College of Arts and Sciences

Department of Economics

Faculty Research

This page is just a sampling of research that is going on in the Department of Economics. Details of each faculty member's research can be viewed on their websites.

"Just ahead of the Joneses" may be the new catchphrase for capturing how Americans want to compare economically with their neighbors, according to Sara Solnick, associate professor of economics. Looking at the social and behavioral factors that influence economics is an interesting marriage between her undergraduate work in psychology at Harvard and her current role as an economist.

Solnick's work remains so provocative that a paper she published in 1998 was cited ten years later in both The New York Times and Slate. That 1998 paper was based on a survey using a "two-world scenario," one in which you have more than everybody and another in which you and everyone else has more but you have relatively less than others. Responses varied depending on the item in question and its visibility to others.

"We found that it varied for the things that we asked about. For some things, people really cared about being ahead, like attractiveness. For other things, people were extremely non-positional - particularly for the 'bads,' like being yelled at by your supervisor," says Solnick.

A recent second survey by Solnick and her colleagues looked at two visible goods and offered people the chance to choose and change where they wanted to be in the spectrum.

"For all the goods, the spending worked the way we expected - when people were told that other people were spending half, they decreased their spending. And when people were told other people spent twice as much, they raised spending," says Solnick. "For satisfaction, after people were told that their spending was either way ahead or way behind, everybody's satisfaction went down. People don't like to be out of step, even if they're spending more."

Does Solnick think there is a plausible way to change behavior? "No... But I think people would be happier if they could let go of some of those behaviors. When people found out they were either way ahead or behind, their satisfaction went down," she says. "They were okay with what they were doing until we told them they were off. So I think it is better to just tend your own garden. But it's hard to do."

Base on interview with Lee Ann Cox in UVM Today.

Structures of Change in the Mechanical Age--Ross Thomson's research concentrates principally on understanding the dynamics of technological change in the United States. His particular focus is on the distribution of knowledge within and across industries, and how knowledge spread where it could be used to solve technological problems. Structures of Change in the Mechanical Age: Technological Innovation in the United States, 1790-1865, published in 2009 by Johns Hopkins University Press, explores these questions from 1790 through the Civil War. He is currently studying these issues in the period from 1865 through 1929.

Structure of Change in the Mechanical Age takes on the classic question of explaining capitalist development in the U.S. context by asking how, when no industry experienced ongoing technological change in 1790, many industries came to evolve technologically by 1865. The project started with the recognition that if technological change in each industry came to depend on spillovers from others, then such spillovers could propel innovation in the whole economy. Thomson conjectured that three groups whose occupations provided knowledge relevant to many industries were especially important in realizing these spillovers, groups he came to call technological centers. Machinists were at the core of mechanical spillovers, engineers were central to spillovers in electricity and other applied science domains, and patent agents, patent examiners, and draftsmen held knowledge relevant to all industries.

The book attempts to answer the question of how ongoing technological change originated across much of the economy by 1865. Thomson argues that such change originated in a two-stage process. In the first, innovation began within particular industries without the benefit of well-developed machinists' and engineering capabilities that could be transferred from other sectors. He explores how and with what limits innovation could proceed in such a setting. In the second stage, machinery and applied science capabilities were coming into being and could affect multiple industries. He examines if and how they shaped development where innovation had already begun and in sectors where it had not. An intersecting problem was the source of knowledge to initiate and sustain ongoing innovation. did it come, as the book formulates the issue, from abroad, drawn from Europe or elsewhere, from "above," taken from outside the commodity-producing economy through the action of governmental bodies or scientific communities, or from "below," from firms, occupations, and other economic entities? And did the significance of these sources change as development proceeded? At issue, among other things, is the elite or commonplace character of innovation.

In whole, the book shows how a dense web of knowledge-diffusing institutions - including occupations, capital-goods firms, patents agents, educational organizations, scientific societies, publishers, the Patent Office, the Ordnance Department, and other government agencies-originated and fostered technological change within and across industries. They formed an integrated innovation system capable of sustaining technological change. Thomson argues that dynamics occurring within particular industries, complemented by the development of knowledge and institutions from above, gave rise to machinists, engineers, patent agents, patent examiners, and others with widely applicable knowledge, who in turn formed the core of the U.S. innovation system. The process began in a number of industries with substantial craft skills, augmented by relatively independent dynamics of civil engineering, education, mechanics' institutions and the patent system. Over time these once-distinct dynamics became more interlinked. In the decade from 1826 through 1836, this integration process had real successes in spreading machinery within and among sectors, bringing science to industry, and deepening the training of technological occupations. Partly as a result of this integration, innovation precesses after 1835 were wider, more mutually informing, and capable of supporting major new technologies. By the Civil War, economic institutions that transmitted knowledge within and between industries sustained innovation across wide ranges of the economy.

