Faculty publication

Prof. Ling Huang ‘s Research Accepted at AER

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huangResearch by Assistant Professor Ling Huang and her co-author, Martin Smith has been accepted for publication in the American Economic Review.  The article, entitled “The Dynamic Efficiency Costs of Common-Pool Resource Exploitation” makes use of a dynamic game to understand the Common-Pool resource extraction.  Natural resources management is a dynamic problem by its nature. Economists have worked on this important area for a very long time in the context of optimal control theory. However, the theoretical framework is very hard to be directly applied to empirical quantification. Based on multiple generations of research, hinged on the data availability and recent methodological development in dynamic discrete choice modeling, this paper is novel in its use of real data and a comprehensive dynamic game framework to empirically quantify the effect of the “tragedy of the commons.” It is the first paper in the fishery field published in AER after three decades.

 

Abstract

We conduct the first empirical investigation of common-pool resource users’ dynamic and strategic behavior at the micro level using real-world data. Fishermen’s strategies in a fully dynamic game account for latent resource dynamics and other players’ actions, revealing the profit structure of the fishery. We compare the fishermen’s actual and socially optimal exploitation paths under a time-specific vessel allocation policy and find a sizable dynamic externality. Individual fishermen respond to other users by exerting effort above the optimal level early in the season. Congestion is costly instantaneously but is beneficial in the long run because it partially offsets dynamic inefficiencies.

Profs. Hallwood and Miceli Complete Manuscript

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Uconn sealProfessors Paul Hallwood and Thomas Miceli have just completed the manuscript of their book, Maritime Piracy and its Control: An Economic Analysis, which will be published by Palgrave-Macmillan. A brief synopsis follows:

Piracy is the oldest international crime, and in international law pirates are regarded as the ‘enemies of mankind’. While prevalent in the seventeenth and eighteenth centuries, piracy has not gone away. Today it primarily afflicts the waters off two continents – East and West Africa and Southeast Asian. It is a serious threat to international shipping, and it imposes high financial costs as well as costs in terms of human life and welfare.  Over the last ten years 3,000 or more pirate attacks, actual or attempted, have been reported, with annual costs estimated to be in the range of $6 billion to $7 billion.

The application of economic theory to maritime piracy is a direct application of the economic theory of law enforcement, and relies on two fundamental principles: first, that pirates behave rationally in the sense that they respond to threatened sanctions in deciding whether or not to commit illegal acts, and second, that an enforcement authority (whether under the control of a single government or a coalition of governments) stands ready to enforce those sanctions. With respect to the first of these claims, there is considerable evidence that domestic offenders do in fact respond to threatened punishments.  As for modern-day pirates, the huge material gain that they can earn from their criminal activity is surely an important objective, notwithstanding claims that Somali pirates are acting in response to overfishing and other unfair practices by foreign agents in Somali waters.

As to enforcement, we offer several reasons for the apparent insufficiency of enforcement efforts against maritime piracy. These include the public good nature of law enforcement in general; the high cost of detaining, prosecuting, and incarcerating pirates; and inconsistent (or in some cases non-existent) national laws against piracy. To understand why these problems have been allowed to persist, we examine the main features of international law that governs the conduct of nations, and conclude by reviewing several proposals that have been made for improving international enforcement efforts.  Our hope is that the application of economic theory to maritime piracy will lead to a better understanding of the nature of the problem while improving the quality of the debate regarding alternative responses.

Economics of the Oceans

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Economics of the OceansRoutledge is publishing Professor Paul Hallwood‘s book, Economics of the Oceans, due out in February 2014.

On the Contents page Hallwood writes:

On the surface of the blue-green planet people have fought over the green bits for ages.  However, because they didn’t seem worth fighting over, they hardly bothered with the blue bits. Strange as it might seem, the green bits are mainly well tended while the blue bits are in awful disrepair.  Why is this? Let’s see if we can find out.

He then attempts to answer this question in 23 chapters using the tools of environmental economics, natural resource economics, and law and economics.

Professor Prakash’s Article Accepted in Journal of Economic Behavior and Organization

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Cover of JEBOProfessor Nishith Prakash‘s article titled “Consumption and Social Identity: Evidence from India” has been accepted for publication in the Journal of Economic Behavior & Organization. 

Abstract:
We examine spending on consumption items which have signaling value in social interactions across groups with distinctive social identities in India, where social identities are defined by caste and religious affiliations. Using nationally representative micro data on household consumption expenditures, we find that disadvantaged caste groups such as Other Backward Castes spend eight percent more on visible consumption than Brahmin and High Caste groups while social groups such as Muslims spend fourteen percent less, after controlling for differences in permanent income, household assets and household demographic composition. The differences across social groups are significant and robust and these differences persist within different sub populations. We find that the higher spending of OBC households on visible consumption is diverted from education spending, while Muslim households divert spending from visible consumption and education towards greater food spending. Additionally, we find that these consumption patterns can be partly explained as a result of the status signaling nature of the consumption items. We also discuss alternative sources of differences in consumption patterns across groups which stem from religious observance.

Click to view full article.

