Look for the next GCER Newsletter in June. Past Newsletters can be found here.
News Archive - Page 18
Sep 20, 2012
During 2012-2013 academic year, there are three distinguished faculty setting to visit GCER and the department of Economics.
Professor of Economics,
University of Pennsylvania
Arrived date: Dec. 6th, 2012
Return date: Feb. 11th - 14th, 2013
Associate Professor of Economics,
Massachusetts Institute of Technology
Arrive date: Apr. 15th - 18th, 2013
Professor of Economics,
New York University
Arrive date: March 11th - 15th, 2013
Sep 12, 2012
The Inaugural IZA-GCER Young Scholar Conference is set to take place during the week of October 22-26, 2012. The conference is jointly sponsored by IZA, the GU Department of Economics, and GCER. Its main objective is to expose young scholars to the world's leading labor economists through a week of presentations (for more details on conference objectives, cllck here).
During the one week program, each of five preeminent scholars will present his/her research, and speak to the Y-S participants about academic work in the field of labor economics. The list of speakers includes Josh Angrist (MIT), Raquel Fernandez (NYU), John Ham (University of Maryland), Jean Marc Robin (UCL, Paris), and Petra Todd (U Penn).
The morning talks will take place in the Edward B. Bunn, S.J. Intercultural Center (ICC), 37th and O St., N.W., Room ICC550. Afternoon seminars will take place in various locations around campus - please check the Conference Program schedule below.
Jun 3, 2012
"What a piece of work is a man! How noble in Reason! How infinite in faculties!" † ... But how much is he worth? Huggett and Kaplan provide an answer.
While markets exist that determine the value of houses, cars and IBM stock, many assets are not marketed. Thus, their value is not precisely known. For example, toll bridges are valuable but their value is not determined on a centralized exchange. GCER Fellow Mark Huggett and co-author Greg Kaplan from the University of Pennsylvania have new research that determines the monetary value of by far the most valuable asset that most people own: themselves.
Their new paper "The Money Value of a Man" proposes a method for evaluating the monetary value of an individual. Far from being an esoteric exercise, knowing one's monetary value is, in fact, quite useful. The most obvious application deals with how one should divide one's financial wealth between stock and bond holding. If one's monetary value can be determined then the return on human wealth is simply the future value plus future earnings divided by the current value. If this human wealth return looks like the return to low-risk bonds, then one should invest heavily in stock since the overall portfolio is already heavily weighted towards bonds. If, however, one's human wealth return looks like the return to stock, then one would be wise not to invest at all in stock. A key part of portfolio allocation advice therefore boils down to answering the question: what is the monetary value of a man?
To answer this question sensibly, Huggett and Kaplan face two main tasks. First, they determine how male earnings move with the return to stock and bonds. Second, given such a statistical model summarizing how earnings and asset returns move, they measure the value of these future earnings in terms of current dollars.
Huggett and Kaplan find that the average return on human wealth for high school or college educated U.S. males is several times the mean return to stock early in the working lifetime and that this return declines as males approach retirement. This is driven by the large amount of idiosyncratic earnings risk faced by young males together with the limited ability to share this risk. The authors also find that the stock component of human wealth is smaller on average than the bond component throughout the working lifetime.
† Shakespeare's Hamlet, Act II, scene II
May 20, 2012
The Economic Club of Washington presented its prestigious Vernon E. Jordan Jr Fellowship Award this year to GU PhD student Mauricio Villamizar. The award was given to Mr. Villamizar in recognition for his essay "Identifying the Effects of Monetary Policy Shocks: Evidence from Colombia." Mr. Villamizar, a fourth year student in the GU PhD program, completed his paper under the guidance of advisor and GCER Fellow Guido Kuersteiner. The award ceremony took place at an Economic Club luncheon on May 16 at the Grand Hyatt featuring Robert Zoellick, President of the World Bank.
Apr 15, 2012
Happiness is in the air! Levinson uses happiness surveys to put a dollar value on air quality.
The U.S. Environmental Protection Agency (EPA) was responsible for 32 of the 105 major rules issued by U.S. federal agencies in 2010. How do economists put a dollar value on the environmental benefits of such rules? This is one of the greatest challenges facing environmental economics, and a new paper by GCER Faculty Fellow Arik Levinson proposes and tests a new approach.
There are three existing and often-used methods of valuing the environment. The first is the "travel cost" approach which originated in a letter by famed economist Harold Hotelling. Hotelling wrote to the National Park Service in 1947, suggesting that the Park Service examine how much people spend traveling to unpolluted recreational sites. A second method, the hedonic regression approach, regresses housing prices on neighborhood characteristics including air quality. Finally, the contingent valuation approach directly asks people their willingness to pay for environmental improvements.
In recent work, Levinson proposes and estimates an alternative based on "happiness" surveys. The fundamental idea combines data from two sources. The General Social Survey asks respondents how happy they are, on a three-point scale, along with their incomes and other demographic information. And the EPA collects daily air pollution data from thousands of monitors all over the U.S. Combining these two sources, it is possible to estimate respondents' happiness as a function of their incomes and the air quality in the place and on the day they were asked the happiness question.
The approach is summarized in two equations. The first is a regression equation with each individual's response to the happiness survey as the left hand side variable. On the right hand side are the individual's income and demographic data and the local air quality conditions. From this equation, Levinson derives a second equation that describes the individual's marginal willingness to trade income for pollution reduction. From this second equation, Levinson estimates how much more income people would have to earn in order to feel at least as happy as they would with an improvement in air quality.
Levinson applies this approach to airborne particulates smaller than 10 microns (PM10), a common measure of air pollution. He finds that, on average, people appear to be willing to forgo about $40 of annual income for a one-standard-deviation reduction in particulate pollution for one day. How large is this change? A one-standard-deviation change represents a 50 percent increase (or decrease) in pollution! This corresponds to a move by an individual from an average county in the United States to one of the most polluted counties, for instance to Riverside or San Bernardino, CA. It also corresponds approximately to the improvement in air quality attributed to the 1970 and 1977 Clean Air Acts.