Congratulations to Professors Michela Giorcelli, Katherine Meckel and Volker Nocke, who became members of the prestigious National Bureau of Economic Research. Giorcelli is a Faculty Research Fellow at the “Development of American Economy” group, Meckel is a Faculty Research Fellow in programs on “Public Economics” and “The Economics of Children”, and Nocke is a Research Associate of the “Industrial Organization” group.
By Adriana lleras-Muney
In late 2003, Norway passed a law mandating 40 percent representation of each gender on the board of public limited liability companies. The primary objective of this reform was to increase the representation of women in top positions in the corporate sector and decrease the gender disparity in earnings within that sector. We document that the women appointed to these boards post-reform were observably more qualified than their female predecessors along many dimensions, and that the gender gap in earnings within boards fell substantially. However, we see no robust evidence that the reform benefited the larger set of women employed in the companies subject to the quota. Moreover, the reform had no clear impact on highly qualified women whose qualifications mirror those of board members but who were not appointed to boards. Finally, we find mixed support for the view that the reform affected the decisions of young women. While the reform was not accompanied by any change in female enrollment in business education programs, we do see some improvements in labor market outcomes for young women with graduate business degrees in their early career stages; however, we observe similar improvements for young women with graduate science degrees, suggesting this may not be due to the reform. Overall, seven years after the board quota policy fully came into effect, we conclude that it had very little discernible impact on women in business beyond its direct effect on the women who made it into boardrooms.
Professor Lee Ohanian writes in today’s San Francisco Chronicle that “California’s solar rooftop mandate doesn’t make economic sense”.
This month, the California Energy Commission voted to require that almost all new California housing include rooftop solar panels. The commission estimates that after three years, the solar mandate will have the same effect on carbon reduction as eliminating 115,000 cars. But this represents only 0.8 percent of California’s registered motor vehicles. With California building about 100,000 homes each year, this relatively small reduction in carbon emissions may increase new home construction costs by as much as $9 billion.
California’s rush into renewables is premature.
This unprecedented mandate will not reduce carbon emissions significantly because California electricity generation is powered primarily by natural gas, which produces less carbon than cars. Transportation is the largest source of greenhouse gases in California, producing more than twice as much as electricity generation.
Addressing the state’s failure to build roads and houses is much more important in reducing carbon emissions than turning every new house rooftop into an electrical generator.
There are fewer miles of serviceable roads in California today than in the 1990s, which means that California drivers burn tons of fossil fuel while sitting in traffic. Los Angeles drivers spend about 150 percent more time in traffic than the average U.S. driver, which costs L.A. drivers about $3,500 per year.
A related problem is that California’s housing supply does not come close to keeping up with demand. California’s housing shortage has increased home prices enormously in coastal cities and is causing a growing number of workers to commute long distances from locations with relatively affordable housing, such as the Central Valley, to work in areas with high-paying jobs, including Silicon Valley, the Bay Area and Los Angeles. In 2016, 471,000 drivers commuted to LosAngeles daily from another county, and California is home to the three U.S. cities with the greatest share of workers commuting at least three hours per day.
The new solar rooftop mandate will also raise housing and business costs, and California’s disproportionate bet on solar energy will probably have the unintended consequence of reducing future energy reliability and increase the possibility of brownouts.
Solar energy has the major drawback that its production peaks when residential demand is low, and it plummets late in the day when demand peaks. This gross imbalance between supply and demand leads to bizarre market outcomes, including California producing so much power at midday that it pays Arizona to take the excess production to prevent an electrical grid overload.
The large imbalance between supply and demand also stresses conventionally generated electricity production, which operates at inefficient low levels during midday, but then must increase production extremely rapidly in the late afternoon. As California increases its solar power share, this tightrope act of matching supply and demand becomes increasingly complicated and will tend to increase brownouts as operators struggle to keep up with demand.
