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Unemployment and Mortality: Evidence from the PSID
We use micro-data to investigate the relationship between unemployment and mortality in the United States using Logistic regression on a sample of over 16,000 individuals. We consider baselines from 1984 to 1993 and investigate mortality up to ten years from the baseline. We show that poor local labor market conditions are associated with higher mortality risk for working-aged men and, specifically, that a one percentage point increase in the unemployment rate increases their probability of dying within one year of baseline by 6%. There is little to no such relationship for people with weaker labor force attachments such as women or the elderly. Our results contribute to a growing body of work that suggests that poor economic conditions pose health risks and illustrate an important contrast with studies based on aggregate data.
Integrating Demand-Management with Development of Supply-Side Substitutes
Sustaining water availability at current prices in the face of growing demand and declining resources is not possible, and scarcity is further exacerbated by falling recharge levels due to climate change, urbanization, and watershed depreciation. We discuss an integrated approach to water-resource development based on principles of sustainability science. In addition to demand management such as pricing, we consider supply-side substitutes such as desalination and wastewater recycling. The importance of integrating demand- and supply-side approaches is especially evident in the case of watershed conservation as climate adaptation. Watershed conservation reduces scarcity by improving groundwater recharge. Yet, incorrect pricing can waste those potential gains. We discuss a joint management strategy, wherein block prices for groundwater consumption and co-determined prices for watershed conservation incentivize and finance efficient profiles of both.
Ordering Extraction from Multiple Aquifers
Optimal groundwater extraction satisfies the condition that the marginal benefits of water consumption equal the full marginal cost of extraction in each period, including the opportunity cost of future benefits foregone. But how should this well-known condition be generalized when there are multiple aquifers available? We provide an extension of the “Pearce equation” to guide the optimal ordering of resource extraction and an illustrative application wherein it is optimal to extract from the “leakiest” aquifer first, letting another aquifer increase in volume. This generalized least cost-first principle contrasts strongly with the sustainable yield approach. By including spatial dimensions, the model provides the marginal valuations of water at each time and place, such that full marginal cost pricing can incentivize users to implement the efficient program. While an untrammeled water market would fail to provide the optimal solution, regulators can facilitate efficient water trading by setting appropriate exchange rates.
A Policy Analysis of Hawaii's Solar Tax Credit Incentive
This study uses Hawaii as an illustrative case study in state level tax credits for PV. We examine the role of Hawaii’s tax credit policy in PV deployment, including distributional and tax payer impacts. Hawaii is interesting because its electricity rates are nearly four times the national average as well as has a 35% tax credit for PV, capped at $5,000 per system. We find that PV is an excellent investment for Hawaii’s homeowners, even without the state tax credit. For the typical household, the internal rate of return with the state tax credit is about 14% and, without it, 10%. Moreover, the vast majority of installations are demanded by households with the median income and higher. We estimate that single-family homeowner’s in Hawaii may demand as much as 1,100 MW of PV. There are, however, significant grid constraints. Policy currently limits PV generation to no more than 15% of peak load for any given circuit, or approximately 3% of aggregate electricity demand. Tax credits are therefore not likely to increase the overall deployment of PV, but rather spread the cost of installation from homeowners to taxpayers and accelerate the rate at which Hawaii reaches grid restrictions.
Intergenerational Equity with Individual Impatience in an OLG Model of Optimal and Sustainable Growth
Among the ethical objections to intergenerational impartiality is the violation of consumer sovereignty given that individuals are impatient. We accommodate that concern by distinguishing intra- and inter-generational discounting in an OLG model suitable for analyzing sustainability issues. Under the assumption of constant elasticity of marginal felicity, the optimum trajectory of aggregate consumption is guided, via the Ramsey condition, by the intergenerational discount rate but not the personal discount rate. In an economy with produced capital and a renewable resource, intergenerational neutrality results in a sustained growth path, without the necessity of a sustainability constraint, even in the presence of intragenerational impatience. We also find that green net national product remains constant along the optimal approach path to golden rule consumption.
Published version: Endress, L.H., Pongkijvorasin, S., Roumasset, J., Wada, C.A., 2013. Intergenerational equity with individual impatience in a model of optimal and sustainable growth. Resource and Energy Economics. In Press.
How Have Catch Shares Been Allocated?
