This is Cara Hayes's Typepad Profile.
Join Typepad and start following Cara Hayes's activity
Join Now!
Already a member? Sign In
Cara Hayes
Recent Activity
We read this paper in Environmental Economics but, after taking Development, I have a very different perspective of it. Reflecting on my blog post from last year, I was only focused on the detrimental effects of climate change on environmental factors, like habitat destruction. After studying the developing world, I am extremely concerned with the impact of climate change on impoverished people. There are currently 1.2 billion people in the world living without electricity, yet they would feel the most extreme effects of a 4°C world. This captures the paradoxical nature of climate change, that those who cause it don’t bear the brunt of its consequences. “The distribution of impacts is likely to be inherently unequal and tilted against many of the world’s poorest regions, which have the least economic, institutional, scientific, and technical capacity to cope and adapt”(p. 1). I would hope that this somber fact would “shock people into action” but it is easy to understand how people living in the United States would feel disconnected from the extremely impoverished in India and not feel pressure to adjust their consumption patterns on their behalf. However, some of the characteristics of a 4°C world, such as extreme heat waves, droughts and floods, already seem commonplace, even in the United States. The 2012 drought in the U.S. affected about 80 percent of agricultural land and, the current drought in the Southeastern United States, has caused raging wildfires. In August of this past year, Louisiana experienced devastating flooding which killed 13 people and damaged thousands of homes. Whether it is local natural disasters or sympathy for the developing world that causes people to take action, it is clear that developed countries, who produce the most greenhouse gases, must take the lead in reducing emissions and preventing a 4°C world because they are the main contributors to climate change.
This paper examines the link between trade openness in poverty, arguing that trade liberalization increases economic opportunities, which, in turn, can worsen income inequality while reducing poverty. I have always thought that trade was one of the most effective tools for development so I was surprised to learn how ambiguous its effect actually is and that, many times, “the benefits of freer trade seem to bypass the poor.” Trade often increases demand for semi-skilled laborers and the poor are most likely unskilled. The most important finding of this paper is the necessity of policies to accompany trade, such as educational programs or financing opportunities, in order to allow the benefits of trade to reach the poor. I think this article is especially interesting today because of Donald Trump’s commitment to renegotiating the NAFTA. From class today, I gained a deeper understanding of the anger felt by voters in industrial states who saw their local economies decimated when companies moved their operations abroad. It makes sense that Trump’s threats to raise tariffs on Mexican assembled goods to 35 percent appealed to them. They became the marginalized group while Mexican laborers and American producers reaped the benefits. While these American industrial workers serve to benefit if production is shifted back to the U.S., the affect on the poor of Mexico is likely to be devastating. Although it is ambiguous whether trade helps the poor, a lack of trade and resulting reduction of jobs and economic growth surely will hurt them. From an economic perspective, it is obvious that American’s who faced job displacement by transfer of industry abroad are still better off than the impoverished people of Mexico. An economy’s ability to take advantage of the opportunities offered by freer trade is characterized by finance, education and governance. Overall, the U.S. has a more educated population than Mexico. The American industrial workers are semi-skilled so have many more employment opportunities than the low-skilled poor people of Mexico, who will face even less demand if trade is restricted. Additionally, the U.S. has a more developed financial sector than Mexico. While these are important considerations, there is an ethical dilemma over whether American policy makers should promote the interests of Americans or those in the world who are more needy. This predicament is a central issue of all trade agreements.
Toggle Commented Nov 29, 2016 on Reading for Thursday at Jolly Green General
“Latest Findings from Randomized Evaluations of Microfinance” speak volumes to how strong the cycle of poverty actually is. In almost all topics we have covered in class so far, lack of access to credit markets is one of the most common characteristics of impoverished households. Three of the four biggest constraints facing those working in agriculture in developing countries are related to this. Amartya Sen even identified economic facilities as its own distinct type of freedom. It is clear that functioning markets and the ability to obtain credit are very important in regards to development. The idea of lending money to families who lack collateral and credit or access to financial institutions seemingly has so much potential in achieving these goals. For these reasons, the results of this research were very surprising to me. The authors found that microfinance has no observable impact on measures of health, education and female empowerment. Furthermore, the groups that benefited the most from increased access to credit were men in high-income quintiles who weren’t even targeted by microfinance institutions. The other forces contributing to poverty are so strong that supplying microfinance is not enough to release an individual from the poverty trap. This sentiment is captured by the fact that “poor people face various limits, and their ability to capitalize on opportunities varies greatly” (19). Overall, I found the findings of this report to be very disheartening but think that the conclusion the authors came to, that microfinance should be studied and applied at the individual level, shows promise.
