Category Archives: Peer Reviewed Article Review

on leadership…

Leave a reply

It seems to be out of fashion, but I always find it interesting when people try to draw social parallels between people and animals. This reminds me of E.O. Wilson’s Sociobiology, which spends hundreds of pages on ants and termites, and after I worked my way through it I actually feel more of an affinity for these creatures and the complex mini-civilizations they have built.

Leadership in Mammalian Societies: Emergence, Distribution, Power, and Payoff

Leadership is an active area of research in both the biological and social sciences. This review provides a transdisciplinary synthesis of biological and social-science views of leadership from an evolutionary perspective, and examines patterns of leadership in a set of small-scale human and non-human mammalian societies. We review empirical and theoretical work on leadership in four domains: movement, food acquisition, within-group conflict mediation, and between-group interactions. We categorize patterns of variation in leadership in five dimensions: distribution (across individuals), emergence (achieved versus inherited), power, relative payoff to leadership, and generality (across domains). We find that human leadership exhibits commonalities with and differences from the broader mammalian pattern, raising interesting theoretical and empirical issues.

 

Costanza!

1 Reply

Last year Robert Costanza published an update to his seminal 1997 paper The Value of the World’s Ecosystem Services and Natural Capital.  Here’s what I had to say about that in 2014:

The paradox is that because nature has so far provided many services in abundance, they are not “scarce” in an economic sense and our human markets place little or no monetary value on them. This would change in the event our human civilization caused the services to be reduced or interrupted in any way. While it may seem strange to value ecosystem services in monetary terms, it can be instructive to ask what we would be willing to pay if we had no choice but to pay for these services. There are many conceptual and practical challenges with this sort of monetary valuation, but there have been some brave attempts to do it, such as those led by Robert Costanza at the Australian National University.[9] By comparing the magnitude of what we would be willing to pay for these services to the magnitude of the human economy, we can get a sense of the importance of ecosystem services in underpinning our human economy. Costanza’s estimate of the annual value of global ecosystem services ($33 trillion in 1997 U.S. dollars) is the same order of magnitude as the world output of goods and services in that year (approximately $29 trillion[10])! While the estimated value of ecosystem services is certainly less precisely measured than the monetary value of goods and services produced, the order of magnitude suggests that humanity could not afford to substitute its own technology and efforts in place of the services provided by ecosystems, at least not with the wealth and knowledge available to us now.

The new paper is called Changes in the Global Value of Ecosystem Services. Here’s the abstract:

In 1997, the global value of ecosystem services was estimated to average $33 trillion/yr in 1995 $US ($46 trillion/yr in 2007 $US). In this paper, we provide an updated estimate based on updated unit ecosystem service values and land use change estimates between 1997 and 2011. We also address some of the critiques of the 1997 paper. Using the same methods as in the 1997 paper but with updated data, the estimate for the total global ecosystem services in 2011 is $125 trillion/yr (assuming updated unit values and changes to biome areas) and $145 trillion/yr (assuming only unit values changed), both in 2007 $US. From this we estimated the loss of eco-services from 1997 to 2011 due to land use change at $4.3–20.2 trillion/yr, depending on which unit values are used. Global estimates expressed in monetary accounting units, such as this, are useful to highlight the magnitude of eco-services, but have no specific decision-making context. However, the underlying data and models can be applied at multiple scales to assess changes resulting from various scenarios and policies. We emphasize that valuation of ecoservices (in whatever units) is not the same as commodification or privatization. Many eco-services are best considered public goods or common pool resources, so conventional markets are often not the best institutional frameworks to manage them. However, these services must be (and are being) valued, and we need new, common asset institutions to better take these values into account.

So $125 trillion dollars per year in value, and last year the IMF says the world economy was about $77 trillion. This is important for a few reasons. First, it strengthens the argument even further that ecosystem services are not just something happening on the fringe of our economy that give us a helping hand. They are absolutely essential and we could not afford to do without them. Second, if I understand correctly, the annual value we can derive is lower per unit area of land because of degradation of the land since 1997. Every year we are using up $4-20 trillion that the Earth is not able to replenish. That value is hard to put in context, because we don’t know what the total stock is, or how low that stock could fall before it would start to constrain our economy.

