This commentary in the WSJ (Nov. 2019) describes a way to improve the incentives PG&E faces. Currently, PG&E must pay the external cost for damages caused by fires started by its power lines. However, it does not bear the external cost paid by users who suffer during blackouts. As a result, it is choosing blackouts instead of investing to reduce the chance its lines start fires. Making PG&E pay for damages users suffer during blackouts as well as damages caused by the fires, would encourage PG&E to invest in ways to reduce fires, to cut off power, or to risk firm depending on which cost is lowest.
The WSJ (Nov. 2019) reports on new government data that shows median income one year after graduation and student debt by College or University and major. Here are some results for VCU.
Major Median Income Debt
- Accounting and Related Services $45,000 $23,625
- Business/Commerce, General $41,600 $23,250
- Business/Managerial Economics $39,300 $21,875
- Marketing $35,000 $20,722
- Psychology $30,200 $23,250
- Political Science and Government $26,000 $23,250
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In the nineteenth and early twentieth centuries, a smog settled over London. It was called the London Fog, or Pea Soup. It was the result of factories and homes burning coal. But much of the cost was borne by third parties who earned nothing from the burned coal. Economist Arthur Cecil Pigou was among the first to explain the concept of such a 'negative externality,' and the first to suggest a way to deal with it.
"Now, Pigou's insight is being used to fight climate change."
Click here to listen to the podcast. It features Greg Mankiw. Listen to hear him explain the graphs in his book.
