Students were occupying buildings Friday on several campuses of the University of California system in protest of a 32 percent tuition hike.

...

University officials said the $505 million to be raised by the tuition increases is needed to prevent even deeper cuts than those already made because of California's persistent financial crisis.

Protesting students said the hike will hurt working and middle-class students who benefit from state-funded education.

While well-intentioned, the students are failing to recognize the simple economics of education.  Students demand education--therefore there is a demand curve for education(click the diagram to the right)  that is downward sloping: some are willing and able to pay more than others.  Private educators are willing to supply education, but it is costly (Private Tuition).   For a variety of reasons--affordable access to education, reduced crime, increased productivity--society, through state and federal tax revenues is willing to subsidize education thereby reducing the costs of education (S_public).  This downward shift in the supply of education decreases tuition (Public Tuition) and increases the number of people willing and able to get an education.

So what happens when the state is forced to reduce the subsidy, as California is currently doing? Starting from the fully subsidized situation (S_public ), the reduced subsidy will shift the supply curve back to the left raising the market clearing price of education (Current Tuition + hike) and reducing the number of number of people receiving an education from Q_before to Q_+hike.  Not only are less people educated, but those losing access to education are those with the lowest willingness to pay OR ability to pay.  And this is where the protests come in.  The increased tuition reduces education among those with the least ability to pay.  Sounds protest worthy, right?

But, what happens if tuition isn't raised in the face of the reduced subsidy?  On that case, the price of education would stay at the current Public Tuition level in the diagram, but the supply curve still shifted left (actually up) by the amount of the reduced subsidy.  If tuition doesn't rise, the quantity of education supplied at the current tuition will be less than if tuition rises (Q_nohike in the diagram). 

Contrary to the tuition hike case, it's now a crap shoot as to which students lose out on education, but the end result in unambiguous: a successful protest for no tuition hikes (assuming funding for education is cut) will result in less total education than allowing tuition to rise. 

 Is that really what the protesters have in mind?

Federal officials say the despised Asian carp may have breached an electronic barrier designed to prevent it from invading the Great Lakes and jeopardizing their $7 billion sport fishery.

Officials with the Army Corps of Engineer say Friday that DNA of the giant carp have been found north of the barrier in the Chicago Sanitary and Ship Canal.

If correct, that would mean the carp might reach Lake Michigan if they get through a navigational lock. From there, they could spread throughout the Great Lakes and out-compete native species for food.

Asian carp escaped from Southern fish farms in the 1990s and have been migrating up the Mississippi and Illinois rivers. They can exceed 4 feet in length and 100 pounds.

I'll be presenting our (Tim, Rob, Kurt and John) recreation demand models for marine fishing for the last time, hopefully. We have a website to support this project: http://econ.appstate.edu/marfin. Check it out for the full report, data, programs, presentations and (coming soon) a working paper.

Abstract:

Price search enables consumers to overcome information asymmetries, it can lead to a reduction in price dispersion and it can increase consumer surplus. But, search is costly and we know very little about how the cost of search enters the consumer’s search decision. In the case of the market for gasoline, the cost of search is a function of the amount of gasoline consumed and the time spent searching for the lowest price. In this paper we conduct an internet survey among a random sample of 480 drivers in the State of Ohio to answer two main questions: when do consumers search, and are consumers considering search costs as sunk. We use a choice experiment on willingness to search to answer these questions. Though, it can be argued that consumers incorporate some search as a sunk cost in their current optimization decision because they have incurred some of that cost in the past, we find that this is not the case. When faced with prices above their expectations, consumers incorporate both gasoline and time costs into their search decision, whereas when faced with prices below their expectations the driving factor on consumers’ willingness to search is the difference between posted and expected price.

*And yes, Carolina will be on the job market next year, so if you are in the market for a well-trained economist with a humble advisor, give her a call.

My picks are below.

First round (1 pt):

Mt. Union
MSU
Albright
DV
NCW
MC
HS
DePauw (go SCAC!)
UWW
'Bash
CWR
Witt
Coe
Monmouth
MH-B
Linfield

Jason Shogren has left an indelible impact on the profession of agricultural and applied economics. ...

Prior to his appointment at his alma mater, he held positions at Appalachian State, Yale, and Iowa State Universities. ...

... he enjoys fishing and performing with his hard acoustic roots band (www.jshogren.com).

Funny story. I'm on the job market and interviewing with Appalachian State at the SEA meetings in San Antonio, November 1989* (or was it the ASSAs? Anyway, doesn't matter). App is one of my dream jobs and I hear that some great environmental guy is down there. Shogren and Larry Ellis, then chair and our interim chair last year, were in the interview room and things are going great. Until, Shogren asks me about incorporating uncertainty in my model. I explain that I only have funding for four years of graduate study, I'm hoping to defend in 6 months, incorporating uncertainty would take too long and I don't think it is a big deal anyway. After leaving I'm wondering if that was the wrong answer ...

