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July 19, 2004

What Good is Happiness, It Can't Buy You Money

Recent advances in the economics of happiness (discussed on this blog here, here, and here) are getting a little more mainstream attention, due to the growing body of research on the relationships between money and subjective wellbeing.

The bulk of the research that's been done on the subject suggests that the correlations between income and happiness are weak. In general, wealthier people are a little happier than the less well off, but it takes an awful lot of income to "buy" the happiness that companionship and community provide for free. For example, on average a long-lasting marriage is worth about $100,000 in annual income -- which means that a stable, 30-year marriage has a present value of about $1.3 million. That's quite an investment opportunity.

But an interesting trend in reporting about this research is that, rather than emphasizing how little difference money actually makes to happiness, many reporters (as well as some academics) are trumpeting the modest contribution that money does make to our sense of wellbeing. Thus, headlines like this one, on the relationships among happiness, money, and sex: "Money Buys Happiness, But Not Sex".

I expect to see more of this, as reporters on the economy beat -- who are used to seeing things in terms of hard cash -- use their own intellectual filters to understand and distill what, to them, could be a somewhat threatening area of research.

Posted by ClarkWD | Permalink | Comments (0)

The Sin of Wages

Yesterday's New York Times reported that hourly pay is not keeping up with inflation.

Although you can't read too much into numbers from a month or two, the news should come as little surprise. Adjusted for inflation, hourly pay for "nonsupervisory workers" (i.e., everyone but management) in the United States peaked more than 30 years ago, in 1973. Hourly wages fell from the late 1970s through the early 1990s, and although they recovered somewhat towards the end of the 1990s, they never regained the highs of 1973.

Leaving aside the inherent difficulty of measuring inflation in a time of rapid technological change and rising standards of living, it's difficult to escape the conclusion that it's harder for a family with a single earner to make ends meet than it used to be. So perhaps the most telling quote of the article is this:

On its own, the decline in workers' wages is unlikely to derail the recovery. Though they account for some 80 percent of the work force, they contribute much less to spending.
But what kind of "recovery" is it, if the average earnings of some 80 percent of the workforce are declining? Just one more reason to believe we need a better definition of "recovery" -- or, more generally, economic wellbeing.

(Thanks to Kevin Drum Washington Monthly for pointing out the article.)

Posted by ClarkWD | Permalink | Comments (0) | TrackBack

July 16, 2004

Surplus with a Smile?

The Northwest Power and Conservation Council says that the Northwest has electricity to spare. That may seem hard to believe, given the rapid population growth that the Northwest states have experienced over the last decade. But it's true -- electricity consumption in the Northwest states is falling, and the trend is particularly evident in per capita consumption:
electricity_per_capita
Much of the decline in per capita consumption can be traced to 3 causes: the closure of aluminum smelters (mentioned yesterday), rising and unstable power prices, and the shift in new construction away from electric heating and towards natural gas. And these shifts have been prompted not by conscious efforts to save energy, but by volatile and rising electricity prices.

The electricity surplus could keep prices stable and relatively low over the next several years--the very opposite of the conditions that led to decreased consumption over the past decade. So, potentially, by undermining the price signal that has encouraged conservation, the power surplus may well contain the seeds of its own undoing.

Posted by ClarkWD | Permalink | Comments (0)

Maxing the Minimum

For decades, the conventional wisdom among economists was that raising the minimum wage increases unemployment. On its face, the argument seemed reasonable enough: no employer will hire a worker at $6/hour if the worker only brings in $5.35/hour in revenue, so raising the minimum wage might cause some companies to shed jobs. A spate of empirical studies seemed to back up the theory, helping to kill any upward momentum on the minimum wage.

But recent research (summarized in this Slate article by Steven Landsburg) suggests that much of the previous research was wrong, and that the minimum wage has almost no effect on unemployment levels in the real world. Put simply...

the power of the minimum wage to kill jobs has been greatly overestimated. Nowadays, most labor economists will tell you that that minimum wages have at most a tiny impact on employment.
It's worth noting that the author of this article actually opposes increasing the minimum wage, on the grounds that it places too much of the burden of higher pay on employers, and not enough on society at large. But other economists (including my favorite blogger on economic topics, Brad DeLong), say that even that contention is flawed: the burden of minimum wage increases fall on the customers of companies that employ minimum wage labor, which includes most of us. So raising the minimum wage is like a small tax on consumers that's funnelled directly to the people at the bottom of the income ladder.

So all this leads me to believe that increasing the minimum wage would be an unalloyed good, rather than a mixed blessing.

One more plug for the Slate article: it provides a fascinating look at how subtle and unconscious biases can have an enormous impact on academic research.