There’s another implication – if we could develop a precise accounting of the natural capital being used up each year, we could orient our economy to shift more of those costs to the people, governments, and business entities choosing to impose those costs on the rest of us. Carbon taxes are a fairly obvious first step.

 

credit, interest, and a steady state economy

Leave a reply

This article in Ecological Economics says that a positive interest rate and a no-growth economy could coincide.

Does credit create a ‘growth imperative’? A quasi-stationary economy with interest-bearing debt

This paper addresses the question of whether a capitalist economy can ever sustain a ‘stationary’ (or non-growing) state, or whether, as often claimed, capitalism has an inherent ‘growth imperative’ arising from the charging of interest on debt. We outline the development of a dedicated system dynamics macro-economic model for describing Financial Assets and Liabilities in a Stock-Flow consistent Framework (FALSTAFF) and use this model to explore the potential for stationary state outcomes in an economy with balanced trade, credit creation by banks, and private equity. Contrary to claims in the literature, we find that neither credit creation nor the charging of interest on debt creates a ‘growth imperative’ in and of themselves. This finding remains true even when capital adequacy and liquidity requirements are imposed on banks. We test the robustness of our results in the face of random variations and one-off shocks. We show further that it is possible to move from a growth path towards a stationary state without either crashing the economy or dismantling the system. Nonetheless, there remain several good reasons to support the reform of the monetary system. Our model also supports critiques of austerity and underlines the value of countercyclical spending by government.

work sharing

Leave a reply

Work sharing – it’s an idea to look into before the robots take over most of the work.

Work-sharing for a sustainable economy

Achieving low unemployment in an environment of weak growth is a major policy challenge; a more egalitarian distribution of hours worked could be the key to solving it. Whether work-sharing actually increases employment, however, has been debated controversially. In this article we present stylized facts on the distribution of hours worked and discuss the role of work-sharing for a sustainable economy. Building on recent developments in labor market theory we review the determinants of working long hours and its effect on well-being. Finally, we survey work-sharing reforms in the past. While there seems to be a consensus that work-sharing in the Great Depression in the U.S. and in the Great Recession in Europe was successful in reducing employment losses, perceptions of the work-sharing reforms implemented between the 1980s and early 2000s are more ambivalent. However, even the most critical evaluations of these reforms provide no credible evidence of negative employment effects; instead, the overall success of the policy seems to depend on the economic and institutional setting, as well as the specific details of its implementation.

Freeman Dyson on the origin of life

Leave a reply

Recently I remembered that Freeman Dyson has this dissenting view on the origin if life. It’s a little hard to follow, but the basic idea is that life preceded DNA/RNA. It started as simple molecules that were able to metabolize, grow and evolve, but not able to replicate themselves efficiently. In other words, life without DNA. If I understand it correctly, this means DNA/RNA would have had to arise separately, perhaps as a virus that then infected the larger molecules and gave rise to modern cells. The most interesting implication, to me, is that this means life arose more than once. So life arising is not as rare an event as we might think. Maybe it happens relatively frequently under a range of conditions, and maybe Earth is not the only place it happens. Maybe it arises frequently, but it rarely gets off the ground. Dyson admits his theory is rejected or ignored by most biologists, but he insists it fits the facts. I was reading this abstract in Trends in Ecology and Evolution, which was a little over my head but reminded me of Dyson’s theory.

Despite recent progress, the origin of the eukaryotic cell remains enigmatic. It is now known that the last eukaryotic common ancestor was complex and that endosymbiosis played a crucial role in eukaryogenesis at least via the acquisition of the alphaproteobacterial ancestor of mitochondria. However, the nature of the mitochondrial host is controversial, although the recent discovery of an archaeal lineage phylogenetically close to eukaryotes reinforces models proposing archaea-derived hosts. We argue that, in addition to improved phylogenomic analyses with more comprehensive taxon sampling to pinpoint the closest prokaryotic relatives of eukaryotes, determining plausible mechanisms and selective forces at the origin of key eukaryotic features, such as the nucleus or the bacterial-like eukaryotic membrane system, is essential to constrain existing models.

