0301

Neha Khanna and Florenz Plassmann

On the Future of World Pollution: The Demand for Environmental Quality and the Kuznets Curve Hypothesis

0302

Michael Dillon, E. C. Kokkelenberg, Sean M. Christy

The Effects of Class Size on Student Achievement in Higher Education: Applying an Earnings Function

0303

Kenneth V. Greene and Bong Joon Yoon

Religiosity, Economics, and Life Satisfaction

0304

Florenz Plassmann

Do Economists need to choose between Efficiency and Justice?

0305

Florenz Plassmann and Neha Khanna

Household Income and Pollution: Implications for the Debate about the Environmental Kuznets Curve Hypothesis

0306

Florenz Plassmann and T. Nicolaus Tideman

A Framework for Assessing the Value of Downtown Land

0307

Neha Khanna and Florenz Plassmann

Exposure to Ozone: Do We Count Pollution Where it Matters?

0308

Daniel J. Henderson

The Measurement of Technical Efficiency Using Panel Data

0309

Daniel J. Henderson

Nonparametric Kernel Measurement of Technical Efficiency: A Random Effects Approach

0310

Subal Kumbhakar and Efthymios G. Tsionas

Measuring Technical and Allocative Inefficiency in the Translog Cost System: A Bayesian Approach

0311

Subal Kumbhakar and Efthymios G. Tsionas

Bayesian Analysis of Input-Oriented Technical Efficiency

0312

Luis Orea and Subal Kumbhakar

Efficiency Measurement Using a Latent Class Stochastic Frontier Model

0313

Florenz Plassmann and Neha Khanna

Preferences, Income and the Environment: Understanding the Environmental Kuznets Curve Hypothesis

0314

Florenz Plassmann and Neha Khanna

A Note on 'The Simple Analytics of the Environmental Kuznets Curve'

0315

Martina Vidovic and Neha Khanna

Can Voluntary Pollution Prevention Programs Fulfill Their Promises? Evidence from the 33/50 Program

**Authors: **Neha Khanna and Florenz Plassmann

**Title:** On the Future of World Pollution: The Demand for Environmental Quality and the Kuznets Curve Hypothesis.

**Abstract:**

The income elasticity of pollution is the key factor in the long-term global applicability of the Environmental Kuznets Curve hypothesis. We argue that the threshold income level at which this elasticity changes sign from positive to negative depends on the ability to spatially separate production and consumption. We test our hypothesis by estimating the income elasticities of five pollutants, using 1990 data for the United States. We find that for pollutants for which spatial separation is relatively straightforward, the change in sign occurs at lower incomes than for pollutants for which spatial separation is impossible. Our results suggest that even high income households in the United States have not yet reached the income level at which their demand for better environmental quality exceeds their willingness to accept higher concentrations of some pollutants.

**File:** Working Paper 0301

**Authors: **Michael Dillon, E. C. Kokkelenberg, Sean M. Christy

**Title:** The Effects of Class Size on Student Achievement in Higher Education: Applying an Earnings Function

**Abstract:**

This paper uses an earnings function to model how class size affects the grade students earn. We test the model using an ordinal logit with and without fixed effects on 363,023 undergraduate observations. We find that class size negatively affects grades. Average grade point declines as class size increases, precipitously up to class sizes of ten, and more gradually but monotonically through class sizes of 400 plus. The probability of getting a B plus or better declines from 0.9 for class sizes 20 to about 0.5 for class sizes of 120 and almost 0.4 for class sizes of 400.

**File:** Working paper 0302

**Authors: **Kenneth V. Greene and Bong Joon Yoon

**Title:** Religiosity, Economics, and Life Satisfaction

**Abstract:**

No abstract.

