The Long View: Thoughts on the Economics Field from Three Environmental Economists

Notable Quotes

• Environmental economists aim to protect the planet at the best price: “I sort of think of the field as all of us trying to save the world a little more cost-effectively. We’ll never get to full cost-effectiveness, but a little more cost-effectively.” —Maximilian Auffhammer (14:37)
• Communicating the economist’s perspective: “Economists have so much to offer in the design and evaluation of environmental policies that a lot of times we do not communicate very well. We think our ideas are obvious. They’re obvious to us, but they need to be translated in a way that other fields can understand.” —Paul J. Ferraro (20:16)
• The future of environmental economics is in good hands: “The young people are brilliant … They’re doing great work. It’s interesting, and we’re just learning a lot about how people respond to environmental insults or improvements in environmental quality and what that means for society.” —John Whitehead (32:40)

Top of the Stack

• Association of Environmental and Resource Economists
• Berkeley/Sloan Summer School in Environmental and Energy Economics
• Pricing the Priceless by Spencer Banzhaf
• “Letter from Birmingham Jail” by Martin Luther King Jr.

The Full Transcript

Margaret Walls: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Margaret Walls. We have a special episode today with three separate guests. We are recording from the annual conference of the Association of Environmental and Resource Economists. AERE, as it's called, is the main professional membership organization for environmental and resource economists in the United States, and the association holds its flagship conference every year right around this time. The location varies, but this year we were lucky enough to have it right here in Washington, DC.

Because it was in Washington, DC, members of the AERE board reached out to us here at Resources Radio, and they asked us if we might be willing to record episodes at the conference. We eagerly agreed to do this. There are many connections between AERE and Resources for the Future, which we're going to talk about in some of the other episodes we recorded, but we also agreed because it seemed like a great opportunity to get some good podcast content.

One thing that happens every year at the conference is that AERE presents a few of its annual awards. The most prestigious among them is what's called the AERE Fellows Award. The AERE Fellows Program, which was launched in 2005, recognizes individuals who've made outstanding contributions to the advancement of the profession. AERE fellows are nominated by their peers and then voted on by the AERE board. To warrant receiving the award, an individual needs to have done research that advances the knowledge base in environmental and resource economics. They need to have a record of policy advising activity; mentorship of young scholars, including contributions to diversity, equity, and inclusion; increasing the visibility of the field; and a record of service to the AERE community, such as serving on boards, journals, and so forth.

Some of the most illustrious members of the field are AERE fellows. This year at the conference, I took time to chat with the three new fellows that were honored this year: professors Max Auffhammer, Paul Ferraro, and John Whitehead. I asked them to reflect on their careers, offer some observations about winning the award, and share thoughts about the state of the field of environmental and resource economics. Stay with us.

I'm here at the AERE Conference, and we're having drop-ins to our little Resources Radio studio here, in a meeting room at the conference venue. I'm lucky enough to have Max Auffhammer here with me, who is a professor in the Department of Agricultural and Resource Economics at the University of California, Berkeley, and who I've known for many years and does a lot of fantastic work. And I'm really excited he's here, because he's one of our brand new AERE fellows to drop into chat with us today. Congratulations, Max.

Maximilian Auffhammer: Thank you very much.

Margaret Walls: That's a big honor. This is kind of the highest honor we have in our profession, so it's fantastic that you got it. Well deserved.

First of all, actually, what I'd like to ask you is—I know you've known about this for a few months, because they notify you ahead of time—how did that happen? Did you get a call from somebody, or an email, or what?

Maximilian Auffhammer: I was doing what we academics do best. I was sitting in my office late in the afternoon working on a paper, procrastinating, and checking my email way too much. All of a sudden, this email from Karen Fisher-Vanden comes in. I was like, "Oh, you're going to be asked to be on some panel or something." And then it said, “Congratulations, you're going to be an AERE fellow.” There were a couple of happy tears there. I mean, it's just such a tremendous honor from this organization that I just truly love. So, there was a little crying in the office.

Margaret Walls: Karen Fisher-Vanden is the current president of AERE, we should say.

That's fantastic. At the conference yesterday, they gave you the award. Tell me about how that went, who presented it, and what did they say?

