Going back to Rachana's question regarding what causes the public misconception about climate change, I think many people fail to distinguish general trend and abnormal extremes. As Professor Greer mentioned during her lecture, climate has fluctuated in general; the planet Earth has experienced several periods of ice age and greenhouse. What I gathered from talking with critics of global climate change is that they tend to treat current situation as a phase of this regular trend. For this reason, I found it interesting that, as Greer pointed out, the Earth should be actually experiencing a cold phase right now. For class tomorrow, I want to talk about how we can possibly fix this prevalent public misconception. Would public education on climate change be effective? Or even, would it be possible to promote such education when Politics distorts any scientific evidence and discussion on climate? Another reason I think people 'deny' the reality of global climate change is that they believe any attempt to cut carbon emission hinders economic growth. People do not necessarily see its economic benefits (or rather, cost of not reducing carbon emission). I am interested in discussing how could we encourage people to get a broader understanding of cost and benefit in carbon reduction.

Since we talked mostly about temperate forests during the last class, I think we should devote more time on tropical forest on Thursday. As Professor Casey mentioned in class, the inhabitants of tropical forests are usually the world's poorest poor. When we over-harvest tropical forests, these are the people who bear most of the social cost. Kahn Chapter 13 gives a variety of policy options that could address/alleviate this unfair situation. I wish to talk more these potential solutions such as volum-based fee of harvesting, performance bond, and economic zoning. It is also important, I believe, that we discuss the limitation of each policy and how we could improve their efficiency. Furthermore, I would like to talk about the potential effect of establishing well-defined property rights in protecting tropical forests. As Professor Casey already said, property rights alone cannot solve the problem of open access that many tropical forests have. Nevertheless, I believe that securing property rights is an imperative policy reform especially for the small scale farmers living in tropical forests. Kahn talks about how lack of property rights has induced many farmers to employ excessive slash and burn agriculture. Securing the rights to their own farmland will encourage locals to be involved in the campaign for protecting tropical forests.

I want to further a point that Jerry brought up in his comment. Jerry suggests that sustainable tourism can collaborate with the MPAs. This will be an ideal win-win situation for both MPA authorities and locals because they can not only contribute to preserving the marine environment but also create an alternative job market for local fishermen. When I was in Belize last spring, I observed that a lot of locals are indeed engaged in tourism related business. However, they worked mostly as employees--local guides, scuba instructors, restaurant waiters, etc. Those who owned these business were wealthy Europeans and Americans who would bring back most of their profits back to their home countries. In order to boost the national economy of these poor countries whose citizens depend heavily on fishery, it is imperative to provide locals with substantial compensations. I believe that these compensations should not be just monetary. For instance, the local and national government could provide job training or education program for local adults and children so that they can pursue career in either sustainable tourism or marine preservation effort. Such policies will help locals understand the importance of protecting their marine environment and reap myriads of financial benefits and thus contribute to the growth of national GDP in those countries.

Megan brings a great point about how politics can often hinder the efficient allocation of resources. As she assumes, it may seem logical that countries like Barbados whose GDP heavily depend on marine biodiversity will prioritize the protection of reefs. However, my experience at Belize tells me otherwise. Our research there also finds that tourists are willing to pay substantially more than what they currently pay for coral reef fund in Belize. (I forgot how much it was exactly, but a very small portion of air ticket to Belize goes directly toward the fund). However, the Belizean government itself refuses to raise the fee, fearing that such an increase will it unappealing among tourists to come visit Belize. This story, I believe, shows yet another example of the conflict between economic facts and decision making process.

As Xiaoxiang has already mentioned in his comment, the Chinese government had implemented the one child policy as its 'mutually coercive' means to control the domestic population size. What a lot of people seem to forget is that the government had to partially abandon the very policy due to the projected (or already happening) slow down of economy as a consequence of the repressed population growth. This example, I believe, illustrates whether Hardin's theoretical suggestion is feasible in real life. Furthermore, Hardin himself acknowledges that we are yet to discover the optimum level of population. To me, any political attempts to restrict the freedom to breed (let alone the morality of such actions) when we are not even sure of our exact goal seems rather counterproductive. Lastly (since no one seems to point out this), the 'revised' version of the Tragedy of the Commons provided an argument that made me almost gasp. Basically, its author Beryl Crowe asserts that it is impossible in today's world to create and enforce mutually coercive responsibilities because many states have lost its monopoly on coercive force. It will be easier for others to read this his own words: "Coercive force which is centered in the modern state cannot be sustained in the face of the active resistance of some...[portion] of population unless the state is willing to embark on a deliberate policy of genocide directed against the value dissident groups". It is true that many nations have seen the trend of decentralization in which the power of federal/central government has been diffused to that of local, smaller institutions/groups. However, I do not believe that this diffusion of power does not necessarily translate into the loss of democracy as Crowe seems to believe. Yes, people today may have more means such as lobbying to influence the legislative decisions, but that does not mean that they are suddenly going to revolt in order to repeal traffic law. If I completely misinterpreted Crowe's argument, please correct me in your comment.

