Philip T. Ganderton

Hypothetical Surveys and Real Economic Commitments

We provide controlled laboratory evidence that open-ended hypothetical surveys do not always accurately elicit real economic commitments from individuals. We argue that they can provide biased measures of true values, where the latter are elicited using incentive-compatible institutions. We also evaluate if it is the hypothetical-payment aspect of these surveys which results in these biases or the lack of explicitly incentive-compatible provision rules. We conclude that it is the former. We are unable to devise a hypothetical survey that uses an incentive-compatible provision rule to elicit valuations that are demonstrably truthful.

Buying Insurance for Disaster-Type Risks: Experimental Evidence

This paper presents a series of experiments that confront subjects with low probability, high loss situations. A rich parameter set is examined and we find subjects respond to low probability, high loss risks in predictable ways. As loss events become more likely, or loss amounts get larger, or the cost of insurance falls, subjects are more likely to buy indemnifying insurance, even for the class of low probability risks that usually presents problems for standard expected utility theory. A novel application of Camerons method to estimate willingness to pay from dichotomous choice responses allows us to estimate willingness to pay for insurance. We do not observe the bimodal distribution of bids found in other studies of similar risk situations.

Hispanic college attendance and completion: Evidence from the high school and beyond surveys

Abstract The problem of low high school completion rates among Hispanics has received considerable attention. Less is known, however, about the higher educational experiences of Hispanic high school graduates. This study uses the High School and Beyond Surveys of the 1980 senior class to examine the higher educational outcomes of Hispanics. Although Hispanic high school graduates are as likely as whites to attend college, differences in college completion are significant among those who attend college. As expected, socio-economic status and traditional academic measures such as grades are shown to be strong predictors of high educational outcomes. Differences in college completion between Hispanics and other students seem to arise more from their unique educational experiences, such as delayed entry into college, attending 2-year colleges, and frequent transfers from full and part-time student status.

Substitution Effects in CVM Values

There is increasing recognition that statistical estimates of the average willingness to pay for environmental programs may be biased by the failure of respondents, or of the statistical methodology, to consider the effect of substitute programs and goods. We design and implement a CVM survey that estimates the impact of substitution effects on the willingness to pay for an environmental program. We find a statistically significant impact and suggest that the set of potential substitutes is very large.

‘Benefit–Cost Analysis’ Of Disaster Mitigation: Application As a Policy And Decision-Making Tool

Many proponents of disaster mitigation claim that it offers potential benefits in terms of saved lives and property far exceeding its costs. To provide evidence for this, and to justify the use of public funds, agencies involved in mitigation can use benefit–cost analysis (BCA). Such analysis, if well done, offers a testable, defensible means of evaluating and comparing projects, helps decision-makers choose between mitigation projects, and provides a means to assess the way we spend public funds. In this critical overview of the more contentious issues and latest developments in BCA, I emphasize the pragmatic choices that one can make in accordance with good practice in project evaluation.

Exploring nonmarket values for the social impacts of environmental policy change

Although the majority of contingent valuation studies have been for environmental goods, the method can be applied to public goods in general. Further, a specific environmental policy may generate both positive and negative nonmarket values. This exploratory study investigates the presence of nonmarket values for maintaining the status quo land use and avoiding social impacts from an environmental policy change. The test case, grazing reform on federal lands in New Mexico, was chosen because of the complexity of the public debate. By switching the traditional perspective, we demonstrate the need to accommodate multi-dimensionality in nonmarket research into controversial policies.

Evidence on omitted variable bias in earnings equations

Abstract In this paper we propose that family background variables are significant in earnings equations because they measure investments in children made by families in the home, over and above formal schooling investments and schooling quality. Together these variables account for a significant proportion of the difference between estimated rates of return to schooling across racial groups. Using data from the National Longitudinal Survey of Youth, we observe a convergence of rates of return across racial groups after accounting for differences in these variables. The estimated equations are used to predict that average minority earnings would be almost identical to white earnings if minorities experienced the same family background and school quality as whites.

Introduction to special section on Water Markets and Banking: Institutional Evolution and Empirical Perspectives

] This special section on Water Markets and Banking:Institutional Evolution and Empirical Perspectives presentsvarious economic approaches and legal and institutionaldiscussions to better understand the issues surrounding theallocation of water. The interest in water markets and waterbanking stems from the growing recognition that demandfor water is outstripping its availability worldwide. Noveland innovative adaptation strategies for decision making areneeded to address increasing scarcity in the face of climatechange, drought, and continuing population growth. One setof adaptive strategies being explored consists of market-type allocation institutions, but how do we design theseinstitutions within the variety of legal settings that existaround the world and how well do alternative marketstructures and arrangements function? The first three papersin this special section present case studies using alternativeeconomic methodologies to understand the operationof water marketing and banking in Australia, the UnitedStates, and South Africa. Other authors present an analysisof prices observed for water trades in the southwestregion of the United States to explore how market pricesconvey information about the operation of the institutionitself. By looking at the experience in the Chilean watermarkets, another paper focuses not on the history of pricesbut on a wide-ranging and qualitative assessment of thesuccess of the market institution. In another paper we arepresented with a comparison of formal and informal watermarkets in Australia. Finally, two papers address legal andinstitutional issues in the design of water market allocationinstitutions.[

Who Benefits from a Lottery-funded College Subsidy? Evidence from the New Mexico Success Scholarship

This paper investigates the enrollment, retention and academic performance effects of NM Success, a merit-based lottery-funded scholarship established in 1997, using student-level data from the University of New Mexico. While we find a staggering 56 per cent increase in University enrollments, the program pays out four subsidies for every new student attracted to college. Less academically able, higher income students have the greatest enrollment response. The program has not improved retention, and students have responded to its performance requirements by reducing their credit hours. Held to overall enrollment objectives, the program is truly a Success, but it fares less well when held to the standards of economic efficiency and distributional equity.

Valuing Environmental Goods: A Critical Appraisal of the State of the Art

This chapter develops a contingent valuation method for estimating nonmarket, typically environmental goods. Economists usually ignore critically important issues in the application of the methods. These issues define a research agenda to be developed here for the application of the method for deriving meaningful value estimates for recreation, environmental, and other nonmarket goods.