeneity in borrowing costs; 2) an increasing interest rate with respect to borrowing amount; and 3) binding borrowing constraints. Using a novel dataset on housing transactions merged with buyer credit reports from Atlanta, we show that ignoring credit constraints biases estimates for willingness-to-pay for school quality downwards by 2 percent. The downward bias is stronger for low SES households (5 percent). The results suggest that credit constraints are an important factor to account for when evaluating amenities using housing and neighborhood choice data.
September 2nd, 2015 (3:15 EH 211)
Speaker: Sarah Jacobson, Williams College Department of Economics; Co-author (not presenting): Angela de Oliveira, University of Massachusetts Amherst Department of Resource Economics
Bio: Sarah Jacobson is an Assistant Professor of Economics at Williams College, which she joined in 2010. She completed her PhD in Economics at Georgia State University in 2010 and her Bachelor of Science in Engineering at Harvey Mudd College in 1998. She is an environmental and behavioral economist who mainly studies the interactions between social preferences and institutions, mostly using laboratory experiments. Specific themes in her work include reciprocity, cases in which social preferences yield inefficient outcomes, and punishment. She has current projects on the enforcement of water pollution regulations, risk preferences, proxy decision-making, and racial bias.
Topic: Patience by Proxy: Making Time Preference Decisions for Others
Abstract: Individuals or organizations entrusted to make decisions for the benefit of others may face options that are tempting but short-sighted as compared to choices that give longer-term rewards. Are people more or less tempted by a small positive outcome today (as compared to a large positive outcome in the future) when making choices for others than for themselves? We use a laboratory experiment to address this question. Each subject makes a series of decisions to allocate time worked at a tedious task (text transcription) across two work periods, one occurring immediately and one six weeks later, with a discount rate (penalty for procrastination) applied across the periods. Each subject makes this set of decisions for themselves and for another person; for some subjects the other person is a friend and for some it is a stranger. We find that subjects choose differently for others than for themselves, and this difference is greater when choosing for strangers. In particular, subjects choose more impatiently (i.e. choose less time now and more time later) for others than for themselves, and this effect is greater when the other is a stranger. The difference between self and other decisions (and also between friend and stranger decisions) is smallest for the smallest and largest discount rates. Questionnaire responses show that a subject’s choices for his/her partner are driven by what he/she prefers for his/her own time allocations and by care for the other (wanting to minimize total time worked or wanting distribute time in a desirable way, which was often expressed as a wish to let him/her get more of the work done sooner). This seems at odds with the pattern of actual decisions we observe. The decisions our subjects made can be explained by people being somewhat impatient for themselves but expecting others to be more impatient, particularly when those others are less personally close to the decision-maker.
September 18th, 2015 (3:15 EH 211)
Speaker: Kevin Novan, Assistant Professor of Agricultural and Resource Economics at the University of California, Davis
Bio: Kevin Novan is an assistant professor of Agricultural and Resource Economics at the University of California, Davis. His research interests are in the fields of energy and environmental economics, focusing primarily on the design of environmental policies targeted towards the electricity sector. Recent work quantifies the impact of renewable electricity on pollution and examines the energy savings provided by residential energy efficiency investments.
Topic: Using Smart Meter Data to Evaluate the Returns to Energy Efficiency
Abstract: This paper uses hourly smart-meter data to estimate the social and private cost savings provided by residential energy efficiency investments. Focusing on over 5,000 households in Sacramento, CA that receive new, energy efficient air conditioning units (AC), we estimate not only how much energy savings are caused by the AC upgrades, but also when the energy savings occur. By determining when the energy savings take place, we are able to accurately estimate the avoided generation and pollution costs. We find that, on average, the AC upgrades reduce electricity consumption by 5%. Within the households that account for the majority of the energy savings, the avoided consumption provides an average social benefit of $9.78/month. However, under the current increasing block pricing structure, the households save an average of $27.30/month on their electricity bills. These results highlight that, under the current retail pricing structure – i.e., low fixed fees with high, increasing variable charges – investments in residential energy efficiency are being dramatically oversubsidized.
September 25th, 2015 (3:15 EH 211)
Speaker: Steve Puller, Texas A&M; Co-authors (not presenting): Mark Hoekstra of Texas A&M and Jeremy West of MIT
Topic: Cash for Corollas: When Stimulus Reduces Spending
Abstract: The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.
October 9th, 2015 (3:15 EH 211)
Speaker: Laura Grant, University of Wisconsin-Milwaulkee
Topic: Prices Versus Social Nudges for Motivating Energy Conservation
Abstract:Recent papers explore the effectiveness of social comparisons, documenting reductions in energy and water use. But these behavioral nudges act jointly with pricing, with limited ability to identify the mechanisms separately. Are the effects attributable to prices, behavioral interventions, or both? What are the dynamics in terms of learning and persistence? In this quasi-experiment, consumers are first charged a marginal value for electricity use, followed by a period with free electricity and notices of their use relative to a social reference. Then in the next period, marginal pricing of electricity is reimplemented along with the social nudge. During free electricity and social nudges, consumption increases 16 to 24%. When prices are reimplemented with the nudges, consumption reduces by 0 to 10% — a significant net increase relative to prices only. Learning occurs rapidly and effects are persistent through the time period evaluated. Further analysis shows a large boomerang by low-use households. I use income and family size to assess other1 heterogeneous effects and address external validity. Finally, I discuss the environmental impacts and propose recommendations for improving the program.