**File:** Working Paper 0303

**Authors: **Florenz Plassmann

**Title:** Do Economists need to choose between Efficiency and Justice?

**Abstract:**

Speech given at the induction of new members into Omicron Delta Epsilon, University of Scranton, April 2003

**File:**Working paper 0304

**Authors: **Florenz Plassmann and Neha Khanna

**Title:** Household Income and Pollution: Implications for the Debate about the Environmental Kuznets Curve Hypothesis

**Abstract:**

The results of many studies that examine the relationship between income and pollution with multi-country, macro-level panel data sets are sensitive to the number and type of countries included in the analysis as well as to model specification. We argue that existing multi-country, macro-level panel data sets are unlikely to yield robust relationships. Using 1990 census tract data for the United States, we find relationships between household income and the concentrations of carbon monoxide, ground level ozone, and coarse particulate matter that are robust with respect to changes in model assumptions and data measurement. Our results suggest that economic growth and increases in household income may by themselves be insufficient to decrease the emissions in the near future. A more viable option for reducing pollution is to raise awareness of its harmful effects so as to alter consumer preferences in favor of higher environmental quality.

**File:** Working Paper 0305

**Authors: **Florenz Plassmann and T. Nicolaus Tideman

**Title:** A Framework for Assessing the Value of Downtown Land

**Abstract:**

The estimation of land values in areas that are substantially built up is not trivial, because it requires the separation of observable property values into unobservable building values and land values. We first describe a theoretical framework for the division of property values into these two components. We then develop an empirical framework that we use to estimate land values in downtown Portland, Oregon. We compare our estimates of property values to estimates of local assessors to evaluate the accuracy of our model, and use the estimates of land values to generate a land value map of the downtown area.

**File:** Working paper 0306

**Authors: **Neha Khanna and Florenz Plassmann

**Title:** Exposure to Ozone: Do We Count Pollution Where it Matters?

**Abstract:**

We examine the exposure of racial minorities to ground level ozone in the United States in 1990. We find that minorities are exposed to significantly higher ambient concentrations but not necessarily to a larger number of days when the ambient concentration exceeded the National Ambient Air Quality Standard. This suggests that minority populations are not exposed to greater health risks due to ozone pollution.

**File:** Working Paper 0307

**Authors: **Daniel J. Henderson

**Title:** The Measurement of Technical Efficiency Using Panel Data

**Abstract:**

This paper surveys the developments and extensions of technical efficiency measurement using panel data. It primarily focuses on both deterministic (where all observations lie on one side of the frontier) and stochastic (where observations lie on both sides of the frontier) production functions. Discussion of deterministic frontiers is divided into two main approaches: Data Envelopment Analysis (DEA - further broken into three separate subsets according to their assumed returns to scale) and the Free Disposable Hull (FDH). For each of these approaches, output-possibility sets and efficiency degrees in output are given. Further, a comparison between the two approaches as well as a brief discussion on the possibility of statistical inference associated with the deterministic frontiers are presented. The section on stochastic frontiers examines both time invariant and time variant measures of technical efficiency. Each topic includes estimation by Random Effects (RE), Fixed Effects (FE) and Maximum Likelihood Estimation (MLE), with and without the presence of heteroskedasticity as well as a discussion on recent developments.

**File:** Working paper 0308

**Authors: **Daniel J. Henderson

**Title:** Nonparametric Kernel Measurement of Technical Efficiency: A Random Effects Approach

**Abstract:**

This paper uses nonparametric kernel methods in order to estimate production (or cost) frontiers as well as to estimate technical efficiency. A random effects nonparametric estimator is proposed and its structure is defined. Monte Carlo shows that it performs almost as well as the parametric model in estimating inefficiency when the true technology is linear and correctly specified. In contrast, when the technology becomes nonlinear, the nonparametric estimator performs best.

**File:** Working Paper 0309

**Authors: **Subal Kumbhakar and Efthymios G. Tsionas

**Title:** Measuring Technical and Allocative Inefficiency in the Translog Cost System: A Bayesian Approach

**Abstract:**

In this paper we propose simulation based Bayesian inference procedures in a cost system that includes the cost function and the cost share equations augmented to accommodate technical and allocative inefficiency. Markov Chain Monte Carlo techniques are proposed and implemented for Bayesian inferences on costs of technical and allocative inefficiency, input price distortions and over- (under-) use of inputs. We show how to estimate a well-specified translog system (in which the error terms in the cost and cost-share equations are internally consistent) in a random effects framework. The new methods are illustrated using panel data on U.S. commercial banks.

