To avoid baggage fees, which have now been in place more than three years, passengers have continued to bulk up their carry-on bags, turning the allotment of one bag and a purse or briefcase into a two-suitcase load. Some game the system by fully intending to check a bag—they volunteer at the gate instead of the counter, and thus avoid the airline fee that usually runs $25 for a first bag and $35 to check a second bag.

United Airlines says its passenger surveys show more domestic customers now are carrying on the biggest bags that carry-on rules allow. ...

Airlines have stepped up efforts to police carry-on limits, patrolling airport lobbies to intercept pack-mule passengers and force them to check bags that violate limits before they get through security. Some carriers even use it as an opportunity to pitch their affinity credit cards that offer waivers of fees on the first checked bag.

Carriers also say they are making more announcements at gates with full flights seeking volunteers to gate-check bags before the boarding stampede begins. ...

And on board planes, US Airways flight attendants and gate agents keep an eye out for empty under-the-seat space and "work with our customers to make sure that they are putting their personal item under the seat in front of them'' to open up bin space, a spokeswoman said.

Fights between passengers for overhead bin space are extremely rare, airlines say. But Catherine Jorgens feared mayhem was about to erupt on a Frontier Airlines flight where passengers did argue over jamming bags into already-full bins. ...

I had titled this post "missing markets" in my head and my comments would have begun like this "If there is a shortage of overhead space then the price is too low ...." but Spirit Airlines ruined it for me. But, good for them in identifying the solution:

Miramar, Fla.-based Spirit Airlines, which tries to offer dirt-cheap fares and hits customers with lots of add-on fees for everything from soft drinks to window seats, added a fee for carry-on bags that go in overhead bins last year. That drew the wrath of travelers and several members of Congress. But Spirit says the fee removes the financial incentive for passengers to avoid checking bags by loading up on carry-ons. Carry-ons can cost as much as $40 each way, more expensive than Spirit's checked-bag fee, which starts at $28 and goes as high as $38, depending on how and when you pay it.

On average, each flight has saved five to six minutes of time spent checking bags at gates, Spirit Chief Executive Ben Baldanza said. The airline has seen in-flight injuries from items falling out of overstuffed bins decline by half (airlines say those injuries are rare).

The carry-on fee gets you early boarding, and flight attendants close bins before letting non-carry-on fee customers board. The fee has increased the amount of baggage that gets checked, but that's what Spirit wanted. Customers still get the space under the seat in front of them at no charge.

And would someone please out those members of Congress who need to take a course in principles of microeconomics?

Hat tip: WSJ weekly review email

NOAA today announced it has begun to use an improved method to estimate the amount of fish caught by saltwater anglers, which will allow rules that fishermen follow to be based on more accurate information.

The method is part of an overall effort to improve the accuracy of recreational catch data collected by the Marine Recreational Information Program, and was developed by a team of NOAA scientists and outside experts.

It seems that some catch estimates have increased:

According to the revised MRIP estimates, there were nearly 3 million more red snapper caught on the West Coast of Florida between 2004 and 2010 than previously reported under MRFSS. 

... the difference between the two estimates resulted from the MRFSS assumption that angler catch rates at high-activity and low-activity sites would be the same.

In Western Florida, we conducted more angler surveys at high-activity sites than we did at low-activity sites. Although this allowed us to gather more fishing data because we were able to talk to more fishermen, we did not account for the fact that catch rates may be different between high-activity and low-activity sites.

In this case, the reality was that angler catch rates were lower on average at high-activity sites, causing the MRFSS estimates of total catch to be biased low.

And some have decreased:

2004-2010 estimates for black sea bass catch in South Carolina were about 1.4 million fish lower using the improved MRIP estimation methodology as opposed to MRFSS.

So I decided to see for myself with a recreational fisheries statistics query:

Revised catch and effort estimates, based on an improved estimation method, are now available for the Atlantic and Gulf Coasts for January 2004 through October 2011. This new estimation method, developed as part of the Marine Recreational Information Program (MRIP), provides more accurate data by removing potential biases that were included in our previous estimates. ...