October 16th, 2015 (3:15 EH 211)
Speaker: David A. Bielen, National Renewable Energy Laboratory
Topic: Do Differentiated Performance Standards Help Coal? CO2 Policy in the U.S. Electricity Sector
Abstract: The Environmental Protection Agency (EPA) recently finalized regulations for carbon dioxide (CO2) emissions from existing fossil fuel power plants in the form of the Clean Power Plan. One interesting feature of the rule is that it imposes different CO2 emission rate standards on coal and natural gas power plants. In this paper, I examine the distributional and efficiency consequences of a differentiated, but fully tradable, performance standard policy in which the standard is relaxed for coal generation and tightened for natural gas generation. I explore the economic incentives induced by such a policy, and evaluate whether or not standard differentiation eases the regulatory burden on coal stakeholders. In particular, I focus on three key distributional outcomes: aggregate coal usage, coal plant profits, and regional wholesale electricity prices. To conduct the analysis, I first develop a simple analytic model of the electricity sector, showing that differentiation, when compared to a policy with the same standard for all fuel types, always increases coal usage, but price and profit changes depend on competing effects. To quantify these outcomes, I construct and implement a detailed simulation model of the U.S. wholesale electricity market. In the simulation results, I find that differentiation increases coal usage modestly, restores coal plant profits beyond the no-regulation level, and increases electricity prices in almost every region of the country. The results imply that differentiation provides limited assistance to coal producers, and benefits coal-fired power plants at the expense of electricity consumers.
October 23rd, 2015 (3:30 EH 211)
Speaker: Patrick J. Gourley, PhD Candidate in Economics at the University of Colorado, Boulder
Topic: Social Stigma and Asset Value
Abstract: I use the unique circumstance surrounding the 1999 Columbine Shooting to estimate the effect of a social stigma on asset value. Using a repeat sale framework I find the immediate effect of stigma from the Columbine Shooting is 10 percent of a property's value and is still present 15 years later. This implies a $34,000 average decrease in housing value which aggregates to a $19 million loss from property sales in the year 2000 alone. The results are robust to numerous specifications and a synthetic control method. Social stigma can play a significant role in consumer preferences and this suggests policy makers take stigma into account when considering remediation from loss in asset value.
November 13th, 2015 (3:15 EH 211)
Visiting Scholar: Adrienne Ohler is an Associate Professor of Economics at Illinois State University
Bio: Adrienne Ohler is an Associate Professor of Economics at Illinois State University. Her research interests examine the interaction between natural resource use, environmental degradation, and public policy. Adrienne’s work at Illinois State includes estimating the value of environmental characteristics, understanding the welfare implications of lottery allocation for natural resource access, examining the relationship between income and environmental quality, and analyzing policies that impact the use of renewable energy.
Topic: Does Environmental Concern Change the Tragedy of the Commons? Factors Affecting Energy Saving Behaviors and Electricity Usage.
Abstract: Electricity consumption produces private goods, such as heat for homes, but fossil fuel consumption impacts the public goods of clean air and water. While self-interests can increase usage, social interests, such as global climate change, can impact an individual's attitude toward energy consumption. This paper examines the tragedy of the commons using household data, and compares the impact of self and social interests in predicting electricity consumption. Using both stated and observed behavioral data, the results show that self-interests have a greater impact on energy saving behaviors and electricity use. We extend the analysis to control for an individual's environmental concern and perceived behavioral impact, finding similar results, and supporting the notion that the tragedy of the commons occurs regardless of a person's perception or environmental concern. These findings may explain why pro-environmental attitudes do not necessarily lead to pro-environmental behaviors, and it contributes to our understanding of the motivating factors for energy savings and electricity use by examining both stated and observed behaviors.
November 20th, 2015 (3:15 EH 211)
Speaker: Sebastien Houde, Assistant Professor at University of Maryland
Topic: Do Energy Efficiency Standards Improve Quality? Evidence from a Revealed Preference Approach (with C. Anna Spurlock)
Abstract: Minimum energy efficiency standards have occupied a central role in U.S. energy policy for more than three decades, but little is known about their welfare effects. In this paper, we employ a revealed preference approach to quantify the impact of past revisions in energy efficiency standards on product quality. The micro-foundation of our approach is a discrete choice model that allows us to compute a price-adjusted index of vertical quality. Focusing on the appliance market, we show that several standard revisions during the period 2001-2011 have led to an increase in quality. We also show that these standards have had a modest effect on prices, and in some cases they even led to decreases in prices. For revision events where overall quality increases and prices decrease, the consumer welfare effect of tightening the standards is unambiguously positive. Finally, we show that after controlling for the effect of improvement in energy efficiency, standards have induced an expansion of quality in the non-energy dimension. We discuss how imperfect competition can rationalize these results.
November 23rd, 2015 (3:00pm EH 211)
Speaker: Robert Williams, Senior Research Scientist at Princeton University’s Andlinger Center for Energy and Environment
Bio: A physicist by training (PhD. UC Berkeley, 1967), Robert Williams is a Senior Research Scientist at Princeton University’s Andlinger Center for Energy and Environment, where he heads the Energy Systems Analysis Group (ESAG) and the Carbon Capture Group of the Carbon Mitigation Initiative—a 20-year BP-supported university-wide project (now in its 15th year).
Topic: Are There Roles for Coal if Global Warming is Limited to 2°C?
Abstract: World leaders have agreed to strive to limit global warming to 2°C. What are implications for coal, the most abundant fossil fuel? Carbon capture and storage (CCS) technologies needed for coal’s survival are advancing only slowly, and coal is facing multiple market constraints. However, the IPCC has concluded that CCS is essential for realizing an energy future with no more global warming than 2°C. A way forward for coal is discussed: There are promising low-carbon coal options that could be launched soon in the US market that are compatible with a 2°C global warming limit; Such options successfully introduced in the US are likely to be competitive in most other coal-dependent regions. Read More