Apparently, the bulk of research published on the topic confirmed the standard theory, i.e., that increases in minimum wage cause unemployment. But the more studies there were, the more troubled economists became: the bigger studies proved to be no more statistically significant than the smaller ones. This is definitely not what one would expect. If a statistical correlation is valid, studies with large sample sizes will show the relationships much more clearly than studies with small sample sizes.

So researchers looking at the body of published results concluded that there was a pervasive bias in play--empirical studies that confirmed economic theory were written up and published, but those that didn't confirm the theory never saw the light of day. The result was a corpus of academic research that came to the wrong conclusion, simply because the correct results didn't seem interesting enough to be worth publishing.

Apparently, when enough great minds think alike, they can all be wrong together.

Posted by ClarkWD | Permalink | Comments (0) | TrackBack

July 15, 2004

River Repatriation

pnwmap_258x375A bit of Cascadian trivia: Cascadia just got some of its water back – or will soon.

Cascadia’s boundaries are defined by the watersheds of the rivers that flow through North America’s temperate rainforests. But there are two places where governments have diverted rainforest rivers to the east to feed irrigation canals: one near the Klamath Basin in southern Oregon, the other near the Trinity Alps of northern California. Since 1964, some 90 percent of the waters of the Trinity River have been sluiced into the Sacramento River rather than running westward to the Pacific. As a result most of the Trinity’s wild salmon have disappeared.

Two northern California tribes, the Hoopa and the Yurok, just won a court case that should put at least half of the river back in its natural bed. Salmon restoration will follow.

Posted by Alan Durning | Permalink | Comments (1) | TrackBack

Alcoa Can't Wait

According to this Seattle Post-Intelligencer article, Alcoa is trying to restart its Wenatchee aluminum smelter, which was idled during the electricity crunch of 2001.

During that summer, when electricity prices up and down the west coast shot up to absurd heights, most of the aluminum smelters in the Northwest shut down: they could make more money selling electricity back to the power grid than they could by using it to make aluminum. And aluminum smelting consumes a prodigious amount of electricity: in Washington state, the smelters used more than half of all industrial electricity, and when they closed, industrial electricity consumption collapsed:
industrial_electricity

Energy consumption isn't the only environmental impact of aluminum smelting. The most recent greenhouse gas inventory for Washington state shows that gases known as PFCs (or perfluorocarbons), which are a byproduct of the smelting process, were responsible for 4 percent of all warming emissions in the state in 2000. So that makes aluminum smelting a double whammy for the environment: it uses lots of energy, and produces climate-warming gases as a byproduct.

Given the high environmental impacts of aluminum, it might seem tempting to celebrate the closure of the smelters, and to rue their reopening. But that's the wrong instinct. The real effort has to be put into reducing Northwesterners' demand for aluminum, since our real contributions to the global problems of aluminum smelting are measured by how much aluminum we use, not how much is made nearby. Handing off the smelting process to some other part of the world might make some of us feel better -- and might keep local electricity prices down. But it certainly doesn't help the climate.

So if the smelter reopens, so be it. Just try not to buy your soda in aluminum cans.

Posted by ClarkWD | Permalink | Comments (0)

Hope in Clark County?

Big decisions are coming down in Clark County, Washington, the sprawling area surrounding Vancouver (Washington) that's functionally part of greater Portland. The county is working on its 20-year growth plan and the implications are huge.

There's momentum in the county, though no consensus yet, to slow the pace of growth and concentrate development in existing neighborhoods.

The sprawling record Clark County is trying to recover from is evident in the map below, which shows populatiown growth in rural areas around greater Portland. Clark County is the area north of the Columbia River.

Figure_4_rural_population

Posted by Alan Durning | Permalink | Comments (0)

Roadless Gains Eroded

In our 2002 book on the Northwest, one of the best pieces of news we reported was a historic pause in the region's road expansion, largely because for the first time in decades, northwesterners reduced the pace of road construction in national forests. From 1991-2000, the Northwest's National Forest road system shrank by 4,400 miles; the Forest Service also closed an additional 17,200 miles of roads.

This week's announcement by US Agriculture Secretary Ann Veneman of a new proposal to significantly weaken the Clinton Administration-era "roadless rule" threatens to erode those steady gains. The roadless rule banned road-building in nearly 60 million acres of national forests, including about 2 million acres in Oregon, 2 million acres in Washington, and 9.3 million acres in Idaho. Governors, said Veneman, will now be in charge of deciding whether or not to protect the roadless forest lands in their states.