Maximilian Auffhammer: Teevrat Garg, who's an economist at University of California, San Diego, who I really admire. Fantastic work.

So, you get introduced. Many of us don't really like to be sort of put in the spotlight like that. That's why we work in our offices on Stata code. But he just mentioned Laura Taylor, who's the chair at Georgia Tech and a wonderful human and organized the first and one of the big AERE conferences. We pushed really hard to go from a workshop model, which was pretty exclusive—you might remember those: 30, 35 people sitting around a table—saying, "Let's try and make this big. We think there's demand here for it." A bunch of people said, "No way. Never are you going to fill this." I don't know how many people are at this conference, but it must be 300, 400, 500.

Margaret Walls: This conference is nearly 600.

Maximilian Auffhammer: Wow.

Margaret Walls: It's the biggest one yet. But I forgot you did the Seattle conference, which was the first one. What year was that, Max? Do you remember?

Maximilian Auffhammer: I was younger and had more hair, but I do not remember what year that was.

Margaret Walls: That was what kicked off these annual conferences.

Maximilian Auffhammer: Then, we organized another one in Lake Tahoe, which is just a beautiful place.

Margaret Walls: That was a good one.

Maximilian Auffhammer: I got sick the day before the conference, so poor Katrina Jessoe had to run the whole thing herself. She was the co-organizer, but it was just a lovely location. I remembered a little bit about being on the AERE board and what wonderful moments there were. I just remember when we decided to get away from Elsevier, and the vote went through that we were going to start our own journal, Journal of the Association of Environmental and Resource Economists, which is, of course, wildly successful now. I just remember Don Fullerton hitting my shoulder so hard out of joy—

Margaret Walls: Really, he pushed for it.

Maximilian Auffhammer: —and Cathy Kling jumping up and down. There were so many exciting moments that really have changed the way we produce our work and share it with others in a nice, inclusive way. Everybody always seems to be smiling and engaged in conversations, and you make new friends, and it's just such a great place to be. That was pointed out.

Teevrat also pointed out that I run something called Grad Camp.

Margaret Walls: You do.

Maximilian Auffhammer: Yeah. I love that.

Margaret Walls: Say a little, a couple words about that, because I hear good things about that from everybody.

Maximilian Auffhammer: Grad Camp is awesome. We started this 13, 14 years ago or something like that. It was a random idea on a phone call saying, "Maybe we should put on a course in environmental economics; invite 8, 9 of the thought leaders in the field and 40, 50, 60 graduate students across the country from a variety of backgrounds and programs that might not have access to a full environment sequence; and bring them to Berkeley. 27 hours of lectures in one week, lots of social events: how to be a grad student, how do you make your way in this field?" We've been doing this for … I think this year is the 13th or the 14th time.

The Sloan Foundation has been incredibly generous funding this. We give a little bit of travel money to some folks. The people teaching look at research proposals from the campers and provide some one-on-one feedback on research proposals. Most importantly, if you're in grad school … I was the only person in my program working on environmental economics, so you're kind of alone except for your adviser. But if you're the only person or one of two, it just creates a network. All of a sudden, you have friends all over the place, and when you come to the AERE Conference, you might know somebody else, and you're like, "Oh my God, we camped together."

Margaret Walls: That's great. I'm glad you talked about that. That's good. You do it in the summer. When is it scheduled for this year?

Maximilian Auffhammer: It's at the end of August. I think it’s the third week of August this year. Admissions are already done and have gone out, so if you're thinking about it, applications are on my website. You should send your students, or if you're a student yourself, apply.

Margaret Walls: Very good.

Max, tell me how you got into economics, environmental economics, and the energy work that you do. What inspired you and how did you come to be who you are today doing this work?

Maximilian Auffhammer: It's kind of a funny story. I was at University of Massachusetts Amherst, which is just a fantastic place to be an undergraduate. I was an environmental science major. I wanted to do toxicology, so I took lots of chemistry classes and learned how to kill bugs—that kind of stuff. I took an intro-to-econ class. I hated it. It was not well-taught. It was all macro stuff, and I didn't put the time into it. Then, toward the end of my undergraduate career, I didn't have a lot of money. There was a sign that said “Free pizza.”I was like, "Oh, free pizza. Yes." I walked in, and it was a talk, and there was a very tall gentleman. Very well-spoken. I was like, "Wow, this sounds really cool." I'm sitting in the back having my little slice of pizza, and he kept on explaining to us how if you want to affect physical change in the world, you can change invisible things called incentives.

