Net Social Benefits Research Articles

Health and economic benefits of cleaner residential heating in the Beijing–Tianjin–Hebei region in China

Millions of households in many underdeveloped countries use coal stoves for heating, which remains a major air pollution source. Since 2015, policies for substituting residential coal use with electricity have been implemented at unprecedented levels in the Beijing–Tianjin–Hebei (BTH) region, one of the most severely air polluted areas in China. This study evaluated the health benefits of the residential “coal-to-electricity” policy in the BTH region. We developed an integrated assessment model to investigate the impact of the policy on both the ambient and indoor air quality improvement. The private health benefits from indoor air quality improvements do not justify the costs. However, adding the spillover public health benefits from ambient air quality improvements, the policy brings net social benefits to the BTH region. Compared to a no-policy scenario, Beijing obtains the most health benefits and enjoys the most synergies from regional cooperation among the three provinces/municipalities. Hebei bears the highest cost since it has more households fueled by coal. Our results showing net social benefits provide support for a massive and accelerated implementation of this policy in the BTH region. The provincial distributional results can provide a reference for subsidies from Beijing and Tianjin to Hebei for achieving region-wide implementation.

Equilibrium Joining Strategy in a Batch Transfer Queuing System with Gated Policy

In this paper, strategic behavior of passengers in a batch transfer queuing system with gated policy under complete information is investigated. Two solutions are used to solve the stationary distribution of the system. Particularly, suppose that arriving passengers have the opportunity to observe all information of the system upon arrival, we derive equilibrium joining strategy of passengers under this information when passengers fall into the dilemma of joining or balking. We prove that the equilibrium joining strategy is a threshold type, but when some parameters change, it may be changed. Under the equilibrium strategy of threshold type of the observable case, we give the parameterized expected total net social benefit function. Finally, a number of numerical experiments on equilibrium social benefit with respect to several parameters are presented, which are used to explore the theoretical results of the system and compare observable case and unobservable case of the system.

How the removal of producer subsidies influences oil and gas extraction: A case study in the Gulf of Mexico

Since producer subsides can entail significant economic, fiscal, social and environmental costs, governments have been increasingly interested in removing them. Although many studies have been done on reducing consumer subsidies, subsidies to fossil fuel production are rarely discussed by scholars. This paper seeks to fill this void by developing an economic optimization model for oil and gas extraction to analyze the effects of producer subsidy removal. We forecast field-specific costs for exploration, development and production through constructing functions for the number of wells drilled and producing wells, production and economic limits. Various scenarios of phasing out producer subsidies in U.S. federal and state regulation on optimal production using field data from the Gulf of Mexico are simulated, including removing royalty relief, amortization of geological and geophysical costs, and percentage depletion. The results show that removal of producer subsidies reduces the optimal production rate and investors' net present value and increases government revenue, but the total effect is a cost of net social benefits. Changes in both the discount rate and oil price have positive effects on optimal production, but they exert opposite effects on producer benefits. Our research is helpful for policy-makers to regulate an efficient subsidy removal path.

The Duty to Work

Most advanced industrial societies are ‘work-centered,’ according high value and prestige to work. Indeed, belief in an interpersonal moral duty to work is encoded in both popular attitudes toward work and in policies such as ‘workfare’. Here I argue that despite the intuitive appeal of reciprocity or fair play as the moral basis for a duty to work, the vast majority of individuals in advanced industrialized societies have no such duty to work. For current economic conditions, labor markets, and government policies entail that the conditions for a reciprocity-based argument to apply to most workers are not usually met. More specifically, many workers fail to provide valuable goods through working or their working does not result in net social benefit. Concurrently, many workers do not receive adequate benefits from working in that they neither have their basic needs met or do not even enjoy an improvement in welfare thanks to working. Hence, workers neither provide nor receive the benefits needed for a reciprocity-based duty to work to apply to them. Furthermore, these conditions are conditions over which workers themselves have very little control. Most workers therefore could not fulfill their ostensible duty to work even if they made conscientious efforts to do so. In most cases, a person who fails to work morally wrongs no one, and in the case of any particular individual or worker, the defeasible presumption ought to be that she has no duty to work.