Toggle Commented Nov 15, 2016 on Readings for this week at Jolly Green General
Going back to our discussion of the endogenous cycle of income and health, it is clear that alleviating impoverished people from the burden of malaria would produce huge economic results. In the malaria piece, the authors write that, “Suppressing malaria in poor, highly malarious regions, especially in sub-Saharan Africa, offers the potential to initiate a virtuous cycle in which improved health spurs economic growth, and rising income further benefits human health.” Schultz also speaks to this point, saying that improving population quality through investments in health and education. I found Schultz approach to improving population quality to be very interesting. He says to treat quality as a scarce resource, which implies that it as an economic value and acquiring it comes at a cost. When returns to quality exceed the cost, the population will have been improved. It was shocking to me that there are one to three million deaths a year due to malaria and that majority of these are children. Because this article was written in 2002, I wanted to see if the malaria’s affect was still as deadly today. According to UNICEF, the malaria mortality rate has fallen 60% from 2000 to 2015 and, in 2015, 438,000 people died of the disease. While the effect of malaria is still way too large considering it is a preventable and treatable disease, this is still a tremendous progress. It would be interesting to examine this improvement in Schultz’s population quality framework. By providing treatment for and preventative measures of malaria, human capital in these malaria endemic countries has increased through health improvements. The cost of acquiring these improvements may be increased government investment or foreign aid. Either way, the benefits of eradicating malaria clearly outweigh the costs.
Toggle Commented Nov 2, 2016 on Readings for Thursday at Jolly Green General
While “Women Empowerment and Economic Development” brings up so many issues regarding gender equality, I am particularly interested in Duflo’s discussion on women’s mortality rate during childbirth. I was shocked to hear that women in sub-Saharan Africa face a 1 in 31 chance of dying during childbirth while women in developed countries have a 1 in 4,300 risk of dying during childbirth. Knowing this, parents in developing countries see their daughters as having a greater chance of dying than their sons and are inclined to invest more in boys. Economists found that, not surprisingly, maternal mortality decreases as countries become more developed. On Monday, there was an article in the Wall Street Journal called “Infant Mortality Soars in Venezuela” about the dire state of the health care system in Venezuela. In the first five months of this year, 4,704 babies in Venezuela died before reaching a year of age and their overall infant mortality rate is 18.6 per 1,000 live births. Childbirth-related maternal deaths in state hospitals are currently five times worse than they were in 2012. The article tells the story of a young mother whose newborn dies during childbirth and, days later, she also dies due to complications that easily could have been fixed in a more developed hospital. While Venezuela’s current situation is greatly exacerbated by the fall in oil prices, it is still not considered developed by many standards. Applying Duflo’s research could lead to significant improvements in the lives of poor Venezuelan people. This leads to the central question of Duflo’s article: Should policy-makers looking to alleviate the high infant and maternal mortality rates in Venezuela focus on developing the entire country or place their efforts in empowering women? Either way, there are clearly a great number of “missing women” in Venezuela and any steps toward development or reducing gender inequality would be steps in the right direction.
Toggle Commented Oct 19, 2016 on Reading for Thursday at Jolly Green General
I found Rodrik’s article to be very refreshing because of its dismissal of the “one size fits all” approach to developmental economics. While it is important to understand the factors that contribute to economic growth, growth strategies should be tailored to a specific country. The economic growth of the United States over the past 200 years has been outstanding, yet no one expects the exact process that led to this to translate to another developing nation today. While current theories emphasize liberalization, deregulation and privatization, they are not the panacea for all developing countries. Rodrik points out that the U.S., Europe and Japan, who have reached similar levels of wealth, all protect property rights, regulate product, labor and financial markets, have sound money and provide for social insurance, yet their institutions to uphold these functions vary greatly. When policy makers lose site of this, “sound economics [are] delivered in unsound form”(15). This article brings me back to Krugman’s piece and our discussion in class last Thursday about the value of economic models. We came to the conclusion that models, while not an accurate reflection of reality, allow us to make valuable estimations about the real world. I think a similar argument can be made about economic theories to developing nations. While a specific growth strategy cannot be expected to immediately ignite economic growth in a country, policy makers can learn a lot from these theories and models. Rodrik concludes that, “The key is to realize that these principles do not translate directly into specific policy recommendations” (32). However, theories such as the Washington Consensus, shouldn’t be completely discarded because certain aspects, such as reforms to establish property rights and creating market incentives, could be highly applicable to certain developing nations.