He gave this example about pricing something at the time. I was like, "Holy moly, I don't have to dig a hole and get some leaking tank out of a gas station lot to make the world a better place. I could sit somewhere in comfort and change a price or a regulation, and then maybe it never happens." It turns out that person was John Kenneth Galbraith, who gave some amazing lectures.

I had no idea who he was even as I was walking out, so I just figured this out later. And I learned later, too, that he's a graduate of the department I now teach in. He's this legendary person. His dissertation is locked away in some precious part of the library. It was just an amazing loop, and what an impressive person. But professionally, I have not ever regretted making this decision.

Margaret Walls: Great story. I'm glad to hear that.

I want to just ask you what you think about the field right now. You've been doing this for a while. You're not super senior; I mean, you're not super old, but you are senior. You're here at the conference; you see a lot of new papers and a lot of new work going on. I don't want to put you on the spot too much, but I just want to ask, what do you think are some optimistic signs for the profession? Do you have concerns about the nature of some of the work being done, or what are your feelings about it as an AERE fellow?

Maximilian Auffhammer: I'm super optimistic about the field itself for multiple reasons. We've always produced really excellent work throughout the history of this field. If you go back to the early days, the Krutilla paper is still one of my favorite papers of all time, or Marty's “Prices vs. Quantities,” or some really amazing economics that changed the way we think. I think the field has become much more empirical, as has most of economics.

I sort of think of the field as all of us trying to save the world a little more cost-effectively. We'll never get to full cost-effectiveness, but a little more cost-effectively. Sometimes you see folks a little bit discouraged. “I work on this small part of the transportation sector or a little bit of deforestation.” But if you put it all together, and you look at the program at this conference, our subfield covers so many areas and so many types of behavior. Whether you're looking at the producer side, the consumer side, or designing instruments, one of the most important things is measurement. For example, find out how big the externality is so we can figure out how big the corrective tax could be.

I think it's super exciting. The tools at our disposal now just really lend themselves to what we do. Everything going on with remote sensing and the sort of spatial analysis tools and what's now rebranded as machine learning. We've done this stuff for a long time now. We just do more of it and do it faster. But all these tools that we can roll out at scale really lend themselves to what we do.

So, I don't know. I saw a bunch of papers where I was just like, "Holy moly, this is cool. I wish I would've had this idea."

Margaret Walls: I agree. There was a lot of good stuff. The last question I'm going to ask, then, is about policy, because at RFF, we are very policy focused, but I think of the Berkeley folks as people that are pretty into affecting policy, as well—especially in California, but also elsewhere. How do you think our profession is doing in terms of its influence on policy? Are we working on the right questions for policy? Do you have thoughts about that?

Maximilian Auffhammer: So, I think there are parts where we're doing extremely well. At Berkeley, we have a pretty close relationship with the state government. California is a big state with the fifth-largest economy in the world, so they, by some rule, have to come to us first if they need a research project. So, there's this really nice tight relationship. Sometimes it's not about designing the next great thing; sometimes it's just about killing a really bad idea, like some really costly way of reducing greenhouse gas emissions when you could take something way more cost-effective and use the money for something else—funding higher education, for example.

I think we do have a long way to go. I was having this conversation with Paul yesterday. It is sort of shocking how little we actually know about which policies work and which policies don't. With the Clean Air Act, we do a little bit better, maybe. But think of the hundreds and hundreds of rules that get rolled out where no evaluation is built in. Most of it relies on ex ante sort of estimates, and then some half-hearted attempt to ex post to see whether it worked.

I think one thing we as environmental economists should do is think more aggressively about how we can not force, but encourage, regulators to do serious ex post evaluation of what worked and what didn’t. No politician ever wants to hear, "Hey, you spent $20 million and it didn't work," but somebody has to come down and do it. Other fields do it. In health, they do this stuff. Why can't we do this in environment and energy? I think we should push there.

Margaret Walls: That's a good thought.

