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Jennifer Friberg
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What this study gave me, and I am sure a lot of its readers, was an additional way to analyze the discrepancy between WTP and WTA. My first initial response to this inconsistency in the typical economic rational is, “of course people are less willing to give up something they already have!” People become attached to anything from the more obvious, such as pets, cars, and houses, to goods less obvious that memories alone can skew the WTA upward. However, attachment has much less relevance in experiments where the object in question has just been given to the participant or has not even been given to the participant yet. By using this method, this study could remove as best as possible the cause of attachment accounting for the difference between WTP-WTA. The idea that morals have a large part in this divergence, especially in regards to donating to charity, creates a new perspective. This experiment gave me the urge to see what the results would be with an experiment designed similar to the one in this article but with donations going to a different foundation. Instead of donating to a WWF project, the experiment could be altered to donating to a recipient foundation that has less of a moral obligation. Then the experiment could be run with a common good, such as a microwave. The chosen good should be highly unlikely to initiate a sentimental connection from its owner. As far as donating to an organization, morality and resulting emotions absolutely go into the decision making process. Although both situations are monetarily equal, the questions in this study intentionally frame questions to produce different emotions brought on by thoughts about morality, supporting the authors’ hypothesis. A study trying to explain why WTA>WTP in regards to public and private goods that do not provoke a moral question would be a great control experiment.
Toggle Commented Nov 18, 2014 on Econ 398 Papers at Jolly Green General
I spent most of my attention on the first experiment, because it seemed to be the most perplexing. This experiment highlighted individuals making primarily affect-based decisions concerning conservation even after analyzing summary-risk tables regarding the 3 management problems. First, the participants were asked to make a purely affect-based decision by ranking the impact of 3 management problems from very good to very bad. This is the experiential system at work, basing decisions primarily off of automatic reactions and intuition. After this first step, they were each handed summary-risk tables providing the amount of risk each management problem posed on 4 objectives. They were asked to rank the 4 objectives from most important to least important. With the risk tables available, the participants were asked to prioritize the management problems once again after being able to compare each with the relative risk to the 4 objectives. This part of the experiment is where the analytic system is supposed to dominate. With their prioritized objectives and the new information given to them via summary-risk tables, calculated, conscious decisions should be predictable. An individual should allocate the most funding to the management problem that had the greatest risk to their most important objective. However, the results showed that affect-ranking decisions overcame calculated, data-based analysis. The affect ratings, and not ranked objectives, were the significant indicators of funding. To me, this seems strange. Even after looking at data and calculated risks relative to each objective, people still had trouble overcoming their initial responses driven by affect. This concerns me, because conservation should be based on the facts and data available on risks and opportunity costs of different conservation outcomes combined with the tradeoffs of economic and social development. This experiment insinuates that many individuals, even when approached with the facts, risks, and tradeoffs, cannot be trusted to overcome their initial responses triggered by affect rather than cognition. In regards to conservation, inaction comes with high costs, both short term and long term. Understanding these costs, being compelled by the overwhelming data, and making deliberate decisions are necessary to create effective conservation efforts, and as long as people can allow their experiential system to regularly overcome their analytic system conservation efforts on a large scale will be largely inefficient and most likely unsuccessful.
Toggle Commented Nov 11, 2014 on Econ 398 for Tuesday at Jolly Green General
This article was a great culmination of a lot of topics and experiments we have covered so far in class but also added additional findings in the field of behavioral economics. It is fascinating to see how much actual decision making deviates from the basic models we learn in econ 101, 102, and even the upper level econ classes. Rottenstreich and Hsee's suggestion in regards to affect-rich and affect-poor decision really caught my attention. It is yet another example of an "irrational" choice in terms of classical economic theories yet I would absolutely respond in line with the participants in the study. Rottenstreich and Hsee suggest that the probability-weighting function would be flatter for affect-rich outcomes versus affect-poor outcomes. In the study, the affect-rich outcome is enduring an electric shock and the affect-poor outcome is losing $20. They found that the WTP to avoid an electric shock was highly insensitive to the probability of the shock when the WTP to avoid losing $20 was very sensitive to the probability of the outcome. This shows that when a highly emotional outcome (affect-rich) is at stake people tend to act out of accordance to typical decision making processes, which usually take into account the probability of the outcome to actually occur. When reading about studies like these in an economics class it is easy to see the way people should "rationally" decide their WTP in these two situations but this is when we are thinking in a focused mindset displaced from the actual emotion of the decision. When greater, more overwhelming emotions, such as hope and fear, are experienced I think we can all agree that our WTP may be slightly "irrational" when it comes to avoiding an electric shock or anything else slightly terrifying... This experiment, as do many others in the field of behavioral economics really challenges the general notion of "rational decisions". Many of the classical economic models would view the participants in a lot of the studies mentioned as irrational decision makers, however, these are the actual decisions people are making. This articles really highlights how necessary it is to take into account immediate emotions, both integral and incidental, when predicting individuals' future choices. The definition of rational choices really does need to include emotional responses, since humans are born and often times are influenced by their emotions.
