Working Papers

The scale of the technological transformation required to reduce greenhouse gas emissions to "safe" levels while minimizing economic impacts necessitates an emphasis on designing climate policy to foster, or at least not impede, environmental innovation. There is only a weak empirical base for policy-makers to stand on regarding the comparative innovation effects of various climate policy options, however. Empirical scholarship in environmental innovation is hindered by the complexity of both the innovation process and the interactions between the dual market failures of pollution and innovation that are in play, and it appears that the field would benefit from the structure provided by a common lexicon. This paper focuses on the issues related to policy categorization in this field; these issues have received little attention in the literature despite their importance to making insights gained from empirical studies generalizable. The paper reviews the origins, strengths, and weaknesses of the dominant policy typology of technology-push versus demand-pull instruments. Its primary contribution, however, is to assemble a comprehensive chronology of solar policy in California and its impacts on innovation, where known, and then use this as a basis for building a new policy categorization that takes advantage of the intuitive resonance of the dominant typology, while encompassing the broader range of policy instruments that are employed in practice in order to stimulate environmental innovation. The most noteworthy aspect of the new categorization is that it introduces a third category of environmental innovation policy instrument that focuses on improving the interface between technology suppliers and users. This reflects developments in the economics of innovation literature as well as considerable evidence in the domain of distributed solar energy technologies that opportunism by some of the actors that work at this interface can be a barrier to innovation.

This paper considers dynamics in the reversal of booms in the housing market.
We analyze three related mechanisms which govern the propagation of changes in the housing
market throughout the rest of an advanced economy: wealth effects, income effects, and effects
through financial markets. As the decade-long boom in the US housing market unwinds, we
anticipate that there will be small wealth effects transmitted to the economy, but there will be
large income effects affecting the rest of the economy and substantial financial market effects.
If the current decline in housing starts and residential investment echoes the declines of the
last three housing downturns, we estimate that gross national product (GNP) growth will be
reduced by close to 3 per cent. Beyond the decline in housing investment, the recent turmoil in
financial markets makes a recession induced by housing market conditions increasingly likely.

Different models of judicial decision making highlight particular goals. Traditional legal theory posits that in making decisions judges strive to reach the correct legal decision as dictated by precedent. Attitudinal and strategic models focuses on the ways in which judges further their preferred policies. The managerial model emphasizes the increasing caseload pressures that judges at all levels face. Each model accurately captures some of what every judge does some of the time, but a sophisticated understanding of judicial decision making should explicitly incorporate the notion that judges simultaneously attempt to further numerous, disparate, and often conflicting, objectives. We offer a preliminary account of a more psychologically plausible account of judicial cognition and motivation, based on principles of goal management in a constraint satisfaction network.

The mobility of consumers and producers in response to fiscal incentives gives the study of local public finance its distinctive
character. Households and firms are partitioned into spatial units on the basis of preferences, costs and the incentives provided by
local tax and expenditure policies. These fiscal incentives are, in turn, chosen by the members of each of these jurisdictions or
clubs. Externalities within and between these localities greatly affect the efficiency of taxation and the provision of public goods
and services.

Deterrence theory proposes that legal compliance is influenced by the anticipated risk of legal sanctions. This implies that changes in law will produce corresponding changes in behavior, but the marijuana decriminalization literature finds only fragmentary support for this prediction. But few studies have directly assessed the accuracy of citizens' perceptions of legal sanctions. The heterogeneity in state statutory penalties for marijuana possession across the United States provides an opportunity to examine this issue. Using national survey data, we find that the percentages who believe they could be jailed for marijuana possession are quite similar in both states that have removed those penalties and those that have not. Our results help to clarify why statistical studies have found inconsistent support for an effect of decriminalization on marijuana possession.

We examine how ordinary citizens translate intuitions about child welfare and distributive justice into dollar amounts for post-divorce child support payments. Our analyses indicate that child support judgments are quite sensitive to anchoring and question-wording effects. Nevertheless, we find much that is both interpretable and principled in these judgments. For example, the amounts that citizens recommended in an open-ended format ("name") were nearly identical to the amounts other citizens selected from an array of choices in a multiple choice format ("choose").

It It is widely recognized that options and futures markets for housing can
reduce and manage the risks inherent in consumers’ large investments in housing
equity. The integrity of such markets depends, however, upon the use of transparent
and replicable benchmarks for house prices and settlement values. In the USA, a
series of state and metropolitan indexes have been produced by a government
agency (the US Office of Housing Enterprise Oversight, OFHEO), and they have
been widely disseminated for over a decade. By construction, the entire historical
path of each of these indexes is, in principle, subject to revision quarterly, that is,
every time the index is recalculated and data are published. This paper provides the
first analysis of the magnitude and bias of these revisions, and it analyzes their
systematic effects on the settlement prices in housing options markets. The paper
considers the implications of these magnitudes for the development of risk-reducing
futures markets.

In a variety of important domains, there is considerable correlational evidence suggestive of what are variously referred to as social norm effects, contagion effects, information cascades, or peer effects. It is difficult to statistically identify whether such effects are causal, and there are various non-causal mechanisms that can produce such apparent norm effects. Lab experiments demonstrate that real peer effects occur, but also that apparent cascade or peer effects can be spurious. A curious feature of American local school configuration policy provides an opportunity to identify true peer influences among adolescents. Some school districts send 6th graders to middle school (e.g., 6th-8th grade "junior high"); others retain 6th graders for one additional year in K-6 elementary schools. Using administrative data on public school students in North Carolina, we have found that sixth grade students attending middle schools are much more likely to be cited for discipline problems than those attending elementary school, and the effects appear to persist at least through ninth grade. A plausible explanation is that these effects occur because sixth graders in middle schools are suddenly exposed to two cohorts of older, more delinquent peers.