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cultural economics

wordleI am happy to announce that my article entitled “Threshold Preferences and the Environment”, co-authored with Benteng Zou from the University of Luxembourg, has been accepted for publication in the Journal of Mathematical Economics. While the journal will publish a slightly shortened version of the article (without section 2), you can find the full version HERE. What is the paper about?

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  • An animated chart of global marine fish stocks from The Economist HERE. Basically, while in 1950 roughly 90% of the fish stocks were in their natural state, in 2009 90% are either fully exploited, over-exploited or collapsed. From the FAO report The State of World Fisheries and Aquaculture 2014: “Global fish production continues to outpace world population growth, and aquaculture remains one of the fastest-growing food producing sectors. In 2012, aquaculture set another all-time production high and now provides almost half of all fish for human food.” Though this seems to be good news, Katheline Schubert and Esther Regnier have a paper together on aquaculture where they show that aquaculture can, nevertheless, have negative consequences on fish stocks. Under some conditions, “Aquaculture worsens the pressure on the wild edible fish stock and leads to a decrease of total wild fish stocks in the long run.”
  • Writing at the Energy Institute at Haas, Meredith Fowlie suggests that moral suasion is no substitute for getting the price right. Her comment is based on a paper by Koichiro Ito and co-authors,  who find the following: “Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for various economic activities. To investigate the persistence of such interventions, we randomly assigned households to moral suasion and dynamic pricing that stimulate energy conservation during peak demand hours. Using household-level consumption data for 30-minute intervals, we find significant short-run effects of moral suasion, but the effects diminished quickly after repeated interventions. Economic incentives produced larger and persistent effects, which induced habit formation after the final interventions. While each policy produces substantial welfare gains, economic incentives provide particularly large gains when we consider persistence.” It would be interesting to also know whether moral suasion together with some peer pressure would not lead to more persistent results. Also, it is really surprising that price incentives would lead to long-run effects. While the authors forward habit formation as a possible argument, it would be interesting to know whether the price effects still linger on now (i.e. 1-2 year after).
  • Thursday: Jeudi 21 mai 12:30-13:30 Emma Hooper (GREQAM, Aix-Marseille School of Economics) will present Sustainable growth and financial markets in a natural resource rich country, at PSE in Paris (see Environmental Economics Calendar).

cultureThere is a new article of mine that I would like to announce, entitled “The endogenous formation of an environmental culture“, and I am happy to tell you that it is forthcoming in the journal the European Economic Review.

The article is summarized as follows:

This article presents a mechanism explaining the surge in environmental culture across the globe. Based upon empirical evidence, we develop an overlapping generations model with environmental quality and endogenous environmental culture. Environmental culture may be costlessly transmitted intergenerationally, or via costly education.

The model predicts that for low wealth levels, society is unable to free resources for environmental culture. In this case, society will only invest in environmental maintenance if environmental quality is sufficiently low. Once society has reached a certain level of economic development, then it may optimally invest a part of its wealth in developing an environmental culture. Environmental culture has not only a positive impact on environmental quality through lower levels of consumption, but it improves the environment through maintenance expenditure for wealth-environment combinations at which, in a restricted model without environmental culture, no maintenance would be undertaken. Environmental culture leads to a society with a higher indirect utility at steady state in comparison to the restricted model.

Our model leads us to the conclusion that, for societies trapped in a situation with low environmental quality, investments in culture may induce positive feedback loops, where more culture raises environmental quality which in turn raises environmental culture. We also discuss how environmental culture may lead to an Environmental Kuznets Curve.

So what is this all about?

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My article entitled “An Empirical Study of the Determinants of Green Party Voting” is now forthcoming in the journal Ecological Economics. In this article I show the following:

I empirically study the determinants of individuals’ green voting behavior. For this I make use of three datasets from Germany, a panel dataset and two cross-sectional datasets. The empirically strongest determinants are the voters’ attitude or distance to nuclear sites, the level of schooling and net income. I show that those voters with deviant attitudes or alternative world views are more likely to vote green, a result of the fact that the green party has always had the position of a protest party. I nd little role for demographic variables like gender, marital status or the number of children. This is in contrast to the stated preference literature. Age plays a role for explaining voting behavior only insofar
as it proxies for health.

You can find the version that is forthcoming HERE.

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I have worked hard and finally here it is, a new working paper entitled “The endogenous formation of an environmental culture“. You can download the paper HERE. I have always been interested in studying the role of preference formation for environmental issues, and this new work is more strongly focused on environmental culture formation. In my opinion, the role of the preferences and their potential endogeneity to the states of nature has seen little to no analysis in the environmental economics literature. However, it should definitely be viewed as equally important as aspects of e.g. technological change or political ones.

Abstract:
We develop an overlapping generations model with environmental quality and endogenous environmental culture. Based upon empirical evidence, preferences over culturally-weighted consumption and environmental quality are assumed to follow a Leontieff function. We find that four different regimes may be possible, with interior or corner solutions in investments in environmental culture and maintenance. Depending on the parameter conditions, there exists one of two possible, asymptotically stable steady states, one with and one without investments in environmental culture.

For low wealth levels, society is unable to free resources for environmental culture. In this case, society will only invest in environmental maintenance if environmental quality is sufficiently low. Once society has reached a certain level of economic development, then it may optimally invest a part of its wealth in developing an environmental culture. Environmental culture has not only a positive impact on environmental quality through lower levels of consumption, but it improves the environment through maintenance expenditure for wealth-environment combinations at which, in a restricted model without environmental culture, no maintenance would be undertaken. Environmental culture leads to a society with a higher indirect utility at steady state in comparison to the restricted model.

Our model leads us to the conclusion that, by raising the importance of environmental quality for utility,  environmental culture leads to lower steady state levels of consumption and wealth, but higher environmental quality.  Thus, for societies trapped in a situation with low environmental quality, investments in culture may induce positive feedback loops, where more culture raises environmental quality which in turn raises environmental culture. We also discuss how environmental culture may lead to an Environmental Kuznets Curve.

As always, comments are more than warmly welcome. Thank you!

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