Thomas D. Crocker

Risk, self-protection, and ex ante economic value

We develop three propositions about the ex ante value of reduced risk. If there is a continuous outcome distribution and if self-protection influences outcome probability and severity, then: (1) unobservable utility terms cannot be eliminated from the ex ante value expressions; (2) knowledge of the convexity or the nonconvexity of dose-response functions is insufficient to sign changes in these expressions; and (3) self-protection expenditures need not be a lower bound measure of these expressions. Therefore, many restrictions applied in recent empirical work on the economic value of risk changes are not immediately transferable to settings where endogenous risks prevail.

On the joint determination of biological and economic systems

Abstract Scarce natural resources and our choices to protect or develop them make ecological and economic systems jointly determined—human choices affect nature; nature affects human choices. This essay considers whether a dynamic model that integrates details of an economic system and an ecosystem with explicit feedback links between them yields significantly different results than does ignoring these links. We focus on the case of exotic invaders that put native species at risk in Yellowstone National Park. The results suggest that integration does matter—in each scenario, cutthroat trout populations differ in both magnitude and survival rates, depending on whether feedback is allowed between the two systems.

An economic assessment of air pollution damages to selected annual crops in Southern California

Agricultural production is influenced by many factors beyond the control of individual producers. In recent decades, air pollution has become one of these exogenous factors. This study uses a price-endogenous mathematical programming model to assess the economic benefits of reducing 1976 ambient oxidant exposures of 14 annual crops in southern California. A measure of the distributional consequences of these benefits across producers, consumers and locations is also provided. Results indicate that 1976 benefits of control for the fourteen included crops would have been approximately

The advantages of contingent valuation methods for benefit-cost analysis

46 million.

Prices and Health: Identifying the Effects of Nutrition, Exercise, and Medication Choices on Blood Pressure

Summary and conclusionsThe preceding is a taxonomic discussion of some reasons why contingent market methods may often be a superior means of generating data with which to value non-market commodities. We have argued that economists have erred in viewing the situations these methods posit as necessarily fictional; that the data generated by the methods may, for non-marketed goods and the activities with which they are associated, accord more closely with the conditions of received economic theory; that the methods can make it easier to remove the difficulties of estimation and interpretation introduced by confounding variables; and that they often permit one to deal more readily with phenomena that have not been in the range of historical experience. Nevertheless, whatever the advantages, a major disadvantage remains. Until detailed analytical knowledge is acquired of the manner in which expectations are formed, there exists no way to refute empirical propositions established from contingent markets. Nevertheless, the previously mentioned South Coast Air Basin experiment, where the bids obtained for clean air conformed fairly closely to the values implied in a residential property value study, suggest that contingent valuations have a basis in the real decision processes of consumers.

Valuing potential groundwater protection benefits

Biomedical studies suggest that a persons behavior matters to health, but these studies usually treat human choice as exogenous. This study shows that individual choices on nutrient intake, exercise, and use of medication are influenced by exogenous food prices, wages, and non-labor income. Using these exogenous variables as instruments for endogenous behavior makes a big difference in the estimated impact of nutrient intake, exercise, and medication on blood pressure. For example, application of instrumental variables methods changes the impact of sodium on blood pressure from positive to negative and significant. Copyright 2002, Oxford University Press.

Incomplete beliefs and nonmarket valuation

This paper explores the implications of endogenous risk for the economic value of preventing groundwater contamination. We consider the analytical implications of endogenous risk for five key building blocks frequently used to structure studies of groundwater valuation: The probability and the location of contamination, the exposed population, risk perceptions, and Intertemporal issues.

Parental and social valuations of child health information

We explore implications of the failure of the individual to behave in accordance with the predictions of the utility maximization paradigm for the application of consumer sovereignty principles to the valuation of environmental goods. A subjective probability framework is used to develop an index of the completeness and the coherence of the individuals risk-neutral beliefs and valuations. These beliefs and valuations are shown to be institution-dependent, and thus endogenous to the choices the individual makes about the medium in which to express herself. A variety of propositions about the influence of incomplete beliefs on value expressions is derived.

Cooperative and Noncooperative Protection from Transferable and Filterable Externalities

Abstract We construct an endogenous risk model of the influence of more precise hazard information on the parental demand for child health. A 256-observation data set is used to estimate the marginal value to parents and to society of risk information about the future consequences of childrens body lead burdens. Our results indicate that the social value of risk information greatly exceeds the cost of providing it and that parents will purchase too little of this information.

Ex ante valuation of atmospheric visibility

Given self-protection from an undesirable environmental externality, we examine, under several conditions, the efficiency properties of cooperative and noncooperative behavior. We demonstrate that if self-protection can transfer the externality to another agent, then noncooperative behavior will lead to overprotection. If self-protection filters or dilutes the externality, then noncooperation leads to underprotection. In addition, overprotection will worsen if an agent with more relative power is allowed a first-mover advantage or if the damage function is elastic and transferability is uncertain. Finally, a reduction in uncertainty about transferability will accentuate overprotection if the damage function is inelastic. Our results suggest that coordination of protection activities among agents will enhance the overall gains from environmental policy in the European Single Internal Market of 1992. Coordination minimizes the costs of environmental protection, thereby reducing the public credibility of its foes.