On‐Bill Financing Programs to Support Low‐Carbon Energy Technologies: An Agent‐Oriented Assessment

On‐bill financing (OBF) schemes have been welcomed as innovative mechanisms for encouraging the adoption of low‐carbon energy technologies. Yet while the potential effects of these schemes have received growing attention, less is known about their actual performance. Departing from New Institutional Economics and insights from Behavioral Economics, this theory‐driven assessment examines the How$mart^® program in Kansas (United States) and the Green Deal in the United Kingdom. The study identifies the mechanisms designed to trigger behavioral change and technology adoption. We focus on market agents, and related market failures and behavioral anomalies that often prevent energy efficiency improvements. The paper adds to our theoretical and empirical understanding of public and utility‐driven OBF programs applied to the residential sector. Our findings suggest that simple, carefully designed on‐bill programs, where the financing of efficient technologies takes the form of a service rather than a loan, are more effective for the diffusion of low‐carbon energy technology and the reduction of transaction costs. At the same time, on bill‐financing schemes challenge the core business of utilities, and given the complexities and dynamics of energy efficiency markets and energy use, other policy interventions are needed.     

Location‐Efficient Mortgages: Is the Rationale Sound?

Location efficient mortgage (LEM) programs are an increasingly popular approach to combating urban sprawl. LEMs allow families who want to live in densely populated, transit‐rich communities to obtain a larger mortgage with a smaller down payment than traditional underwriting guidelines allow. LEMs are premised on the proposition that homeowners in such “location‐efficient” areas can safely be allowed to breach underwriting guidelines designed to prevent mortgage default because they have lower than average automobile‐related transportation expenses and more income available for mortgage payments. This paper employs records of more than 8000 FHA‐insured mortgages matched with data on various measures of location efficiency to test this proposition. The results suggest that it does not hold and that LEMs—like other low‐down‐payment mortgage programs—will raise mortgage default rates. This cost must be weighed against any potential anti‐sprawl benefits LEMs may have. © 2001 by the Association for Public Policy Analysis and Management.     

Correlates of rigorous and credible transnational governance: A cross‐sectoral analysis of best practice compliance in eco‐labeling

The number of eco‐labeling schemes is rising dramatically, yet the rigor and credibility of such schemes remains uneven. Whereas some eco‐labeling organizations (ELOs) comply with best practice guidelines designed to increase the credibility of their standards through attention to good operating principles, such as transparency and impartiality, others do not. Within this article, I attempt to explain this variation through multivariate regression analysis of an original cross‐sectoral dataset of transnational ELO policies and practices. I find compelling evidence to suggest that ELOs with environmental non‐governmental organization (ENGO) partners, nonprofit structures, or broad transnational reach are most likely to comply with best practices. I also find that private ELOs are more likely to disregard best practices than public ones. Conversely, I find little evidence that levels of industry funding or sector‐specific competition dynamics affect best practice compliance. This study contributes new data, a new method of comparison, and new findings to the growing literature on transnational governance.     

Does Universal Coverage Improve Health? The Massachusetts Experience

In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national reform. Using data from the Behavioral Risk Factor Surveillance System, we provide evidence that health care reform in Massachusetts led to better overall self‐assessed health. Various robustness checks and placebo tests support a causal interpretation of the results. We also document improvements in several determinants of overall health: physical health, mental health, functional limitations, joint disorders, and body mass index. Next, we show that the effects on overall health were strongest among those with low incomes, nonwhites, near‐elderly adults, and women. Finally, we use the reform to instrument for health insurance and estimate a sizeable impact of coverage on health.     

Low-Income Issues in Electricity Restructuring

Lower prices. New technologies. More choices. These are benefits that competition through electric industry restructuring was supposed to bring customers. Thus far, results have been disappointing, and harmful to the most vulnerable–low‐income people. Restructuring is no longer under active consideration in any state that has not already enacted it. In several states, restructuring has been reversed. This article focuses on the few states that have retained electric industry restructuring, providing a menu of necessary protections, strategies for putting them into place, and supporting arguments to keep them there. However, low‐income protections are appropriate for anactment in all places because vulnerable low‐income families live in states with both restructured and traditional electricity regulation.     

Decentralisation and poverty: conceptual framework and application to Uganda

In order to shed further light on the discussion about decentralisation‐poverty linkages in developing countries, this article introduces a conceptual framework for the relationship between decentralisation and poverty. The framework takes the form of an optimal scenario and indicates potential ways for an impact of decentralisation on poverty. Three different but interrelated channels are identified. Decentralisation is considered to affect poverty through providing opportunities for previously excluded people to participate in public decision‐making, through increasing efficiency in the provision of local public services due to an informational advantage of local governments over the central government and through granting autonomy to geographically separable conflict groups and entitling local bodies to resolve local‐level conflicts. Based on the experience with decentralisation in Uganda, it is shown that these channels are often not fully realised in practice. Different reasons are singled out for the Ugandan case, among them low levels of information about local government affairs, limited human capital and financial resources, restricted local autonomy, corruption and patronage, high administrative costs related with decentralisation and low downward accountability. Copyright © 2007 John Wiley & Sons, Ltd.     