 

 

Viktor Glushkov

Leave a reply

Viktor Glushkov was a Soviet computer science who developed an idea for a cash-free, computer-controlled economic system. The theory is seductive because the idea was to improve information flows and feedback loops while reducing lag times. In other words, if you could collect perfect information and make it perfectly available, the economy could be perfectly efficient and in perfect balance. It didn’t work out, running into the crushing Soviet bureaucracy and technological limits. But in theory at least, the technology would be less of a constraint today.

Glushkov’s initial proposal included one particularly controversial provision. He envisioned that the new network would monitor all labor, production, and retail, and he proposed to eliminate paper money from the economy and to rely entirely on electronic payments. Perhaps Glushkov hoped that this idea would appeal personally to Khrushchev. The elimination of paper money evoked the Marxist ideal of money-free communist society, and it seemed to bring the Soviet society closer to the goal of building communism, promulgated by Khrushchev at the Twenty-Second Party Congress in 1961. The Academy president Keldysh, who was much more experienced in top-level bureaucratic maneuvers, advised Glushkov to drop the provision, for it would ‘only stir up controversy.’ Glushkov cut out this section from the main proposal and submitted it to the Party Central Committee under a separate cover. If ideology were to play any significant role in Soviet top-level decision-making, this was its best chance. Glushkov’s proposal to eliminate money, however, never gained support from the Party authorities.

emerald ash borer targets human arteries

1 Reply

The emerald ash borer is supposed to kill trees, not people. But this study found that heart attack risk for women went up 25% when all the trees were killed by this pest. Lessons learned – (1) contact with nature lowers stress in an urban environment, (2) people grieve for lost trees. So cities should plant trees and take care of them. Just not all the same kind of trees, which is a basic principle of resilience. Sure, cities have limited money to spend, but there is a public health case to be made for spending some of it on trees.

value of levees

Leave a reply

This study seems to have had trouble finding any measurable economic value of levees, which is interesting.

The value of levee protection to commercial properties

Ecological Economics

Volume 119, November 2015, Pages 181–188

Levees have historically been a dominant approach to riverine flood control in the United States. Recent investigations have found many levees around the country are in substandard condition, however, and some communities are moving to upgrade and repair their levee systems. Little empirical work has examined how increasing flood protection from levees is valued. We present estimates of the capitalization of upgraded levee protection into commercial property prices in St. Louis County, Missouri. By using controls for surrounding land cover and coarsened exact matching to ensure close distribution between treatment and control on surrounding land cover, we attempt to isolate the price effect of the levee from agglomeration effects that may also be operating. We find that commercial properties protected by a 500-year levee do not have a statistically significant price discount as compared with properties not in a floodplain. We find the selling price of properties with levee protection to be higher (although also insignificant in many specifications) than those in a floodplain without levee protection.

the Environmental Kuznets Curve

1 Reply

Here’s a journal article with some discussion of the Environmental Kuznets Curve, which is the idea that a developing country’s environment will slowly degrade, then improve again. Having breathed and drank in a variety of countries, it is pretty clear to me that the concept applies to air and water pollution, but not to overall ecological footprint, wildlife habitat, or long-term stability of our atmosphere and oceans. I suspect that this is because air and water pollution are things people can understand – they affect health, safety, and property values in pretty obvious ways. Over time, economic development starts giving people some money, education, and leisure time, and they become more politically active, generating pressure to clean up the immediate human environment. But people don’t understand or don’t care about the long-term ecological issues as much, so the political pressure does not develop.

