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Austin Hay
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I think what Matthew said is interesting. When we look at who are actually making it down to these Scuba places, we surely won’t see a normal income distribution, but rather one probably skewed pretty high. Matthew argues that an increase in fees might not affect many of these divers. A fair point. This is interesting, because maybe this valuation that we all are trying to come to isn’t dependent on the coral being observed or the animals in the area (per the article, the fish diversity, coral cover, etc.), but rather on the demographics of those visiting. If we are to add a fee for diving to preserve the area, we should try to ‘price discriminate’ by location based on tourists demographics. It might be tempting to make this ‘value’ or fee a function of strictly the quality of the natural sights (coral, etc.). I’d argue it’d be better to set this fee according to the wealth of people visiting there (surely correlated to the quality of the natural sights, but not perfectly). Since so many very high income earners are the ones visiting these sites, we might be able to charge more than the observed willingness to pay without any adverse effects in certain locations, whereas in others we may have to be closer to the measured willingness to pay.
Toggle Commented Feb 2, 2016 on ECON 255 for next Thursday at Jolly Green General
I think we all find the results of this paper interesting, and a little intuitive (though maybe not to the magnitude that the authors claim). The authors are able to observe differences in behavior based on a variety of emotions elicited among participants and that feat is impressive. In a more general sense, it would be interesting to measure how a variety of emotions changes purchasing behavior of other products (surely something done daily behind closed doors by big corporations testing their ad campaigns). The reason I think more studies being done on this would be interesting is due to the increase in internet sales. When we make purchases online we are held captive to any ads the company decides to display (however briefly, but consider even just a flash of an image can affect emotion). This differs from ads we are bombarded with when shopping at a physical store/mall. At a store/mall it's easy to overlook ads (as it's a busy, moving environment). On a webpage, though, it's harder to evade. So maybe the increase in internet shopping is not only a consequence of consumer convenience, but also of the desire of companies to better manipulate consumers emotions to increase sales. Let me clarify what I mean by ads. Think less of ads for specific products, but ads for a certain emotion (and probably also a product). It's much easier for the company to create a "happy" or "excited" environment for a consumer on a computer screen than it is to create that environment in a 20,000 square foot department store. Hampton talks about the fight that Big Tobacco puts up against these ad campaigns to protect their bottom line. So if they understand how effective these emotion-eliciting ads can be, surely other corporations do too and use it to their advantage (which is potentially greatest in the online realm). I know I'm being a bit conspiracy theorist here but I felt like this paper was sound, uncontroversial, and intuitive. It added some evidence to arguments we all understand at some level, so I didn't have much to say about it directly.
Toggle Commented Nov 10, 2015 on ECON 398 for next Tuesday at Jolly Green General
The reason why this field of study is expanding so rapidly makes sense. We have the technology to observe some brain activity in these experiments to spark more questions than answers. But I don't know what these answers will look like. The author at one point speaks about an experiment where it was hypothesized that a "non-normative pattern of cooperation has its origin in circuits of the prefrontal cortex." It's fascinating that we can link a physical part of the brain to a phenomenon that we observe in people's social behavior. As technology progresses it will be interesting to see how/if economics textbooks will change because, as quoted in the book, the assumptions of "the standard economic model...are in direct violation of even the most basic facts about human behavior."
Toggle Commented Sep 20, 2015 on ECON 398 at Jolly Green General
I agree with what Raymond posted above, though for different reasons. Like Ray, it was counterintuitive to me that the group loans wouldn’t produce a lower loan default rate. It seems, in theory, to be the best solution for everyone involved. The borrowers have decreased costs, the lender takes on a smaller risk (hedging his bets that someone in a group will be able to fully repay the loan, versus counting on an individual to do so), it also encourages (theoretically) more people to save and borrow (putting more money in the economy). It seems like a smart approach to lend to groups, evidently though it doesn’t prove to provide lower default rates. A lot of people have posted about how important insurance could be to these communities, and I really liked Kate’s point above. It would have been great it we introduced this insurance talk last week in agroforestry. In that context insurance could very well provide the impetus for more farmers to adopt the new, slightly riskier, methods and hopefully have higher yields.
The previous comments really hashed out a lot, so I don't have much more to add. I did find it interesting that the data presented gave a tangible (non income related) analysis to investments in human capital. We talk often about how the benefits from sending kids to school come in the form of better nutrition when they're adults and higher lifetime earnings, but this paper discussed a new benefit. Efficiency is a very important factor when farming, especially on these small farms, and if an increase in Human Capital leads to more efficient farms it not only helps the families running the farms (maybe in an increase in income, maybe not), but also the surrounding area. I say this because, as the paper said, the more trust the farmers can put into the information about agroforestry, the more likely they are to take part, and what better way to add "weight" to local farmers' decision making than for them to see their neighbors succeeding with it. Interesting, we always seem to come back to the point that communities can get caught in cycles of relative prosperity or cycles of disparity. Success breeds success and failure often leads to more failure. It'd be interesting to see an experiment where an outside 'expert' comes in and trains one local farmer to become an expert on agroforestry. Then a successful local farm that incorporates agroforestry would add credibility to all the other farmers in the area, with the hope of more people taking part. This experiment could also show us how its dangerous to encourage these new practices without ensuring those implanting it are fully informed of the methods. For instance, consider if one convinced a local farmer to start planting the cedar trees on his farm, and he doesn't understand the strategy behind it and the outcome is harmful to his farm. Then the 'weight' that all the other locals might have put into deciding whether or not to also take part decreases. So one bad attempt of encouraging this can sour an entire area on it all together based on the models in this paper.
