The Effect of Crime on Residential Rents and Property Values: A Comment

[Excerpt] In the Spring 1979 issue of this Journal, Mario J. Rizzo (8) presented an interesting quantitative analysis of the value placed by households on avoiding crime. He used a technique currently popular among researchers for estimating the value of a whole array of impacts which impinge upon property values. This note does not quarrel with the legitimacy of using such a technique for capturing household marginal willingness to pay for crime avoidance. Instead, it focuses on two questions about how Rizzo used the technique. First, should income be used, even as a proxy for other variables, in estimating an essentially reduced form equation which relates housing characteristics (quantity measurements) to their implicit prices? Second, if a liberal estimate of the value of crime avoidance is generated, why not a conservative one also

THE ECONOMICS OF PURE ECONOMIC LOSS AND THE INTERNALISATION OF MULTIPLE EXTERNALITIES

This study emphasises the divergence between the legal approach to pure economic loss and the economic one, and focuses on the latter. Traditional economic theory is grounded on the divide between social and private loss and is employed in formulating policy recommendations for an efficient outcome. However, it fails to explain why pure economic loss cases are treated differently in different legal systems. This study suggests that pure economic loss should be regarded as the internalisation of positive externalities through a mechanism (tort law) primarily designed for negative externalities. The pure economic loss problem is a problem of choosing between secondbest solutions, because tort law generally fails to provide first-best internalisation of both types of externalities. Within this framework, some new hypotheses on the comparative law and economics of pure economic loss will be discussed.economic loss, financial loss, tort, damage, compensation,

An Assessment of Subjectivism. Its Meaning and its Limits

This working-paper deals with the meaning of the subjective theory of value. It is argued that in spite of its wide utilization in economic theory, subjectivism is an equivocal concept generating incompatible interpretations. The affluence of various and incompatible interpretations is the consequence of a conception that is either too complex or too elastic. This is the case since the subjective theory of value cannot accommodate most of the features that are traditionally associated with it: utility, marginalism, ordinal evaluation, knowledge, expectations. Actually, this working-paper defends a specific view of subjectivism which is much simpler than most of its current interpretations.