How spatial targeting of incentive payments for forest carbon storage can be adjusted for competing land uses

Spatial consideration of costs and benefits plays a critical role in assessing the effectiveness of payments for ecosystem services (PES). While spatial assessment has received much attention, few, if any, studies have explicitly considered spatial variations in the benefits and landowners’ opportunity costs of competing land uses as targeting criteria for PES. The objective of our research is to identify different spatial targets for PES based on spatial variations in ecosystem benefits and opportunity costs for competing land uses. As a case study, we use incentive payments for forest carbon storage in the Central and Southern Appalachian Regions of the eastern United States. We find, on average, supplying forest carbon storage by converting pasture to forest is approximately five times more cost effective than mitigating deforestation for urban use because of its lower opportunity cost and its higher per hectare gain in carbon storage. We also find that the targeted areas that have positive net social benefits in supplying forest carbon represent 9.32% of the case-study region’s pasture land, while zero pixels are identified with positive net social benefits when urban use is the competing land use. These findings imply that the spatial targeting of the region’s areas that have positive net social benefits should focus on afforesting pasture instead of preventing forestland from being converted to urban use. The results also help target cost-effective areas for afforestation of pasture for carbon storage.

The rural telecommuter surplus in Southwestern Ontario, Canada

This paper asks the question: what kind of economic benefits do rural telecommuters experience in Southwestern Ontario? This is a relevant question in Canada where, according to Statistics Canada (2017) one in 14 people work from home. This paper presents an overview of the current literature on telecommuting. We estimate the telecommuter surplus in Southwestern Ontario where the region is currently deploying one of Canada's largest publicly-funded ultra-high-speed broadband initiatives known as SouthWest Integrated Fibre Technology Inc. (SWIFT). The analysis is based on SWIFT residential and farm surveys (n = 3948) conducted in 2017. We find that an average telecommuter's surplus in terms of costs saved, including opportunity cost ranges from $8820 to $23964 per annum per telecommuter, depending on the number of days telecommuted per week for home and primary residence dwelling type. The social net benefits of telecommuting differ from its private net benefit (the focus of our paper) since the former includes both positive and negative externalities associated with telecommuting such as reduced traffic congestion, reduced probability of road accidents, as well as some workers shirking their duties (a negative impact). We leave this for future work.

Weather or not? Welfare impacts of natural gas pipeline expansion in the northeastern U.S.

With the rapid development of new natural gas resources in the United States has come a number of proposals for new natural gas transmission infrastructure. We use a unique and fine-grained data set on natural gas spot pricing and gas transmission operations to model how a local pipeline expansion connecting a Marcellus Shale producing area to the main Transco pipeline system would affect flow patterns and zonal gas pricing across the Transco. Our modeling approach is based on arbitrage cost models for constrained energy networks, accounting for the effects of zonal gas transmission rates as mandated by the U.S. Federal Energy Regulatory Commission. Application of our model to a data set of daily gas market outcomes and operating conditions on the Transco between 2012 and mid 2014 suggests that the modeled pipeline expansion would increase overall economic welfare in the spot market for Transco deliveries by $1.7 billion and have positive net social benefits of about $0.4 billion. However, more than 80% of this estimated welfare gain occurs in one season (winter 2014) featuring high gas demand due to colder weather. Thus, the spot market efficiency gains associated with pipeline projects in the Marcellus region may be limited by the frequency of extreme cold weather conditions. To examine the sensitivity of our estimates of welfare gains to different weather conditions, we calculate the expected benefits of the pipeline expansion in terms of historical temperatures from 1992 to 2011, and find that Atlantic Sunrise would have increased welfare by approximately $1.8 billion over a two and half year period, on average.