A unique database was created that describes the methods used to allocate shares in nearly every major catch share fishery in the world. Approximately 54% of the major catch share fisheries in the world allocated the Total Allowable Catch (TAC) solely on the basis of historical catch records, 3% used auctions, and 6% used equal sharing rules. The remaining 37% used a combination of methods, including vessel-based rules. These results confirm the widely-held belief that nearly all catch share programs have “grandfathered” private access to fishery resources: 91% of the fisheries in the database allocated some fraction of the TAC on the basis of historical catch. This publicly available database should be a useful reference tool for policymakers, academics, and others interested in catch shares management in Hawai‘i and across the globe.
To suggest edits or additions to the database, please email email@example.com.
Behind-the-counter, but Over-the-border? The Assessment of the Geographical Spillover Effect of Increased Access to Emergency Contraception
Washington was the first state to ease the prescription requirements making emergency contraception (EC) available behind-the-counter at pharmacies to women of any age in 1998. I hypothesize that the increased availability of EC affects fertility rates beyond the borders of the state that allows it. In contrast to the literature, I show that increased access to EC is associated with a statistically significant albeit economically small decrease in abortion rates in Washington counties where women had access to no-prescription EC pharmacies. Yet, there is no effect on pregnancy rates. These results are robust in a number of specifications. Finally, I find some evidence in support of the spillover effects in Idaho, but not Oregon. However, after accounting for changes in the availability of abortion services, the decrease in fertility rates in “treated” Idaho counties is rather small and models lack sufficient power to detect it.
Investigating the Effects of Furloughing Public School Teachers on Juvenile Crime in Hawaii
Policymakers have long been concerned about the large social costs of juvenile crime. Detecting the causes of juvenile crime is an important educational policy concern as many of these crimes happen during the school day. In the 2009-10 school year, the State of Hawaii responded to fiscal strains by furloughing all school teachers employed by the Department of Education and canceling classes for seventeen instructional days. We examine the effects of these non-holiday school closure days to draw conclusions about the relationship between time in school and juvenile arrests in the State of Hawaii on the island of Oahu. We calculate marginal effects from fewer juvenile assault and drug-related arrests, although there are no changes in other types of crimes, such as burglaries. The declines in arrests for assaults are the most pronounced in poorer regions of the island while the declines in arrests for assaults are the most pronounced in poorer regions of the island while the decline in drug-related arrests is larger in the relatively more prosperous regions.
Economic Impacts of Inter-Island Energy in Hawaii
This study assesses the economic and greenhouse gas emissions impacts of a proposed 400MW wind farm in Hawaii. Due to its island setting, this project is a hybrid between an onshore and offshore wind development. The turbines are planned for the island(s) of Lanai and, potentially, Molokai. The project includes building an undersea cable to bring the power to the population center of Oahu. It is motivated by 1) Hawaii’s high electricity rates, which are nearly three times the national average, and 2) its Renewable Portfolio Standard mandating that 40% of electricity sales be met through renewable sources by the year 2030.
We use an economy-wide computable general equilibrium model of Hawaii’s economy coupled with a detailed dynamic optimization model for the electric sector. We find that the 400MW wind project competes with imported biofuel as a least-cost means of meeting the RPS mandate. As such, the wind project serves as a “hedge” against potentially rising and volatile fuel prices, including biofuel. Though its net positive macroeconomic impacts are small, the estimated reduction by 9 million metric tons of CO2 emissions makes the project a cost-effective approach to GHG reduction. Moreover, variability in imported fuel costs are found to be a much more dominant factor in determining cost-effectiveness than potential cost overruns in the wind project’s construction
Please contact Makena Coffman at firstname.lastname@example.org for the full study.
Common correlated effects and international risk sharing
Existing studies of international risk sharing rely on the highly restrictive assumption that all economies are characterized by symmetric preferences and uniform transmission of global shocks. We relax these homogeneity constraints by modeling aggregate and idiosyncratic fluctuations as unobserved components, and we use Pesaran's (2006) common correlated effects estimator to control for common factors and cross-sectional heterogeneity. We compare the proposed approach with the conventional ones using data from Penn World Table 9.0 for 120 countries. While we do not detect a significant increase in risk sharing during the last four decades, our results confirm that consumption is only partially smoothed internationally and risk sharing is directly related to the level of development.
