Air Pollution Externalities and Crime
Thursday May 15, 2008
Felix Salmon - How Unleaded Gasoline Slashed the Violent Crime Rate:
Even if the true figure is half of that finding, it is a remarkable result. Two questions for the Coase-lovers out there?
...The main result of the paper is that changes in childhood lead exposure are responsible for a 56% drop in violent crime in the 1990s.That is a pretty striking result. I am not sure if I entirely believe the 56% number, but I cannot see anything wrong with the methodology.
What are those "changes in childhood lead exposure"? Primarily the move to unleaded gasoline, which happened in the US between 1975 and 1985.
Even if the true figure is half of that finding, it is a remarkable result. Two questions for the Coase-lovers out there?
- Is it not possible that air pollution imposes serious externalities on some people, such as those with asthma?
- If air pollution can and does impose serious externalities on some people, should the Coase theorem not have taken care of this problem? Why was government intervention necessary here?
Comments
After having been baited several times, I’ll bite this time. Rather, I’ll nibble.
The Coase Theorem holds ONLY if transaction costs are low or zero. They clearly are not in the case of air pollution.
I’ll not comment on your unconvincing slap at the Coase theorem.
This paper suggests something else: post-lead children should be smarter.
My students are not much amused when I threaten them with harder exams because I know that they, being post-lead, are smarter than my generation.