Monday, May 19, 2008
All Else Equal... Global Warming Legislation Is Stupid
POP QUIZ!
Ok, we have two alternate worlds with two identical villages, the exception being that Village A has only an income tax and produces greenhouse gasses. Village B has a combination of income tax and greenhouse gas emissions taxes. Village B's tax system implemented in a way that completely eliminates greenhouse gas emission, but has no effects on its ability to meet the material need of its population; i.e., the villages have the same GDP, population growth rates, etc.
Both populations start with 2000 people.
The population growth rate is 1.3% for both villages.
The GDP growth rate is 4% for both villages.
30% of both populations have IQs sufficient to perform higher level work requiring a college degree, and do so.
Lets say Village B has a .01 chance of a 100 year storm hitting which will kill .05 of the population and destroy .05 of the economy every year. Due to its greenhouse gas emission, Village A has a .011 change of being hit by a 100 year storm. Various engineering projects are available that will reduce deaths and destruction .005. These projects require 100 civil, environmental, or marine engineers to start.
Assuming a hundred year storm absolutely will not happen until at least 100 years from now, which village is at greatest risk from a hundred year storm? Please explain why and show any calculations.
Ok, we have two alternate worlds with two identical villages, the exception being that Village A has only an income tax and produces greenhouse gasses. Village B has a combination of income tax and greenhouse gas emissions taxes. Village B's tax system implemented in a way that completely eliminates greenhouse gas emission, but has no effects on its ability to meet the material need of its population; i.e., the villages have the same GDP, population growth rates, etc.
Both populations start with 2000 people.
The population growth rate is 1.3% for both villages.
The GDP growth rate is 4% for both villages.
30% of both populations have IQs sufficient to perform higher level work requiring a college degree, and do so.
Lets say Village B has a .01 chance of a 100 year storm hitting which will kill .05 of the population and destroy .05 of the economy every year. Due to its greenhouse gas emission, Village A has a .011 change of being hit by a 100 year storm. Various engineering projects are available that will reduce deaths and destruction .005. These projects require 100 civil, environmental, or marine engineers to start.
Assuming a hundred year storm absolutely will not happen until at least 100 years from now, which village is at greatest risk from a hundred year storm? Please explain why and show any calculations.
Thursday, May 15, 2008
Giffen Behavior in Driving
One more plausible rational reason why fuel efficiency continues to decline.
Perhaps there is Giffen Behavior in driving. If the cost of driving goes up, we may get more demand for driving.
People are pressured to forgo luxery driving during off-peak hours, but must drive more during peak hours to produce a needed increase in income.
Added: And people are only willing to do so much driving in a day or week. People must drive more during congested times and are too tired to take the family out or take that country drive to visit grandma. Maybe mom and dad don't even want to be in a car any more.
Perhaps there is Giffen Behavior in driving. If the cost of driving goes up, we may get more demand for driving.
People are pressured to forgo luxery driving during off-peak hours, but must drive more during peak hours to produce a needed increase in income.
Added: And people are only willing to do so much driving in a day or week. People must drive more during congested times and are too tired to take the family out or take that country drive to visit grandma. Maybe mom and dad don't even want to be in a car any more.
Tuesday, May 13, 2008
Fuel Efficiency Continues to Decline
Kevin Drum observes that people respond to higher gas prices by driving less.
He fails to notice that along with the decline in fuel production is a decline in GDP growth.
He also fails to notice that miles driven have decreased much more than fuel production. That's right, fuel efficiency is declining with higher fuel prices.
According to Kevin, fuel production has declined by .7%. Average Daily Miles Driven have declined by 5%.
Some of this decrease in efficiency is due to increasing population and limited growth in infrastructure. Some may be due to people forgoing long trips to recreational destinations. But none of this comes close to explaining a 5% decline in driving. It's hard to believe that long recreational drives are a big part of American culture, let alone the greater than 5% of driving necessary to drive down efficiency.
I have my own theory. Markets only perform well when there is good flow of information. Because of people's misconceptions of what is efficient and how they affect traffic, they are modifying their behaviour in counter productive ways.
Popular belief is that people will notice their decreased fuel efficiency and correct their mistakes. However, among other complications, I believe gas prices are nowhere near high enough to get people to seriously consider the consequences of their actions.
