The Regulation-Litigation Interaction

This paper provides a preview of a new Joint Center book on the relationship between regulation and litigation.

The Blockbuster Punitive Damages Awards

This paper provides an analysis of 64 punitive damages awards of at least $100 million. Based on an inventory of these cases, there is evidence that these blockbuster awards are highly concentrated geographically, as two states account for 27 of the 64 awards.The awards also have been rising substantially over time, with the majority of these blockbuster awards taking place since 1999.An assessment of the current status of the blockbuster punitive damages awards indicates that most of these awards have been appealed, but the reversal of these punitive damages awards is the exception rather than the rule.Many large punitive damages awards are settled without any appeal. The ratio limits outlined in State Farm v. Campbell will affect over 90% of the blockbuster awards and over 90% of the damages associated with these awards if a ratio of 1.0 becomes the upper limit on punitive damages.

Monetizing the Benefits of Risk and Environmental Regulation

This article provides a response to the opponents of monetization of risk and environmental benefits, such as the authors of Priceless: On Knowing the Price of Everything and the Value of Nothing . Putting benefit values in dollar terms ensures that there will be full recognition of these benefits in the policy evaluation process, and also places them on terms comparable to program costs. Much of the article is devoted to advocating the use of the value of statistical life to value health risk reductions from government regulations. The article explores sensitive issues such as the heterogeneity of the value of statistical life with respect to income and age. While the use of a "senior discount" was controversial and involved too great of a discount, there is substantial evidence that there are age variations in the value of statistical life. The article also advocates the continued use of stated preference approaches to valuing environmental benefits, which is in contrast to the critiques of stated preference analyses by those who consider environmental resources to be priceless and by those who believe that all non-use values of environmental benefits are zero.

Sorting Models of Labor Mobility, Turnover, and Unemployment

Utilizing a model in which individuals search among lotteries on likely success at different jobs, this paper analyzes both the search decision when unemployed and the implications of the sorting process. The model correctly predicts both the direction and convexity of the age-unemployment relationship and the impact of experience on turnover and wages. Actions taken when unemployed have an important impact on equilibrium turnover rates, unemployment rates, and the work history of the pool of unemployed. The sorting model is used to analyze racial differences in youth unemployment and major empirical features of low income labor markets.

Specific Information, General Information, and Employment Matches Under Uncertainty

Employment matches under uncertainty are typically accompanied by opportunities for information acquisition. Workers can acquire specific information about productivity lotteries at the firm or general information affecting their probabilistic beliefs about work elsewhere. Enterprises can acquire specific information concerning the productivity of a particular worker or general information about different groups of workers in a production process. In all cases, the market equilibrium with flexible wages is efficient. Moreover, there is no opportunity for strategic behavior that would alter this result. Both forms of information are associated with rising earnings profiles over time, hut the steepness is greater in the general case. The negative turnover-wage relation is attributable in part to the lower match termination rate of workers with productive lob histories, who earn higher wages than their less productive counterparts. General information is associated with more termination of employment matches by employers and employees than is specific information. The implications of specific/general information for matching processes in many respects aralle1 the role of that distinction in human capital theory, strengthening the link between matching theories and earlier human capital analyses.

The Generational Divide in Support for Environmental Policies: European Evidence

This article examines age variations in support for environmental protection policies that affect climate change using a sample of over 14,000 respondents to a 1999 Eurobarometer survey. There is a steady decline with age in whether respondents are willing to incur higher gasoline prices to protect the environment. This relationship remains after controlling for socioeconomic characteristics. There are age-related differences in information about environmental risks, information sources about the environment, perceived health risks from climate change, and degree of worry about climate change. However, taking these factors into account does not eliminate the age variation in willingness to pay more for gasoline to protect the environment.

The Mortality Cost to Smokers

This article estimates the mortality cost of smoking based on the first labor market estimates of the value of statistical life by smoking status. Using these values in conjunction with the increase in the mortality risk over the life cycle due to smoking, the value of statistical life by age and gender, and information on the number of packs smoked over the life cycle, produces an estimate of the private mortality cost of smoking of $222 per pack for men and$94 per pack for women in 2006 dollars, based on a 3 percent discount rate. At discount rates of 15 percent or more, the cost decreases to under $25 per pack.

Hyperbolic Discounting of Public Goods

This article examines revealed rates of time preference for public goods, using environmental quality as the case study. A nationally representative panel-based sample of 2,914 respondents considered a series of 5 conjoint policy choices, yielding 14,570 decisions. Both the conditional fixed effect logit estimates of the random utility model and mixed logit estimates implied that the rate of time preference is very high for immediate improvements and drops off substantially thereafter, which is inconsistent with exponential discounting but consistent with hyperbolic discounting. The implied marginal rate of time preference declines and then rises. Estimates of the quasi-hyperbolic discounting parameter range from 0.48 to 0.61. People who are older are especially likely to have a high disutility from delays in improving water quality.