Toggle Commented Oct 4, 2016 on Reading for Thursday at Jolly Green General
Paul Krugman points out one of the biggest shortcomings of economic theory, the use of simple models to explain the complexities of the world. I personally believe economists rely too heavily on assumptions in their models causing them to be too simplistic and, therefore, inapplicable for real world considerations. However, I understand that many real-world factors are impossible to fit into a model. To use Krugman’s example, economies of scale are crucial to high development theory and should not be ignored when studying developing countries. When considering economists’ struggle to accurately fit economies of scale into their models, I couldn’t help but think of the current struggle capture the effects of global climate change into models. The threat of global warming has serious implication for developing countries and no modern development theory should ignore this. In Environmental Economics, we learned the effects of climate change are measured in negative externalities but this doesn’t capture the true costs. While this is another example of the shortcomings of simplified economic models, the complete effects of climate change would be impossible to boil down into a single model. This paper creates a dynamic discussion on the role of models in economic theory. While I think Krugman’s conclusion that, “there's not much that can be done about the kind of apparent intellectual waste that took place during the fall and rise of development economics” is pretty harsh, it was interesting to get Krugman’s opinion on the different stages of development economic theory and how the subject has evolved over time. The main takeaway I have from this paper is that models are essential to economics because they allow us to make valuable estimations about the real world. As long as people utilize them with the caveat that they do not capture all aspects of reality, I think they should remain a part of the evolution of economic theory.
In the first two chapters of "Development of Freedom" Sen finds an articulate way to define the vague concept of freedom. According to Sen, freedom involves political freedom, economic facilities, social oppurtunities, transparency guarantees and protective security. It also requires the removal of unfreedoms which arise from poverty, tyranny, poor economic opportunities, systematic social deprivation, neglect of public facilities, intolerance and an overactive repressive state. These unfreedoms seem very uncharacteristic of the United States, the "land of the free," yet Sen pulls the United States into his discussion. I was shocked to learn that, as a group, African Americans in the U.S. have lower chances of reaching advanced ages than people in the extremely poor countries of China, Sri Lanka, Jamaica and Costa Rica even though African American's in the U.S. are much richer than the poor in those countries. This finding supports Sen's argument that income is not the only measurement of one's economic freedom. While most African Americans likely live on more than $2 a day, they do not have the equal ability to live whites, a major contradiction to Sen's holistic approach to freedom. The large gap between US white survival rates and US black survival rates in figure 1.1 on page 22 of nearly 20 years really caused this notion to sink in. One of the most important points Sen makes is that freedom can be a means and an end to development. While Americans may see their country as more free than other developing countries, the level of freedom the US has achieved so far has only been a means and is not yet the end. In light of the growing inequality in the US, I think it is very important that people realize that the freedoms they enjoy are "part and parcel of enriching the process of development" and that the "role of political freedom as means to development does not in any way reduce the evaluative importance of freedom as an end of development" (37).
“The Economic Lives of the Poor” gave a really thought-provoking insight into the everyday decisions those living in poverty have to make. I am currently in Demographics and Development in South Asia and it was interesting to read this article through that lens. Banerjee and Duflo specifically examine Udaipur, one of the poorest districts in India where 47% of people surveyed live on under $1 per day and 86% live on under $2. The tendencies of the people of Udaipur provide many insights into the lives of the poor. For examples, 99% of people surveyed in the Indian city had spent money on a wedding, funeral or religious festival in the past year. Banerjee and Duflo found that the typical poor household in Udaipur could spend up to 30% more on food than it actually does, if it spent less on alcohol, tobacco and festivals. From this, they conclude that the poor do not appear to be as hungry as one might expect and do not always choose to spend all their income on food. In my other class, we also read an article by Banerjee this week which examined the impact of colonial land revenue institutions in India that were established during the British occupation. “History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India” compliments “The Economic Lives of the Poor” by adding an additional explanation to the fate of the poor: history. Banerjee comes to the conclusion that when property rights to areas of land in India were given to landlords by the British instead of the cultivators themselves, those areas experience significantly lower agricultural investments and productivity as well as less investment in education and health. While limited access to credit and labor markets are definitely major contributors to poverty, it would be very interesting to examine the economic history of Udaipur and see how its historic land tenure systems affected the extreme level of poverty in the city today and the tendencies of the poor there. From reading the two articles, I would infer that a landlord system would be connected to areas of poverty today because of the stifled levels of investment in health and education over the past generations. Additionally, I think it would be interesting to explore the tendencies of the poor in other countries in Banerjee and Duflo’s survey and see how they are affected by the historic property rights laws in their region.
