Tuesday, September 25, 2007

Thinking Through Green

Despite this political appeal, we argue that the standards have a cost in terms of efficiency and effectiveness. In particular, we show that an LCFS [Low Carbon Fuel Standard] limiting carbon emissions per unit of energy (the energy-based LCFS) can achieve the first best outcome only under unrealistic assumptions. Moreover, we find that, contrary to the stated purpose, an LCFS can actually raise carbon emissions. Additionally, we show that the second best LCFS—from a regulator’s perspective—“under-taxes” all fuels and may require a nonbinding standard, i.e., the optimal standard may be no standard at all.

That is an excerpt from
a working paper by Stephen P. Holland, Jonathan E. Hughes and Christopher R. Knittel. Reading through the simulated economic effects of environmental policy ideas becomes a difficult exercise. On one side, most everyone admits the externalities from carbon emissions exist and most likely harms long-term global climate. However, dealing with such global issues hardly warrants a “magic wand” approach to the problem.

No one policy can solve all problems. Moreover, having one policy simulated in best-case scenarios with maximum restrictions in place is not only improbable, but also unrealistic. Not even environmental regulations are always efficient. This is where policy fails us.

Once again, what we are seeing in the Low Carbon Fuel Standard is an attempt to affect the free-market. We try to adjust the market so that people favor low carbon fuels, but this essentially makes the price of low carbon fuels so low, that the public uses the fuel to the extent that we end of polluting just as much as we were before.

There is a caveat however. Fore example, giving a corporation a tax break that realizes record profits is not necessarily a logical maneuver economically, albeit logical politically. Luckily, if you did not know, congress has rescinded on those tax breaks. Such tax breaks are of the same ilk as subsidizing already profitable farms.

And if you think policy is the only place where we can get it wrong on the environment, you might need to think again. As Warren Brown recently wrote in the Washington Post, what do we do when the time comes to dispose of the large batteries that come in hybrid vehicles? What are the real costs of the entire hybrid vehicle from its length of life, to its ability for salvage and/or disposal? Rather, would it not be more efficient to simply purchase a small economical gas engine vehicle?

Instead of having these questions of policy and “green” life style externalities answered, and instead of having facts and numbers discussed, the public sees a grandiose delusion about how to “help” the environment. What happened to the good old days where reducing, reusing, and recycling were key elements in not only helping the environment, but also being efficient?

If you read Warren Brown’s article, you’ll understand what he, many others, and I have been saying for quite some time now. The public is simply not ready to discuss the real costs of reducing our use of oil, which would best come by the way of a gas tax.

Sunday, September 16, 2007

Education for Whom?

Have you ever stopped to consider why so many of our nation’s teachers go back to school to receive elaborate graduate degrees and even in some cases doctorates?

Well, whether they like it or not, Charles T. Clotfelter, Helen F. Ladd, and Jacob L. Vigdor have answered that question by asking another question, what effect does having a graduate degree have on student achievement?

From the August NBER Digest, Linda Gorman summed the paper on graduate-degree teacher credentials and their effect on students educations. In the end the effect was put simply as, none.

According to Linda, the authors, like many before them, have gone through the statistics and found what their predecessors have found. What matters is not whether you have a graduate degree or not, but rather on your experience. (My apologies to all my friends who have become new teachers; I can only hope that you are the outliers in the data field.)

However, dare not think for even a moment that a teacher’s credentials are not correlated with how students perform in their classes. The authors have found that teachers whose credentials are weak have received disadvantaged students. This condition then leads to a further widening of the achievement gap that had been created by the students’ socioeconomic circumstances.

By asking the question as to what the effects of the teacher’s graduate education, the authors find that the motivations for attaining a graduate are plentiful. I believe increases in pay and better students/classroom environment would head the list for motive.

Is this truly the efficient manner to be taught? Should our most disadvantaged teachers consistently receive the most disadvantaged students? I emphasize consistently because there may be a need to provide incentives for teachers to take on these particular students. Quite possibly, the incentives may be misaligned. Perhaps more incentive should be provided to a teacher who takes on students who fall on the bad side of the achievement gap.

Conversely, the data suggests that teachers most likely receive incentive to attain a master’s degree so as to be pampered in how their future classes will be composed. That is to say, they go back to school not become better teachers, but rather, to get better students.

Economists have always spoken out on misaligned incentives, and this may yet be another case of such askew system. I am reminded of Arnold Kling’s feelings on the purchase of carbon offsets. The offset system in hardly efficient, and is an example of trying to eat a salad just because you are feeling guilty for eating cheesecake. That is to say, you are eating more and wasting resources all for the sake of one’s conscience.

Maybe it is time that the incentives for teaching were realigned so that taking on the students who need the help ends up being the fiscally rewarding. According to the data, whether a teacher has a graduate degree or not does not affect the student’s performance, so the other students would hardly be mal-affected since each teacher has to be qualified anyway. John Stossel may in fact be right; a more competitive, incentive driven education system could put the right teachers in the right places.

Thursday, September 06, 2007

Games and Perception

Dating has many variables in which each person plays in different ways whether we think about those decisions consciously, or sub-consciously. One specific type, I have linked to before thanks to Ben Casnocha.

What Casnocha did not know at the time was that his observation and reading of The Game: Penetrating the Secret Society of Pickup Artists, by Neil Strauss would gain more notoriety even to the point where Stephen Dubner at the Freakonomics blog would make mention of it as well.

Dubner wrote entirely on the concept of “negging,” which Casnocha mentioned, but did not go too far in depth because he was writing an entire book review. Negging essentially is Neil Strauss’ term for providing what is not exactly an insult or a compliment per se, but rather an accidental insult, or a back-handed compliment. I dare anyone who is not a practiced pick up artist to try that.

According to Strauss and others, negging works. In fact, in the post Dubner wrote, he also cited research that showed many males will flat-out insult their partners in what is described as some sort of “mate-retention.” That is to say, the men make derogatory comments or insults so that their female counterparts will not (or never) have the confidence to leave them.

We can assume that any sane woman (please, don’t start writing me that there is no such thing; that joke has been done ad nauseum) would proclaim that “negging” is not something she would enjoy having done to her. On the other hand, the problem with that assumption possibility is that women like playing the game as much as men do, and would therefore want to be disarmed and “negged” to a certain extent.

As much as you can try, the game is never ending.

Also, how we look, and how we see ourselves concerns almost everyone. This post from Megan McArdle describes that we are not as hot as we think we are.

A cognitive scientist at the University of Chicago explained why to me last winter. When we look at ourselves in the mirror, in any given session we tend to anchor on the time slice image that makes us look our best. That, we decide, is the "real" us.

You're also biased by the fact that no one ever tells you you're ugly. It's not merely that people inflate what they tell you (they almost certainly do); it's also that people who think you're ugly tend to drop out of the sample. They may not cultivate an acquaintance with you, and those that do will probably not spontaneously let you know that they find you kind of repulsive.

You're stuck in a web of cognitive biases and a positive feedback loop. It's a wonder anyone does get married.

This phenomenon, believe it or not was discussed by musician, Mike Doughty, while looking at some self-portraits. He wrote that while he eyed over the photographs he wondered what had happened to the man whom he saw in the mirror.

Within our relationships, the differing perceptions and games played that come from you or other people continue to play pivotal roles no matter what their intended lasting value.