Since other students have already done a thorough job of summarizing the World Bank's paper, I thought I would contribute to this blog post by elaborating on few points that have been raised in previous comments. Firstly, Juan critiques the paper for ignoring the possibility for innovation (e.g. solutions and previous attempts) to reverse the global warming trend. Although his concern is legitimate, I wonder if such information would have been appropriate for the particular purpose of this paper. Through this paper, World Bank was trying to raise the public awareness of gravity of global warming. If the organization ended its paper on a positive note indicating that there are already potential solutions to the problem, there might be a chance that people do not take the issue as seriously as World Bank hopes. Also, I do no think we will know for certain whether the paper mentions innovations or not just by reading its executive summary. Moreover, probably due to the characteristic of World Bank, the paper concentrates on regions with impoverished developing countries. I wonder how many scientific research and project could have been conducted when most people in these region struggle for basic needs. (Concerning this point, I was actually wondering if we can talk about possibility of advanced countries aiding LDCs in research and development as a reward for participating in global carbon tax initiatives in class tomorrow.) Jean mentions that she is surprised that the paper does not mention Southern Africa and South Eastern Asia as impact regions. I am quite curious as well. These two regions are also poverty-stricken and global warming will bring catastrophic consequences on poor people there. So what accounts for this omission?

Reading Eichengreen and Mody's paper reminded me of Eric Rosengren's talk from few weeks ago. As Rosengren said, the (nominal) interest rate in the US has been set close to zero for quite a while now. With continuous failure to achieve 2% inflation rate, Fed has been unsuccessful in escaping the liquidity trap. According to Eichengreen and Mody, a high US interest rate curtails investment abroad because people can attain high yields by investing within domestic economy. In other words, low interest rate will necessarily make foreign investment more attractive. I wonder if that is the case with the current interest rate of 0%. At the same time, I would like to question if the 'US interest rate' theory alone can explain the whole picture. Take Baht devaluation in 90s as an example. Many US investors were putting their money in Thai economy because the interest rate was quite high there. In 1997 however, the huge capital influx into Thailand suddenly diminished precisely because many US investors lost confidence in Thai financial institutions. To be honest, I am not sure whether the US interest rate rose quickly and significantly at that time as to incentivize American investors to withdraw their money from abroad. Nevertheless, I believe that panic among investors rather than change in domestic interest rate caused the reverse in direction of capital between Thailand and US. Lastly, I wonder if this paper is undermining the gradual rise of economic power in South. Alexandra's comment about the lingering impact of colonial institution on North and South division particularly made me think about this point. It is true that most of the wealth in today's world is still concentrated in the northern hemisphere. However, the countries that used to be considered as "poor" and "backward" are now fast catching up. For instance, increasing number of Chinese are investing their money in US economy these days. I think it would be interesting to observe the pattern of foreign investment from the South's perspective.

Without doubt, I strongly believe that human capital plays a significant role in decision making for investment. However, I think Juan bring a very important point to our discussion. Callie said in her comment, "people with more to lose are less likely to take risks" and are therefore more reluctant to invest. As Juan points out, the relatively smaller family size among farmers who did try agroforestry definitely had less to lose. What also caught my attention from the empirical results was that farmers with lower income level were more inclined to have tried or show interests in agroforestry. I was initially confounded since it seemed that engaging in agroforestry would require farmers to spend part of their income in planting the trees. However, if the monetary cost of agroforestry was not so high (i.e. people could get the trees from nearby forest and simply transplant them), it would make sense that the decision to invest is solely up to one's outlook and knowledge about agroforestry. Furthermore, the relatively poor farmers would have less wealth to lose and thus feel less risky about investing in agroforestry. Reading a paper that relates human capital and agriculture, I could not help but remember the last class discussion about education in the rural countrysides. Professor Casey is correct in emphasizing the role of education in boosting investment in agriculture, yet I wonder what kinds of education he is aiming. Would the education reform in the rural area specifically focus on sustainable farming and other agricultural techniques or should it include other fields of study as well that might not be too practical (i.e. the ability to cite Shakespeare)?