Toggle Commented Sep 13, 2016 on ECON 280 Reading for Thursday at Jolly Green General
I thought this paper did a great job of laying out the benefits of a carbon tax policy vs. a cap and trade policy. One issue they briefly mentioned that I wish they went into more detail about is the need for an international climate change regime. Climate change and is a serious, time-sensitive issue that won't be solved by the actions of only a few countries. While, for the most part, there is a global agreement that something needs to be done about the emission of greenhouse gases, there is disagreement over which economic policy to utilize and how fast to start cutting back on emissions. Aldy, Ley and Perry call for "policy coordination and verification among countries" and I am curious as to how possible it would be to attain this. While the European Union's Emissions Trading System, launched in 2005, seems to have implemented an effective cap-and-trade policy across Europe, would this same type of system work if grew to include the rest of the world? Furthermore, could an international body with the sole purpose of regulating global emissions have an effective presence? Thinking back to the failure of the Kyoto Protocol, the answer is seemingly no. However, the US did not participate in this effort, something that could have made a huge difference. In 1920, the League of Nations failed largely due to the United States' refusal to participate. The US clearly has a huge influence on the world stage and, if it aimed to be, could become the global leader on climate change efforts. Unfortunately, the partisan politics of the US causes many climate change policy changes to stay pending in Congress forever and, if this is reflective of how they would act on an international front, the outcome does not seem effective. Even if the world did agree on the best method of emission regulation presented by Aldy, Ley, and Perry, it is unlikely that it could successfully be implemented unless an intergovernmental body with significant authority was created and the US was in favor of this effort.
Toggle Commented Mar 30, 2016 on ECON 255 for next Thursday at Jolly Green General
While all three articles raised thought-provoking issues, I found “Confronting the Climate-Energy Challenge” by Daniel Schrag to be especially interesting. He identifies the actions that need to happen in order to reduce the risk of future climate change as increasing energy efficiency, increasing the stock of non-fossil energy generating, and adopting technologies for capturing and storing carbon dioxide. The last of these suggestions, carbon sequestration, particularly interested me. I have heard of carbon sequestration before but never knew that it involved physically capturing CO2 emissions and storing them in geologic repositories. The US Department of Energy actually has a lot of detailed information on their website about carbon capture and storage. Schrag calls for improving carbon sequestration technologies and the DOE also recognizes that carbon capture technologies are not yet advanced enough for full-scale deployment. On the carbon storage side however, there are some value added propositions that could incentivize the further development of carbon sequestration. For example, CO2 can be used in an oil or natural gas reservoir to push out the oil or natural gas in a process called enhanced oil recovery. I would like to know exactly how widespread this process is and if it could be even more so because it takes something we have too much of, CO2, and uses it in a way that adds value. While advancements in technology like carbon sequestration are great steps toward adapting to the problem of too much CO2, I think it is even more important to pursue developments that begin to mitigate the problem.
Toggle Commented Mar 16, 2016 on ECON 255 for next Thursday at Jolly Green General
I was very alarmed by this piece because it not only pointed out how widespread the use of coal is and how dependent the U.S. is on it for energy, but also explained its incredibly harmful impact on the environment. One statistic that jumped out at me was that, in the U.S., coal produces half of the nation's electricity and is responsible for 81% of CO2 emissions. Considering all of the activities that cause CO2 pollution, 81% is a staggering amount. Considering the fact that electricity demand worldwide is expected to double by 2030, this is very frightening. I agree with Epstein that coal needs to be measured at its true cost, including externalities. Because this is expected to double or triple the price, this would make coal economically competitive and possibly bring more money back to the people in Appalachian communities. Another aspect of this essay that jumped out to me was the information on mountain top removal. After Professor Casey mentioned it in class the other day, I looked up pictures of what this process looks like. From the images alone, it is obvious that the impacts to the local ecosystem must be enormous but Epstein pointed out the full extent of this damage. Deforestation, landscape change, mudslides, flash floods, and increased heavy rainfall are some of the few environmental changes that areas with MTR experience. I was also shocked to learn there are over 500 sites across Virginia, Kentucky, West Virginia, and Tennessee. That amounts to an entire region of the U.S. that is altered because of MTR. The authors recommend to end MTR completely and I have to agree them with after reading this essay.