Does multidisciplinary rehabilitation of tortured refugees represent \u2018value-for-money\u2019? A follow-up of a Danish case-study

BackgroundThe recent surge of asylum seekers in the European Union (EU) is raising questions about the EU’s ability to integrate newcomers into the economy and into society; particularly those who need specialized services for the treatment of severe trauma. This study investigated whether rehabilitating traumatised refugees represents ‘value-for-money’ (VfM) in terms of intervention cost per health gain and in a long-term and societal perspective.MethodsThe economic evaluation comprised a cost-utility analysis (CUA) and a partial cost-benefit analysis (CBA). The CUA incorporated data on Quality Adjusted Life Years (QALY) for 45 patients who were treated at the Rehabilitation and Research Centre for Torture Victims, Copenhagen, Denmark, in 2001–2004 and followed for up to 2 years, to determine the incremental cost effectiveness ratio (ICER). For the CBA, data was collected for 44 patients who completed treatment between 2001 and 2004 and 44 matched controls on the waiting list, for the patients’ primary health care utilisation, and personal and family labour income from 2001 to 2014. This was analysed to evaluate the Net Social Benefit (NSB) of the programme.ResultsThe average cost of treatment was found to be about 32,000 USD per patient (2016 prices) with an average gain in QALY of 0.82. The treatment was cost effective according to the ICER threshold suggested by the National Institute of Health and Care Excellence (UK). At the individual level, the NSB remained negative throughout the study period. However, at the family income level the intervention proved to have been beneficial after 3 years.ConclusionThe implication of the study is, that providing rehabilitation to severely traumatised refugee families can be an economically viable strategy, considering the economic effects observed at the family level.

Demand for Giving to Multiple Charities: An Experimental Study

We study how competition among charities affects individuals’ giving behavior. We characterize situations where charities benefitting substitute or complementary causes incentivize donations by offering subsidies in the form of rebates. Our theory predicts that an increase in the rebate rate offered by a given charity relative to a substitute charity will shift donations away from the substitute charity, but this “stealing” effect is not expected when complementary charities are considered. Our model further characterizes the conditions under which total donations increase with rebates. We test the model in an experimental setting, and demonstrate that the experimental results support our theoretical predictions. We derive the demand for giving as rebates vary for both substitute and complementary causes. The social net benefit of rebates is calculated by comparing campaign costs with new donations generated.

The Hidden Cost of M&A

The shareholder wealth maximization norm exerts tremendous influence on both business practice and corporate legal scholarship. Widespread acceptance of the norm has produced substantial focus among corporate executives, analysts, and scholars on one key metric: share price. The norm and the related focus on equity prices rest on two key assumptions: (1) that the pursuit of shareholder wealth maximization, as measured by share price, effectively maximizes the wealth of actual shareholders and (2) that the pursuit of shareholder wealth maximization, as measured by share price, is socially beneficial. If the shareholder wealth maximization norm does not truly maximize shareholder wealth, it fails by its own terms. If pursuing shareholder wealth maximization does not produce a net social benefit but instead generates a net social harm, the pursuit of shareholder wealth maximization no longer constitutes a “win-win” for businesses and consumers but instead elevates business interests in a zero-sum competition between the two groups. This Article addresses one context where the pursuit of share price gains both fails to maximize the wealth of all shareholders and fails to benefit society: corporate mergers and acquisitions activity. Since Henry Manne’s seminal paper, The Market for Corporate Control, it has been generally accepted that merger gains accrue either through efficiency or market power. Efficiency gains involve creating synergies and eliminating redundancies, thus enabling merged entities to do more with less. To the extent that merger gains accrue via this route, mergers benefit everyone involved: shareholders benefit from a boost in share prices, society benefits from a more efficient marketplace, and consumers benefit from lower prices for goods and services. In contrast, market power gains enable the merged entity to increase the price of the goods it sells or the services it provides, thereby reducing consumer welfare. Because of the increased cost to consumers, this second option pits the interests of some groups against others. Wealthy shareholders likely benefit more from share price increases than they are harmed by the increased cost of goods and services, since these shareholders tend to own substantial amounts of stock and to make substantial sums from that stock. However, the reverse may be true for less wealthy shareholders and society at large. Corporate legal scholarship has largely failed to address this hidden cost. Historically, economic literature has left unsettled whether merger gains accrue primarily through the former or latter routes, leaving scholars free to assume that merger gains do not necessarily come at the expense of consumers or society. Recent research, however, reveals that most gains in U.S. mergers come from market power increases. This finding exposes two key shortcomings of traditionalist interpretations of the shareholder wealth maximization norm: (1) share price gains serve as an inadequate proxy for increased financial welfare for all shareholders, and (2) share price gains serve as an inadequate proxy for increased social welfare. If we truly desire to maximize the wealth of all shareholders and to benefit society as a whole, then we cannot rely on share price gains as a proxy for the interests of all constituencies.

