Working Papers
Abstract. Syphilis has re-emerged as a global public health issue. In lesser developed countries, millions of people are contracting the disease, which can be fatal without access to proper treatment. In developed countries, prevalence is much lower but has cycled around endemic levels for decades. The authors of a recent high-profile article in the journal Nature argue that these regular fluctuations in syphilis prevalence are driven primarily by endogenous disease dynamics rather than social or behavioral factors, as often theorized. We explore this hypothesis by extending the classic SIRS epidemiological model to incorporate forward-looking, rational individuals. This economic SIRS model (or E-SIRS) model is consistent with microeconomic fundamentals as it is derived from the behavioral equations of rational individuals. In contrast to the Nature article, the E-SIRS model predicts that human preferences over health and sexual activity are central to the nature of syphilis cycles. We find that low-activity individuals will behave in a manner that significantly dampen the cycles, while high-activity individuals will tend to exacerbate the cycles, a phenomenon we refer to as rational dynamic resonance. The economic SIRS model also provides additional insights into two failed attempts by the U.S. government to eradicate syphilis from the U.S. population.
Abstract. We report the findings of a unique nation-wide experiment to price access to U.S. public lands. In 2004, the U.S. Federal Lands Recreation Enhancement Act mandated the creation of a new annual pass to cover all federal recreation sites that charge an entrance or access fee. Our task was to assist federal policymakers in determining an appropriate price for this new pass. Toward that end, we administered a national telephone survey to over 3,700 households and used contingent valuation to estimate households’ willingness to pay (WTP) for the new pass at different prices. Our innovative experimental design allows us to estimate three distinct components of hypothetical bias in order to calibrate our WTP estimates against actual purchasing decisions. In a sample of the general U.S. population – most of whom have little experience with similar federal passes – respondents tend to greatly exaggerate their WTP for the pass when contrasted with previous pass sales. A sample of recent pass purchasers, however, exhibits little bias, confirming other recent research showing that market experience can mitigate hypothetical bias. Calibrated for bias, our results indicate that the $80 pass price ultimately adopted by policymakers implies an increase of nearly 2.5% in total revenue relative to the former pass, priced at $65, but a 4.5% loss in potential revenue absent any such pass.
Communalism versus the Incentive to Free-Ride: Experimental Results from Economically Emergent Africa (with Arthur Caplan and Anthony Macharia)
Abstract. This paper reports results from a public good experiment conducted in the African nation of Botswana. Our findings provide a test of whether ‘African communalism’ influences willingness to contribute to the provision of public goods. As globalization expands markets, and economies such as Botswana’s continue to modernize, there is an increasing need to understand how cultural factors might influence the valuation of public goods. We find evidence that stated willingness to contribute to a public good in a hypothetical setting is higher than actual contribution levels in a real setting. However, this is only true in the second and final round of the experiment, when participants in the real setting have learned to significantly lower their contribution levels. The results draw into question the existence of a communal spirit in economically emergent Africa when it comes to the provision of public goods.
Equity Basis Selection in Allocation Environments (with Van Kolpin)
Abstract. The successful formation and long-term stability of a cooperative venture is often linked to the perceived fairness of the associated cost or resource allocation. In particular, the effectiveness of such collaborations can be hampered by the lack of a consensus view on what basis should be used for gauging an allocation's "fairness." Standards of equity in traditional cost-sharing applications could be assessed on many dimensions: per capita, per unit of demand, or per unit of revenue, to mention a few. This multiplicity of logically compelling "equity bases" is a feature common to many practical cost-sharing applications. Our analysis shows that features of the allocation environment are capable of explaining a substantial amount of the variation in the equity bases employed in practice and are consistent with the axiomatic principles of collective behavior.