What particularly interested me in Shultz’s article was his criticism of political distortion which discriminates agriculture. In his Nobel prize lecture, Shultz states that the potential productivity of agriculture has not been fully realized due to the price and cost distortion. He asserts that this mismatch is a deliberate political decision that favors urban population. They reason on the grounds that "agriculture is inherently backward and that its economic contribution is of little importance". As a result, price of agricultural products have been significantly reduced in order to feed the urban consumers whereas the price of manufactured goods remained relatively high. I believe that such political action only exacerbates the poverty, especially in the developing countries. As Shultz says in the beginning of the lecture, majority of the world's poor reside in the rural countryside. Unless their situation is addressed, the country can never truly make progress in social welfare. As demonstrated in the first article about malaria, one negative social impact can engender a broad social cost. Let's connect the idea of persisting rural poverty with what we talked about last week: migration. Because of the distortion, peasant farmers would be inclined to move to the cities in search of jobs. The mass migration to urban area can also bring about overpopulation, pollution, and other negative consequences in the city. In other words, such policy decision can induce a vicious cycle of migration.

It was quite interesting to me that at one point Udry explicitly says that the optimal amount of child labor is not actually 0. His exact wordings from the paper is as follows; "...it is efficient to increase child labor and reduce schooling up to the point at which the present discounted value of future costs of additional child labor are just balanced by the current benefit to the household of that additional child labor." It may be quote like this that turned off many people above. A rational economist, Udry views the amount of child labor as an equilibrium of the benefits and cost of children's employment (discounted at present value). I was also initially a little shocked by his statement. However, I think the mindset that dictates "no children should be removed out of school in order to work" is a product of having grown up in a very advanced country. On the other hand, It still makes me wonder if Udry is giving 'too much credits' to the parents of working children. To what degree are these parents making correct prediction about their children's foregone future earnings? To find the equilibrium between cost and benefit of child labor, they would need perfect information about the potential wage increased by education. I can't help but doubt that many of these parents would be biased when calculating children's future wage (especially if the child is a girl and lives in a culture where most women are sold into marriage). If that is the case, would that not be the problem of imperfect information leading to the wrong equilibrium?

As Jean has already mentioned in her comment, Krugman's paper reminded me a lot of Professor Goldsmith's Economics of Social Issue last year. Professor Goldsmith would often say "think like economists! Build models to explain a social phenomenon". This approach really helped me simplify and thus better understand particular issues in the contemporary society. Unlike Jean and Kate however, I feel more optimistic about the usefulness of formal models in economics. Yes, Rodrik does argue in his paper that we should not restrict our understanding to a standardized set of ideas. However, he does acknowledges that there are indeed economic principles that are common to every successful nations: property rights, fiscal solvency, market oriented incentive, and sound money. The difference between these nations is that they adopted unique policy measures that implemented and utilized all these principles in a varying degree. Clearly, formal models and other generalization help us more easily observe a common theme. Formal models are also handy in that it does not aim to conclusively declare an irrevocable truth. As Krugman argues, "verbal expositions...make [it] seem like something that 'must' be true. In...model we see that it is something that 'might' be true". In other words, formal models simplify a phenomenon and enable us to test the hypothesis before actually empirically proving it.

Rodrik's article has numerous points that were discussed in materials that I have been reading for Professor Dickovick's IPE class (which is conveniently right after Development Econ). One of the points that I thought would be interesting to elaborate is the protectionism. In theory (and assertion among champions of trade liberalization), protectionism is considered to be restricting free trade from achieving its full benefits. Histories of Latin America show us that the strong emphasis on Import Substitution was a huge failure. Economists such as Coughlin, Chrystal, and Wood believe that protectionism is deleterious in that it deprives both domestic and foreign investors of opportunities to start new business. (If interested in reading their work, you can find the article via http://research.stlouisfed.org/publications/review/88/01/Protectionist_Jan_Feb1988.pdf) On the other hand, Rodrik asserts that countries such as South Korea and Taiwan have reaped myriads of benefits by giving advantages to domestic producers through subsidies and selective trade protection. Although these countries adopted policies antithetical to Washington Consensus, they still managed to achieve sustainable economic development. So when it comes to the issue of protectionism, is it always case-by-case?