The Electoral Sweet Spot: Low‐Magnitude Proportional Electoral Systems

Can electoral rules be designed to achieve political ideals such as accurate representation of voter preferences and accountable governments? The academic literature commonly divides electoral systems into two types, majoritarian and proportional, and implies a straightforward trade‐off by which having more of an ideal that a majoritarian system provides means giving up an equal measure of what proportional representation (PR) delivers. We posit that these trade‐offs are better characterized as nonlinear and that one can gain most of the advantages attributed to PR, while sacrificing less of those attributed to majoritarian elections, by maintaining district magnitudes in the low to moderate range. We test this intuition against data from 609 elections in 81 countries between 1945 and 2006. Electoral systems that use low‐magnitude multimember districts produce disproportionality indices almost on par with those of pure PR systems while limiting party system fragmentation and producing simpler government coalitions.     

Connecting social and environmental policy in Australia: Collateral gains or collateral damage?

Climate change research relating to “co‐benefits” suggests that the facilitation of social‐welfare outcomes through environmental policy offers a powerful means of incentivising climate change action. Concerns about social‐welfare, however, are often used to undermine climate change policies, typically through political claims that low‐to‐middle‐income households should not shoulder the costs of greater policy alignment between social and environmental objectives. Integrating the social into the environmental can therefore, on the one hand, lead to “co‐benefits” as each agenda promotes the other in political discourse, or alternatively to collateral damage if the policy objectives are framed as incompatible. This article explores both scenarios through two case studies of energy policy in Australia. The findings show that social‐welfare concerns can be a powerful discursive tool with the potential to facilitate political consensus, but also that this potential is not being fully realised, primarily because environmental concerns suffer when attempts are made to integrate the two areas discursively.     

THE PERSISTENCE OF POVERTY IN THE CONTEXT OF FINANCIAL INSTABILITY: A BEHAVIORAL PERSPECTIVE

We review recent findings regarding the psychology of decisionmaking in contexts of poverty, and consider their application to public policy. Of particular interest are the oft‐neglected psychological and behavioral consequences of economic scarcity coupled with financial instability. The novel framework highlights the psychological costs of low and unstable incomes, and how these can transform small and momentary financial hurdles into long‐lasting poverty traps. Financial instability, we suggest, not only has obvious economic ramifications for well‐being, but it also creates the need for constant focus and attention, and can distract from the very opportunities otherwise designed to alleviate the effects of poverty. We describe a variety of public policy strategies that emerge from this perspective that are not readily apparent in conventional theories that permeate the design of social programs.     

A Modest Defense of Politically Engaged Best Practices: The Case of Legislative Strengthening

Critics of donor‐funded democracy promotion claim that these programs are frequently designed to reproduce social and governmental models drawn from developed countries and imposed on the recipient country without regard to local conditions, with experts parachuted in to provide guidance based on international “best practices.” The critique focuses on first‐generation development with a neutral, technical focus, whereas democracy promotion has evolved toward a more politically engaged approach to programming—what we label as second‐generation and, more recently, third‐generation development practices. We apply this distinction to the area of legislative strengthening (LS) by describing its history from the post–World War II period to the present and provide examples of LS projects to support the argument. The challenge is to combine valuable insights from best practices from decades of experience while adapting them through political engagement with local partners and with bilateral donors.     

Over‐commitment and backsliding in international trade

‘International commitments pay’ could be the mantra of the current literature on international organisations: tying their hands at the international level is a means for governments to push through politically costly, but ultimately welfare‐enhancing reforms. It is argued in this article that this logic has a limit, which can be empirically observed. Past a given point, further depth of integration increases odds of backsliding. This belief is tested in the context of accession to an institution whose rules have been heavily scrutinised: the World Trade Organization (WTO). Countries with low rule of law are imposed a risk premium in the form of demands for deeper concessions, making ‘over‐committing’ possible. This relationship is used to assess the extent to which deeper commitments lead to backsliding. Industry‐level analysis supports these beliefs: deep commitments lead to increased odds of backtracking through a range of legal and extra‐legal mechanisms. Ambitious international commitments can backfire.     