Later that day I'm in the elevator, Shogren gets on and is talking with a buddy. The buddy asks, "have you interviewed anyone any good?" (or something like that). My ears perk up as Shogren goes down the list. I cringe and get sucked into the elevator wall as he doesn't mention Whitehead.

I guess I got the last laugh 15 years later!

*There was an active SEA job market until the recession of the early 1990s killed it.

The [SEA] hotel is overcharging for each room to pay for the conference meeting rooms. When facing a high price, such as in a year with limited travel budgets, consumers tend to shop around. ...

An alternative would be to go ahead and charge a higher registration fee (about another $100, I think). Registration fees are reimbursable by employers and there are no substitutes. You must wear you name badge to gain admittance to the meeting rooms. Then, attendees could feel free to shop around and find the hotel that suits them best.

From the inbox yesterday:

We’re staying at the [non-conference hotel]. It’s a great historic hotel  and MUCH cheaper than the conference hotel, and my travel budget is seriously constrained this year.  ...

The Western hotel policy is just as stupid. Went to Vancouver this year. Bombarded by emails from WEA telling me I had to book before the deadline to get the “special” conference rate on the hotel room. I just went to the hotel web site, saw the regular rack rate was lower than the “special” rate, got an additional discount for AAA, and saved more than $300 for the 7-night stay. Furthermore, because we stayed 7 nights—which we couldn’t have done at the “special” rate, they gave us a primo room ...

Attention regional economics conference organizers: Demand falls as the price of substitutes falls and the internet makes it easy to find substitutes.

• Prostitutes aren't patriotic because they work on July 4th.
• The drunk walking stuff is an assertion. 
• Volcanoes don't produce positive externalities.
• The disconnect between two statements repeated more than once: "it is hard to change people's behavior" and "people respond to incentives." Huh?
• A 25% reduction in the number of "minor" injuries suffered by kids in car accidents due to car seats and relative to seat belts is shrugged off as a small reduction. It sounds like a lot fewer injuries to me. Well worth the cost of the car seat.

Yet, the strangest thing to me about the book is the unnecessary dissing of lab experiments.

I've been through this stuff before as a young researcher trying to use the contingent valuation method. After the Exxon Valdez oil spill, the stakes were raised and revealed preference types and lab experimentalists (here is how I put it recently) dumped on surveys that elicited hypothetical behavior. Researchers eventually saw revealed preference and stated preference data as complements and not substitutes. Most recently, choice experiment types are dumping on contingent valuation (er, behavior). Come on, guys, these methods aren't necessarily competing!

Anyway, who cares what I think? Here is how Falk and Heckman conclude their recent piece, which seems to be motivated by the lab vs field experiment debate, in Science (abstract):

In this context it is important to acknowledge that empirical methods and data sources are complements, not substitutes. Field data, survey data, and experiments, both lab and field, as well as standard econometric methods can all improve the state of knowledge in the social sciences. There is no hierarchy among these methods and the issue of generalizability of results is universal to all of them.

Hard to argue with that.

Now that I'm finished I can get back to Dan Brown and my bag of cheetos.

Update: Add this to the things I can take issue with:

• "Eyeballing" a too-short length of the global temp time series data and concluding cooling should not have led to a global cooling subtitle.

Here is a fairly comprehensive post detailing the negative reviews of the climate change chapter (including one of mine). And, yikes, apparently a link to it was deleted from the Freakonomics blog comments section.

Long quote, brief comment (from the Wilmington Star-News):

The question is no longer whether the seas are rising, just if human-induced factors are speeding up the natural process.

But for North Carolina’s coastal officials, that answer matters little. What does is that while the oceans rise, an average of 3.5 millimeters annually as measured by tide gauges since 1993, the elevation of their barrier islands doesn’t.

But what to do about it as the waves creep closer remains a thorny question with plenty of political, economic and social challenges.

On Tuesday, those attending the N.C. Beach, Inlet and Waterway Association’s annual meeting in Carolina Beach were told that it’s not too early to start thinking about and planning for the changing face of the coast.

...

Rob Young, director of the Program for the Study of Developed Shorelines at Western Carolina University, recommended North Carolina adopt a sensible policy that both prioritizes areas to be saved and plans for relocating homes and infrastructure where there are no realistic long-term hope of holding back the waves.

He also said infrastructure and high-density development should be limited from being built within the 1-meter threshold.

Several attendees questioned the validity of the scientific data and the cost of building infrastructure to handle an estimated 1-meter rise in sea level by the end of the century when that’s three times the current rate.

But Young cautioned that being wrong about sea-level rise or underestimating its impacts could cost communities and taxpayers a lot more.