Toggle Commented Nov 5, 2014 on Econ 280 for Thursday at Jolly Green General
Early on in the paper the author discusses the caveat to the assumption that an increase in wages leads to a reduction in child labor. I think an important reason why this assumption is wrong is that the marginal benefit of a dollar to these poor households is huge. So when, as he mentions, coffee prices rise in Brazil school attendance drops. The coffee prices won’t stay high for an extended period of time so it becomes even more imperative that the child stays to work to earn money at a faster rate. It’s the equivalent to working overtime at time and a half your regular wage. One is more likely to work an extra three hours if the pay is temporarily increased; likewise, the poor families want to take advantage of an increase in product prices while they are available. As he states the seemingly ‘obvious’ responses to this problem can be incredibly detrimental to the household. The household depends on the labor and wages brought in by the children so to ban it, in one way or another, would simply drive the family to an even worse level of impoverishment. The food for education initiative he discusses is a great example of an incentive based program that allows the family to realize some of the benefits of schooling in the present time. The parents are given an incentive to push their children to attend school and if this incentive outweighs the child’s potential labor and wages there’s no reason to believe it wouldn’t work. I’d be interested to see what the ‘price’ actually is to make this incentive equal to the wages and labor of the child. Once that is measured I think the search for funding could ensue.
Toggle Commented Oct 22, 2014 on 280 Paper for Thursday at Jolly Green General
In my very limited exposure to the study of economics I’ve grappled with the sentiments expressed in this article. I’m also a math major, so I feel more comfortable with models, and ‘rules’ that hold in all situations. When one has a model, however ‘vague’ it might be, so much more (sometime unforeseen) information can be garnered. When I compare my econ classes to my math classes, the two contrast starkly. At no point in math can I write a proof as a ‘story;, weaving together some logical based statements and loosely realized results. But in econ one can’t find results that are simply always true, as one can in math. So personally, it took some time for me to adjust to the fact that there aren’t steadfast theorems, lemmas and laws in economics as there are in math. As the article says, a balance of models and story telling are necessary to the advancement of developmental economics. For the most part the article has been thoroughly dissected by the comments above, so I wanted to share my personal realization of this exact phenomenon. The author took the right approach though, saying that the ignorance must go through stages to reach a place of less ignorance. Likewise, he acknowledged the need to find a balance, and the importance of simplified models.
The examples that were discussed in this article elucidate some interesting findings. I think the clear thesis in this article was strong, yet vague. He basically came up with some guiding principles or elements to starting growth, continued on to say there’s no way to know how to do these in any form outside of deciding case by case, and then further went on to say even if one comes up with the right implementation of “property rights,” “sound money,” “fiscal solvency,” and “market oriented incentives” that often times the benefits fade after maybe a decade (or less). He often used the phrase “higher order principles of sound economic management do not map into unique institutional arrangements.” As others have commented above, I find it odd that not one of these cornerstone economic traits that he emphasizes deals with any qualitative measure of life in a country. Sure, this is an economics paper, and measures of the quality of life are spotty at best, but at some point (as we’ve discussed in our class time) any amount of economic incentives or plans cannot succeed if a majority or large portion of the population is in danger of starving, has no access to health care, or any other number of unfortunate circumstances. I feel like most of the examples he brings up would fall apart in many developing areas where so many are living on less than $2 or $1 a day. He says any plan for economic growth needs to depend heavily on local knowledge, but doesn’t mention much about how poverty and extreme poverty would factor in. That would be an interesting addendum to this and to some extent Duflo’s piece last week complements this article in this way. She supported fixing these quality pieces first in order to reach the point of doing the vague ideas brought up in this article.
Toggle Commented Oct 1, 2014 on ECON 280 Paper at Jolly Green General
In section 3.1 of this article they first discuss the ways this data can be skewed. Whenever a study dealing with some sort of social issue that’s hard to quantify comes out these types of questions need to be answered and addressed. It’s tempting to look and say that in a family where the woman has employment, better education or receives income of some sort that this creates a more nurturing environment for the children. Clearly, as pointed out in this part of the article, many extraneous factors must be taken into account. One thing I felt like they left out was the question of whether just having an additional income causes these changes, whether or not a woman happened to be earning them. I’d be curious to see a study where one studies the behaviors of a family before a child reaches working age, and then again after. If a child, male or female, begins working and earning a wage for the household, then would we see these same changes in the dynamic of the family’s financial behavior? So many of these aspects of household spending and behavior vary so greatly from family to family, as they discussed, and any study to garner pertinent results would have to be extensive.
Toggle Commented Sep 25, 2014 on ECON 280 paper #2 at Jolly Green General
The limited amount of data, and consistent data across countries, struck me as a huge hindrance to the study of developmental economics. The first several pages of this article talked about how surveys in some country didn’t ask this, and others didn’t and how we can’t compare one things to another because we don’t have the data. I would be interested to see what would change in this discipline with greater resources dedicated to finding more and better information and data about the very people discussed in this article. Outside of that, something that also struck me was the conversation about the land owners and the lack of enforcement of titles. The author pointed out that many of these poor families have little incentive to use the land in the most efficient way because they are “agents rather than owners.” The example he gave was that leaving land fallow increases its productivity but it also increases the risk of someone seizing the land. The other main point the author discussed was the time that the poor had to dedicate to defending their own land. There is no legal recourse for them because they don’t have a title or deed for the land. A more organized and official way of documenting who owns what land, and a government presence to enforce it, would be a tremendous step into helping the impoverished in these countries. Surely it wouldn’t fix everything, but being able to mortgage land, having an incentive to use it more efficiently and not wasting time frivolously defending it would no doubt be beneficial to everyone.
Toggle Commented Sep 17, 2014 on 280 reading for Thursday at Jolly Green General
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Sep 17, 2014