Toggle Commented Nov 4, 2014 on Econ 398 for Tuesday at Jolly Green General
**The Economic Value of the Gladden Spit and Silk Cayes Marine Reserve in Belize This article had additional variables incorporated into the way the researchers calculated the value of the ecosystems, natural resources, and MPA's in Belize by introducing surveys to the locals as well as tourists. The tourists were split between both visiting and non-visiting in respect to the reserves. In agreement with Bailey, I was also thrown off guard by the results revealing that 95% of those tourists who did not visit the MPA in question (GSSCMR to be specific) had a high willingness to pay even though they had not visited. In addition to Bailey's thoughts on this interesting report of preferences and behavior I would like to point out the non-use values, such as quest value and option value. If these visitors who were surveyed were choosing to not visit not as a result of income or lack of time then it is quite possible that this survey is evidence of the utility derived from still knowing the GSSCMR merely exists or for hoping that it can be available to kids and grandkids and the future in general. Maybe just having a basic knowledge of a public good such as a marine protected area without even visiting themselves can cause people to automatically view them in a positive light worth protecting because, after all, it is a public good and morality is probably a huge affect on those who do not gain much from the MPA's as far as use value. This makes me question our hypothesis that the WTP for protecting whale sharks before and after a dive will be different. Before a dive, the anticipation of the unknown, their projected future use value, and their currently existing non-use values will still come into play.
Toggle Commented Apr 26, 2013 on Un Belizeable!!!! at Jolly Green General
**Coastal Capital: Belize The Economic Contribution of Belize’s Coral Reefs and Mangroves As Katie pointed out, retraining programs are a great example of treating the SOURCE of the problem, which is threatened fisheries in this specific case. Retraining programs are an effort to deal with the problem pointed out by our recent article that focused on the trade-offs along the ppf curve between biodiversity/ecosystem health and socio-economic wellbeing. By attempting to increase the number of fish and the biodiversity of the coastal ecosystems in Belize, many fishermen are put out of work. According to this article, "Belize’s fisheries are threatened by over-fishing, especially of desirable finfish such as grouper and snapper, as well as by the loss of healthy coral reef and mangrove habitat." Since overfishing is not the only factor to the demise of fisheries, focusing on the overall health of the coral reef by ceasing the destruction of mangroves and seagrass should be the main priority, along with stricter enforcement of some minor fishing laws like needing to be a resident in Belize in order to fish there. Putting more focus on the health of the ecosystem rather than stopping Belize citizens from harvesting their dinner and income makes more sense and is ideal considering the intrinsic value of ecosystems is more clear than the idea that a fishery has more value than a struggling family trying to feed their kids.
Toggle Commented Apr 26, 2013 on Un Belizeable!!!! at Jolly Green General
As many of my classmates admitted, I was also surprised by the lack of data on the non-market valuation in even the more commonly researched areas such as beaches, land, and fisheries. With the majority of the peer-reviewed literature submitted by only eight different authors, many of who worked together on multiple papers, there is not substantial, recent, scientific support to initiate any sort of general policy. Another contribution to the lack of policies resulting from the non-market valuation research being done is the fact that most of the research has a clear focus on specific places, such as beaches and land in north carolina and california. My initial reaction to p. 372 where the article states that little research has been done in the Pacific Northwest, mentioning Alaska, started me thinking about the ANWR oil drilling. This article being from 2007 could not possibly enlighten me about non-market valuation done in Alaska in regards to the ANWR drilling but I would be curious to see what kinds of research went in to protesting the drilling, especially since the region is not a commonly researched location according to this article.