**File:** Working Paper 0310

**Authors: **Subal Kumbhakar and Efthymios G. Tsionas

**Title:** Bayesian Analysis of Input-Oriented Technical Efficiency

**Abstract:**

This paper deals with Bayesian estimation of input-oriented (IO) technical efficiency using a stochastic production frontier approach. Although the IO technical efficiency concept is commonly used in theoretical works, it is never estimated in practice using a production function. We provide inferences for parameters and efficiency using Bayesian methods based on Markov Chain Monte Carlo techniques, especially the Gibbs sampler with data augmentation. Both cross-sectional and panel data models are developed. To emphasize the point that estimated efficiency, returns to scale, etc., might differ depending on whether one specifies an IO or output-oriented (OO) technical efficiency term within the context of the model, we compare results from the IO and OO models using different priors. The proposed techniques are illustrated using dairy data.

**File:** Working paper 0311

**Authors: **Luis Orea and Subal Kumbhakar

**Title:** Efficiency Measurement Using a Latent Class Stochastic Frontier Model

**Abstract:**

Efficiency estimation in stochastic frontier models typically assumes that the underlying production technology is the same for all firms. There might, however, be unobserved differences in technologies that might be inappropriately labeled as inefficiency if such variations in technology are not taken into account. We address this issue by estimating a latent class stochastic frontier model in a panel data framework. An application of the model is presented using Spanish banking data. Our results show that bank-heterogeneity can be fully controlled when a model with four classes is estimated.

**File:** Working Paper 0312

**Authors: **Florenz Plassmann and Neha Khanna

**Title:** Preferences, Income and the Environment: Understanding the Environmental Kuznets Curve Hypothesis

**Abstract:**

We derive a simple expression for the income-pollution path using the standard static model of the Environmental Kuznets Curve (EKC). This expression makes it straightforward to identify general characteristics of utility and pollution functions that lead to an EKC. We show that suitable preferences can always lead to an EKC while there is no technology that yields an EKC for all types of preferences, and we derive a sufficient condition for technology that leads to an EKC for almost all types of preferences. Our results hold for a model with multiple goods with different pollution intensities and for a production economy with non-constant relative price of consumption and environmental effort. We derive our results without assuming specific functional forms and we encompass several other models as special cases.

**File:**Working paper 0313

**Authors: **Florenz Plassmann and Neha Khanna

**Title:** A Note on 'The Simple Analytics of the Environmental Kuznets Curve'

**Abstract:**

In a widely cited paper, Andreoni and Levinson (2001) argue that, under very mild restrictions on preferences, increasing returns to scale in pollution abatement are a sufficient condition for pollution to ultimately fall to zero with income growth. We show that the existence of an Environmental Kuznets Curve depends on the relative magnitudes of the returns to scale in abatement and in gross pollution, rather than on their absolute values. Increasing returns to scale in abatement by themselves are not sufficient for pollution to fall with income unless the returns to scale of abatement exceed the returns to the production of gross pollution.

**File:** Working Paper 0314

**Authors: **Martina Vidovic and Neha Khanna

**Title:** Can Voluntary Pollution Prevention Programs Fulfill Their Promises? Evidence from the 33/50 Program

**Abstract:**

We examine incentives for firm participation in the EPA’s 33/50 Program and the impact of this Program on firm emissions. We use a sample of manufacturing firms from 19 industry groups that were invited to participate in the Program in1991. We find that while the Program may have attracted some of the most polluting firms, the decline in emissions observed between 1991 and 1995 was the result of an independent trend rather than a direct consequence of the Program.

**File:** Working paper 0315