not the coffee

We had a minor earthquake an hour ago. Since I was the only one at the library table who felt it, I figured it must've been coffee and nerves during finals, or maybe a passing truck. I would still be thinking that if I hadn't checked the USGS web site during a study break. Now I'm blaming it on the 3.1 earthquake instead of the coffee. That's my story and I'm sticking to it.

cost, worth, and externalities

The Daily Kos has an op-ed (they call them diaries) by VetGrl that discusses the concept of cost versus worth. It tries to distinguish between the market price of an item and its intrinsic worth.

Unless they're buying or selling, and assuming no financial calamity has struck, the value many people attribute to their homes has more to do with neighbors and community than with market value.

While it might give economists headaches and make modeling the process a real pain, there doesn't seem anything intrinsically wrong with saying the subjective valuation of an item can vary depending on circumstances. Certainly it can vary with new information, as we can see every day on the stock and commodities markets: if there's sabre rattling in Iran, the price of oil jumps up a notch. It's the same oil, but information regarding how available the next barrel of oil will be affects its valuation and therefore its price. An example closer to home might be the value you place on a piece of paper with a crayon drawing on it, which could vary depending on whether or not you believed your child was the one who created it.

The op-ed then goes on to consider valuations that change, not over time, but with the price of the item being valued.

The problem is that not enough people consider the worth of much more mundane goods, like cookware, clothing or linens. For these things, the consideration is no different than the environment to the GOP: What does it cost?

Here the opinion piece starts moving into something that sounds a lot like externalities. Take a cotton towel as an example. The market price of the towel might not accurately reflect the true cost to society of creating that towel, if you take into account the impact of the pesticides used to grow the cotton entering the food web, whether the land on which the cotton was grown is pulling more or less carbon dioxide out of the atmosphere, and whether the people involved in harvesting the cotton or manufacturing the towel would be better off if the towel had not been made, or created in a different way. An external cost is a cost whoever's making the go/no-go decision does not have to bear, a cost they can transfer to someone else, so that it never factors into that decision.

The interesting thing about recasting the language in terms of externalities is that it should open a fair bit of common ground across the political spectrum. If we assume the free market functions to maximize overall social benefit, then externalities get in the way of that function by distorting the go/no-go decisions. If the cost of gas at the pump is too low to adequately reflect its impact on the city's air quality (and therefore health care issues) or the cost to keep the roads in repair, I might take the car when the real cost, that takes those things into account, would normally convince me to bicycle. The market mechanics are working just fine, but they're maximizing the wrong thing because they're working from faulty premises, and free market advocates should have a problem with that.

Now, the language of externalities won't reconcile all relations across the political spectrum. A purely utilitarian approach says maximizing overall social wealth is good, but it doesn't care about the distribution of that wealth within society except as it affects wealth maximization. (Under that view, one Bill Gates plus a million people in hovels is the same as a million and one people with $50,000 each unless having money lets the million people build a secondary market and increase overall wealth even further.) In contrast, many folks on the left have an issue in principle with a system where a lot of people live in hovels. Still, it's a good starting point for finding common ground on many problems such as carbon and pollutant emissions and energy and transportation infrastructure.

a brief interlude

Classes are turning into finals. I'm in one of those odd schedule gaps right now. It's half an hour before my last class starts. Since it's the last one, there's no homework, as such, to work on, just some big projects that require lots of reference materials and are a pain to get started. I'm waiting on the release of some questions for a take-home exam, and I can't bring myself to work on outlines at the moment. It's tough to relax, knowing what's coming down the pipe, but there's also no good way to use this time gap. Ah well. Soon things will be happening so quickly it'll be a blur.

On a totally different subject, I remember reading a reference to the "fortress king" in the Bible, maybe in Revelations. (I can't imagine why I would be having apocolyptic thoughts just before finals...) The phrase came back to me when I heard about the proposal to fence the entire border between the U.S. and Mexico: a United States-sized fortress is certainly big enough to fit a king. I haven't been able to find the reference, though, so I might be confused about it.

IEEE virtual museum on nanotechnology

Another quickie from amidst the movin boxies: the IEEE has a "virtual museum" (which, I guess, is a web site that's more informative than usual) that gives an overview of the history of nanotech to date. It's readable, informative, and does a good job of covering how far we've come and how far we have yet to go.

ask a ninja!

First, there was the Real Ultimate Power site, which became a net cult hit. Then suddenly ninjas were totally sweet! But what are these ninjas? How do they think? What do they do? What do you get one as a gift? Finally, there's a site that gives you the answers. Yes, now you can Ask a Ninja! (See question #14 if you're still wondering about the gift thing.)

rolling blackouts in Texas

This is one of life's odd juxtapositions. Jeffrey Skilling, former Enron CEO, testified in Houston today. Also today, Texas experienced "highly unusual" rolling blackouts. Enron, of course, was implicated in California's rolling blackouts. Skilling's defense team must just be loving the timing of this one.

follow-up: drilling in the Arctic

Here's a quick follow-up to the previous post. I've heard some widely diverging estimates of what drilling in the Arctic National Wildlife Refuge (ANWR) would achieve, so I decided to run the numbers. According to the USGS's 1998 assessment, ANWR contains between 4.3 and 11.8 billion barrels of "technically recoverable" oil (that's the 5% to 95% confidence levels) with a mean of 7.7 billion. The CIA's World Factbook estimates U.S. oil consumption for 2003 at 20.03 million barrels per day. Using that rate as a baseline, ANWR could supply the U.S. with enough oil for between 215 and 589 days (0.6 to 1.6 years) with a mean of 384 days (just over 1 year). Those timespans don't seem worth the effort if we're trying to meet Mr. Bush's goal of ending the country's dependence on imported oil.

OK, but what about the impact on the price of oil, which I've been saying is correlated with the price of gasoline? The Energy Information Administration released a March, 2004 study saying

With respect to the world oil price impact, ANWR coastal plain oil production in 2025 is projected to constitute between 0.5 to 1.3 percent of total world oil consumption. It is expected that the price impact of ANWR coastal plain production might reduce world oil prices by as much as 30 to 50 cents per barrel, relative to a projected 2025 world oil price of $27 per barrel (2002 dollars) in the AEO2004 reference case. Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries could countermand any potential price impact of ANWR coastal plain production by reducing its exports by an equal amount.

You can find an MSNBC report on the study here.

Again, I think we're left with the hard truth that if we don't like gas prices, the answer is to stop wanting gas so much.