We're sitting here at the Association of Environmental and Resource Economists Conference in the RFF recording studio for Resources Radio. That's a joke, since we're just in one of the meeting rooms, but Paul Ferraro stopped in, so I'm taking the opportunity to ask Paul a few questions. Paul is a professor at Johns Hopkins University and has a joint appointment in environmental engineering and public health and the business school. I've known Paul for quite a while, and he does fantastic work. As it turns out, he just was named an AERE fellow, which is the highest honor our association has for members of the association. Congratulations, Paul.

Paul J. Ferraro: Thank you, Margaret.

Margaret Walls: I just want to ask you about that. First of all, when we do these awards at the conference, usually you get nominated by somebody, and then somebody stands up and talks about your career and why you're getting the award, and then there is a video. Tell me a little bit about who presented and all of that.

Paul J. Ferraro: Jay Shogren, a professor at University of Wyoming who's also an AERE fellow, did my introduction. I've known him for a long time—since I was a graduate student. He's been extremely influential on my career and been extremely supportive in my career. He gave a short, three-minute—and usually, with his style, it's funny—introduction to me where he tried to describe my path to economics and some of his perceptions of my accomplishments today.

Margaret Walls: What was your path?

Paul J. Ferraro: He brought up the fact that I started as an ecologist working in Africa, and happened by chance to meet an environmental economist. Randy Kramer used to be at Duke University (and maybe still is). I found the conversation with him infuriating, because he seemed to be able to parry everything I said about how the world works with some counterexample. He said, "Well, if you really want to do something about environmental problems, don't study biology." He said, "Environmental problems aren't a biological problem, they are human-behavior problems, so you should be studying environmental economics."

I thought he was dead wrong, but he offered me the opportunity to come to Duke, get some training, and do a graduate program in environmental economics. I was going to go, because I thought I would learn environmental economics and then show him why it was wrong and inappropriate. But when I started to learn it, I thought, "Oh, my God, this has changed my whole view of how the world operates and how one can intervene if you want to make the environment better."

Margaret Walls: That's so interesting. I think of you as somebody who is very committed to evidence-based empirical analysis of a lot of conservation programs and things like that, but others, as well. Just talk about that being your motivating thing—I think it is.

Paul J. Ferraro: Yeah. An important theme in my work is trying to get better evidence for not only the programs that we design to improve the environment, but also the underlying theory of how the world works that motivates those program designs. We think this is the way the world works, and therefore we should do this kind of program. Probing those assumptions, asking, Do these programs work the way we think they work?, is super important to me.

Partly, it's because my early work was very theory based, and Subhrendu Pattanayak, who's a professor at Duke University, once asked me, "How do you know this program that you've designed works?" And I said, "It's obvious. The theory is very clear." And he said, "Well, but you've had this other paper on theory that shows some quite different things." And I said, "Well, maybe it is ambiguous." Then I realized, Wait a minute. It is ambiguous whether this thing will work or not. And I just realized that if you really thought about it carefully, every program we design theoretically can have good or bad outcomes. If we're not actually doing a good job of measuring those outcomes, we could be wasting resources—or, worse, making things worse off than they actually are now.

That pushed me in that direction, mostly out of frustration with my former self, to focus on that and try to get not only economists, but the broader environmental community to think more carefully about evidence so that we're not wasting resources or potentially doing harm.

Margaret Walls: Do you use your ecology background in your work?

Paul J. Ferraro: I do. Sometimes I'm actually doing pure ecology research, but the area where it helps me the most is understanding how natural scientists and physical scientists view environmental systems and environmental problems, understanding where they'd get tripped up on how economists view things, and how to translate how economists view the situation so that they understand. I think that's a big issue. Economists have so much to offer in the design and evaluation of environmental policies that a lot of times we do not communicate very well. We think our ideas are obvious. They're obvious to us, but they need to be translated in a way that other fields can understand.

Knowing how other fields interpret the world, because that's the way I used to interpret it, and knowing how they approach their science, which is a little bit different from the way economists approach their science, has been really valuable to me as sort of an ambassador for environmental economics into other fields. To be able to show them what we have to offer not only improves their work, but it improves overall environmental policy design.

Margaret Walls: You've been at this for a while; you're not that old, but you're getting to be a senior member of our profession. We're here at the conference, but you know where the field is these days, and I hate to put you on the spot, but what do you think about the trends and the kind of work you see younger members of environmental economics doing? Are you optimistic? Just give me your feelings about things.