Here is one result. I tried a MRFSS/MRIP comparison for south Atlantic dolphinfish from 2004-2010:

The MRIP catch estimates are lower but the MRFSS estimates are within the MRIP 95% confidence interval. Tim and I (and many others) have used the MRFSS data for demand estimation [here is the most recent example]. I'm wondering how the new weights will affect these models. To be continued ...

Hat tip: David Carter.

So...I'm excited for this:

And for those of you who have trouble finding the deeper meaning in Seuss' work, here's some help:

Recently, there have been lots of positive signs coming out of the real estate market. Foreclosure rates are down, housing starts are up, and homes have appreciated in value in some markets for the first time since 2006. Even so, two reports surfaced last week indicating that, for the nation as a whole, home prices dropped by 3.5% to 5% in 2011. And one factor hurting the prices of homes that are for sale is the enormous number of homes that aren’t for sale — but that should be.

The Case-Shiller housing index was released last week, stating that home prices had dropped 3.7% in 2011, compared with the previous year. CoreLogic, a real estate research firm, also recently released a report estimating that prices had dropped in 2011 — by 5%.

“While overall prices declined by almost 5% in 2011, nondistressed prices showed only a small decrease,” said Mark Fleming, CoreLogic’s chief economist. “Until distressed sales in the market recede, we will see continued downward pressure on prices.”

Most housing experts agree: prices won’t rise until all distressed inventory (a.k.a. foreclosures and short sales) is moved through the market. Distressed sales keep prices low because banks want to get rid of such properties asap, and they’re willing to sell at a loss so long as the homes are out of their hands.

via business.time.com

Increasing supply (shifting to the right) will cause a movement along (down) a demand curve.  As a result, prices fall.  Combine increasing supply with decreasing demand and prices fall further.  Until demand increases or supply decreases, housing prices will stay low.

Econ is simple.

A rainy start to Ohio’s deer-gun season dried up the chances of many hunters to bag a white-tail.

After killing more than a third fewer deer than last year on opening day, hunters were unable to close the gap as the weather improved later in the week. They netted about 14 percent fewer white-tailed deer than last year during the weeklong deer-gun season that ended Sunday. The Ohio Department of Natural Resources reported yesterday that hunters bagged 90,282 deer between Nov. 28 and Sunday. That’s down from 105,034 last year.

via www.dispatch.com

If prices change, the quantity demand changes. If something else changes, the demand curve shifts. In this case, to the left. Because it rained.

Caption:

NOAA Applauds Mid Atlantic Fishery Management Council for Efforts to Manage Fisheries

Picture by: Bill Zahner Picture taken on: January 25th, 2012

Jane Lubchenco, NOAA Administrator, recognizes the Mid Atlantic Fishery Management Council. 

Left to right: Lubchenco; Rick Robins, Chairman; Lee Anderson, Vice Chairman; Chris Moore, Executive Director; and Sam Rauch, Acting NOAA Assistant Administrator for Fisheries.

Source: NOAA Honors Fishery Management Councils

Note: Lee Anderson is an economist

North Carolina hopes to win permission this spring from the Federal Highway Administration to pay for the work on I-95 by collecting tolls from drivers who use it. Tolling and construction details are expected to change before the final plan is approved later this year. If federal permission for toll collection is denied, DOT planners would have to scrap their proposal. [...]

Car and truck owners who buy N.C. Quick Pass transponders would pay the lowest toll rate. E-ZPass and Sun Pass transponders used on toll roads in other states also would work on I-95.

For vehicles without transponders, cameras would record the license numbers, and the owners would be billed by mail, at a higher toll rate.

Current plans call for toll collection to start on the full 182 miles of I-95 in 2019 - after the eight-lane widening is finished on 60 miles and before the six-lane widening starts on the remaining 122 miles.

