2013 Economics Research Working Papers
- Kidnap Insurance and its Impact on Kidnapping Outcomes [PDF]
Authors: Pingle, Mark & Fink, Alexander. Abstract: In the developing world, kidnapping is relatively common, and a market for kidnap insurance has arisen in response. We provide a model that allows us to analyze how kidnap insurance affects the interaction between the kidnapper and the victim's family when both are self-interested and have complete knowledge. We find that a market for kidnap insurance can be supported because it benefits a risk averse family, as long as the introduction of insurance does not increase the risk of kidnapping too much. Families should fully insure if purchasing insurance does not increase the probability of kidnapping, and partially insure otherwise. Kidnapping insurance allows families to redeem hostages from kidnappers who are more willing to kill, which reduces the number of kidnapping fatalities as long as the insurance does not increase the risk of kidnapping too much.
- The Impact of Legalized Casino Gambling on Crime [PDF]
Authors: Nichols, Mark & Tosun, Mehmet. Abstract: We examine the impact of legalized casino gambling, including Indian casinos, on crime. Using county-level data between 1994 and 2009, the impact that casino legalization had on crime is examined. Our results show an increase in crime associated with casinos in some circumstances, but not others. Crime impact results are quite sensitive to data, sample periods and econometric specifications. In addition to known Part 1 offenses (assault, burglary, larceny, robbery, rape, and auto theft), we also examine various arrest classifications, including driving under the influence (DUI), fraud, and prostitution. Again, casinos are associated with a statistically significant increase in some circumstances but not in others, with results depending on econometric specification. In no circumstances, however, are casinos and crime significantly negatively correlated.
- Risk Externalities, Wildfire Hazard, and Private Investment to Mitigate Wildfire Risk in the Wildland-Urban Interface [PDF]
Authors: Taylor, Michael & Christman, Laine. Abstract: Homeowners in areas adjacent to wildlands - in the Wildland-Urban Interface (WUI) - can mitigate the risk that their home will be damaged in a wildfire by creating "defensible space" on their property. This article explores homeowners' incentives to invest in defensible space using a unique data set on 35 WUI communities in Nevada. This is the first study to analyze homeowners' incentives to invest in defensible space, comparing across both forested (alpine forest) and non-forested (sagebrush rangeland, pinyon pine and juniper woodland, grassland) communities. This article explores two explanations for perceived homeowner underinvestment in defensible space: (i) homeowners' misjudging their wildfire risk and (ii) spatial interdependencies between neighbor's defensible space investments due to risk externalities. We find no evidence to suggest that homeowners' systematically misjudge their wildfire risk, though we do find evidence of strategic complementarities in defensible space investments due to risk externalities in certain communities, depending on predominant vegetation. Our results suggest that wildland fire policy to promote defensible space should focus on financial and regulatory barriers to investment in defensible space, rather than on educational programs, and that "tipping policies" to encourage early adopters to invest in defensible space may be appropriate in communities where the majority of homeowners have not invested in defensible.
- The Price Elasticity of Marijuana Demand [PDF]
Authors: Davis, Adam & Nichols, Mark. Abstract: This paper uses crowd-sourced transaction data from a cross-section of the US to examine demand for marijuana. State and regional variations in consumption, price and quality are explored. Price elasticity of demand estimates range between -0.3 and -0.6. Noticeable price differences are found between high, medium, and low quality marijuana, with high quality marijuana, at $13.57 per gram, 144% greater than low quality marijuana, at $5.55 a gram. Significant variation is also found by medical marijuana status and census region, although this variation depends critically on the quality of the marijuana.
- Riverboat Casino Gambling Impacts on Employment and Income in Host and Surrounding Counties [PDF]
Authors: Geisler, Karl R. & Nichols, Mark W.
- Another Look at Non-Renewable Resource Exhaustion [PDF]
Authors: Dobra, John & Dobra, Matt. Abstract: This paper challenges the widely held hypothesis, considered as accepted scientific consensus in some circles, that modern industrial society is rapidly exhausting non-renewable resources. We argue that this paradigm is amiss and use copper availability as an example to demonstrate the problems with this consensus. In the 80 years for which reasonably reliable estimates of copper reserves and reserve life are available, there is no evidence of resource exhaustion. In addition, an analysis of the economics of resource exploration indicates that mining companies will treat exploration as an inventory control problem and trade off using limited capital resources between expanding inventories of reserves and generating current revenue through production. In the case of the copper industry, it is argued that there is little incentive for major copper producers to explore for more resources. Non producers, exploration companies do have an incentive for expanding reserves, but this does not change the conclusion that new copper resources are effectively not worth looking for. We also conjecture that, except for in rare and temporary circumstances, this conclusion is applicable to most non-renewable resources.