• Should we increase (or remove) speed limits?


    Arthur van Benthem‘s answer is a clear no. In his job market paper, which uses data from the US, he shows that the potential social benefits are largely dominated by the social costs, which result among others from an important increase in fatal accidents, but also in the health consequences of increased pollution.

    When choosing his speed, a driver faces a trade-off between private benefits (time savings) and private costs (fuel cost and own damage and injury). Driving faster also has external costs (pollution, adverse health impacts and injury to other drivers). This paper uses large-scale speed limit increases in the western United States in 1987 and 1996 to address three related questions. First, do the social benefits of raising speed limits exceed the social (private plus external) costs? Second, do the private benefits of driving faster as a result of higher speed limits exceed the private costs? Third, could completely eliminating speed limits improve efficiency? I find that a 10 mph speed limit increase on highways leads to a 3-4 mph increase in travel speed, 9-15% more accidents, 34-60% more fatal accidents, and elevated pollutant concentrations of 14-25% (carbon monoxide), 9-16% (nitrogen oxides), 1-11% (ozone) and 9% higher fetal death rates around the affected freeways. I use these estimates to calculate private and external benefits and costs, and find that the social costs of speed limit increases are three to ten times larger than the social benefits. In contrast, many individual drivers would enjoy a net private benefit from driving faster. Privately, a value of a statistical life (VSL) of $6.0 million or less justifies driving faster, but the social planner’s VSL would have to be below $0.9 million to justify higher speed limits. The substantial difference between private and social optimal speed choices provides a strong rationale for having speed limits. Although speed limits are blunt instruments that differ from an ideal Pigovian tax on speed, it is highly unlikely that any hidden administrative costs or unforeseen behavioral adjustments could make eliminating speed limits an efficiency-improving proposition.

    Including as external costs, through their impact on social security schemes, some of the health related consequences of single-vehicle accidents (about half of all accidents), which van Benthem considers here as private costs, could only reinforce the conclusions.

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  • Generosity Day 2012


    Following a previous post on this blog on the generosity experiment and some reflections on how and why we chose (not to) give to and help others, I was suggested to take part in Generosity Day 2012. So after the theory, now is time for some practice.

    The idea, this February 14th, is to reboot Valentine’s Day as Generosity Day, pledging on that day to say YES to every request for help and be generous. Here is the place to take the pledge.

    We’re rebooting Valentine’s Day as Generosity Day: one day of sharing love with everyone, of being generous to everyone, to see how it feels and to practice saying “Yes.” Let’s make the day about love, action and human connection – because we can do better than smarmy greeting cards, overpriced roses, and stressed-out couples trying to create romantic meals on the fly.

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  • L’enfance pauvre en France


    Implacable résumé par Jean-Pierre Rosenczveig sur son blog de l’étude « Vivre la pauvreté quand on est un enfant ». Extraits:

    Quelques remarques déjà sur les chiffres sachant que pour la CNAF le seuil de pauvreté est à 942 euros par mois et par unité de consommation.
    Quoique déjà plus élevés que ceux dont nous disposions jusqu’ici, ils souffrent d’une évidente sous-évaluation. En l’espèce les fichiers des caisses d’allocations familiales et de la mutualité agricole ont parlé. Or un tiers des enfants uniques ainsi que nombre d’enfants de familles en grande précarité ne sont pas allocataires. Ajoutons, détail qui passe souvent inaperçu que l’étude concerne la seule France métropolitaine. En d‘autres termes, le chiffre réel doit être proche de 3,5 millions sinon le dépasser. Sachant que la France compte 13,5 millions d’enfants on mesure que la 5° puissance économique mondiale travers de sérieuses difficultés pour offrir un revenu décent à au minimum un quart de ses enfants.
    Il va de soi que certaines régions ou certains départements sont plus durement frappés que d’autres. Ainsi PACA est à 29% avec de villes comme Marseille à 44% et Avignon à 45% ! On ne s’étonnera pas que je relève que la Seine Saint-Denis est à 37% quand les Yvelines le sont à 13%. Toujours la faute à ces maudits mauvais vents qui en région parisienne poussent les pauvres à l’est. Aucune une politique volontariste d’aménagement du territoire ou de solidarité entre collectivités ne sera parvenue à combattre cette donnée qui date de la deuxième vague d’industrialisation!
    Je rappellerai ici que pour la fondation Abbé Pierre, 600 000 enfants vivent le mal-logement dont 200 000 dans un meublé ou dans un appartement occupé sans titre, 52000 chez des tiers, en centres d’hébergement ou à l’hôtel, 21 000 dans un camping ou un mobil home quand 21000 sont sans domicile fixe ou ont un habitat de fortune (cabine, cave, garage, voiture…).

    Lire également la dernière partie sur la perception qu’ont les enfants eux-mêmes de leur situation.

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  • Infrastructure and climate change: The Panama canal


    This note in the Natures newsblog provides an excellent example of how large scale infrastructure investment choices may have a long-lasting impact on carbon dioxide emissions.