Drivers on the eight-lane section would pay a rate expected in 2019 to be around 19.2 cents a mile. Drivers on the rest of I-95, with improvements scheduled farther in the future, would pay about 6.4 cents a mile.

That means a trip from North Carolina to Virginia would cost $19.20 for a two-axle vehicle. Larger trucks would pay higher rates.

Reasons to deny the request:

1. A toll is a tax -- taxes are bad, Q.E.D.
2. A whiff of big brother -- you're taking pics of my license plate?
3. Equity -- a toll is regressive, people who drive highways can't afford to fly, the rich should pay

Reasons to approve it:

1. A user fee is the most efficient way to finance a public project

Three reasons vs only one! Denied.

Update (1:48 pm]: Some clarifications in the comments.

A coalition of budget watchdog groups says that in the absence of the age-old practice of Congressional earmarks, the legislative tools that let members attach pet projects to bills, lawmakers appear to have found a backdoor method: special funds in spending and authorization bills that allow them to direct money to projects in their states. [...]

The latest example, the groups say, is the recently passed budget for the Army Corps of Engineers. Budget documents show that Congress included 26 different funds — totaling $507 million — for the corps to spend on various construction, maintenance and other projects that were not included in President Obama’s budget or the final spending bill.

The funds were financed by reducing money for projects included in the president’s budget request and adding $375 million to the corps budget, documents show. [...]

But Mr. Ellis of Taxpayers for Common Sense said Congress had added other criteria, like the number of jobs provided, which makes it easier for members to force the corps to pursue what he called questionable projects that were previously financed only through earmarks. [...]

One example of using a jobs criterion to finance a questionable project, watchdog groups say, could be the Delaware River dredging project. For years, lawmakers from Delaware and Pennsylvania have earmarked millions of dollars to dredge the river to allow bigger ships to enter the port of Wilmington. But with an earmark ban in place, members have had to lobby the administration or the corps for money. Lawmakers and local officials have argued that the project is essential to national security and the local economy.

But a 2010 report by the Government Accountability Office questioned some of the economic claims of the project. Local officials called the report flawed.

Unless you stumbled over here by mistake, you've heard this over and over but I'll say it again: jobs are costs in benefit-cost analysis. That Congress is prioritizing COE projects based on jobs suggests the objective function is that costs, and the deficit, are being maximized subject to, what, a political constraint?

Another shame is the shady budget-making taking place in Congress (surprise!), but I'll let those watchdog groups handle the outrage over that.

Athens, GA:  Some of the greatest songs were written to give voice to anxiety, despair and unwanted change.  “After it’s Gone”, a new single just released by Patterson Hood and the Downtown 13, was inspired by the threat of a Walmart in the heart of the downtown that nurtured the band’s career.  Hood, singer, writer and guitarist for the band Drive-By Truckers assembled The Downtown 13, a musical collective made up of some of Athens, Georgia's finest musicians to celebrate Athens, GA's beauty and vibrant musical heritage and to protest a developer's proposed building of a massive mixed use development in downtown Athens, anchored by a 94,000 sq. foot Walmart.

*Not really, I volunteered, but I guess they thought I was too busy as Patterson Hood's guitar tech.

We recently put out a podcast called “The Truth Is Out There … Isn’t It?” about how people decide what to believe about everything from global warming and nuclear risk to UFO’s. It was inspired by the research of Dan Kahan and his colleagues at the Cultural Cognition Project; they have found that we systematically filter our beliefs through our personal and political ideologies. In other words, we allow our biases to influence what we think about theoretically non-ideological issues, but we aren’t aware of that influence. ...

