Crows are Also Averse to Inequality

First evidence in non-mammals of inequality aversion.

International Happiness

Just read the survey by Oswald and Blanchflower on the happiness literature. Something that surprised me was that there was very little discussion of the effects of culture on how people respond to surveys. It was mentioned but I thought it would be more important than this. I notice that as someone originally from England that I am much less willing to award high scores on surveys of say hotels or movies or whatever than Americans are and probably this also translates into how I would report on my happiness compared to people from some other cultures. Or is this not really important?

The paper does mention eating fruits and vegetables as being important for well-being. This is investigated in more depth in another of the authors' papers. I wonder if that helps explain why everyone seems to be so miserable in Eastern Europe in all these surveys? :)

How Should Benefits and Costs Be Discounted in an Intergenerational Context?

I can see that this paper is going to be important. A paper by Arrow and twelve other authors reporting on a workshop at RFF in 2011 where the EPA asked 12 of the economists how the benefits and costs of regulations should be discounted for projects that affect future generations. This sounds similar to the panel convened in the early 1990s by NOAA on the consensus on contingent valuation that also included Arrow.

The economists all agreed that the Ramsey formula provides a useful framework for thinking about intergenerational discounting. However, they did not agree as to how the parameters of the Ramsey formula might be determined empirically. It seems that they also agree that declining discount rates make more sense than using different rates for projects with different time scales, stating: "Theory provides compelling arguments for a declining certainty-equivalent discount rate." But they think that doing this in the Ramsey framework involves too much uncertainty about parameter values. Therefore, they recommend the approach introduced by Weitzman in "Gamma Discounting". A declining discount rate raises, however, the issue of time inconsistency. They argue that as the discount rate schedule needs to be updated from time to time as new information is available, this updating means that a new decision will need to be made anyway and, therefore, there is no inconsistency. But I think they realise that this is a bit of a stretch.

I've always favored combining sustainability constraints combined with regular discounting to get around these issues. To my mind, anyway, doing a cost-benefit analysis of an issue involving very large changes like global climate change doesn't make economic sense nor moral sense. The problem is better stated as how to stay within the 2 Celsius target (or how to get back within it) at minimum cost (and equitably). And uncertainty should be modeled explicitly rather than built into the discount rate.

Monash-UMelb-ANU Economics Paper in Science

Paper by Lisa Cameron and Lata Gangadharan of Monash, Nisvan Erkal of U. Melbourne, and Xin Meng of ANU on the effects of the one child policy on social behavior in China. They used economic experiments and sophisticated econometrics to see the effects of the one-child policy on things like trust and risk-taking. This seems to be part of a trend to more regular articles in Science on social science topics.

Completed a Choice Modeling Survey

This week, I was a respondent to a choice modeling survey for the first time. The purpose of the survey was to find out about reliability of supply of water, electricity, gas etc. So this was something that I as a consumer have a lot of knowledge about and a lot of interest in and it is a clear private market. So all the criticisms about environmental valuation don't apply here. Choice modeling is often used to obtain environmental valuations and I think it is superior to other approaches in that application.

The online survey gave us eight different scenarios of possible packages with varying prices and utility reliability that we could pick from. Each scenario had three different packages - our current service plus two alternatives. Each alternative had around 10 different characteristics. I've always wondered whether survey respondents could handle that and thought that you just need to give each respondent one choice set and survey more people. I was just overwhelmed with information.



I chose the current package in every case. Partly because of the information overload but also because saving $50-$400 a year on my utility bill is just not worth it to me to suffer from multiple power cuts each year and the like, which is what the trade-offs were about. Even when I lived in East Jerusalem in the 1980s as an undergrad student we didn't have that many power cuts (Troy, NY was almost as bad :)). So I'm thinking the results of this survey will be pretty insensitive to price except for the more extreme scenarios at low incomes. $400 is a big deal to someone on $30,000 a year (Australian full time minimum wage), but $50 isn't for someone on $60,000 (average wages).

Being a social science researcher myself I always feel sympathetic to people carrying out surveys and often do them. But I get really annoyed when a surveyer has me on the phone for more than a quarter of an hour asking endless questions or when an online survey turns out to have tens of pages of questions. Why do people design surveys like this that are going to either have less patient people drop out of or refuse to respond or just give random answers to either from impatience or choice fatigue?