    By 2014 — 100 years after the canal was first completed — ships with a beam of up to 49 metres will be able to travel through the 82-kilometre channel, up from the current 32.2-metre limit.
    Upping the beam constraint, known among seafarers as ‘Panamax’, will have ripple effects throughout the shipping industry. Larger ships will enable the transport of more goods in fewer trips, and larger beams will facilitate the design of more efficient hulls, according to a study in the International Journal of Maritime Engineering.
    Overall, the potential savings — in both fuel and reduced emissions — may be as great as 16% per tonne-mile.
    The improvements would go beyond the ships that use the canal. Some 45% of larger seagoing vessels built in the last decade conformed to the Panamax constraint because, despite the fact that many of these ships never go near the Panama Canal, their value is based on their ability to do so.

    A case for revising mitigation incentives and subsidies? A more systematic view on this issue is provided in this paper by Zmarak Shalizi and Franck Lecocq:

    Mitigation investments in long-lived capital stock (LLKS) differ from other types of mitigation investments in that, once established, LLKS can lock-in a stream of emissions for extended periods of time. Moreover, historical examples from industrial countries suggest that investments in LLKS projects or networks tend to be lumpy, and tend to generate significant indirect and induced emissions besides direct emissions. Looking forward, urbanization and rapid economic growth suggest that similar decisions about LLKS are being or will soon be made in many developing countries. In their current form, carbon markets do not provide correct incentives for mitigation investments in LLKS because the constraint on carbon extends only to 2012, and does not extend to many developing countries. Targeted mitigation programs in regions and sectors in which LLKS is being built at rapid rate are thus necessary to avoid getting locked into highly carbon-intensive LLKS. Even if the carbon markets were extended (geographically, sectorally, and over time), public intervention would still be required, for three main reasons. First, to ensure that indirect and induced emissions associated with LLKS are taken into account in investor’s financial cost-benefit analysis. Second, to facilitate project or network financing to bridge the gap between carbon revenues that accrue over time as the project/network unfolds and the capital needed upfront to finance lumpy investments. Third, to internalize other non-carbon externalities (e.g., local pollution) and/or to lift barriers (e.g., lack of capacity to handle new technologies) that penalize the low-carbon alternatives relative to the high-carbon ones.

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  • Recaudación fiscal


    En un post anterior, discutía el tema de los magros ingresos fiscales y de las dificultades del gobierno paraguayo para lograr mayor recaudación.

    Este artículo del País Internacional provee una perspectiva continental sobre esta problemática.

    “La región, en donde siempre se ha dicho que pocos pagan impuestos, ha logrado elevar los ingresos tributarios desde el 14,9% del producto interior bruto (PIB) en 1990 al 19,2% en 2009, según destaca un reciente informe de la Comisión Económica para América Latina y el Caribe (Cepal), el Centro Interamericano de Administraciones Tributarias (CIAT) y la Organización para la Cooperación y el Desarrollo Económico (OCDE).
    El documento atribuye la mejora de la recaudación impositiva al fuerte crecimiento económico, que se registró sobre todo en la última década, a una mejor gestión de las administraciones tributarias y a la imposición de gravámenes a los recursos naturales. Por ejemplo, Argentina ha aplicado altos tributos a la exportación de petróleo y materias primas agrícolas, mientras que países como Perú y Chile han elevado las regalías que pagan las mineras.

    “A pesar de estas mejoras, siguen existiendo brechas significativas entre América Latina y los países de la OCDE”, afirma el estudio. La media de los de ingresos tributarios en porcentaje del PIB en los países de la OCDE alcanza el 33,8%, frente al 19,2% de los latinoamericanos.
    “Como los países de la región aún disfrutan de condiciones económicas relativamente fuertes, es el momento de considerar la realización de reformas que generen recursos estables a largo plazo para que los Gobiernos puedan financiar el desarrollo”, recomienda el documento. Colombia, Panamá, Honduras, Nicaragua y Ecuador han emprendido recientes reformas tributarias, mientras que Guatemala y Costa Rica han fracasado en el intento. Un estudio del Banco Interamericano de Desarrollo (BID) advierte de que muchos de los Parlamentos latinoamericanos tienen sobrerrepresentadas regiones donde gobiernan partidos cercanos a las élites económicas y eso impide que progresen los proyectos de ley para gravar a los más ricos.”

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  • Oil prices and economic recessions


    Article by James Murray and David King in Nature (Comment, 481, 433–435, 26 January 2012), making a link between oil price peaks and economic downturns.

    What does this mean for the global economy, which is so closely tied to physical resources? Of the 11 recessions in the United States since the Second World War, 10, including the most recent, were preceded by a spike in oil prices13. It seems clear that it wasn’t just the ‘credit crunch’ that triggered the 2008 recession, but the rarely-talked-about ‘oil-price crunch’ as well. High energy prices erode family budgets and act as a head wind against economic recovery.
    Another powerful example of the effect of increasing oil prices can be seen in Italy. In 1999, when Italy adopted the euro, the country’s annual trade surplus was $22 billion. Since then, Italy’s trade balance has altered dramatically and the country now has a deficit of $36 billion. Although this shift has many causes, including the rise of imports from China, the increase in oil price was the most important. Despite a decrease in imports of 388,000 barrels per day compared with 1999, Italy now spends about $55 billion a year on imported oil, up from $12 billion in 1999. That difference is close to the current annual trade deficit. The price of oil is likely to have been a large contributor to the euro crisis in southern Europe, where countries are completely dependent on foreign oil.


    I would certainly like to see a more thorough analysis of the kind insights presented in the figure on the right (how exactly has the elasticity of supply evolved, and how is it related to price levels?), as well as more systematic evidence on the recession-oil prices link.

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