As part of our on-going efforts to close the knowledge-practice divide, we’re launching a new S&S working paper series. One of the biggest obstacles to the more rapid spread of academic knowledge is the price of access to academic publications. These paywalls exist for many reasons and the debate about their merits is on-going. However, it is obvious that paying upwards of $35 per article limits access to the knowledge contained in these academic journals. That limitation means that policy-makers, particularly those at local or non-profit levels, often do not have access to the most cutting-edge research on the problems that they are trying to solve.
It is our hope that these new S&S working papers will make it easier for these policy-makers to get first-hand access to relevant and cutting-edge research. These working papers will be published in addition to our existing articles reviewing and integrating the current research on many different topics in sustainability – from income inequality to gene editing. Each paper will be authored or co-authored by one of our Graduate Fellows whose areas of academic expertise range from environmental economics and international relations to environmental engineering and East Asian history. While these papers will not be formally peer-reviewed, they represent the academic work of our fellows and as such are subjected to the standards of informal review (conference presentations, seminar discussions, etc.) typical in each of their respective fields.
In Who Bears the Burden of Energy Taxes, Sam adds to the growing literature on the distributional consequences of environmental policy by taking on the broad perception that gasoline taxes are regressive. The government of Spain passed a new information mandate in 2007 that makes the retail price of diesel available. Sam uses this data in combination with changes across time and space in diesel taxes to estimate the share of tax changes that are “passed on” to the consumer. For example, if the tax on gasoline increases by $0.20/gallon but the price that consumers pay only increases by $0.15/gallon then pass-through would be 75%.
Sam’s results indicate that, average across the whole country, pass through is basically 1. That is, consumers end up bearing the burden of all of the tax. What is remarkable about his results is that averaging across the whole country hides substantial spatial differences in how much of the tax is passed through. In some areas as little as 70% is passed on to consumers while in others as much as 120% is passed on. That suggests that in some areas retailers increase their prices even more than the tax increase! It seems that those retailers who have greater market power in a given geographic area are the most likely to pass through higher shares of the tax (or raise overall prices).
The most remarkable result of Sam’s work, however, is the finding that pass through is always higher in areas with higher home prices relative to those areas with lower house prices. That suggests that the wealthy pay a greater share of increased taxes on diesel than the poor. In Sam’s words, that indicates that a diesel “tax [is] unambiguously progressive.”
Our next working paper, Will We Adapt?, attempts to determine how well we will be able to cope with the increased temperatures that will come with climate change. Adding to a rapidly growing literature by Sol Hsiang, Melissa Dell and others on the economic impacts of higher temperatures brought on by climate change, Jisung suggests that adaptation is possible but there are limits.
Using data on county level temperature and labor productivity in the U.S. from 1986-2012 Jisung shows that in the average county, one additional day where the maximum temperature is above 90F decreases per capita payroll by 0.048%. To put that in perspective, from 1986-2012 the average U.S. county experienced 12 days above 90F per year. So in an average county in an average year, temperature extremes reduced payroll by 5%.
The average impact says nothing about adaptation however. In order to measure how well people can adapt to temperature Jisung compares the impact of a day above 90F in areas that are normally very hot (i.e., Houston) to areas that are not typically hot (i.e., Boston). He finds that in the coldest areas, one additional day above 90F reduces payroll by 0.263% while in the hottest areas it only reduces it by 0.046%. As a result, he finds evidence that we can adapt to the hotter temperatures that will result from climate change (for example by installing central air conditioning). However, there are limits to that ability to adapt. Even in the hottest, most well-adapted cities in the U.S., there are still significant negative impacts on payroll from additional hot days.
Both of these papers make an important contribution to the literature on environmental economics. Understanding how we will respond to climate change is critical in determining what the costs of climate change will ultimately be. And knowing how environmental policies differentially affect individuals across the income spectrum is crucial in determining what policies we use to respond to climate change. Going forward we are excited to continue to publish the work of our fellows as working papers in the hope that policy-makers can more easily access the cutting edge research.
Image courtesy of Flickr. Originally published by S&S on August 4, 2016.