Blind spots in policy analysis: What economics doesn't say about energy use

This article describes the difficulties of reducing analysis of energy use to an application of economic theory. It shows how economic concepts of behavior direct attention selectively to some important determinants of consumer behavior and away from others; how available economic accounts of short-term change in energy use, investment in energy efficiency, and the dynamics of investment limit understanding and narrow analysts' vision; how promising policy options are overlooked as a result; and how concepts and knowledge from the noneconomic behavioral sciences can compensate. Two strategies are discussed for improving analysis. Using economic theory to guide the improvement of existing models can help, conceptual blind spots will remain. A problem-oriented approach drawing on concepts and methods from across the behavioral sciences can avoid the blind spots, but cannot be systematic. Analysis can be improved by using both approaches in concert; some implications of a combined strategy are sketched.     

Collective action in small-scale mushroom production in Swaziland: does organisational form matter?

While substantial literature is available on the determinants of small-scale farmers’ participation in collective action, and the welfare impacts of producing and/or marketing collectively, studies on the likely implications of organisational form on producers’ collective behaviour remain scant. This article attempts to address this knowledge gap by using an example of different forms of small-scale mushroom-producing groups in Swaziland. Given the importance of collective action in sub-Saharan Africa, the overall results of this article provide valuable insights into alternative means of coordinating commercial small-scale agricultural activities, which can improve producers’ ultimate benefits while reducing the likelihood of internal free-riding.     

Affordability and mortgage design: Permanent buydowns and buyups

Abstract

A simulation model that mirrors the actual practices of lenders in setting qualification requirements for mortgage loans is used to assess the impact of permanent buydowns and buyups on the maximum sale price that buyers can afford. Buydowns are reductions in the coupon rate traded off against higher discount points; buyups are the reverse. Although buydowns have little effect on afford ability, buyups can have significant effects. Their potential is largely unrealized, however, because of the call risk to lenders of loans carrying premiums. The authors propose a “discount recovery” provision, which would be similar to a prepayment penalty except that the payment upon prepayment would be tied to the amount of the discount foregone by the lender. This would protect lenders against call risk, giving them every reason to offer buyups as a way of expanding demand.     

Performance Funding in Federal Agencies: A Case Study of a Federal Job Training Program

Our case study highlights important details that enter into developing performance contingent budgeting schemes—details that do not emerge in more general discussions of the subject—and shows how the handling of these details can be crucial to these schemes' success. We study a federal job training program that gives state and local decision makers discretion over the program's operation, but through performance funding holds them accountable for achieving specific objectives. We find that states' modifications to the scheme's construction produced over time highly individualized performance funding schemes that likely varied in their effectiveness.