If you are at all interested in these kind of bias stories, and especially if you care about the realm of academic economics, you’ll definitely want to look at a new paper by Christis Tombazos and Matthew Dobra, who looked for bias within their own field. The paper (PDF here) is called “Using a Voting Mechanism to Evaluate the Quality of Research in Economics: Lessons from the Australian National Research Assessment” (emphasis added):

As part of the Australian National Research Assessment, the nation’s 133 most senior academic economists participated in a voting process that assigned quality ratings to almost a thousand journals of economics. The ratings were applied on the nation’s 975 academic economists’ publications retroactively by a number of institutions for a variety of purposes. The government used them to rank Universities and to distribute research funds. And Universities used them in hiring decisions, and the determination of salaries and publication bonuses. This study investigates the determinants of voting decisions. We find that voters are influenced by objective measures of journal quality. However, we also find strong evidence that, other things equal, voters assign the highest possible quality rating to journals in which they have published. They also overstate the quality of journals to which they have special access while understating the quality of journals that fall primarily in the fields of expertise of their 842 non-voting colleagues, or in which these non-voting colleagues have published.

via www.freakonomics.com

The $50 million project by the artist Christo, who hopes to drape nearly six miles of the Arkansas River here in southern Colorado with suspended bank-to-bank fabric, received approval from federal land managers late last year. ...

Christo’s supporters — a strange bedfellow’s mix of art lovers, politicians and tourism interests — rallied near the county administration building before the session began, handing out sky-blue T-shirts.

Anti-Christo forces, led by a group that has dubbed the project, and the name of their organization, “Rags Over the Arkansas River,” or ROAR, said that moneyed interests and state politicians were pushing a project that would mostly benefit outsiders. ...

The project, which is projected to draw upward of 400,000 visitors — during the two-year construction period and the two-week final exhibition, tentatively scheduled for August 2014 — has divided people over multiple fracture lines.

Some speakers at the hearing said they resented the pressure to say yes, which they said is bearing down on their small rural communities from local chambers of commerce and politicians, led by Gov. John W. Hickenlooper, a vocal enthusiast.

Others said the project, in seeking to create art in the midst of an already stunning natural setting in a rugged river valley, would diminish nature by presuming to improve upon it — a prospect that would offend true lovers of Colorado’s wild beauty and keep them away. ...

And in classifying an art project as a “recreation activity,” the suit says, the federal analysts framed their assessment in ways that excused the impact of the thousands of bore-holes, rock-bolts and anchors that will have a cumulative effect, the suit says, not unlike industrial mining.

via www.nytimes.com

Wow, where to start? First, the costs of the project is $50 million plus the external "resource extraction costs." But the $50 million is, apparently, covered by Christo's art sales (really?). The benefits are the consumer surplus values enjoyed by the expected 400,000 visitors (wondering where that number came from ...).  

So, what we have here is a classic western lands problem, nature lovers vs art lovers, cast in unfamiliar terms for westerners, resource extraction costs vs outdoor recreation benefits. But, oddly, in this case the costs and benefits coincide with the same project instead of being competing projects (e.g., you can either mine it or build a mountain bike trail).

Ohio officials have long considered the Asian carp a dire threat to Lake Erie’s $10 b illion-a-year tourism and fishing industries. Concerns have grown since 2009, when DNA tests indicated the fish had slipped past a Chicago-area electric barrier meant to keep them out of Lake Michigan.

The carp eat most of the food that native fish rely on. Some specimens can weigh as much as 50 pounds.

“The key is to stop them before they get in, and that’s why these physical barriers are so important,” said David Ullrich, the Great Lakes and St. Lawrence Cities Initiative director. “We need a higher degree of certainty.”

...

Ohio government leaders, including Gov. John Kasich, express support for the barriers but are concerned about funding the project.

Kristy Meyer, clean-water director for the Ohio Environmental Council, said the risk justifies the expense.

“One out of every 10 jobs on the lake is supported by tourism,” Meyer said. “That’s all at risk."

via www.dispatch.com

Just a quick back-of-the-envelope calculation to see if the risk justifies the expense:  The proposed barrier costs $3,000,000,000.  My quick calculation is there are roughly 300,000 people employed in Ohio Lake Erie bordering counties who are not employed in Cleveland or Toledo (I'm ruling out urban jobs as they are unlikely to be affected by loss of tourism).  If 1 in 10 of those jobs are at risk, and Ohio's portion of the cost of is 50%, then we are talking about $50,000 in expense per job loss prevented ($1,500,000,000/30,000).  Worth it?  You be the judge.