Emerging regional security co‐operation in Europe and the Asia Pacific

European and Asian‐Pacific policymakers need to shift from policies based on competition to those based on co‐operation. If European and Asian‐Pacific states are successful in implementing and strengthening new security institutions on the basis of co‐operative behaviour designed to realize absolute gains, then conflict in these two regions may decrease and regional hegemonic competition may not materialize. It is argued that three key factors will determine the viability of any regional security framework. These are reciprocity in security relations, great power support for the security arrangements and reassurance. In this study's comparative evaluation of Europe and the Asia Pacific, the pursuit of absolute gains through a security regime appears to be a better alternative to relative gains strategies which serve to intensify security dilemmas.

In Europe, rules and norms for state behaviour are being extended throughout the continent through the gradual extension of the West European security institutions to Central and East European states. The NACC and the PfP offer to combine the stability of the North Atlantic Alliance with the principles of co‐operative security at a pan‐European level. In the Asia Pacific, the ASEAN Regional Forum represents a positive initial step towards greater security co‐operation among the ASEAN states and their neighbours, and the United States and China need to give the ARF their full support. The difference between the ARF and NACC and the PfP is that the former does not have a history of successful military collaboration behind it, nor a developed security agenda or structure similar to that now supporting the latter two.     

Aviation Security,Risk Assessment,and Risk Aversion for Public Decisionmaking

This paper estimates risk reductions for each layer of security designed to prevent commercial passenger airliners from being commandeered by terrorists, kept under control for some time, and then crashed into specific targets. Probabilistic methods are used to characterize the uncertainty of rates of deterrence, detection, and disruption, as well as losses. Since homeland security decisionmakers tend to be risk‐averse because of the catastrophic or dire nature of the hazard or event, utility theory and Monte Carlo simulation methods are used to propagate uncertainties in calculations of net present value, expected utility, and probabilities of net benefit. We employ a “break‐even” cost‐benefit analysis to determine the minimum probability of an otherwise successful attack that is required for the benefit of security measures to equal their cost. In this context, we examine specific policy options: including Improvised Physical Secondary Barriers (IPSBs) in the array of aircraft security measures, including the Federal Air Marshal Service (FAMS), and including them both. Attack probabilities need to exceed 260 percent or 2.6 attacks per year to be 90 percent sure that FAMS is cost‐effective, whereas IPSBs have more than 90 percent chance of being cost‐effective even if attack probabilities are as low as 6 percent per year. A risk‐neutral analysis finds a policy option of adding IPSBs but not FAMS to the other measures to be preferred for all attack probabilities. However, a very risk‐averse decisionmaker is 48 percent likely to prefer to retain FAMS even if the attack probability is as low as 1 percent per year—a level of risk aversion exhibited by few, if any, government agencies. Overall, it seems that, even in an analysis that biases the consideration toward the opposite conclusion, far too much may currently be spent on security measures to address the problem of airline hijacking, and many spending reductions could likely be made with little or no consequent reduction of security.     

Do Alternative Base Periods Increase Unemployment Insurance Receipt Among Low‐Educated Unemployed Workers?

Unemployment Insurance (UI) is the major social insurance program that protects against lost earnings resulting from involuntary unemployment. Existing literature finds that low‐earning unemployed workers experience difficulty accessing UI benefits. The most prominent policy reform designed to increase rates of monetary eligibility, and thus UI receipt, among these unemployed workers is the Alternative Base Period (ABP). In 2009, the American Recovery and Reinvestment Act sought to increase use of the ABP, making ABP adoption a necessary precondition for states to receive their share of the $7 billion targeted at UI programs. By January 2013, 40 states and the District of Columbia had adopted the ABP despite the absence of an evaluation of ABP efficacy using nationally representative data. This study analyzes Current Population Survey data from 1987 to 2011 to assess the efficacy of the ABP in increasing UI receipt among low‐educated unemployed workers. We used a natural‐experiment design to capture the combined behavioral and mechanical effects of the policy change. We found no association between state‐level ABP adoption and individual UI receipt for all unemployed workers. However, among part‐time unemployed workers with less than a high school degree, adoption of the ABP was associated with a 2.8 percentage point increase in the probability of UI receipt.     

Comment on Donald A. Krueckeberg's “The Lessons of John Locke or Hernando de Soto: What if Your Dreams Come True?”

Abstract

Krueckeberg's critique of de Soto's paean to homeownership in Third World countries is well taken; his use of John Locke's rationale for private ownership provides support for the critique. But then Krueckeberg puts forward a proposal to extend homeowner‐ship benefits through a National Homestead Trust, with Individual Development Accounts or a tax like Social Security, to help renters accumulate a down payment. Abandoning a broader approach, Krueckeberg reverts to supporting homeownership as a central tenet of U.S. housing policy and wants to extend its real and perceived benefits to low‐income households. He recognizes the shortcomings of U.S. property law and tax policy that may leave low‐income owners with threats to shelter security.