Paul J. Ferraro: Yeah, I'm optimistic in two ways: One, there's broader recognition within the economics community about the importance of environmental work. It wasn't true when I first started.

Margaret Walls: That's true.

Paul J. Ferraro: That's great, because there's a lot more great minds now working on environmental problems. The empirical work is a lot more careful, and I’m thinking particularly about … You know, the magnitudes matter. When we say we reduced pollution by 30 percent, those magnitudes matter, and we're doing a better job of getting a handle on those magnitudes.

And the other thing that makes me optimistic is there's more rewards for environmental economists to talk to other scientists and policymakers, which didn't really exist 20 years ago. Those were considered a hobby. You could do those, but you wouldn't get necessarily credit for those in an academic organization. Groups like RFF always rewarded that sort of work, but I think you were rarities at that time. I think more and more academics can publish work in non-economics journals and get professionally rewarded, which is great, because that's what we need to do. We need to be communicating with all the other disciplines that drive environmental policy and environmental solutions.

All the institutions that are coming out of this former structure of silos for each discipline are still struggling with how to incentivize interdisciplinary work. But the thing that makes me most excited is that they finally realize that incentives matter. It's not an information deficit. People just didn't do it before, not because they didn't think it was important or they didn't realize they could work across disciplines, but because it wasn't rewarded. Now, we're starting to get the incentives right so that we get this public good of interdisciplinary work in greater quantities.

Margaret Walls: We are here again at the AERE Conference in our little recording studio, and I have the pleasure of having John Whitehead here with me. I'm so excited. John is another one of the folks that was awarded being an AERE fellow, so I'm excited to talk to him about that. John, congratulations on that win.

John Whitehead: Thank you, Margaret.

Margaret Walls: I'd like to ask you first, John, if you don't mind, how you got into this field. Can you talk about your background a little bit? How did you become an environmental economist?

John Whitehead: I went to graduate school at the University of Kentucky.

Margaret Walls: Go Big Blue.

John Whitehead: Go Big Blue. We shared a professor, Glenn Blomquist.

Margaret Walls: We did.

John Whitehead: He was totally inspiring to me in graduate school, and I was inclined toward environmental economics. But I took his course and took another course he taught, and everything just clicked. All of a sudden, I went from wanting to drop out of school and take my master's and get a job to wanting to get a PhD.

Margaret Walls: Wow. Does Glenn know that he had that effect on you? Probably.

John Whitehead: I said something to that effect yesterday, maybe for the first time, 40-some years later.

Margaret Walls: Yeah. I should have started by saying that you are a professor of economics and have long been one at Appalachian State University in North Carolina. Let's talk about being awarded as an AERE fellow and tell me how you found out about it.

John Whitehead: Karen Fisher-Vanden emailed me—I think it was sometime in February—and it was a total shock. I did not know I had been nominated. A guy from Appalachian State University, a regional public school—that's not the sort of person who gets an AERE Fellow Award. So, I was totally shocked, and I still am. The AERE fellows are people you look up to; I've looked up to them for 35 years or whenever they started giving them, and it's hard to believe that I'm part of that group right now.

Margaret Walls: That's fantastic. It's a great honor. Tell me how the award ceremony went yesterday. Who was it that presented the award to you?

John Whitehead: My good friend Lynne Lewis introduced me with some kind words about our friendship going back 20-some years, and she mentioned that she was pretty sure that I was feeling uncomfortable about being talked about and the whole thing, and she was correct, but I got through it. And it was fun.

Margaret Walls: You told me that you had a whole speech written and then you couldn't even pull it out and go through it, because you were kind of emotional about it, right?

John Whitehead: It was emotional, yes. It was overwhelming. I had 500 words written out, which Google told me I didn't have time to say, so I practiced it, and it took five minutes. I was allowed three minutes, so all day I was editing the little speech by hand. Then, when it came time to get up there, I just knew I couldn't say what I had planned to say. I just reacted to what Lynne said, the folks in the videos, and the nice things they said about me. I tried to react as best I could at the time, and I'll take that speech and those words and I'll email everyone and thank them that way.

Margaret Walls: That's a good idea.