Toggle Commented Apr 24, 2013 on testing at Jolly Green General
**Trade-offs between conservation and socio-economic objectives in managing a tropical marine ecosystem In order to protect what is left of many previously diverse fisheries, and to take advantage of the generally higher WTA as compared to WTP before it is too late and we are attempting to substitute/restore entire ecosystems, this article gives great social and economic trade-offs and cost/benefit analyses in support of reducing the numbers of fishing fleets per fishery. To steer clear of fishing up until the bionomic equilibrium (BE), a reduction of fishing fleets in a fishery up to a point will have small negative effects on the economy and employment numbers and large positive effects in way of conserving the biodiversity and general health of the ecosystem in question. This point where conservation and socio-economic objectives meet at the optimal level is what is highly desired. I like how this article gives a clear focus for policy-makers to take from after reading it rather than purely giving information on previous research and not specifying what to do about it. The article mentions that the largest setback in the attempt to increase conservation efforts while minimizing economic downfall is that in many places, especially third world countries, there are not many other options in the way of employment other than fishing. Working to create markets that are not subject to the destruction of the environment or subject to the tragedy of the commons is key in making improvements in the fisheries across the world.
Toggle Commented Apr 24, 2013 on Three more for Wednesday at Jolly Green General
**Ecosystem services of the tropical seascape: interactions, substitutions and restoration Bailey made a great point. Even if man could find the technology to recreate a perfect environment the expenses, time, and resources necessary to develop the research and to carry out the process would be overwhelming. There would be no need to even research the technology to "fix" our degrading seascapes if we could solve the problem that is destroying them in the first place. What I took from this article is that the focus should be on researching how to get what consumers want in the market (like hotels on the beach) without causing a domino effect of destroying mangroves, seagrass, and ultimately the coral reefs. By the end of the article I felt that, although the information was incredibly convincing to the reader that technologically restoring ecosystems is less desirable than avoiding the destruction of existing natural habitats, the conclusion was something we all know too well. Clearly, if we knew of a way to not need to restore these threatened ecosystems we would but that is the struggle. Going back to the source of the problem and starting from there is key. On another note, I think the "mineral accretion technique" is fascinating. I can really appreciate the science that went behind discovering that low-voltage electrical currents increase pH levels, which leads to the precipitation of limestone from seawater ultimately resulting in an increase in the growth rate of corals.
Toggle Commented Apr 24, 2013 on Three more for Wednesday at Jolly Green General
Although this article brings a hopeful message to readers that there exists the technology to use all renewable resources to power the state of New York, what is necessary and altogether missing is the plan of how to implement this. If it is just a grand idea that is apparently feasible, it still ultimately is doing nothing for the environment until it is put into effect. It is the job of the environmental economists to create economic incentives to achieve this goal the article claims feasible. Yes, initial costs may be high but that is when taking into purely monetary costs. When considering health costs, environmental costs, and the billions of dollars in negative externalities that the use of nonrenewable resources is costing society now, I would undoubtedly agree that initial costs of creating the infrastructure necessary to power New York with only renewable resources is no greater than the costs we are bearing now.
David Zetland's claim that there is NO deadweight loss resulting from Pigouvian taxes may be a little extreme but he makes his point loud and clear. Of course, revenue brought in by Pigouvian taxes will not be used with 100% efficiency to eliminate whatever specific behavior that is being zeroed in on, and most likely, the tax will not always have as much of an effect on the consumer's behavior as the policy-makers intended. However, it is hard to deny that when gas prices go up, people DO make changes. People drive less, carpool more, and are more conscious about their gas use in general. One problem with Pigouvian taxes that I have is that the lower socio-economic classes are more affected by the increase in prices and while the rich may be supplying more of the revenue through the taxes, the poor end having an even harder time affording the commute to work because of a pollution problem that everyone is contributing to. This harsher effect on the poor is a common problem with most taxes however but it is definitely even more intriguing when related to the Pigouvian taxes.
Toggle Commented Jan 22, 2013 on My Bad..... at Jolly Green General
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Jan 22, 2013