The cost of cutting carbon with rooftop solar is high. The Energy Commission estimates that the solar mandate will raise construction costs by about $9,500 per home. Cost estimates by builders, however, which include the mandate’s additional requirement of more efficient appliances, lighting, windows and insulation, are $30,000 in higher constructioncosts. But even the commission’s low estimate drives up the already high cost of California housing, where only 30 percent of households can afford the median home price of nearly $540,000. This will push even more Californians further away from large job centers, increase commuting times and further increase carbon emissions from autos.
The Energy Commission counters that lower future energy costs would more than offset their estimate of additional construction costs. But if solar panels, extra insulation, thermal windows and highly energy-efficient appliances and lighting were such a great deal, then consumers would demand them, and builders would build them without any state arm-twisting. The commission seems to have chosen a mandate because consumers don’t value these energy-saving items nearly as much as the commission thinks they should.
Sensibly adopting renewables on such a major scale requires waiting until new technology is developed that can feasibly store renewable energy. Waiting would also allow California to assess alternative options to reduce carbon, including emerging technologies that capture carbon, and that turn carbon into ethanol, as well as consider further development of large-scale solar power generation, which generates electricity at about half the cost of rooftop solar.
In the meantime, it is straightforward for California to reduce carbon — build more roads, build more houses, and enjoy not only less carbon but more economic growth, lower housing costs and more time outside of our cars.
New algorithm more accurately predicts life expectancy after heart failure
The following is from today’s Daily Bruin.
UCLA professor and 2002 California gubernatorial candidate Bill Simon often dresses up as famous economic figures like J.P. Morgan for his classes.
“A couple years after I ran for governor, a friend of mine asked me, what are you going to do now?” Simon said. “I said I’d like to get dressed up like Julius Caesar and go in front of a bunch of freshmen, slam my helmet on the table and say ‘veni, vidi, vici’ – I came, I saw, I conquered. If they start laughing, maybe I’m in the right place.”
Simon, a professor in the department of economics, received the My Last Lecture Award at a ceremony in De Neve Auditorium on Tuesday. The award, created by the UCLA Alumni Scholars Club in 2010, honors a student-nominated professor and gives them the chance to lecture on a topic they would want to talk about if it were their last lecture on Earth.
Simon structured his lecture around nine lessons that he’s learned in his life, from human nature to career advice, and talked about a range of topics, such as the importance of exercise, Mark Twain quotes and the role of self-deprecation when presenting.
Simon established a career in investment banking and ran for governor of California in 2002, but realized his passion for education after he lost. He said he became a professor on a whim, at the suggestion of a friend, but quickly grew to enjoy teaching.
“It started feeling really great, and I really enjoyed it,” Simon said. “The student evaluations came back and they were good, and one thing led to the next. (Teaching) has gone from a passion to a calling.”
Simon said he had to get used to preparing for class and learned new perspectives in economics from reading and putting together course material.
“Even (though) it’s something I’ve been doing for many years, I learned once again some things I knew once before and had forgotten, and (was exposed to) other new perspectives,” Simon said. “It’s been fun for me.”
He added he tries to teach students by using the mistakes and challenges he’s overcome in his own life as educational tools.
“I try to say to the students, in effect, don’t worry,” Simon said. “You are the future and you’re going to do great, and you’re going to make mistakes, but it can make you feel better if I can tell you about all the mistakes I’ve made, and all the mistakes that have been made in history.”
Students who have taken Simon’s classes said they appreciated how he connected with them and took the time to help develop their interests.
Michael Chen, a fourth-year economics student, said Simon’s courses have changed the way he views economics.
“One (phrase) that really resonated with me was, ‘Trees don’t grow to skies,’” Chen said. “An asset can look like a tree but it will have a reversion to the mean. I reflect on that whenever I look at the market.”
Chen said Simon engages students by learning personal details about them.
“He acted not only as a teacher but a mentor to me,” Chen said. “In a class of 30 or 40 students, (Simon) takes the time to know every student individually and tries to cater to their needs.”
