Corrections for the Hackett Textbook

Second Edition

On page 86 I say in the middle of the first big paragraph that "At the limiting case of a 100 percent discount rate...." This is wrong, and it should read "At the limiting case of an infinite discount rate...."

On page 91 I talk about the number of "trollers" or "trolling vessels" working the sardine fishery. Purse seine and lampara nets are the gear used for sardine fishing, not troll gear.

On page 92 I state that most sardines were reduced into fertilizer. This is not right. Most sardines were either reduced as meal or oil or protein supplements for poultry feed operations, or were canned for human consumtion.

Old First Edition

• Pages 22-23: On Pareto and Kaldor-Hicks efficiency criteria. To clarify the material in the text, consider two policy alternatives--the status quo and a proposed change in policy. Suppose that under the proposed change in policy some gain and some lose relative to the status quo, and that the aggregate net social benefits are larger than under the status quo. In this case the proposed policy change is more efficient than the status quo based on the Kaldor-Hicks criterion (aggregate net social benefits are increased relative to the alternative). For the change in policy to be more efficient than the status quo based on the Pareto criterion, an additional step is needed: those who gain from the change in policy would have to compensate those who lose so that nobody is made worse off.

• Page 27, second paragraph: "...Modeling improves through a Darwinian process of scientific evolution..." A student of Stephen Jay Gould has pointed out to me that Darwinistic processes are more a matter of new mutations succeeding in a particular niche than less successful mutations being out-competed. methods. Solution: Remove the word "Darwinistic" from the sentence.

• Pages 34, 36: The intercept of the supply curve on page 36 should be at zero, not 1, to be consistent with the table on page 34.

• Page 63: The PDV formula should NOT have "N" in the numerator; it is supposed to be SUMMED from i = 1, 2, ..., N.

• Page 65: Second line from the bottom, "In our example the PDV of the XXX Hotelling rent is $4.65 in each of the two periods...." Insert the word "marginal" where indicated by XXX above.

• Page 69: First sentence under Renewable Resources Case Study--
  "Fishery resources are the only wildlife resource still COMMERCIALLY hunted on a large scale...."

• Page 78: Second-to-last line, "effort=price" should read "effort-price"

• Page 83: End of second paragraph, "Ehrlich paid Simon $576.07; the inflation-adjusted aggregate price of the metals had fallen by AROUND one-half."

• Page 97: Third sentence, "razing" should be "grazing" (Thanks, John).

• Page 97: Shortcomings of Benefit-Cost Analysis: In addition to the problem of finding an appropriate discount rate for policies affecting future generations, perhaps an even more intractable problem is determining the preferences and available technology of future generations.

• Page 104: End of second full paragraph, "Those owning the right to clean air bear a pollution cost of $275 million ...."

• Page 113: Material on Embedding Bias: More specifically, embedding bias is said to occur when the WTP response to preserve, say, 200,000 acres is the same as for 2,000 acres. In this case the 2,000 acres is embedded in the 200,000 acres, and the WTP response appears to violate local nonsatiation (more is better). A number of studies have found evidence of embedding bias in CVM studies.

• Page 147: Deterrence formula: You can remove the "PDV" from the formula and treat it as occurring in a single period.

• Page 276: Paragraph about the Schatz Energy Research Center: Schatz is misspelled as "Shatz."