Brexit and OTC Derivatives Clearing: The Role of Politics

In this paper, we argue that a drastic impact of Brexit on UK CCPs should in principle be avoided, for the simple reason that they have so far provided efficient clearing services to counterparties located in other EU countries, so that their disruption would not be in the interest of Europe as a whole. Nonetheless, we do not go as far as arguing that the relocation of part of the OTC derivatives clearing which presently occurs in London to other EU countries should be avoided as certainly inefficient. While believing that clearing efficiency would be optimized through concentration of the clearing services in a small number of clearing houses, we acknowledge that the information presently available on the EU clearing economy does not always support the status quo. We also admit that a relocation of part of the clearing business to other EU financial centres could be efficient in the long-run if given conditions materialize, such as the shifting of a substantial mass of derivatives transactions to one or more CCPs in the Continent at a reasonable cost. We further argue that EU and national politics could determine an impact of Brexit on OTC derivatives’ clearing that is disruptive of the status quo without bringing net social benefits. Indeed, the protection of national interests and local constituencies could prevail over an informed view of the efficiency and stability of the clearing industry, which would imply leaving the choices to be made in one direction or the other to market participants. As a policy solution, we advocate a reform of EMIR strengthening the supervision of CCPs, including those located in third countries, along the lines recently proposed by the European Commission. Nevertheless, we suggest some amendments to the Commission’s proposal that are directed to avoid the disruption of the clearing industry which would be caused by the proposed regulatory requirements. A similar reform would entitle not only ESMA and the national competent authorities, but also the central banks of issue, the ECB in particular, to effectively supervise third-country CCPs and protect the financial stability of the Union. Moreover, the central banks of issue would be able to provide liquidity to CCPs and their clearing members, particularly in stress situations. However, we advocate a clearer recourse to substitute (or comparative) compliance for third country CCPs and reject the idea of a location requirement that under the Commission’s proposal could be imposed to third country CCPs in extreme circumstances.

How Might Earnings Patterns and Interactions Among Certain Provisions in Oasdi Solvency Packages Affect Financing and Distributional Goals?

Analysts often compile packages of Social Security changes based on publicly available projections of the effects of individual provisions. Such analyses may neglect issues of whether and how the provisions might interact to alter intended outcomes, thwarting the proposal’s financing and distributional goals. To inform policymakers about the importance of such interactions in examining the cost and distributional implications, we catalog a range of possible interactions, including some that are subtle and not well understood. Using data on U.S. workers from the Survey of Income and Program Participation matched to administrative records, we document important patterns in work and benefit histories to show how several commonly discussed Social Security proposals would affect different population groups. We then use DYNASIM, the Urban Institute’s dynamic micro-simulation model, to measure how accounting for interactions among a few of these provisions changes projections of distributional effects. The study found that: -Interactions between Social Security parameters and between Social Security and personal income taxes can be significant. -Modelers may thus wish to display incremental analyses of combinations of provisions and the both gross and net Social Security benefits in their distributional analyses. The policy implications of the findings are: -Social Security packages are best evaluated holistically. The whole does not always equal the sum of its parts, either in terms of costs or distributional effects.