Why should you care?

I attended (and recorded!) an interesting panel discussion at the ASSA in Chicago

Environmental Economics, Policy, and Politice
Moderator: Robert Stavins (Harvard University)
Joseph Aldy (Harvard University)
Michael Greenstone (Massachusetts Institute of Technology)
Robert Hahn (University of Oxford)
Adele Morris (Brookings Institution)
Richard Newell (Duke University)
William Pizer (Duke University)

Most participants had worked for a few years "inside the machine" and then gone on to further academic research. They had a number of interesting stories.

In response to my question ("were you able to revoke policies that failed an economic cost-benefit?"), they answered "No. It's really hard to kill a policy that's in place. Most of the good we did was in preventing bad ideas from moving ahead."

Good news, I guess.

Here are two MP3 recordings. The first has everyone's opening remarks; the second has the Q & A.

Bottom Line: It's hard to work for change from within the government. On the one hand you have access to decision makers and the policy process; on the other, you may be trapped in bureaucratic silos or excluded from decisions where the policy is to ignore economics.

Will someone remind me to play this for my benefit-cost analysis class in the fall on one of those days when I'm wrapped in a blanket, curled in a fetal ball and can't face delivering my lecture?

Burmese pythons have eaten so many small mammals in Everglades National Park that populations of rabbits and foxes have disappeared and numbers of raccoons, opossums and bobcats have dropped as much as 99%, according to a report released Tuesday by researchers at Virginia Tech University, Davidson College and the U.S. Geological Survey.

“Pythons are wreaking havoc on one of America’s most beautiful, treasured, and naturally bountiful ecosystems,” said U.S. Geological Survey Director Marci McNutt in a statement.

“Right now, the only hope to halt further python invasion into new areas is swift, decisive, and deliberate human action,” McNutt said.

Burmese pythons are native to southeast Asia, their range extending from southern China to the Malay Archipelago, according to the National Zoo. The snakes reach breeding age in four to five years and a female lays an average of 35 eggs during the spring breeding season, though one snake may lay up to 100. Burmese pythons can live as long as 30 years.

In their native range, the snakes are considered threatened and are hunted by humans for their meat and skins, according to the National Zoo.

via news.blogs.cnn.com

Does anyone have any idea why markets aren't solivng this?  A shortage in native hunting areas, a surplus in non-native protected areas, external impacts from an invasive specie...someone's missing an opportunity.

Can I assume this is a regulatory problem?

or am I just a cynic...

*Ross Perot**

**It's fun to throw in a Ross Perot quote every once in a while.

To determine which smaller cities are growing fastest, we used census data to calculate the population growth rate between 2007 and 2010 for every Metropolitan and Micropolitan Statistical Area (MSA) with fewer than 100,000 people. These statistical areas are geographic entities defined by the U.S. government that usually encompass a core municipality and its suburbs. The truly smallest towns in America were excluded from our ranking, as micropolitan areas must have populations of at least 10,000. And though the data from 2007 and 2010 is not ideally comparable—the 2007 populations are official estimates based on the 2000 Census, while the 2010 numbers are actual counts—it still provides a good snapshot of how these areas have grown.

Retirees also contributed to the rapid growth of two other places on our list: Boone, N.C., and Heber, Utah, both popular leisure destinations, coming in at No. 4 and 5. ...

The population of Boone, a ski area nestled in the Blue Ridge Mountains, rose 14.7% to 51,079. It has a median income of $31,967 and a below-the-national-average unemployment rate of 7.2%, and it was recently named one of the 10 best places to retire by U.S. News & World Report. In addition, it’s home to Appalachian State University.