The main purpose of this paper is to present a theoretical model incorporating the concept of circular economic activities. We construct a circular economy model with two types of economic resources, namely, a polluting input and a recyclable input. Overall, our results indicate that the factors affecting economic growth include the marginal product of the recyclable input, the recycling ratio, the cost of using the environmentally polluting input and the level of pollution arising from the employment of the polluting input. Our analysis also shows that, contrary to the Environmental Kuznets Curve (EKC), environmental quality cannot be maintained or improved via economic growth. Instead, the improvement in environmental quality, as measured by a reduction in pollution, can only be achieved by an increase in the environmental self-renewal rate or the recycling ratio.

more on automation

Leave a reply

The Economist has an article reviewing three recent papers on automation (i.e. robots, artificial intelligence) and employment. For two of the three papers, the bottom line is that automation has led to inequality in the past, because it means unemployment for some groups of people, but has led to overall economic growth and society-wide benefits in the longer term. The third paper, however, talks about the current exponential “explosion” of technological progress as a revolutionary development that cannot be compared to anything in the recent past. The last time anything like this happened was about 500 million years ago.

These are all open access, so I’ll put links to the papers below along with abstracts.

Autor, David H. 2015. “Why Are There Still So Many Jobs? The History and Future of Workplace Automation.” Journal of Economic Perspectives, 29(3): 3-30.

In this essay, I begin by identifying the reasons that automation has not wiped out a majority of jobs over the decades and centuries. Automation does indeed substitute for labor—as it is typically intended to do. However, automation also complements labor, raises output in ways that leads to higher demand for labor, and interacts with adjustments in labor supply. Journalists and even expert commentators tend to overstate the extent of machine substitution for human labor and ignore the strong complementarities between automation and labor that increase productivity, raise earnings, and augment demand for labor. Changes in technology do alter the types of jobs available and what those jobs pay. In the last few decades, one noticeable change has been a “polarization” of the labor market, in which wage gains went disproportionately to those at the top and at the bottom of the income and skill distribution, not to those in the middle; however, I also argue, this polarization is unlikely to continue very far into future. The final section of this paper reflects on how recent and future advances in artificial intelligence and robotics should shape our thinking about the likely trajectory of occupational change and employment growth. I argue that the interplay between machine and human comparative advantage allows computers to substitute for workers in performing routine, codifiable tasks while amplifying the comparative advantage of workers in supplying problem-solving skills, adaptability, and creativity.

Mokyr, Joel, Chris Vickers, and Nicolas L. Ziebarth. 2015. “The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different?” Journal of Economic Perspectives, 29(3): 31-50.

Technology is widely considered the main source of economic progress, but it has also generated cultural anxiety throughout history. The developed world is now suffering from another bout of such angst. Anxieties over technology can take on several forms, and we focus on three of the most prominent concerns. First, there is the concern that technological progress will cause widespread substitution of machines for labor, which in turn could lead to technological unemployment and a further increase in inequality in the short run, even if the long-run effects are beneficial. Second, there has been anxiety over the moral implications of technological process for human welfare, broadly defined. While, during the Industrial Revolution, the worry was about the dehumanizing effects of work, in modern times, perhaps the greater fear is a world where the elimination of work itself is the source of dehumanization. A third concern cuts in the opposite direction, suggesting that the epoch of major technological progress is behind us. Understanding the history of technological anxiety provides perspective on whether this time is truly different. We consider the role of these three anxieties among economists, primarily focusing on the historical period from the late 18th to the early 20th century, and then compare the historical and current manifestations of these three concerns.

Pratt, Gill A. 2015. “Is a Cambrian Explosion Coming for Robotics?” Journal of Economic Perspectives, 29(3): 51-60.

About half a billion years ago, life on earth experienced a short period of very rapid diversification called the “Cambrian Explosion.” Many theories have been proposed for the cause of the Cambrian Explosion, one of the most provocative being the evolution of vision, allowing animals to dramatically increase their ability to hunt and find mates. Today, technological developments on several fronts are fomenting a similar explosion in the diversification and applicability of robotics. Many of the base hardware technologies on which robots depend—particularly computing, data storage, and communications—have been improving at exponential growth rates. Two newly blossoming technologies—”Cloud Robotics” and “Deep Learning”—could leverage these base technologies in a virtuous cycle of explosive growth. I examine some key technologies contributing to the present excitement in the robotics field. As with other technological developments, there has been a significant uptick in concerns about the societal implication of robotics and artificial intelligence. Thus, I offer some thoughts about how robotics may affect the economy and some ways to address potential difficulties.