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More nicotine for your dollar from the merchants of death

The Harvard School of Public Health have published a study showing that the nicotine content of cigarettes has increased in the US by 11% during the period 1997-2005. Nicotine is the primary agent that makes smoking addictive.

As I recently suggested it is inappropriate to define smoking in terms of the number of cigarettes […]

Defending paternalism

I have been rereading Milton Friedman’s Capitalism and Freedom – one of the books that have most influenced me. I am particularly interested in Friedman’s views on paternalism which probably determine my own and which torpedo some of the extreme claims of libertarians and those who see any attempt to limit self-destructive or irrational behavior […]

Conserving biodiversity in the face of climate change

A framework is provided for designing adaptation policies for conserving Australian biodiversity in the face of climate change.

Uncertainty about climatic effects and the resilience of biodiversity are intrinsic as are ‘species loss’ and ‘sunk cost’ irreversibilities, nonlinearities in damage responses, long policy maker time horizons and ambiguities in objectives.

Policy insight can be gleaned […]

Coalition to be returned?

Some interesting posts at the oz politics blog on the next Federal election.

The Morgan Poll forecasts a two-party preferred vote of 57.5% to Federal Labor. The bookies still give odds to the Coalition winning of 57.4%. Three weeks ago 60% of Labor supporters believed Labor could win. Hardly surprising this is much more […]

A case for biofuels

Guest post by Sir Henry Casingbroke

The Howard government’s winner-picking is clearly bad for the environment, dishonest, smacks of crony capitalism and in the case I am about to quote, inimical to the long-term aim of turning down the flow of petrodollars to islamofascists of the Wahhabi kind.A budding biodiesel industry is being nipped in […]

In the wake of Australia Day

I had a quiet Saturday making yet another attempt to grow Kangaroo Paws from seed. A few years ago I did the whole thing carefully – first soaking the pots in bleach and cooking the seeding mix for 30 minutes at 180 degrees C to kill bugs – and had brilliant success with dozens of […]

Savvy investors don’t like polluting firms

I put up a rather dull post a few days ago showing how water restrictions were having some obvious market effects that would enhance water conservation. For example, households have incentives to invest using use grey water for their gardens or covers to prevent evaporation from their swimming pools.

More importantly concerns over high […]

Tim Flannery

Well I missed out on a best blog posts award last year and was omitted from the Australia Day honours list today. All those wasted emails and postage on nominations and letters of support! But I was delighted that Tim Flannery was given the Australia Day, Australian of the Year award. I’ve read several of […]

Climate change & climatic extremes: forecasts

One prediction is that with global heating (James Lovelock’s term that emphasizes that humans are cooking the planet) we will be hotter and there will be more climatic disasters. More droughts, floods, cyclones, extremely hot days and so on.

Australia’s climate is dominated by El Nino, and hence those ‘droughts and flooding rains’ that […]

Howard’s bold move on water

The Howard Government’s proposal to give the Commonwealth control of the Murray-Darling River system is welcome news. The government will spend $1.5 million paying farmers to reduce their water usage – $500 million to reduce evaporation and seepage, about $500 million on improving river flows and $500 million will be given to the Bureau of […]

Assisted migration for biodiversity

This article in the NYT deals with one of the biodiversity conservation options I have been thinking about as an adaptation policy for dealing with the effects of climate change. The radical strategy is assisted migration – moving species to climatic zones where they have a better chance of survival.

This triggers strong, mixed […]

Greenhouse policies in a complex world – some analytics

How do you design an appropriate response to anthropogenic climatic change when the costs and benefits of dealing with the problem are uncertain? The physical and environmental effects of climate change are uncertain, there is controversy over the discount rate to be used and damage functions are highly nonlinear, involve important irreversibilities and policy makers […]

State public sector wages bills gallop away

We have Labor governments in each of our states and territories. According to the AFR editorial this morning (subscription only) the expenses of these governments in recent years have risen by an average of 7.5% per annum.

Most of this has gone on extra wages for public employees. In 2006-07 wages growth in Queensland […]

Sound economic analysis made me a tree-hugger

Over a decade ago I wrote a paper (‘Forest Rotation and Streamflow Benefits’, Australian Journal of Forestry, 1994) that looked at optimizing the total water supply plus timber benefits from logging in a water catchment – specifically the Thomson River catchment.When trees are of intermediate size and growing fast they cut into water yields simply […]

Neuroeconomics of being a spendthrift or tightwad

Why do people run up excessive debt? Why are many in the population tightwads? The Economist reviews an article in Neuron (by Brian Knutson, Scott Rick, G. Elliott Wimmer, Drazen Prelec and George Loewenstein) which provides a possible neuroeconomic explanation.Economics assumes humans are rational beings so price is a signal that helps decide the combination […]

No sour grapes ex this buttercup

So the best blog posts of 2006 have been selected by Ken Parish at Troppo with assistance from a committee including Ken Parish, Nicholas Gruen and Helen Dale. Having co-operated in producing a shortlist, Ken then chose the best blogs with Nicholas acting as a ‘sounding board’.

I didn’t get a prize – indeed I […]

Puff harder, the price went up

An attractive paper by Jérôme Adda & Francesca Cornaglia in the September 2006 American Economic Review (a preprint here) re-examines popular accounts of the price-sensitivity of the demand for cigarettes.

Smoking can be defined as a process by which agents give their brains a nicotine hit. Nicotine is a psychoactive stimulant and one of the […]

The US engagement in Iraq as a behavioural quirk

I have no dispute with the idea that agents have optimism biases and an aversion to cutting one’s losses and that these insights may have application to military conflicts and the proclivity to be a hawk as Daniel Kahneman and Daniel Renshon have recently argued.

Optimism biases make sense in optimistic positive-thinking societies where […]

Markets resolve a hi definition DVD standards war

Have you been waiting to choose one of the new generation of high-definition DVDs and disc players? I have because there are two rival formats (Blu-ray and HD DVD) and because I don’t want to be left with a format that eventually is rejected by the market as was the Betamax videocassette. Consumers generally are […]

Libertarian paternalism & drug policy issues

I got a buzz from reading the Becker-Posner blog on libertarian-paternalism. Their argument is in part a criticism of C. Sunstein & R. Thaler’s ‘Libertarian Paternalism is Not an Oxymoron’ .Sunstein & Thaler claim it is both possible and legitimate for private and public institutions to affect behaviour while respecting freedom of choice because people’s […]