Estimating Demand Elasticities in Non-Stationary Panels: The Case of Hawai‘i Tourism
It is natural to turn to the richness of panel data to improve the precision of estimated tourism demand elasticities. However, the likely presence of common shocks shared across the underlying macroeconomic variables and across regions in the panel has so far been neglected in the tourism literature. We deal with the effects of cross-sectional dependence by applying Pesaran’s (2006) common correlated effects estimator, which is consistent under a wide range of conditions and is relatively simple to implement. We study the extent to which tourist arrivals from the US Mainland to Hawaii are driven by fundamentals such as real personal income and travel costs, and we demonstrate that ignoring cross-sectional dependence leads to spurious results.
The Impact of Marriage Equality on Hawai′i’s Economy and Government: An Update After the U.S. Supreme Court’s Same-Sex Marriage Decisions
The U.S. Supreme Court’s decisions in the two same-sex marriage cases have substantially increased the short-term and medium-term benefits that could accrue to Hawai‘i if the Hawai‘i State Legislature enacts legislation allowing same-sex marriages to begin in Fall 2013 or early in 2014.
Forecasting with Mixed Frequency Factor Models in the Presence of Common Trends
We analyze the forecasting performance of small mixed frequency factor models when the observed variables share stochastic trends. The indicators are observed at various frequencies and are tied together by cointegration so that valuable high frequency information is passed to low frequency series through the common factors. Differencing the data breaks the cointegrating link among the series and some of the signal leaks out to the idiosyncratic components, which do not contribute to the transfer of information among indicators. We find that allowing for common trends improves forecasting performance over a stationary factor model based on differenced data. The common-trends factor model" outperforms the stationary factor model at all analyzed forecast horizons. Our results demonstrate that when mixed frequency variables are cointegrated, modeling common stochastic trends improves forecasts.
Published Version: Peter Fuleky and Carl S. Bonham (2015). FORECASTING WITH MIXED-FREQUENCY FACTOR MODELS IN THE PRESENCE OF COMMON TRENDS. Macroeconomic Dynamics, 19, pp 753-775. doi:10.1017/S136510051300059X.
Potential Benefits, Impacts, and Public Opinion of Seawater Air Conditioning in Waikïkï
This report provides a summary of an investigation by the University of Hawai‘i Sea Grant College Program into the viability and effectiveness of installing a seawater air conditioning district cooling system in Waikīkī. Seawater air conditioning (SWAC) harnesses the cooling properties of cold seawater to provide cool air for air conditioning purposes. In doing so, SWAC reduces the amount of electricity needed for air conditioning. SWAC is particularly relevant to Hawai‘i for two reasons: first, the proximity of deep, cold, ocean water to areas of high population make Hawai‘i an obvious location for implementing the technology; and secondly, with approximately 90% of its electricity generated from fossil fuels, Hawai‘i is the most fossil fuel dependent state in the nation. Unlike the rest of the U.S., where coal, natural gas, and nuclear power are called upon to meet a substantial proportion of the electricity demand, Hawai‘i relies heavily on residual fuel oil (the by-product of refining crude oil for jet fuel, gasoline, and other distillates). As a result, Hawai‘i has very high electricity prices compared to the rest of the country. SWAC has the potential to both cut the cost of air conditioning and reduce the amount of harmful emissions that are released as a by-product of generating electricity from fossil fuels.
Seawater air conditioning works by pumping cold (44-45°F), deep (1,600-1,800 feet) seawater into a cooling station (Figure 1). Here, the cold seawater is used to chill fresh water flowing in nearby pipes. The chilled fresh water is then piped into hotels for cooling purposes while the seawater (slightly warmed to 53-58°F) is pumped back into the ocean at a shallower depth (120-150 feet).
Sustainable Development and the Hawaii Clean Energy Initiative: An Economic Assessment
The connection between the emerging field of sustainability science and the economics of sustainable development has motivated a line of interdisciplinary research inspired by the notion of “positive sustainability.” This notion is founded on three principles or pillars: (1) adopting a complex systems approach to modeling and analysis, integrating natural resource systems, the environment, and the economy; (2) pursuing dynamic efficiency, that is, efficiency over both time and space in the management of the resource-environment-economy complex to maximize intertemporal well-being; and (3) enhancing stewardship for the future through intertemporal equity, which is increasingly represented as intergenerational neutrality or impartiality. This paper argues that the Hawaii Clean Energy Initiative (HCEI) fails to satisfy all three pillars of sustainability, and consequently fails to achieve the "sustainability criterion" put forward by Arrow, Dagupta, Daily et al: that total welfare of all future generations not be diminished. HCEI shrinks the economy, contributes negligibly to reduction of global carbon emissions, and sparks rent seeking activity (pursuit of special privilege and benefits) throughout the State of Hawaii.