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Special Topics: Renewable Energy, Pandemics & Blood Lead Levels

Paper Session

Sunday, Jan. 3, 2021 3:45 PM - 5:45 PM (EST)

Hosted By: National Association of Forensic Economics
  • Chair: Scott Gilbert, Southern Illinois University Carbondale

Setting Rules for Future Financial Evaluation of Non-Tradable Assets

Subodh Mathur
,
Independent Consultant

Abstract

This paper addresses a critical business evaluation issue in the promotion of small-scale solar-based power systems set up by private firms with government subsidies in developing countries in rural areas where the power lines have not yet reached. The main power utility is likely to reach these sites in 7-10 years and take over the business. We need to set up a formula/method today for the future valuation of the independent small businesses, so that today's investors feel secure about the future. Electricity regulators in several countries have promulgated different methods, but none are methodologically sound.

The Social-Economic-Epidemiological Choice: Incorporating Human Response and Avoiding Policy Mistakes

Patrick Anderson
,
Anderson Economic Group

Abstract

The pandemic of 2020 appeared to present a stark choice: either harshly restrict travel, socialization, and work in the manner of the quaranta giorni of the Middle Ages at enormous economic cost; or relax such restrictions and accept a surge in the number of people infected and the possibility of overwhelming the medical infrastructure.
This choice was commonly presented as a rigid “doomsday dichotomy:” either protect public health by shutting down schools, businesses, and events; or let people sicken and die. A critical basis for this dichotomy was the use of passive epidemiological models, built largely on the same framework as the SIR model first introduced in 1927. These models often carried embedded assumptions that enforced this dichotomy, such as the notion that health care system resources were fixed, human behavior was largely determined by government policy, treatment options would not improve over time, and government restrictions were costless and always beneficial to public health. Within this structure, passive epidemiological models such as the classic SIR model became the dominant mode of thinking about policy options in a pandemic.
In fact, government restrictions have both positive and negative consequences for public health. Individual behavior is affected, but not dictated by, governments. Multiple policy options existed. Uncertainty was profound, especially in the early months of the pandemic. As a result, the “doomsday dichotomy” was false, and the usefulness of passive epidemiological models must be questioned.
We identify at least two classes of sequential decision models that address the serious deficiencies identified above. First, we recommend the “behavioral SIR” models that build upon classic epidemiological models but directly incorporate human choice. Second, we propose a novel social-economic-epidemiological choice model where: (1) people make decisions under conditions of uncertainty, (2) policy options include pursuit of vaccination and local mitigation, and (3) public health costs of restrictions are directly considered. We provide evidence that decisions made using a sequential decision model can preserve public health better than those that rely upon naïve, passive epidemiological models.

Structural, Black Box and Ad Hoc Models Used to Determine the Worklife Expectancy of a Child With Blood Lead Levels

Jerome S. Paige
,
Jerome S. Paige & Associates, LLC
Subodh Mathur
,
Independent Consultant
Richard Lockley
,
Phillip Partners

Abstract

Our client asked us to determine how the plaintiff’s economic expert could opine that Mr. Brown’s worklife expectancy would be reduced by 22 years because his average blood lead level was 11 µg/dl when he was 1 to 5 years old. We were defense forensic economic experts in the Samuel Brown case. We changed the names of the plaintiff and the experts in this case for this presentation. To answer our client’s question, we reviewed the reports and depositions of the medical, neuropsychological, vocational, and economic experts for both the plaintiff and defense. Our review led us to explore the experts' use and misuse of structural, reduced form, and ad hoc models and that led us to opine that there was no established link between blood levels and worklife expectancy. Our paper presents how we reached our conclusions.
Discussant(s)
Scott Gilbert
,
Southern Illinois University Carbondale
Steven Shapiro
,
New York Institute of Technology
Gary Skoog
,
University of Michigan
JEL Classifications
  • K0 - General
  • D0 - General