Joint Distribution Network and Renewable Energy Expansion Planning Considering Demand Response and Energy Storage—Part I: Stochastic Programming Model

The first part of this two-paper series describes the incorporation of demand response (DR) and energy storage systems (ESSs) in the joint distribution and generation expansion planning for isolated systems. The role of DR and ESS has recently attracted an increasing interest in power systems. However, previous models have not been completely adapted in order to treat DR and ESS on an equal footing. The model presented includes DR and ESS in the planning of insular distribution systems. Hence, this paper presents a novel model to decide the joint expansion planning of distributed generation and the distribution network considering the impact of ESS and price-dependent DR programs. The problem is formulated as a stochastic-programming-based model driven by the maximization of the net social benefit. The associated deterministic equivalent is formulated as a mixed-integer linear program suitable for commercially available software. The outcomes of the model are the location and size of new generation and storage units and the distribution assets to be installed, reinforced or replaced. In the second companion paper, an insular case study (La Graciosa, Canary Islands, Spain) is provided illustrating the effects of DR and ESS on social welfare.

Incentivizing spectrum sharing via subsidy regulations for future wireless networks

Traditional regulatory methods for spectrum licensing have been recently identified as one of the causes for under-utilization of the valuable radio spectrum. Governmental regulatory agencies such as the Federal Communications Commission (FCC) are seeking ways to remove stringent regulatory barriers and facilitate broader access to the spectrum resources. The goal of such new FCC-backed efforts is to allow for an improved and ubiquitous sharing of the precious radio spectrum between commercial service providers. In this paper, an interdisciplinary framework for spectrum management is proposed in which the government, using its regulatory power, can motivate spectrum sharing among the service providers in order to gain a net social benefit. In this framework, a noncooperative game is used to analyze how to foster more sharing of the radio spectrum via the use of regulatory power. The providers are incentivized with subsidized spectrum bands from the regulators. In return, the providers will be asked to provide coverage to the users that are not subscribed to them so as to maintain their subsidy incentives from the government. In a simplification of the model, the providers’ perfect equilibrium strategies are found numerically, and the existence of perfect equilibrium for the government’s strategy is discussed. Our numerical results using real base station locations from two cellular providers show that through subsidization, the government can provide small service providers a fair chance to compete with the large providers, thereby avoiding monopolization in the market.

Determining socially optimal rates of nitrogen fertilizer application

Effective management of nitrogen (N) fertilizer is central to enhancing agricultural productivity, while improving water and air quality and mitigating climate change. Quantifying “socially optimal” rates of N fertilizer (i.e. maximizing net benefits to society while minimizing social costs) is a key component of any regulatory or incentive program designed to better manage N application. Here, we estimate spatially-explicit socially optimal N fertilizer application rates for corn in Minnesota that account for uncertainty, both in valuation techniques and model parameters. We find that socially optimal rates of N fertilizer application are between 0 and 161 kg ha−1, whereas the private optimum is 165 kg ha−1. Choice of valuation methods shifts the spatial configuration and magnitude of the socially optimal N application rates illustrating the importance of valuation method and assumptions. Even after accounting for uncertainty in valuation methods, we find reducing rates of N fertilizer application offers significant opportunities to improve social welfare. By internalizing the social costs of nitrogen, net social benefits of N could increase by over $1100 ha−1, even while accounting for declines in agricultural yields.

Benefit-Cost Analysis and Emerging Technologies.

Emerging technologies are, by definition, full of surprises: developments that we cannot fully anticipate and that might have some bad outcomes as well as good ones. This presents a challenge for anyone trying to make forward-looking policy decisions, including those who apply benefit-cost analysis. BCA is now widely known and used, but it is also widely misunderstood-by many of its advocates as well as its detractors. In this essay, I will begin by examining some of the strengths and weaknesses of BCA as a normative science. Yes, "normative science" is an oxymoron, and the incongruity it speaks to is a source of much of the controversy; BCA is an imperfect answer, but often the best available answer, to the question of how a society should go about making collective but not unanimous choices. I also want to take a hard look at the question of what we are evaluating. BCA is designed to weigh government actions, to see whether they are in the public interest; it is not designed to evaluate private actions. But if the government action is to approve a private action that otherwise would be prohibited, then the BCA inevitably must evaluate the latter. From the perspective of a government regulator, it is very tempting to shift the burden of proof onto private innovators-to obligate them to seek permission to proceed, and to demonstrate that their proposed actions have acceptable risks and will produce a net social benefit. But such burden-shifting is not merely an administrative convenience; it has serious economic consequences that need to be examined.