Colin Connor, a third-year economics student, said he thinks Simon was selfless with his time and resources.
“Once, I asked him about something in a book that he had written and he just said, ‘Oh, I’ll just send you a copy,’” Connor said.
Nick Katzaroff, a fourth-year economics student, said he appreciated how personally engaged Simon was with his students.
“He was kind of like another dad, or a grandfather,” he said. “He would always ask how your family is doing and always wants your feedback. When you challenge his view, he will either be open to your view or research more about (the topic).”
Andrew Atkeson, a professor in the department of economics who has co-taught classes with Simon, said he thinks Simon is able to teach complicated economics concepts in an accessible and engaging manner.
“I think I’ve learned a lot about teaching in working with him, which has been a great pleasure for me,” Atkeson said. “A lot of times in economics, we present on a dry and technical level, but what we are discussing are human motivations.”
Simon said he feels indebted to the UCLA community and is grateful to have the opportunity to share his knowledge and resources with students.
“I’m a lucky guy,” he said. “It’s not often that at my age you stumble upon something that becomes a second career, and that’s exactly what happened to me.
We would like to congratulate Jay Lu for winning the Scoville Award for best undergraduate teaching in Winter 2018 for his class Econ 148 on Behavioral Economics.
Jay Lu
Behavioral economics is a subfield of economics that incorporates insights from psychology and other social sciences. The broad goal is to improve the realism of economic models by incorporating features such as aversion for losses, problems with self-control, or concern for others. The class reviews some of the standard assumptions made in economics, examines evidence on how human behavior systematically departs from these assumptions and explores alternative models of human decision-making in order to help improve economic analyses. This is Jay Lu’s third time winning this award. Congratulations!
Andrew Atkeson and Pierre-Olivier Weill’s work on the impact of Dodd-Frank regulations is described in this Anderson Review article.
Edward Kung
The sharing economy represents a set of peer-to-peer online marketplaces that facilitate matching between demanders and suppliers of various goods and services. The suppliers in these markets are often small (mostly individuals), and they often share excess capacity that might otherwise go unutilized. Economic theory would suggest that the sharing economy improves economic efficiency by reducing frictions that cause capacity to go underutilized, and the explosive growth of sharing platforms like Uber and Airbnb testify to the underlying demand for such markets. The growth in the sharing economy has caused great disruption to traditional markets, leading to contentious policy debates about how best to balance individual participants’ rights to freely transact, the efficiency gains from sharing economies, the disruption caused to traditional markets, and the role of the platforms themselves in the regulatory process.
Home-sharing in particular has been subject to intense scrutiny. Namely, critics argue that home-sharing platforms like Airbnb raise the cost of living for local renters. It is easy to see the economic argument: by reducing frictions in the peer-to-peer market for short-term rentals, home-sharing platforms cause some landlords to switch from supplying the market for long-term rentals—in which residents are more likely to participate—to the market for short-term rentals—in which non-residents are more likely to participate. Because the total supply of housing is fixed or inelastic in the short run, this drives up rental rates in the long-term market.
In a new paper, titled “The Sharing Economy and Housing Affordability: Evidence from Airbnb,” Professors Edward Kung (UCLA), Davide Proserpio (USC), and former UCLA student Kyle Barron, empirically investigate whether or not the rise in home-sharing has raised housing costs. Using 5 years of listings data scraped from Airbnb, the researchers show that a 1% increase in Airbnb listings is causally associated with a 0.018% increase in rental rates and a 0.026% increase in house prices. In aggregate, the growth in home-sharing through Airbnb can explain 0.59% in annual rent growth and 0.82% in annual price growth.