Toggle Commented Mar 10, 2016 on ECON 255 for Thursday at Jolly Green General
This article did a great job of highlighting the threats to biodiversity, which are happening on all corners of the Earth. I was very surprised by the negative effects that agriculture has on biodiversity. I had always thought of farming as an environmentally friendly process and had not considered the widespread effects of the agriculture industry on biodiversity. Over-abstraction of water for agriculture is an issue I knew little about but, after discussing it in class, seems extremely pressing and easily resolved by increasing the cost of water to farmers. Additionally, shifts in agriculture demands, like the increased demands for many vegetable oils, is rising prices and therefore incentivizing farmers to grow more, even if the cost of that is habitat destruction. I found it interesting how Rand et. al pointed out that "existing generally underused in decision-making at a local, national, and international level," implying that environmental economists have thoroughly researched these issues yet policy makers do not fully consider their findings. Richer, more developed nations need to share advancements in agricultural techniques that protect biodiversity with less developed nations so they too can benefit. The proposed Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services sounds like it would be very helpful in empowering developing countries incorporate new scientific findings into their policies. This is very important because, although "the challenges of working across administrative and national boundaries are considerable,"... "protected areas need to be managed as a coherent network rather than as isolated habitat islands in order to sustain biodiversity, particularly in the face of climate change."
Toggle Commented Mar 2, 2016 on ECON 255 for Thursday at Jolly Green General
From chapter 11, I found the different methods of preserving recreational fishery resources to be interesting because the fish are consumed for recreational purposes, not for a true human need like food. Among the five policies to limit the participation, I am most familiar with catch and release. Catch and release is enforced through moral suasion and command and control, would there be a way to make a market to better enforce this policy?
Toggle Commented Feb 11, 2016 on More Chapters from Kahn at Jolly Green General
While I have enjoyed snorkeling in coral reefs, I did not fully understand their economic importance to the islands around them. Besides providing habitats for fish and other sea animals, coral reefs protect and produce white sand for beaches, protect coastlines, and support water tourism activities. If 15% of Barbados's GDP is a direct result of tourism, then coral reefs are extremely important to its economy. Because coral reefs are nonmarket and public goods, it is difficult to determine their indirect use values. I think this research sought to determine the value of coral reefs in the best way possible- trying to understand how people view the reefs. Because value is determined by people, not by natural law or government, understanding how the people who utilize coral reefs, like SCUBA divers, are willing to pay to preserve them is crucial. Most people in Barbados probably do not realize how much coral reefs effect their wellbeing while divers who frequent Barbados probably have a greater sense of this. It would be interesting to do a similar study examining how Barbadians value the coral reefs. I think they would have a greater nonuse value than use value. Just knowing the coral reefs existence and will exist for their children to enjoy is probably of great value to the Barbadians.
Toggle Commented Feb 3, 2016 on ECON 255 for next Thursday at Jolly Green General
The world population today has over 7 billion people, which is nearly two times greater than it was in 1965, three years before Garret Hardin wrote the Tragedy of the Commons. It is predicted by the United Nations that by 2050, the world population will be nearly 10 billion people. As Hardin predicted, “space” is still not a viable escape for this growing population so room on Earth is “finite”, meaning overpopulation will eventually overwhelm our planet. So are we the next dinosaurs, destined for permanent extinction? Reading the Tragedy of the Commons, it seems that Hardin identifies the source of the population conundrum as resulting from freedom to breed and freedom of the commons. He says, “To couple the concept of freedom to breed with the belief that everyone has an equal right to commons is to lock the world into a tragic course of action.” This made me think of China, the most populated country in the world with around 1.36 billion people, which recently repealed its one child policy after 36 years. This policy was very controversial for many reasons, one of which is that it isn’t right for a government to dictate how families chose to grow. The reason the Chinese government chose to repeal the policy was not because of the moral implications but rather to balance out the aging population. While allowing families to have two children is widely considered a good thing, is this greater freedom to breed in China going accelerate population growth even more? Hardin would surely argues yes and that, although “it is painful to have to deny categorically the validity of this right,” education could help make people realize “the necessity of abandoning the freedom to breed.” Whether its through education or economic incentives such as tax breaks to families with fewer children, or making birth control more readily available, there is a moral imperative to explore the options that could limit population growth. Without any efforts to change the current situation, depletion of the commons and an uninhabitable planet are unavoidable.
Toggle Commented Jan 20, 2016 on ECON 255 for Friday at Jolly Green General
Cara Hayes is now following The Typepad Team
Jan 20, 2016