[UPDATE: Giffen Behavior may contibute to decreasing efficiency]
He fails to notice that along with the decline in fuel production is a decline in GDP growth.
He also fails to notice that miles driven have decreased much more than fuel production. That's right, fuel efficiency is declining with higher fuel prices.
According to Kevin, fuel production has declined by .7%. Average Daily Miles Driven have declined by 5%.
Some of this decrease in efficiency is due to increasing population and limited growth in infrastructure. Some may be due to people forgoing long trips to recreational destinations. But none of this comes close to explaining a 5% decline in driving. It's hard to believe that long recreational drives are a big part of American culture, let alone the greater than 5% of driving necessary to drive down efficiency.
I have my own theory. Markets only perform well when there is good flow of information. Because of people's misconceptions of what is efficient and how they affect traffic, they are modifying their behaviour in counter productive ways.
Popular belief is that people will notice their decreased fuel efficiency and correct their mistakes. However, among other complications, I believe gas prices are nowhere near high enough to get people to seriously consider the consequences of their actions.
[UPDATE: Giffen Behavior may contibute to decreasing efficiency]
Thursday, May 08, 2008
Should People Slow Down? Maybe, An Envelope Calculation
31556926 Seconds/Year (Google search)
303824646 Population of US (2007 est, cia world factbook)
$13860000000000 Annual GDP of US (2007 est, cia world factbook)
(13860000000000 $/year) / (303824646 people*31556926 seconds/year) = .0014456 $/person-second [That's $4.97 an hour]
30 miles/gallon at 55mph (source, est from graphic)
23 miles/gallon at 75mph (source, est from graphic)
25 miles/gallon at 70mph (source, est from graphic)
28 miles/gallon at 65mph (source, est from graphic)
3.62 $/gallon May 4th US average (source)
1.63 person/vehicle (source)
3600 second/hour
(3.62 $/gallon * 55 mi/hour) / (30 miles/gallon * 3600 second/hour * 1.63 people) = .001131 $/person-second
(3.62 $/gallon * 75 mi/hour) / (23 miles/gallon * 3600 second/hour * 1.63 people) = .002012 $/person-second
(3.62 $/gallon * 70 mi/hour) / (25 miles/gallon * 3600 second/hour * 1.63 people) = .001727 $/person-second
(3.62 $/gallon * 65 mi/hour) / (28 miles/gallon * 3600 second/hour * 1.63 people) = .001432 $/person-second
Of course, this assumes that your daughter and grandmother are as likely to be the 1.63 occupants as you and your wife.
(Also, I don't like that consumption curve. That 55mph tripe is based on old vehicles, and may also include big trucks. I know my 2002 Mazda protégé is at 3400RPM at 75mph, still in the flat part of the torque curve.)
303824646 Population of US (2007 est, cia world factbook)
$13860000000000 Annual GDP of US (2007 est, cia world factbook)
(13860000000000 $/year) / (303824646 people*31556926 seconds/year) = .0014456 $/person-second [That's $4.97 an hour]
30 miles/gallon at 55mph (source, est from graphic)
23 miles/gallon at 75mph (source, est from graphic)
25 miles/gallon at 70mph (source, est from graphic)
28 miles/gallon at 65mph (source, est from graphic)
3.62 $/gallon May 4th US average (source)
1.63 person/vehicle (source)
3600 second/hour
(3.62 $/gallon * 55 mi/hour) / (30 miles/gallon * 3600 second/hour * 1.63 people) = .001131 $/person-second
(3.62 $/gallon * 75 mi/hour) / (23 miles/gallon * 3600 second/hour * 1.63 people) = .002012 $/person-second
(3.62 $/gallon * 70 mi/hour) / (25 miles/gallon * 3600 second/hour * 1.63 people) = .001727 $/person-second
(3.62 $/gallon * 65 mi/hour) / (28 miles/gallon * 3600 second/hour * 1.63 people) = .001432 $/person-second
Of course, this assumes that your daughter and grandmother are as likely to be the 1.63 occupants as you and your wife.
(Also, I don't like that consumption curve. That 55mph tripe is based on old vehicles, and may also include big trucks. I know my 2002 Mazda protégé is at 3400RPM at 75mph, still in the flat part of the torque curve.)
