Thursday, December 22, 2016

An Appetizer Buffet of Economic Research Highlights

The sort of readers who find this blog interesting might also want to check out the "Research Highlights" blog being run by Tim Hyde for the American Economic Association. The AEA publishes the Journal of Economic Perspectives, where I work as Managing Editor, but it also publishes six other research-oriented journals. Once or twice each week, the blog features a paper chosen from this set of seven journals and offers up a short, readable, nontechnical overview. Here are some examples from the last few weeks:

"Are subsidies for electric cars good for the environment?" (December 14, 2016)This is an overview of Stephen P. Holland Erin T. Mansur, Nicholas Z. Muller, and Andrew J. Yates, ""Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors," American Economic Review, December 2016, 106:12, pp. 3700-3729. Tim Hyde summarizes:
"When an electric car is charging overnight, it is drawing on a regional power grid and prompting power plants across the network to produce slightly more electricity. Depending on where in the U.S. that car is plugged in, the emissions at those power plants could be pretty dirty in their own right. ... In some cases, electric cars provide a clear win for the environment. The people living in Los Angeles, with its notoriously poor air quality and constricted topography, benefit a lot when a gas-powered car is removed from its freeways. Of course the electric car replacing it has its own emissions, but most electricity generation in the western U.S. is pretty clean. Totaled up across the country, the benefits clearly outweigh the costs.
"Then there’s the case of New York City. When more electric cars plug into the power grid there, they are mostly drawing power from relatively dirty coal-fired plants in Pennsylvania – and a lot of the smoke that billows out of those smokestacks eventually gets blown east back to the New York metro area. ... That cycle plays out over hundreds of miles and is quite a bit less visceral than exhaust coming out of a tailpipe, but the ultimate effect on air quality is about the same for the New York area as a whole. Some suburban counties on Long Island and Connecticut are actually worse off with the extra power plant emissions than the local tailpipe emissions. Among the worst places to switch are North Dakota and Minnesota, where air quality is very good to begin with and additional exhaust from gas-powered cars dissipates quickly. The authors calculate that these regions should have a negative subsidy – actually a tax – of thousands of dollars on each electric car. Meanwhile, switching in western cities with bad air quality and a relatively clean power mix (Los Angeles, Houston, Phoenix) ends up being hugely beneficial for the environment."

"How does the relentless churn of jobs in the modern economy affect happiness?" (December 9, 2016)

This is an overview of Philippe Aghion, Ufuk Akcigit, Angus Deaton, and Alexandra Roulet, "Creative Destruction and Subjective Well-Being," American Economic Review, December 2016 (106: 12), pp. (pp. 3869-97). Hyde writes:
"The authors develop a simple model of job destruction driven by technological change and predict that, for a given level of unemployment, more creative destruction should improve self-reported life satisfaction. Ultimately, this is because economic growth leads to more job openings and higher earnings in the future. In other words, a city that can maintain 8% unemployment in the face of a chaotic job market (with lots of jobs being created and destroyed each year) should be a more satisfying place to live than a city with 8% unemployment and a stagnant labor market. ... The results suggest that job turnover and labor market dynamism might be an underrated factor of quality of life, perhaps nearly as important as unemployment in explaining happiness levels in differents parts of the country."
"Tax cuts for the super rich? (December 5, 2016)

This is an overview of Laurence Ales and Christopher Sleet, "Taxing Top CEO Incomes," American Economic Review, November 2016 (106: 11), pp. 3331-66. Chris Fleisher summarizes:
"[S]ome economists have suggested that CEOs earning tens of millions of dollars should be giving back as much as 80 percent of their income to the government. Carnegie Mellon University economists Laurence Ales and Christopher Sleet don’t agree. Their recent paper ... says the marginal tax rate on top earning CEOs should be closer to 20 percent.  Why? Because rewarding them for their hard work by letting them keep more of their paycheck leads to “spillover” effects that boost corporate profits, which can then be taxed and grow government coffers more quickly than collecting tax revenue from individual executives." 
This link includes audio of a 15-minute interview with the authors.

"Why a carbon tax on shipping would harm the world’s poorest economies" (November 230. 2016) 

This is an overview of Joseph S. Shapiro, "Trade Costs, CO2, and the Environment," American Economic Journal: Economic Policy, November 2016 (8: 4), pp. 220-54. Hyde writes:
"[T]ankers, trucking, and cargo planes pump more than one billion tons of CO2 into the atmosphere each year. This is equivalent to the emissions from the bottom 164 carbon-emitting countries in the world combined. ... [T]he shipping industry is still expecting to be hit with a carbon tax within the next few years. ... [A] carbon tax on shipping could reduce emissions, but also that such a policy would actually slightly hurt some of the countries with the most to lose from climate change. ... But in a cruel twist of fate, it's the same equatorial countries facing the greatest risks from rising temperatures -- especially sub-Saharan Africa, the Indian subcontinent, and southeast Asia -- that are also most reliant on fossil fuels to sell their goods around the globe."