Another point I want to note separately is Duflo's brief opinion on China's Only Child policy. Although the policy itself was created in the environment that prefers boys, it has actually brought an unexpected result of creating gender equality in modern China. Because many people can either have only one son or one daughter, families nowadays tend to cherish their only child regardless of the gender. Furthermore, in case some people do not know, Chinese government has partially revoked the Only Child policy in that people born in the year of 1992 and after can have more than one child when they get married (conditional that they themselves were only child).

One of the points that really interested me in Duflo's paper was her support for the political quota system. She argues that since many women (both in developing AND developed nations) are dissuaded (directly or psychologically) from pursuing career in political realm, mechanisms like gender quota can help women participate in social decision making process and thus better reflect their interests and needs. However, I wonder if people in today's developed (and albeit more equalized) countries will be in favor of her suggestion. I attended W&L Women's Leadership Summit last year. One of points for discussion on our agenda was how to bring more women leaders to politics. Along with professor Bell (who teaches philosophy of feminism occasionally), I suggested that US government could adopt gender quota like several other countries do. However, I was taken aback by the prevailing opposition from the female students. They argued that such a system would not be fair for the male leaders who would want to compete on equal basis and women should try to win elections on their own, not through reservation. On the other hand, I believe that quota actually creates a fair ground for female and male leaders to work together and better represent a balanced interests of all citizens. In today's world, there are too few female leaders who can collectively and effectively represent women's interests. Reserving number of seats in government for female leaders guarantees that their voice be heard in decision making process. As Duflo points out in her paper, these female leaders who won the position through quota actually helped make changes that were more conducive to development (i.e. sanitary drinking water) than those male leaders have been making. Even in South Korea, there is a government department called "ministry of women and families" that is composed only of female leaders and designed to promote welfare of women and their families. So quota system is not an entirely noble or unusual political concept around the world, both in LDCs and advanced countries. However, it seems that many women in the US look down upon the quota system and view it as a way to "cheat the system". This mind set perhaps might be hindering US from moving onto the next level of gender equality.

It was interesting how Gitter and Barham chose the parental education attainment rather than income level as their indicator of power relationship within households. Since the contribution to the wealth of family can be directly or indirectly determined by the power struggle between male and female head of a family (i.e. women cannot leave their house to work because they have to take care of their children and tend home), it can certainly distort our understanding of true intra-household effects. I wonder then if studies that have used income level as their measurement of power can be significantly biased. Concerning the "tipping points" in children's school enrollment rate in relation to women's power within households, I believe it implies a very important message; that dominance by either head of the partner can be detrimental to children's well-being and thus families should strive to achieve a healthy balance in decision making. Lastly, I am curious about the quality of school and teachers in communities that Gitter and Barham chose to observe. From our last reading, we learned despite a high school enrollment rate, children still cannot reap the benefits of education in many LDCs due to frequent absence of teachers. I wish Gitter and Bradford supplied us with more information regarding the school these children in their study enrolled.

As others have already pointed out in their comments, I too found the poor's spending pattern on non-essential goods very interesting. Although this consumption could definitely be a result of addictive behavior as Kate argued, I think that such spending habits might be explained in a perfectly rational and socially understandable context. Since poor people often depend on their relatives and neighbors to borrow money, it is probably very important to keep a good relationship with them. Festivals might be the best way for the poor people to ensure good terms with these potential future lenders. Additionally, modest consumption of tobacco and alcohol might help the poor to ease their stress over their financial situation and long day of work and thus better rest. As for why the poor households do not spend their marginal increase in income on nutrition, we can observe the similar spending pattern in US as well. When I was in POV 101, Professor Pickett told me that many poor households regard food as the most flexible part of their budget. Since they prioritize payment of fixed budgets-such as rent, utility bill, etc- they choose to forego healthy amount of nutrition intake. Additionally, it might be that those living in extreme poverty are so accustomed to constant hunger that they do not necessarily feel reason to increase food consumption with additional income. Lastly, this article helped me better understand the difficulty in improving public service for education in developing countries. I was surprised to learn that the amount of money the poor households spend in education is insignificant not because of low enrollment rate but because most schools are funded by the national governments. Despite the relatively high enrollment rate, schools in developing countries have not been so effective precisely because of its adverse quality. My biggest question concerning this point would be how to motivate public school teachers to become better educators.