I have moved my blog over to Substack (and I've lost many readers). Please join me there. Here is a recent column. The Wall Street Journal has published an important piece about how the high heat is reducing economic activity in Houston. The piece has a pessimistic tone that the heat melts the city’s infrastructure and shaves off economic activity as people don’t want to go outside. When microeconomists study consumer expenditure dynamics as people buy cars, go out to dinner and buy groceries. During hot spells, people are less likely to go out for dinner or to play multiple rounds of golf. A ..read more

The New Economic Geography of WFH Matthew E. Kahn Over the last three years, companies from all over the world have learned valuable information about how their firm’s productivity and worker satisfaction is affected when workers can engage in Work from Home (WFH) on at least a part-time basis. Each firm faces fundamental tradeoffs in not requiring workers to return full time to the office. On the one hand, WFH accommodates worker lifestyles and responsibilities at home. WFH workers gain from commuting less often and some may choose to live further from their place of work because they commute ..read more

Climate change adaptation refers to our individual and collective ability to cope with Mother Nature’s more intense weather punches in terms of extreme heat, drought, fire, flood and many other place based risks. My microeconomics research, as sketched out in my 2010 Climatopolis book and my 2021 Adapting to Climate Change books, argues that capitalism accelerates our ability to adapt as market price signals encourage substitution and innovation. Whether government policy complements the private sector muffles the private sector’s efforts continues to be a major research topic. In my 2010 Clim ..read more

This has been a very hot summer.  For every person on the planet, what is her willingness to pay to avoid this hot summer?  So, on a day when it s 93 degrees on average --- how much is Sally in Seattle willing to pay for this day to have been 78 degrees instead? In a "make versus buy" economy, one can either pay God to not face the 93 degree day in Seattle or one can use a suite of adaptation strategies to cope with the high heat.  Basic economic logic teaches us that one's willingness to pay to avoid the heat is bounded by what it would cost you to adapt to the heat.  &nbs ..read more

Is face to face interaction over-rated?   I am not talking about participating in the service economy (i.e getting a haircut), romance, friends and family interaction. I am talking about workplace face to face interactions and the vaunted "Water Cooler" (WC).   The cliche WC story has focused on serendipity and spontaneity that occurs when people casually chat about this and that.   This is not "directed search".   POINT #1;   Pessimists claim that the rise of WFH-HYBRID work will tax the Water Cooler such that organizations will become less ..read more

Millions of American workers engaged in Work from Home (WFH) during the pandemic.   WFH helped us to adapt to the risk of disease contagion.  Going forward, WFH will also helps us to adapt to the rising climate risks we now face.   Given that global greenhouse gas emissions are likely to continue to rise as the world’s population and per-capita income grows faster than the decarbonization of the world economy (declining GHG emissions per dollar of GNP), the climate change challenge will grow more severe over time.  New climate risk modelling firms ..read more

 I joined the USC Economics faculty in 2015 and Romain Ranciere also joined that year.  Permit me to list the impressive scholars who have subsequently joined our faculty. Marianne Andries  Tim Armstrong Vittorio Bassi Augustin Bergeron Fanny Camara  Thomas Chaney Pablo Kurlat Jonathan Libgober Robert Metcalfe Monica Morlacco Afshin Nikzad  Paulina Oliva Simon Quah  Jeffrey Weaver  David Zeke In July 2022, a star theorist will join our department as our newest hire. USC fascinates many people.  This list highlights that the hype about us is earned.  ..read more

 The New York Times has published a good opinion piece by a Professor of English on the unintended consequences of federal subsidies and regulations for living in flood plains. When one owns an asset, there is uncertainty about how the price of the asset will change over time.  A share of Tesla can either rise or fall over time.  A home's value can go up or down over time.  The asset's owner is not guaranteed that "nothing bad" will ever happen to the home.   Under the logic of the efficient markets hypothesis,  expected future risks to a specific property wi ..read more

 While I don't write best selling books, I do like my books!  Amazon sells them here.  In April 2022, my Going Remote book will be published.  This book studies the urban and labor economic issues related to persistent Work from Home (or work from anywhere) going forward.   Below, I post a growing set of podcasts where I discuss my book. Podcast #1 Podcast #2 Podcast #3 ..read more

 China features state owned enterprises (SOEs) that pursue a "double bottom line".  They simultaneously seek to earn profit and to please the powerful Central Government.  Relative to their private sector counterparts, these Chinese SOE firms receive special treatment. They can often access subsidized energy, land and capital.  Facing such low factor prices such firms use more resources and this creates distortions because the opportunity cost of one firm using scarce resources is that another more productive firm does not use those resources. Macroeeconomists continue to s ..read more