They do these videos. They started during COVID when people weren't really in person. They had these tribute videos where people would say little things, and now they've continued those. It's a really nice touch, I think.

John Whitehead: Yeah, it's really nice.

Margaret Walls: Glenn was one of the people in the video, wasn't he?

John Whitehead: Yes, Glenn. It was Glenn; Tim Haab; Paul Hindsley, my former student; Jill Caviglia-Harris, who's at Salisbury; and my colleague and fellow graduate student from University of Kentucky, Pete Groothuis. I think those were the five.

Margaret Walls: That's nice. You've had a lot of involvement in AERE, right? You and I were on the board together. What kind of things have you done with the association?

John Whitehead: The first thing I did was I developed the first website.

Margaret Walls: Oh my gosh.

John Whitehead: Glenn Blomquist started the internet presence for AERE with his graduate student, Mike Newsome, and it was called AERE Gopher back then. Then, they got tired of doing it, and Glenn said, "John, would you like to take this over?" He checked with the board, and they said, "Okay." So, I put the website up, and I did that for five or six years and was told my skills just weren't keeping up with what was going on. Then, Gernot Wagner took over the website, and now it's done professionally. Gernot did a great job. It's done professionally.

Then, I did a three-year board term in the early 2000s, and then I was organizing the AERE at Southern Economic Association Sessions for I think maybe 15, 20 years. I'm really proud of that. They grew from three or four sessions, and there were great sessions, but mostly academic economists who are tenure track or tenured, and it became this thing—nothing that I had planned—but it became this thing, where it was a lot of graduate students, brand new assistant professors, or brand new people who work for the government who come, and it's just a place where they can present their work, maybe for the first time, and hopefully not be too nervous about it. It's AERE sessions, and it's AERE people, so everyone's nice to them.

Margaret Walls: It's an easier place to get into making presentations. Yeah, that's fantastic. I know you did a great job with the Southern, so that's good that you did that.

John, I want to ask you about your work a little bit, because, of course, your research is most of why you became an AERE fellow and why you received that award. Talk a little bit about the kind of work that you do, because you pretty much stayed in what we call the stated-preference area. Talk about that for our audiences who might not know exactly. A lot of people know what it is, but some people might not. Tell us about the kind of work you do.

John Whitehead: A stated-preference approach to environmental valuation is when the researcher writes a survey and asks people survey questions that they can answer that reveal their value for changes in the environment or natural resource allocation. Stated-preference research has been around for a long time, but it really got busy in the '80s and '90s. With the Exxon Valdez oil spill, and then the BP oil spill, it hit a couple more peaks of activity.

Now, when you first started going to the AERE Summer Conference, there were a lot of stated-preference sessions. These days, it's hard to find some at this conference. There are several graduate students and early-career economists doing stated-preference research, and there were posters at the poster session and papers presented in various sessions, so you had to look a little harder to find them this year. But there's people doing it, and it was really good work, and it was great to see them do that.

Another thing is we have learned a lot about stated-preference and valuation in general, and in terms of the innovations that can be done, it may have peaked, or we might be doing a pretty good job about estimating environmental values. Not that there's no room for improvement, but I think we've hit diminishing returns.

Margaret Walls: That's interesting that you think that.

John Whitehead: Well, having said that, I went to a session yesterday where the researchers were using high-frequency data, so there's all sorts of cell phone data and other ways of collecting information on people's revealed preferences, and I think that area of valuation is becoming much more active with this additional type of data.

Margaret Walls: We actually are having a Resources Radio episode on that with Dan Phaneuf to talk about some of that work that he's doing with the cell phone data, so I agree with you on that.

That just brings me to the broader question about the field at large. Now that you've been in it for a while, and you're an AERE fellow, and now that you've been here at the conference for two and a half days, give me your sense of what you think about the young people in the field and where the profession is going. Are you optimistic? What are the interesting things you see going on?

John Whitehead: The young people are brilliant. I've gotten to the point where I'm sitting in sessions, and I've been to every session since I got here. I was sitting in sessions, and I just don't understand what they're doing. They're doing great work. It's interesting, and we're just learning a lot about how people respond to environmental insults or improvements in environmental quality and what that means for society. I think it's really exciting to attend these sessions and see what people are doing.