Two additional results shed light on the underlying economics of home-sharing. First, the researchers show that the effect of Airbnb on rents and prices is decreasing in the owner-occupancy rate of the neighborhood. This is because non-owner-occupiers are the homeowners who are on the margin of switching from supplying the long-term rental market to the short-term rental market. Owner-occupiers are always in the long-term market (they rent to themselves), and primarily use Airbnb to rent out excess capacity, but this action does not reduce supply in the long-term market. Second, the researchers show that the effect of Airbnb on house prices is generally stronger than the effect on rents. This is because the effect of home-sharing on prices happens through two channels. First, prices increase because the increase in rents gets capitalized into the house price. Second, prices increase because home-sharing increases the ability for homeowners to utilize their excess capcacity, such as unused rooms, or time in which they are away from the house on vacation.
The results of the paper should help inform policymakers as they debate how to best regulate home-sharing. For example, the results suggest that concerns about Airbnb raising housing costs for local residents are not unfounded. However, the results also suggest that Airbnb improves the efficient use of housing by helping homeowners better utilize their excess housing capacity. One policy implication would be that home-sharing regulations should at most seek to limit the reallocation of housing stock from the long-term to the short-term markets, but it should not discourage the sharing of primary residences by owner-occupiers.
Steven Laub
Like many of our Bruins, former alumni Steven Laub embodies the traits of passion, determination, and resilience. These are the very same traits that shaped his illustrious career as a former consultant and top executive at numerous public semiconductor companies such as Lattice Semiconductor, Silicon Image and until recently, the Atmel Corporation where Laub served as President and CEO for a decade. Unlike many UCLA graduates, what makes Laub’s story unique was his background and unusual foray into the technology industry.
Upon graduating UCLA in 1980 with a B.A. in Economics, a subject that captivated him since junior high, Laub attended the Harvard Law School to pursue his initial career interest in the field of law. It took him two years, however, to realize that this was not his true calling and immediately after graduating, he switched gears and began to work as a management consultant for Bain and Company. When pressed why, Laub recalled how management consulting allowed him to gain exposure to a multitude of industries while picking up vital skills along the way, which he best described as “almost like acquiring an MBA education without going to business school”.
Without question, this exposure certainly paid off. After having several technology companies including a few semiconductor firms as consulting clients, he was offered a job with Lattice Semiconductor Corporation. The young consultant initially turned down the offer, only to later be offered the position as Vice President and General Manager at the same company. He knew if there was ever an opportunity to get involved in the tech business world, this was it.
Although it is highly unusual for someone with a non-technical background to head a technology-based firm, this notion never impeded Steven Laub. When his CEO sought to hire him, the company’s board of directors questioned why a man with a legal background and no prior engineering or technological experience was a good fit for the role of a VP at a semiconductor company. His CEO replied by describing Laub as highly intelligent, ambitious and willing to work very hard – an identity that Laub believes fits several of our Bruins. He believes that individuals who are passionate and determined to work hard will attract mentors and be given the opportunity to do more. Working to forge these relationships are of the utmost importance.
That said, even with valiance and an excellent work ethic, his transition into the industry was not one of ease. Despite not being acclimatized to the technology sector, early on he was advised to spend two thirds of his first two years at the company in the engineering division. He attributes his sudden immersion in the engineering department as a key part in overcoming the steep learning curve ahead of him. Although this may seem radical, Laub believes that this is one of the most efficient ways to assimilate into new career environments; by working in the departments or roles that push you out of your comfort zone and force you to think.
The qualities that Laub possesses which have enabled him to achieve his tremendous degree of accomplishments are similar to those he looks for in hiring individuals. Aside from being effective team players, Laub looks for people that are capable of putting the needs and goals of the firm ahead of themselves. Most importantly, high integrity and character are absolutely necessary to succeed at every company he has led. He contends that truly passionate individuals who are hungry to accomplish goals for the greater good will leave a mark.
Given his success, it is easy to see that Laub was comfortable in not allowing his degree to solely determine the trajectory of his career. However, several students face the overwhelming concern of how important their major is in determining their career opportunities. Laub contends that most students either enter college not knowing what major to pursue or they pursue a major in order to break into an industry they envision themselves working in. He says that while picking a best fit major is important, it is by no means the only determinant of your future career – especially since many people, including himself, end up changing their careers at some point.
