ECONOMIC ANALYSIS AND EFFICIENCY IN PUBLIC EXPENDITURE

Benefit-Cost Analysis involves several steps: development of a program information structure (product categories), estimating the production function, pricing benefits and costs, adjusting for opportunity costs, choice of investment criteria, and incorporating uncertainty. Each step involves conflicts of interest that can only be resolved by political (collective) choice of property rights assigning opportunities to the various interest groups. The rules of benefit-cost analysis for public expenditure are equivalent of private property rights established by legislative and court decisions for the market economy. The traditional separation of technical analysis and political choice is not longer tenable. Theory and practice point to a more interactive, iterative relationship between analysts and politicians.Public Economics,

SOURCES OF SOCIAL CAPITAL

If the capital metaphor is to be taken seriously, social capital must focus on sources and not consequences. Human motive is the equivalent of physical capital goods which can perform transformative functions such as creating utility for one person out of the consumption of another and solving free rider problems. The focus on consequences of social capital cannot distinguish a gift motivated by affinity from a goods transfer motivated by moral obligation or promise of selfish gain. Motive is important if we are to understand investment and depreciation in social capital. The paper develops and tests a survey instrument to measure the predominant motive describing the relationships among people in eight Michigan communities with different socio-economic characteristics. Such a social capital account would allow community stocks to be compared and tracked over time.Institutional and Behavioral Economics,

THE SPARTAN SCHOOL OF INSTITUTIONAL ECONOMICS AT MICHIGAN STATE UNIVERSITY

Heterodox scholarship at Michigan State University (MSU) was influenced by the institutional economics of John R. Commons at Wisconsin. But it was far from monolithic and had many other sources and originality of its own. A case can be made that the center of institutional economics moved across Lake Michigan from Madison to East Lansing and blossomed in the second half of the 20th century with such Wisconsin Ph.D's as Raleigh Barlowe, Warren Samuels, Allan Schmid, Harry Trebing, and others. Equally important in making MSU a center of institutional economics were scholars from other institutional backgrounds such as Paul Strassmann, economic development; Robert Solo, science and technology; James Shaffer, agricultural marketing and consumer behavior; Nicholas Mercuro, law and economics; and others.Institutional and Behavioral Economics,

INSTITUTIONAL ALTERNATIVES FOR IMPROVING OUR ENVIRONMENT

Environmental Economics and Policy,

THE ECONOMICS OF PRIVATE VOLUNTARY ORGANIZATIONS AND COLLECTIVE ACTION IN DEER MANAGEMENT

Game theory and other approaches have been used to characterize problems involving high-exclusion-cost goods which also have the characteristic that marginal cost of an additional user is zero over some range. These analytical tools have made valuable contributions to understanding voluntary organizations and collective action. Resource systems for which composition or scale of the resource is an important factor do not fit neatly into the types of problems which are typically analyzed. The Quality Deer Management Association (QDMA) in Southern Wisconsin is used as an example to illustrate where the existing literature must be modified to take account of particular features of this resource problem. Schelling's multi-person prisoner's dilemma model is modified to incorporate preferences and marginal benefits of deer quality to different types of hunters and to explore issues of resource sustainability. Against the odds, the private QDMA has successfully organized hunters to practice harvesting techniques consistent with improved herd quality.Resource /Energy Economics and Policy,

REGIONAL POVERTY IN MICHIGAN: RURAL AND URBAN DIFFERENCE

This paper examines the relationship between the quality of local labor force and variation in regional poverty outcomes among Michigan areas. A regional poverty model is derived from the household production model for that purpose. The US Census 2000 data on small geographical areas of Michigan (Census Block Groups) is used for the analysis. It is found that the difference in regional poverty is explained primarily by differences in quality and quantity of labor available to a household. Second, heterogeneity of the model is detected with respect to a degree of urbanization. Also, the relation between average income and regional poverty is found to be nonlinear and distribution of income playing a major role in explanation poverty. Higher poverty rates in rural areas tend to persist over time.Community/Rural/Urban Development,

APPLICATIONS OF SOCIAL CAPITAL THEORY

Experiments and studies were conducted to investigate the role of social capital. Social capital (relationship to others) is a productive asset which is a substitute for and complement to other productive assets. The productivity of social capital leads to the expectation that firms and individuals invest in relationships. Data were collected to answer the following questions: Does the identity (relationship) of trading partners affect selling and buying prices; the acceptance of catastrophic risk; the choice of share or cash leases in agriculture; loan approval; and the banks investment to retain customers? The evidence is in the affirmative.Behavioral economics, Institutional economics, Social capital, Institutional and Behavioral Economics,

AGAINST MECHANISM: METHODOLOGY FOR AN EVOLUTIONARY ECONOMICS

When the first economics departments were proposed at Cambridge and Oxford, the proponents thought acceptance would be improved if economics could be seen as incorporating the methods of physics. The enterprise was premised on the existence of economic laws that describe invariant relationships between events. These event regularities, like gravity, were not affected by human action. Humans could adapt and use them, but not change them. Thus the metaphor of "mechanism" seemed appropriate and became embedded in economists' language. It is common to use the term market mechanism to link prices and commodities. This suggests the economy is like turning a crank attached to a set of gears where there is a fixed relationship between the crank's motion and the last gear's motion. The gears have no ideas of their own, they don't get mad; there is no cognitive element between events and action.Institutional and Behavioral Economics,

SOCIAL CAPITAL AND POVERTY REDUCTION: TOWARD A MATURE PARADIGM

Introduction The purposes of this paper are: (1) to introduce the social capital paradigm; (2) to present evidence that social capital has an important role in poverty reduction; and (3) to suggest several policy prescriptions for building and using social capital to reduce poverty. The social capital paradigm includes social capital, networks, socio-emotional goods, attachment values, institutions, and power. Social capital is a person or group's sympathy for others. Social capital resides in sympathetic relationships that can be described using networks. One reason to value social capital is because it can produce economic benefits and if neglected, economic disadvantages. Another reason to value social capital is because it can be used to produce socio-emotional goods. Sometimes socio-emotional goods become embedded in objects. When this occurs, the meaning and value of the object change. The change in the value of an object produced by embedded socio-emotional goods is the object's attachment value. Individuals exchange both physical and socio-emotional goods. Institutions are the rules that order and give meaning to exchanges. Institutions with high attachment values are more likely to be observed than those whose compliance depends on economic incentives or threats. Finally, power, the ability to influence others, depends on one's resources, including one's social capital. In most personalized transactions, persons exchange both socio-emotional goods and physical goods and services. Moreover, the relative amounts of socio-emotional goods and physical goods and services exchanged will alter the levels and terms of trade when measured in physical units. Since one's ability to include socio-emotional goods in exchanges for physical goods and services depends on one's social capital, the terms and levels of exchange of physical goods and services will be influenced by the transacting party's social capital. Those with high levels of social capital will have advantages over those who lack social capital because they can exchange both socio-emotional goods and physical goods and services. Furthermore, since social capital alters the terms and levels of trade and the terms and levels of trade influence the distribution of incomes derived from trades, then social capital also has an important influence on the distribution of household income and poverty. Some evidence suggests that the distribution of social capital in networks and the distribution of household incomes are connected.Food Security and Poverty, Institutional and Behavioral Economics,