“Boone is a university town, but more than most university towns, it is dominated by the university,” says Todd Cherry, director of the Center for Economic Research and Policy Analysis at Appalachian State. “Indeed, enrollment exceeds the town’s population. Between 2007 and 2010, university enrollment increased by nearly 2,000 students, and [university] employment increased by about 200 people. That’s a primary factor in Boone’s recent growth.”

Grump: At the 15% rate Boone's population will double to 88,000 in about 20 years. That will be great, maybe my mortgage won't be underwater by the time I retire. And with 88,000 people there will be no where else to build and I'll be able to sell my house. Then I'll need one of these great small town lists to identify a place to retire to and join the thousands who also plan on ruining it. 

Wired Campus:

Elsevier, the global publishing company, is responsible for The Lancet, Cell, and about 2,000 other important journals; the iconic reference work Gray’s Anatomy, along with 20,000 other books—and one fed-up, award-winning mathematician.

Timothy Gowers of the University of Cambridge, who won the Fields Medal for his research, has organized a boycott of Elsevier because, he says, its pricing and policies restrict access to work that should be much more easily available. He asked for a boycott in a blog post on January 21, and as of Monday evening, on the boycott’s Web site The Cost of Knowledge, nearly 1,900  scientists have signed up, pledging not to publish, referee, or do editorial work for any Elsevier journal.

The company has sinned in three areas, according to the boycotters: It charges too much for its journals; it bundles subscriptions to lesser journals together with valuable ones, forcing libraries to spend money to buy things they don’t want in order to get a few things they do want; and, most recently, it has supported a proposed federal law (called the Research Works Act) that would prevent agencies like the National Institutes of Health from making all articles written by its grant recipients freely available.

Four points:

1. What is an environmental economist to do? JEEM, REE and Ecol Econ are all Elsevier journals. Sorry, the only boycott I can participate in is the one imposed by JEEM when they decide not to publish my crappy papers. On the other hand, and not to brag[*], but I do have warning track power at REE. 
2. Don't we as economists know that boycotts don't work? As soon as the big shots boycott JEEM, my crappy paper will, all of a sudden, look good in the depleted pool. I'll cheat on the cartel, get my paper published and enjoy the benefits of JEEM's reputation built up by the big shots who are boycotting. 
3. The most recent AERE Newsletter has an essay written by big shots arguing for the start of a new official AERE journal that would compete with JEEM. This seems to be the proper response, which I fully support, relative to boycotts.
4. So #3 is how BE Press arose, right? Hmph. Yesterday I heard a rumor that BE Press was sold and that the buyer promised not to raise prices for a year. Librarians are expecting a big price increase after that year. [any confirmation to that rumor?]

Full Disclosure: I earn $1500/year by handling about a paper a week as an Associate Editor at Journal of Environmental Management.

[*] Bragging: I discovered that our paper is one of the most cited while finding the link for REE. Thanks for those citations! I hope all of them aren't pointing out how we were wrong. Also, a paper on which I made a minor contribution is at the top of the most downloaded list.

State and federal agencies have spent more than $370million to research and fight longhorn infestations in Illinois, New York, New Jersey and Massachusetts. The first U.S. infestation was found in Brooklyn in 1996. The beetles hitch rides to the U.S. inside wooden pallets and crates shipped from Asia.

In Ohio, they threaten millions of trees as well as the state’s syrup industry, which produced 125,000 gallons of maple syrup in 2011.

The extermination strategy officials proposed in November was to cut down and mulch every healthy tree within one-quarter mile of lightly infested trees and within a half-mile of a tree with at least 10 holes from which the beetles had emerged as adults.

For Bonnie and Paul Barbick, that means hundreds of trees in a 20-acre wooded lot near their renovated brick farmhouse.

“If there is a way to save (healthy) trees that have some real property values to the owners, they’ve got to work with us on an approach to make that happen,” Mr. Barbick said.

In other words, "ERADICATE!...unless it makes my property value go down in which case, WAIT!"