Philip E. Graves

Household migration: Theoretical and empirical results

A consumption theory of migration is developed which supplements the traditional job search models. Migration, seen as an equilibrating reaction to an initially non-optimal location, is analyzed using standard demand theory. When one groups goods into those that are traded between areas and those that are not (weather, racial discrimination, crime rates, etc.) it is clear that only changing demands for the non-traded goods will result in changing optimal locations (assuming supplies are fixed). Illustrating an increase in family income might lead to an increased demand for non-traded good ‘personal safety.’ This might result, for example, in the substitution (through migration) of a lower crime suburban neighborhood for a higher crime central city neighborhood. An empirically testable implication of the model is that the probability of migration should be positively related to changes in the absolute value of those exogenous variables which lead to altered demands for non-traded goods. This and other hypotheses were examined using cross-sectional data in a nonlinear maximum likelihood (prohibit) regression analysis. The results strongly support the model and its implications.

A Life-Cycle Empirical Analysis of Migration and Climate By Race

There was no abstract for this paper, but it explores the role of climate amenities in net migration behavior over the life-cycle, by race. Holding constant climate is seen to greatly improve the performance of traditional economic variables.

Benefit-Cost Analysis of Environmental Projects: A Plethora of Systematic Biases

There are many reasons to suspect that benefit-cost analysis applied to environmental policies will result in policy decisions that will reject those environmental policies. The important question, of course, is whether those rejections are based on proper science. The present paper explores sources of bias in the methods used to evaluate environmental policy in the United States, although most of the arguments translate immediately to decision-making in other countries. There are some “big picture” considerations that have gone unrecognized, and there are numerous more minor, yet cumulatively important, technical details that point to potentially large biases against acceptance on benefit-cost grounds of environmental policies that have true marginal benefits greater than true marginal costs, both in net present value terms. It is hoped that the issues raised here will improve future conduct of benefit-cost analyses of environmental policies.

Mobility behavior of the elderly

Mobility patterns of the elderly provide a particularly interesting theoretical subcase of a more general migration model which interacts individual-specific traits (e.g., health and retirement status) and location-specific traits (e.g., amenities, rents, and wages). The spatially invariant incomes (pensions, dividends, etc.) of the retired are shown to lead to migration toward areas where the wage and rent compensation for amenities (necessary for spatial equilibrium) occurs primarily in the labor market, rather than in the land market. Empirical evidence appears to be consistent with theoretical expectations; more investigation, however, is clearly desirable.

A Note on the Design of Experiments Involving Public Goods

Concern about potential free riding in the provision of public goods has a long history. More recently, experimental economists have turned their attention to the conditions under which free riding would be expected to occur. A model of free riding is provided here which demonstrates that existing experimental approaches fail to explore a potentially important real-world dimension of free riding. In a cash-in-advance economy, free riding becomes a two-stage problem, while existing experiments only address the second stage. That is, one would expect households with high demands for public goods relative to private goods to generate less income than households preferring ordinary private goods, because the former are unable to individually increment the public good and leisure is valuable. Existing experiments start with a given number of “tokens” for each decision-maker, effectively only addressing the second stage of the free riding problem, namely, under what conditions free riding becomes a problem out of a given income. A recommended solution to this problem is to incorporate the potential to generate income prior to (or simultaneously with) the decision of how to allocate that income between private and public goods.

Multiple-Choice Testing: Question and Response Position

To prevent cheating, instructors often use alternate exam forms—one in content sequence, the other scrambled. The authors of these two papers independently conducted tests to measure the effect on test scores.

Income and Migration Revisited

While there was no abstract for this paper, it provides a theoretical model and empirical results that support an important role for climate in the human location/relocation decision.

Optimal Public Goods Provision: Implications of Endogenizing the Labor/Leisure Choice

Conventional analysis of public goods provision aggregates individual willingness to pay while treating income as exogenous, ignoring the fact that we generate income to allow us to purchase utility-generating goods. We explore the implications of endogenizing the labor/leisure decision by explicitly considering leisure demand in a model of public goods provision. We consider benefit analysis of public goods provision and find that increments of the public good will generally be under-valued using conventional analysis while decrements to the public good (rare in public good settings) will be overvalued. (JEL C91, D61, Q51)

Speed Variance, Enforcement, and the Optimal Speed Limit

A model of the optimal speed limit is developed which explicitly recognizes the roles of average speed, speed variance, and the level of enforcement. An unusual result emerges, namely that a higher speed limit may be optimal when reducing the variance in highway speeds reduces accident externalities.

Relative Risk Aversion: Increasing or Decreasing?

While there is no abstract for this paper, it makes an argument that relative risk aversion is decreasing in wealth rather than increasing in wealth as hypothesized by Arrow, using the money demand findings of Friedman.