MODERNIZING POLISH AGRICULTURAL ECONOMICS TEACHING AND RESEARCH: AN EVALUATION OF ACADEMIC COOPERATION

Twenty-five years ago in response to the collapse of communism in Poland, an academic consortium was formed around two Polish Universities of Life Sciences (formerly Universities of Agriculture) for a Tempus project. The consortium has expanded from a project to revise curricula in agricultural economics within a market economy to much wider educational and research interests. The consortium’s main achievement has been in the organisation and accreditation of MBA programmes which has subsequently been augmented by a network for other educational and research programmes in a number of countries (AGRIMBA). This article explores the social net benefits of this example of investment in human capital relying on the concepts laid down by the Nobel Prize winners Theodore Schulz and Gary Becker.

Estimating health and economic benefits of reductions in air pollution from agriculture

Agricultural ammonia emissions strongly contribute to fine particulate air pollution (PM2.5) with significant impacts on human health, contributing to mortality. We used model calculated emission scenarios to examine the health and economic benefits accrued by reducing agricultural emissions. We applied the “value of statistical life” metric to monetize the associated health outcomes. Our analysis indicates that a 50% reduction in agricultural emissions could prevent >200 thousand deaths per year in the 59 countries included in our study, notably in Europe, Russia, Turkey, the US, Canada and China, accompanied with economic benefits of many billions US$. In the European Union (EU) mortality could be reduced by 18% with an annual economic benefit of 89 billion US$. A theoretical complete phase-out of agricultural emissions could lead to a reduction in PM2.5 related mortality of >50% plus associated economic costs in 42 out of the 59 countries studied. Within the EU, 140 thousand deaths could be prevented per year with an associated economic benefit of about 407billionUS$/year. A cost-benefit assessment of ammonia emission abatement options for the EU indicates that the reduction of agricultural emissions generates net financial and social benefits. The monetization of the health benefits of air pollution abatement policies and the costs of implementation can help devise cost-effective air quality management strategies.

Do tidal stream energy projects offer more value than offshore wind farms? A case study in the United Kingdom

Marine-based renewable energy could help the United Kingdom (UK) move towards a more sustainable and low-carbon energy system. Today, offshore wind is the prevailing marine renewable technology but there is growing progress towards developing others, such as tidal stream energy (TSE) turbines which capture kinetic energy from tidal currents. Using historical operations data from 18 wind farms and simulated generation data for two TSE sites in the UK, we estimate that TSE projects offer about $10/MWh more in net social benefits than offshore wind projects. This estimate includes the value of energy generated, value of reduced marginal CO2 emissions, cost of visual changes to the landscape, and cost of energy generation forecast errors. However, relative to offshore wind, the increased cost of TSE projects far outweighs the increased social benefits. The levelized cost of energy (LCOE) of TSE projects is expected to be about $74/MWh to $330/MWh higher than offshore wind projects through 2050. Only with optimistic LCOE projections, small TSE projects (20MW) may be competitive (when including increased net social benefits) with small offshore wind projects by 2020.

DYNAMIC TREATMENT EFFECTS OF TEACHER'S AIDES IN AN EXPERIMENT WITH MULTIPLE RANDOMIZATIONS

Using data from a large‐scale two‐stage experiment wherein students and teachers were randomized at both kindergarten entry and first grade to be sorted into classes either with or without full‐time teacher's aides, I estimate an econometric model that is uniquely suited to take advantage of this design to determine their effect on academic achievement. The identification strategy produces fully nonparametric dynamic average treatment effects for every treatment path. I find that the use of full‐time teacher's aides increases student achievement, but the benefits appear to accrue mostly to those of higher socioeconomic status and to White students. A cost‐benefit analysis shows that full‐time teacher's aides may be a competitive alternative to class size reductions in terms of net social benefits. (JEL I21, I28)