Margaret Walls: It's amazing.

On the stated-preference work, though, I just want to push you on that a little bit. There's a lot of movement in the policy world—a big push, these days, on valuing ecosystem services. The government has released various guidances this year on valuing and emphasizing that we need to build that into things. Do you feel that, for some problems, that's the approach we need to use? I mean, maybe we're not at the frontiers of new methods, but applications might still be needed, and we don't have a lot of folks doing them. What do you think about that?

John Whitehead: I agree. Yeah. What's less exciting for the young people and graduate students about stated-preference research is that there's fewer opportunities for split-sample hypothesis tests.

Margaret Walls: What do you mean by that? Explain that in plain language.

John Whitehead: There's less opportunity for methodological advances. In terms of actually developing a benefit estimate to use in benefit-cost analysis, we know how to do that or at least to do that so the benefit estimate is fairly accurate, and if the US Environmental Protection Agency wants to send out a survey, they know how to do it, and they'll collect their data, and they'll get tight confidence intervals, and it's going to be a well-done valuation study that is going to be useful in terms of policy analysis.

This year, the revised federal guidelines for benefit-cost analysis came out, and for the first time, stated-preference valuation methods were included as a way to estimate benefits of environmental quality changes. The guidelines said when we can use revealed-preference methods to develop these valuation estimates, then that's preferred. But they said stated-preference methods are another way to go, which is huge, and it seemed to fly under the radar with the people who were talking about those guidelines. There was more controversy about equity weighting and the discount rate, and I kept waiting for someone to say, "Well, what about stated-preference methods? We need to get rid of those," or "It's great." I didn't hear anyone say anything about them.

Margaret Walls: Part of what I was saying is there have been some policy guidelines put out, and I forgot about the circulars on the benefit-cost analysis. But anyway, for some problems you don't have revealed-preference methods that you can go to, so it's important that we keep that part of our field going.

We end every podcast episode with our Top of the Stack question, which is to say I'm putting you on the spot again, but have you read anything, listened to a podcast, watched a movie, consumed any kind of content that resonates with you that you'd like to recommend to people?

Paul J. Ferraro: Right now, I'm reading Spencer Banzhaf, a professor at North Carolina State University—his book called Pricing the Priceless. If you're an environmental economist or interested in environmental economics, it's a book that sheds new light and a totally new perspective on how this discipline came to be and how it resolved this prior tension where people thought economists were the foe of the environment rather than part of the solution for environmental problems. It's extremely well written. It's gripping to follow. I'm going through every chapter. I think if you're an environmental economist, you can't not read this book in order to understand where we've come from.

Margaret Walls: Yeah, that's awesome.

John Whitehead: The economics book that's on the top of my stack right now is Spencer Banzhaf's history of environmental economics. It's an excellent book. I've read several of the chapters when they were journal articles or drafts. I'm rereading those and reading the whole thing. I'm trying to go from beginning to end, but it's just excellent. It's just a feel-good moment for me, because a lot of it's in the old days, but a lot of it is stuff that I lived through, so it's been great.

Margaret Walls: We had him on Resources Radio talking about the book, and you're not the only person who has said that's on the top of their stacks, so that's awesome.

Maximilian Auffhammer: I'm an avid reader. I don't read a lot about economics, frankly. I like a good novel. I really like autobiographies by chefs. I like short stories. The last thing I read that really stuck with me, and I'm not going to get the title exactly right, but it's called “Letter from Birmingham Jail” by Martin Luther King Jr. It's just a letter from jail about what is just and what is a just system and how we can lead to more just outcomes. It's really short. There were 10 pages. Apparently, it was handwritten on a newspaper and transcribed, and I can't stop thinking about it.

Margaret Walls: That's a great recommendation. I have heard of that, but I have not read it, so that's fantastic. Thank you for that. That's perfect.

Maximilian Auffhammer: All right.

Margaret Walls: Thank you, Max, for coming in.

Maximilian Auffhammer: Thank you for having me, and so nice to see you.

Margaret Walls: Thanks, Paul. It’s good to see you.

Paul J. Ferraro: You're welcome. Thank you for having me.

Margaret Walls: John, thank you so much for coming in. I appreciate it.

John Whitehead: Thanks.

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