15 Jul 2008
The Clean Air Act and Climate Change:
First in a series
by Richard Belzer
in Regulatory Economics, Regulatory Science
On July 11, 2008, EPA published for public comment an advanced notice of proposed rulemaking on the question whether, and if so, how, EPA should regulate carbon dioxide as a criteria air pollutant under the Clean Air Act. EPA simultaneously published a letter from Susan Dudley, Administrator of OMB's Office of Information and Regulatory Affairs, publicly distancing the Bush administration from EPA's proposal. Comments sent to EPA by other federal agencies also were made public.
This set of events may be unprecedented in the annals of federal regulatory poliicy. Today we begin a series providing a policy-neutral examination of the documents and the issues presented.
More...28 Jun 2008
Are Airline Loyalty Programs About to Die?
Delta (and others?) to start charging for award tickets
by Richard Belzer
in Regulatory Economics
Delta Airlines has announced new fees for redeeming frequent flyer miles into airline tickets -- $25 for domestic flights and $50 for international destinations. Other airlines are considering reciprocal actions.
What does economics teach about the likely consequences of this action? More...
24 Jun 2008
McCain's $300 Million Prize for a 'Super Battery':
Would this help or hurt?
by Richard Belzer
in Regulatory Economics, Regulatory Policy
Sen. John McCain has proposed that the federal government award a $300 million prize for the "for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars."
Assuming it would be a good thing to have this technology, is McCain's proposal economically sensible?
More...
17 Jun 2008
Carbon Taxes and Auctions:
What to do with $7 trillion, part 2
by Richard Belzer
in Legislation, Regulatory Economics, Regulatory Policy
In a story summarizing an in depth interview with Sen. Barack Obama, Wall Street Journal reporters Bob Davis and Amy Chozick provide news insights concerning how he or Sen. John McCain would propose to spend trillions of dollars in new government revenue that would be collected by auctioning carbon emission allowances. More...
14 Jun 2008
Cap and Trade:
Applying it to gasoline
by Richard Belzer
in Legislation, Regulatory Economics
Energy economist Jonathan Lesser publishes a commentary in the Wall Street Journal "recommending" a cap-and-trade program for gasoline. The piece is lightly satirical but nevertheless highlights an important point: All emission permit systems, including the proposed cap-and-trade regime for greenhouse gases, is a form of rationing. More...
4 Jun 2008
Carbon Taxes and Auctions:
What to do with $7 trillion
by Richard Belzer
in Regulatory Economics, Regulatory Policy
Robert Reich, secretary of the Department of Labor in the Clinton Administration, addresses the question of what the federal government should do with several trillion dollars worth of new revenue from carbon taxes or auctioned permits. More...
2 Jun 2008
Economists, Advocacy Groups, and Climate Change:
The Southern Alliance for Clean Energy's 'Economist Statement'
by Richard Belzer
in Regulatory Economics
The Senate is this week debating what would be the most far-reaching environmental legislation in US history, the Lieberman-Warner Climate Security Act (S. 3036). A regional US advocacy group, the Southern Alliance for Clean Energy (SACE), has distributed a "Cap and Trade Economist Statement" which would imply that economists favor the bill.
The Statement is interesting on several levels. First, it never mentions the bill being debated. Second, it focuses solely on one narrow (but politically important) aspect -- whether carbon emission permits would be given way or auctioned. Third, the principles that SACE wants economists to agree with are fundamentally incompatible with elementary economics. Finally, SACE says that a number of distinguished economists have signed the Statement anyway. More...
1 Jun 2008
Breaking Even is Hard to Do:
The higher cost of hybrid vehicles
by Richard Belzer
in Regulatory Economics
New York Times reporter Bill Vlasic says "[c]onsumers have been slow to embrace" General Motors' new Yukon/Tahoe Hybrid despite the near 50% improvement in city driving fuel efficiency. It's easy to see why. More...
30 May 2008
Economic Incentives that Work:
How to stop 'flopping'
by Richard Belzer
in Amusements, Regulatory Economics
The Washington Post's Ivan Carter writes that the NBA has decided to fine players who 'flop'. Will it work? More...
28 May 2008
Gas Tax Holidays, Part 4:
Pressure in favor mounts in Europe
by Richard Belzer
in Legislation, Regulatory Economics
Public discussion about a federal gas tax holiday has abated in the U.S., but according to the Washington Post it is heating up in Europe. More...
27 May 2008
More Evidence that Consumers Respond to Gas Prices
Increases observed in mass transit use
by Richard Belzer
in Regulatory Economics
During the short-lived debate about suspending the federal gas tax to ease prices, economists quoted in the news seemed to agree that consumer demand is highly inelastic -- that is, as price increases a lot, the quantity demanded changes very little.
The news increasingly contains stories suggesting that consumers respond more to changes in the price of gasoline than economists have assumed is the case. Example: rising use of mass transit. More...
24 May 2008
To Save Gas, Consumers Accept More Safety Risk and Emit More Air Pollution
Some costs of switching to motor scooters
by Richard Belzer
in Regulatory Economics
The Wall Street Journal reports that at the same time consumer demand for low-mileage SUVs and trucks has plummeted in response to high gasoline prices, consumer demand for high-mileage motor scooters has intensified. This tradeoff is entirely predictable. Scooters are ubiquitous commuter vehicles in European cites, where because of high taxes gasoline prices have for years been as high as they are now in the U.S.
Consumers are making two less obvious (but just as predictable) trades to get higher gas mileage: increased risk of injury and death from motor vehicle crashes and more air pollution. More...
8 May 2008
Gas Tax Holidays, Part 3:
Do economists' predictions make economic sense?
by Richard Belzer
in Regulatory Economics
It has been widely reported that over 200 recognized economists, spanning the political spectrum, have signed an open letter opposing the federal gas tax holiday proposed by Sens. John McCain (R-AZ) and Hillary Clinton (D-NY). Despite the ubiquitousness of reporting about the letter, we've been unable to locate an authoritative copy of it. Still, what we have have found raises questions about the economists' economic reasoning. More...
Gas Tax Holidays, Part 2:
The value of symbolic benefits
by Richard Belzer
in Regulatory Economics
Economists often complain that they are ignored when they make policy recommendations, or recommend against policies they believe are ineffective, inefficient, or counterproductive. A large number of economists have signed a joint letter objecting to the gas tax holiday proposed by Sens. John McCain (R-AZ) and Hillary Clinton (D-NY).
Clinton has responded saying "I'm not going to put my lot in with economists." This remark appears to have been widely interpreted as a dismissal of the economics profession with respect to its area of specific expertise. An alternative interpretation is that she believes economists have little or no expertise with respect to politics, and the value of a gas tax holiday is political, not economic.
Today, economist Bryan Caplan of George Mason University writes in support of a gas tax holiday because of these symbolic benefits. More...
2 May 2008
Gas Tax Holidays...
...and how they conflict with the candidates' energy policy proposals
by Richard Belzer
in Regulatory Economics
Recently, Sens. John McCain (R-AZ) and Hillary Clinton (D-NY) have proposed a "gas tax holiday" in which the federal government would suspend its collection of motor fuel taxes during the summer vacation travel season. Sen. Barack Obama (D-IL) has opposed it because it would provide minimal relief.
The proposed gas tax holiday is an odd idea to dominate an energy policy debate. All three candidates have promised to take action if elected that would dramatically and permanently increase gasoline prices. More...