Thomson's current research examines how innovation evolved through 1929. The first paper in that project, entitled "Understanding Machine Tool Development in the United States: Uniting Economic and Business History," examines how the "machines that made machines" changed and spread in the Second Industrial Revolution. Their development can be understood in quite different ways. Economic historians often look at whole industries and at patents as quantitative measures of invention. Business historians frequently use firm records to relate inventions to the strategy, organization, and growth of the firm. I argue that both approaches are needed to understand how machine tools originated and spread, and that an evolutionary idea of firms and industries can integrate these approaches. Many types of firms produced, invented, and sold a wide range of machine tools, and new methods or markets further differentiated these firms. Some particular firms and some types of firms ascended, but they never dominated and always found competition from new and different kinds of firms. To understand this process, patents and industry sources depict innovation as a whole. Firm records for the Brown and Sharpe Manufacturing Company and studies of ten other innovating firms demonstrate various ways in which firms made use of innovations and, in the process, educated others who would continue to innovate.

The project will continue with studies of technological convergence and mechanization, the telegraph and electrification, the roles of machinists, engineers, and patent agents in transmitting knowledge within and among industries, and the geographic flows of technological knowledge within the United States and between the United States and other parts of the world. In the longer term, Thomson intends to complete a sequel to Structures of Change in the Mechanical Age.

Environmental Economics--Donna Ramirez-Harrington's papers analyze the effectiveness of environmental policy instruments in improving environmental performance of firms, with emphasis on the more contemporary types of instruments which rely on environmental management systems (EMS), voluntary technology adoption, and information disclosure mechanisms. While environmental regulations have traditionally relied on prescriptive top-down approaches, her research work focuses on bottom-up decentralized approaches that rely on pressures from consumers, investors and the general public, which allow firms to behave strategically in various markets to convey signals of environmental responsibility. This area of research is very active and dynamic as contemporary approaches are increasingly being adopted for public policy. Her work is among the first to explore the effectiveness of specific instruments on different measures of environmental performance using econometrics and facility specific data.

One area of her research explores the link between EMS adoption, particularly Total Quality Environmental Management (TQEM), and adoption of pollution prevention technologies, and the consequent impact on toxic emissions. She explores the motivations for TQEM adoption, its impact on pollution prevention, the effectiveness of different state level policy instruments in promoting pollution prevention, and the effectiveness of pollution prevention technologies in reducing toxic emissions. Her results show that TQEM is effective but its impact is limited to specific types of pollution prevention practices, suggesting that other policy tools are necessary. She also finds that the adoption of pollution prevention activities is more common in states with information disclosures systems and EMS programs and that the effect of pollution prevention on emissions is rather weak, short-term and much stronger for onsite releases compared to offsite releases, and is limited to very specific types of pollution prevention practices. These findings bring to question the current emphasis of the U.S. Environmental Protection Agency on pollution prevention as the preferred method of pollution reduction, as stipulated under the National Pollution Prevention Act of 1990, and suggest that other technologies need to be promoted or mandated to achieve more significant reductions in toxic emissions. Her future plans include: an assessment of the efficacy of state level programs on different measures of environmental performance in the U.S.

Another area of her research focuses on information disclosure mechanisms for climate change. Due to an absence of a formal regulatory framework for climate change mitigation, many countries, including Canada, are instituting greenhouse gas registries to encourage firms to report their emissions and mitigation activities. However, the efficacy of such approaches is yet to be investigated. She explores the specific motivations for voluntarily participating in such registries and whether participants do indeed have lower greenhouse gas emissions than non-participants. She finds that pressure from investors and environmental regulators, but not consumers, drive firms to participate in such registries and that experience with other voluntary programs are the strongest determinants of involvement. However, greenhouse gas emissions do not appear to be different between participants and on-participants.

Last modified April 10 2013 06:26 AM

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