In other words, the benefits of building smarter at the coast outweighs the costs, accounting for subsidies and external costs. Hasn't that always been true? Yet, when you live there (as do all of the members of the NCBIWA) you don't factor in the subsidies and external costs and so it is difficult to see the positive net benefits of reversing years of growth at the beach.

Posts like this are why I don't recommend this blog--to anyone. Use your "Puerile Humor" tag less sparingly.

My reply:

Oscar,

I don't recommend this blog to anyone either! And thanks for your anonymous comment! Those are the ones I pay most attention to!

Anyway, taking your anonymous comment a bit more seriously. I've added the puerile humor tag to this post. That was an oversight, sorry.

The Clean Air Act (Title VI) established caps on most CFC's as agreed upon under the Montreal Protocol, with a complete phase out occurring around the year 2000. The tax on CFC's was $1.37 a pound in 1990 and 1991, about twice the then current product price. Recycled CFC's were exempted from the tax.

The tax was raised in 1990 and again in 1992. The tax raised to $3.10 per pound in 1995 and to $4.90 per pound in 1996, raising the price six fold.

The lesson: economic incentives change behavior.  Looks like Jupiter, Florida is applying that lesson...to overgrown lawns?

[In Jupiter, Florida, an] overgrown lawn could cost a homeowner $1,000 a day.

A plan to quadruple the penalty from the current maximum of $250 per day for a first violation is scheduled for consideration at Tuesday night's town council meeting.

A repeat violation by the same person would be boosted to $5,000 a day maximum from $500 per day.

Peter King on John Gruden's time away from coaching:

I also really like how he's taken the year for some continuing education about football. We talked about the spread offense and how much he's learned about it from reaching out to college coaches. "I've really learned a lot from [Oregon coach] Chip Kelly and the Appalachian State coaching staff,'' he said. "I've liked learning more football.''

I'll be missing the "Battle for the Old Mountain Jug" Saturday to attend the SEA Meetings. But, after winning the Southern Conference championship there is a 99% chance that Appstate will be hosting a playoff game on Saturday after Thanksgiving. See me there!

In the latest obstacle to proposed U.S. climate legislation, key lawmakers on Thursday urged Senate Democrats to change distribution plans for carbon permits to offer more protection for coal-dependent utilities.

Isn't the point of all of this to make coal dependent utilities uncomfortable?  Read on...

The lawmakers said the allocation scheme in the current Senate bill does not apportion permits in an equitable manner...

OK, I'll buy that...

...and will result in higher electricity rates for consumers in regions that rely mostly on coal for power generation.

Yep.

The 14 lawmakers who signed the letter mostly hail from heavy coal using states, including Senators Tom Harkin, of Iowa, Byron Dorgan, of North Dakota, and Robert Byrd of West Virginia. Senate Democrats are trying to craft a bill that could receive enough support to be approved by the chamber.

"We believe it is essential that we strive to formulate legislation that equitably distributes transition assistance across individuals, as well as states and regions and economic sectors," the Democratic Senators said in a letter to Senate Majority Leader Harry Reid.

Nodding...

The bill passed by the Senate Environment and Public Works Committee would require polluters to get permits for the greenhouse gases they release into the atmosphere.

Still nodding...

Initially, industries would receive most of the permits for free, with local electric distribution companies allocated 30 percent of the free permits. The current formula for divying up those permits would probably lead to higher costs for utilities in more sparsely populated areas where coal use is prevalent.

Nope, lost me.  No matter the initial allocation, the end result will be higher electricity prices for coal fired electricity consumers.  The initial allocation just determines the revenue distribution after the market (Trade) reallocates permits based on the marginal cost of abatement.  In the end, we still have less carbon, higher carbon prices and higher electricity prices...no matter who benefits or loses from the permit giveaway.  So while politically savvy, the economic argument for distributing permits to keep electricity costs low is the exact opposite of savvy. 

As construction began on these plants, the cost of power began to rise, which in turn reduced demand.

A reasonable next sentence might be: The eventual result was that the region had lower electricity prices. Yet, the next sentence in the textbook is:

The eventual result was that the region had a surplus of power, higher electricity prices, ...

The authors are guilty of sloppy economic writing. What actually fell with higher power costs was quantity demanded. A reduction in quantity demanded is a movement up the demand curve, not a shift of the demand curve to the left. 

I expect to see this in the news, but not in my textbook. Crap.

The Chamber of Commerce recently blasted out a fundraising e-mail to its member groups asking for $50,000 to hire a "respected economist" to study the health-care bills. Seems sensible enough. Knowledge is power, and all that. But then, as Michael Shear reports, comes step two:

"The economist will then circulate a sign-on letter to hundreds of other economists saying that the bill will kill jobs and hurt the economy. We will then be able to use this open letter to produce advertisements, and as a powerful lobbying and grass-roots document."

The "respected economist" who takes this job is not going to remain respected for long, I fear.