Oxford University Press publishes book edited by Professor Couch

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Oxford University Press has published a book entitled, Counting the Poor:  New Thinking about European Poverty Measures and Lessons for the United States, co-edited by Professor Douglas Besharov at the University of Maryland and Professor Kenneth Couch at the University of Connecticut.  The book is a collection of papers by leading scholars on current European measures of poverty, their conceptual underpinnings, and how they contrast with poverty measurement in the United States.  The papers were originally presented at a conference held at the Organization for Economic Cooperation and Development (OECD) in Paris co-organized by Besharov and Couch.

Credibility and the International Monetary Regime

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Professor Paul Hallwood has four chapters in the above titled book just published by Cambridge University Press in England.  The chapters are “Crash! Expectational Aspects of the Departures of the United Kingdom and United States from the Inter-War Gold Standard”;  “Realignment Expectations and the US Dollar, 1890–1897: Was There a ‘Peso’ Problem?”; “Credibility and Fundamentals: Were the Classical and Inter-War Gold Standards Well-Behaved Target Zones?”; and “Did Impending War in Europe Help Destroy the Gold Bloc in 1936? An Internal Inconsistency Hypothesis?”  All four chapters were written with Ronald MacDonald and Ian Marsh, and the book is edited by Michael D. Bordo and Ronald MacDonald.

 Hallwood’s chapters demonstrate that adherence to a fixed exchange regime imposes severe monetary and fiscal discipline on member countries – not unlike the Euro-zone today; that at some point this discipline can become unbearable, though the USA did ride out the free-silver movement in the 1890s; that the gold standard was heavily implicated in the generation of the Great Depression: and that it was also implicated in the French defeat by Germany in 1940 as France for too long accepted the fiscal constraint of gold, restraining its military spending, even while Germany remilitarized.

Thomas Miceli publishes “The Economic Theory of Eminent Domain: Private Property, Public Use”

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Professor Thomas Miceli’s latest book, “The Economic Theory of Eminent Domain: Private Property, Public Use”, has just been published by Cambridge University Press.  A brief description of the contents of the book is as follows:

This book surveys the contributions that economic theory has made to the often contentious debate over the government’s use of its power of eminent domain, as prescribed by the Fifth Amendment. It addresses such questions as: When should the government be allowed to take private property without the owner’s consent? Does it depend on how the land will be used? And what amount of compensation is the landowner entitled to receive (if any)? The recent case of Kelo v. New London (2005) revitalized the debate, but it was only the latest skirmish in the ongoing struggle between advocates of strong governmental powers to acquire private property in the public interest and private property rights advocates. Written for a general audience, the book advances a coherent theory that views eminent domain within the context of the government’s proper role in an economic system whose primary objective is to achieve efficient land use.

Prof. Segerson edits book on pollution control

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Prof. Segerson is the invited editor of a forthcoming volume on the Economics of Pollution Control, which is scheduled for publication in February 2011 by Edward Elgar Publishers. The book collects 26 previously published articles that provide a contemporary overview of this field. Rather than highlighting classic papers in the field, the volume focuses on more recent key contributions, highlighting advances in theory, models, and empirical methods that have occurred over the past ten to fifteen years. The included papers illustrate the wide range of contexts and ways in which the insights from economics in general, and environmental economics in particular, can inform current policy debates over pressing environmental issues. The volume is part of Elgar’s The International Library of Critical Writings in Economics series.

From Detroit to Singur

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“As land gets transferred from agriculture to industry, many people (like share croppers and landless workers) will lose their livelihood. It would be morally reprehensible to drive a Nano or a Cadillac on the dirt roads wet with the tears of the dispossessed. Economic rehabilitation of these displaced workers remains the first priority of any responsible government.”

An article by Professor Subhash Ray recently appeared in the November 17, 2009 issue of the highly esteemed biweekly literary magazine, Desh, published in Bengali from Calcutta. His paper draws upon the parallel between the experiences of General Motors in Poletown, MI in the 1980s and the recent events relating to Tata Motors and the agricultural land in Singur, West Bengal, to raise a number of questions about government taking of land for private development. A brief review of the history of land acquisition through eminent domain in the US serves as the background for a discussion of the different important questions like the problem of strategic holdouts and fair compensation. The essay ends with an emphasis on the moral obligation of the government, especially in India, for proper rehabilitation of the displaced when exercise of Eminent Domain powers becomes unavoidable.

His paper has attracted a lot of attention and has been highly acclaimed by scholars interested in the question of land acquisition for economic development. An English version of the paper is available as a University of Connecticut Economics working paper. The original article in Bengali is available on request from the author.

Prof. Ross to publish in the Review of Economics and Statistics

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Prof. Stephen Ross with his co-authors Eric Brunner (BA alumnus) and Ebonya Washington had their paper “Economics and Policy Preferences: Causal Evidence of the Impact of Economic Conditions on Support for Redistribution and Other Ballot Proposals” accepted recently at the Review of Economics and Statistics, one of the leading journals in the profession.

In this paper, they analyze voting data on California ballot propositions between 1990 and 2004 classifying these propositions based on their political leaning (Democrat vs. Republican) and based on the type of proposition (fiscal vs. social). They find strong evidence that positive economic shocks lead to declines in support for redistributive policies using an exogenous proxy for economic shocks based on changes in national employment composition and the composition of worker industry at the neighborhood level. Further, they find that voters behave as if the voters have a preference for consistency in political preferences so that economic shocks have a smaller but similar impact on voting on non-economic ballot issues.