The Oregonian editorial board voiced cautious approval for the plan--citing it as a win for local control. The Seattle P-I, meanwhile, cited Oregon evidence that suggests only logging-friendly governors "should expect their views to be respected."

"Witness what happened in Oregon's Klamath-Siskiyou region where the Forest Service just approved a huge timber sale, much of it in a roadless area despite pleas from Gov. Ted Kulongoski."

Idaho's forests may be most vulnerable: While Governors Kulongoski of Oregon and Gary Locke of Washington criticized the plan, Idaho Governor Dirk Kempthorne is a strong supporter of the plan.

It's worth remembering why roadless areas are so important: Roads are not only indicators of the physical scale of northwesterners’ real-estate development and logging--see our clearcutting maps for a 30-year snapshot of what roads and the industries they support do--but they are also a first-order ecological problem in themselves. Roads fragment previously intact ecosystems, speed the spread of invasive organisms, cause landslides on steep slopes, and send pollution and sediment into nearby waterways.

Roadless forests and watersheds, meanwhile, offer sanctuary for salmon and Sitka spruce; for keystone predators like grizzly bears, whose presence structures entire food webs; and for an invisible foundation of fungi and microorganisms. They sustain the ancient regenerating rhythms of fire and flood and provide humans with benefits ranging from clean water and moderate climates to crop pollination and recreation.

And though growth of the Northwest's road network has slowed, it still stretches an estimated 800,000 miles (1.3 million kilometers), enough to wrap around the equator more than 32 times. That length of roads is roughly equal to the combined length of all the region’s streams taken together, which means that that vehicles may have better access to the Northwest’s terrain than do salmon.

Posted by Elisa Murray | Permalink | Comments (0) | TrackBack

July 14, 2004

Sprawl Gobbles Paychecks

stpp_transport_spendingThe price of gasoline has again dipped below (US) $2 per gallon in most of Cascadia, though it’s still up about 40 cents from its January level.

This increase has hit low-income drivers harder than anyone else, as the Wall Street Journal documented two days ago. (Subscription required, login, then search July 12 for Jeffrey Ball’s frontpage article “For Many Low-Income Workers, High Gasoline Prices Take a Toll.”)

Jeffrey Ball writes,

Today, even among those U.S. households earning less than $15,000 a year, about three-quarters own cars. The cost -- of car payments, insurance premiums and gasoline -- represents a bigger financial hit for those whose wallets are thinner. Moreover, those with lower incomes are likelier to be driving older, less-fuel-efficient cars and trucks, further intensifying the sting of higher gas prices. According to a report last year from the U.S. Department of Transportation, individuals with annual incomes of less than $8,000 spent nearly 10% of their incomes commuting in 1999. Those with incomes of $45,000 or more spent just 2%

As the Wall Street Journal chart on the right shows, residents of Portland devote fully 16 percent of their household budgets to transportation, well above levels in East Coast cities that developed before the automobile. Residents of sprawling Seattle devote 20 percent--about the same as Dallas and Houston.

Ball continues,

At [today’s price] level, assuming a car travels 15,000 miles a year, which is typical, and gets 21 miles per gallon, approximately the national average, its driver will spend $1,350 annually on gas, or $286 more than last year. Families that need two or three cars to get around, as many do, could be spending $3,000 or $4,000 a year on gas.
That may be tolerable for a family making $100,000 a year or more. But for a family scraping by on $19,000, roughly the federal poverty line for a family of four, it hurts.

Later, Ball notes the kicker:

It's very difficult to have good transit service when stuff is spread out like a thin coat of peanut butter across the horizon," says Ed Crawford, who is public liaison for the bus system, Hillsborough Area Regional Transit [in sprawling Tampa, Florida]. He rides a motorcycle to work. "We have multiple cores and mostly suburban bedroom communities. As a consequence, people are forced to drive," he says.

Sprawl turns low incomes into poverty incomes.

Posted by Alan Durning | Permalink | Comments (0)

Timber Rush

Timber exports from BC, especially from the province’s interior and especially to the United States, are roaring, despite the punishing tariffs Washington, DC, has imposed on Canadian lumber in protest over provincial subsidies. Prices are up by half over last year, the Vancouver Sun reports. (Subscription required.)

What’s going on? The US home building industry had a booming spring, thanks to low interest rates and the expectation that they would rise sometime very soon. (As they’ve now done.) And thanks to the massive tax subsidy (download PDF, see page 40) that the US treasury gives to home buyers, in the form of the mortgage interest deduction. Also, Canada’s dollar is weak compared with the Euro, which is boosting Canada’s market share in Japan.

Expect to see faster clearcutting, when NEW updates the BC forest indicator in the Cascadia Scorecard.

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