Due to the manner in which UCLA influenced his career, Laub would not have done much differently. He received what he believes to be an outstanding education at UCLA under the tutelage of notable professors like John Riley of the UCLA Economics Department. Despite an engaging and rewarding academic experience, Laub looks back and believes that he could have involved himself more in the breadth of courses and events UCLA offered, especially in the theatre and arts. Although back then he had little desire for those areas, he reflects upon it conceding that with age grows an appreciation for such forms of creative expression.
These days, what initially motivated Mr. Laub to wake up every morning remains the same. He lives for challenge, the opportunity to learn and the chance to give back to his communities. While the stresses of running firms and managing people can seem unappealing to some, these are aspects he thoroughly enjoys. Far from having retired, he continues to challenge himself and to advise others. Laub currently serves on the board of a semiconductor company, the advisory board of a tech-focused private equity company and the board of a public charter high school in the Bay Area. He is now at a point in his life where he can focus on giving back and aiding others with his wisdom.
Mr. Laub leaves us with advice regarding tackling change – a topic all too familiar for him. Most people will graduate, find a career, realize it is not their passion and will have to confront the possibility of a change. Mr. Laub adds that by taking ownership of your actions and finding the courage to make life-changing decisions, you open yourself to a potentially better path. One might have a steady income, a marriage to sustain and a family to support, so change will not come easily. However, the Bruin champions the belief that “having the courage to live the life you desire” will make the ultimate difference.
by Adithya Kumar and Marcella Pensamiento
Rosa Matzkin
UCLA professor of economics Rosa Matzkin is among 213 individuals from a wide range of disciplines and professions to be elected as members of the American Academy of Arts and Sciences in 2018.
Founded in 1780, the academy honors exceptional scholars, leaders, artists and innovators and engages them in sharing knowledge and addressing challenges facing the world.
Matzkin is the Charles E. Davidson Professor of Economics. Her research has been aimed at creating a tight connection between econometrics and economic theory. Econometrics is a field that harnesses mathematics and statistical methods to quantify economic phenomena into empirical data, turning theoretical models into useful tools for economic policymaking.
Her methods can be used to test whether data is consistent with any particular model, to estimate unobservable functions and distributions, and to predict behavior and economic outcomes when economic structures change.
Her work has been published in Econometrica, Journal of the American Statistical Association, Journal of Economic Theory and Journal of Econometrics, among others.
Matzkin, who is a fellow of the Econometric Society, was a member of the executive committees of the American Economic Association and of the Econometric Society. Matzkin was also editor of Quantitative Economics, co-editor of the research monograph series of the Econometric Society and associate editor of Econometrica and Journal of Econometrics. She is currently committee member for the Annual Review of Economics
Before joining UCLA, Matzkin held positions at Northwestern and Yale.
“This class of 2018 is a testament to the academy’s ability to both uphold our 238-year commitment to honor exceptional individuals and to recognize new expertise,” said Nancy Andrews, the chair of the board of the academy. “John Adams, James Bowdoin and other founders did not imagine climatology, econometrics, gene regulation, nanostructures or Netflix. They did, however, have a vision that the academy would be dedicated to new knowledge — and these new members help us achieve that goal.”
The new class will be inducted at a ceremony in October 2018 in Cambridge, Massachusetts at which the newly elected members will sign the Book of Members, and their signatures will be added to the academy members who came before them, including Benjamin Franklin (1781) and Alexander Hamilton (elected 1791) in the 18th century; Ralph Waldo Emerson, (1864), Maria Mitchell (1848), and Charles Darwin (1874) in the 19th; and Albert Einstein (1924), Robert Frost (1931), Margaret Mead (1948), Milton Friedman (1959) and Martin Luther King Jr. (1966) in the 20th.