To provide security for low‐income residents, fundamental changes are required. Attention should be paid to protection from evictions and from foreclosure; income/employment support; guarantee of services from utilities to schools; and, as needed, direct subsidies for housing.     

Housing needs and effective policies in high‐tech metropolitan economies

Abstract

What are the most effective ways to provide low‐income housing to those left behind in new economy housing markets? Do winners and losers in high‐tech competition require federal housing strategies geared to metropolitan differences? This article examines 45 large metropolitan areas grouped along a high‐tech spectrum to see who is dis‐advantaged and to deduce effective local low‐income housing strategies from market characteristics.

Finding affordable housing was, on average, more difficult for low‐income renters and owners in high‐tech economies in the 1990s. Nonetheless, high‐tech metropolitan economies, like other local/regional markets, vary greatly. Sharp differences among and within metropolitan markets make it essential that federal strategies allow local policies to respond to local conditions. To most effectively provide low‐income housing to those left behind in all markets, federal policy should target sufficient resources to severe housing needs through many more vouchers and programs that permit and encourage effective local choices.     

Understanding the neighborhood: From residents’ perceptions and needs to action

Abstract

Motivated by a renewed interest in homeownership, the U.S. Department of Housing and Urban Development developed techniques to study patterns of ownership. A baseline model is used to forecast homeownership in 2000 and then extended to illustrate how policy initiatives designed to overcome race‐and income‐based barriers to ownership could affect the national homeownership rate and the rates of ownership by specific subgroups. Another technique uses American Housing Survey data to estimate how these initiatives could affect household location and the choice of housing type.

This article clearly demonstrates that even limited success in reducing race‐and income‐based disparities will result in a significant increase in the national homeownership rate and dramatic increases for subgroups, such as minorities, young households, and low‐income households, that have low rates of homeownership. Thus, these techniques affirm the importance of focusing on access and affordability.     

Understanding Informal Payments in the Public Sector: Theory and Evidence from Nineteenth‐century Sweden

Informal payments for public services such as health care are a major problem in many countries around the world. Explanations for their prevalence include cultural factors, lack of enforcement as well as insufficient funds and low wages for public employees. This paper analyzes the phenomenon from an economic perspective, arguing that they are a logical consequence of low wages in the public sector. However, informal payments from citizens to public employees for services may be preferable to a situation in which no services are delivered. Given that the informal payments thus can be seen to have a functional element, and that reforms aimed at eliminating them largely have been unsuccessful, formalization and legalization rather than increased enforcement may be a way forward. Many government employees in nineteenth‐century Sweden received their salary through semi‐informal payments (‘sportler’) from citizens. A case study reveals that politicians at the time reasoned along the lines of what could be expected from economic theory: although undesirable and problematic, sportler were necessary to finance the wages of the government employees, given the lack of tax revenue and monitoring capabilities. In contrast to previous research, this article argues that reform efforts were aimed at pragmatically improving the existing system through formalization and regulation rather than simply prohibiting the informal payments.     

Should Love Conquer Evidence in Policy‐Making? Challenges in Implementing Random Drug‐Testing of Welfare Recipients in Australia

The Australian Government announced in its 2017 budget that it would trial random drug‐testing of recipients of the Newstart Allowance and Youth Allowance in three locations from January 2018. The Prime Minister described it as a policy ‘based on love’, but that sentiment is hard to find in the policy rhetoric, which situates it in a suite of measures designed to ‘ensure taxpayers’ money is not being used to fund drug addictions which are creating significant barriers to employment'. The policy may make it harder for people to buy drugs with their welfare payments, through income management, but research suggests it will not help them overcome addiction and its costs will exceed any savings it generates in income support. Furthermore, the policy perpetuates ‘medicalisation’ of the problem of long‐term unemployment by suggesting it stems from deficiencies in individuals that can be ‘treated’, despite evidence to the contrary. Finally, the policy claims to close loopholes in enforcement of mutual obligation requirements without addressing structural weaknesses in the welfare‐to‐work model. Each of these issues will pose challenges for those charged with implementing the policy.     

Preserving the low‐income housing stock: What nonprofit organizations can do today and tomorrow

Abstract

In recent years, nonprofit organizations involved in housing have multiplied in number and expanded the size and scope of their activities in low‐income housing preservation. Newly available data show that nonprofits now constitute a significant sector in the upgrading, maintenance, and management of affordable housing and continue to focus their efforts on serving those most in need. Analysis also indicates that the potential exists for significant further expansion of their activities in the short and medium term. While nonprofits cannot by themselves meet the enormous needs for preserving low‐income housing, they can be major contributors, particularly if carefully designed expansion of federal support for projects and operations comes to complement their current resources.