Ohio House legislation could make Ohio’s bad water problems worse

For the past few years, my firm Scioto Analysis has published a series of studies of Ohio’s Genuine Progress Indicator, a “GDP+” measure that monetizes the impact of environmental damage and external social benefits and costs of nonmarket activity in the state.

One of the biggest takeaways we’ve found year after year from doing this study and comparing Ohio’s results to those in other states is how poorly Ohio stacks up when it comes to water quality. Lower water quality means less opportunities for residents to fish, boat, and swim and can lead to negative health impacts and loss of biodiversity, all of which exact costs on the residents of a state.

While the average state had a typical resident bearing about $139 in costs in 2011 (the most recent year we have state-by-state Genuine Progress Indicator data for), the average Ohioan bore $219 in costs, a rate more than 50% higher than that in other states.

Ohio tends to be pretty middle-of-the-road with most indicators, so this sort of exceptionally large problem should be an area of concern for policymakers, especially those who care about environmental protection and those who have districts that benefit from lake and river tourism.

Top policymakers in the state including the governor and legislative leaders have identified harmful algae blooms as a policy priority and have passed some legislation to reduce fertilizer runoff. At the same time they have shied away from a fertilizer tax that leading state economists endorse as a solution for reducing fertilizer runoff and thus algae blooms.

Most recently, the legislature has been considering a bill that could exacerbate Ohio’s problems with water quality. House Bill 175, passed by the Ohio House last month, would exclude streams and pools that appear during rainstorms from water pollution control programs, specifically eliminating their requirement to undergo water quality certification review in order to reduce the cost of development associated with building around these streams and pools.

It is easy to see why this sort of legislation is attractive to policymakers. Those worried about the cost of development see this as a tool the public sector can wield to reduce a cost for development. Those who are interested in development of more affordable housing should see reason to reduce barriers to development that can increase the supply of housing and thus stabilize increases in the cost of housing.

That being said, the $5 water quality certification review fee per linear foot of stream to be impacted is not likely to have a massive impact on whether a development can happen or not. Also, though the magnitude of the problem is hard to ascertain, the reduction in water quality review will likely have some negative impacts on water quality. If these “ephemeral features” run fertilizer or chemicals into the water supply, they could contribute to the further degradation of a natural asset that Ohio already struggles to maintain.

Keeping costs of development low can be a worthy cause, but what do we lose in the process of doing it? Possible environmental damage needs to be balanced against the supposed benefits of such a policy.

This commentary first appeared in the Ohio Capital Journal.

Ohio's economists agree coal subsidies are not good for Ohio's economy

In a survey published by Scioto Analysis this morning, all 22 Ohio economists who responded were skeptical of the ability of coal subsidies to improve Ohio’s economy.

Of the 22 economists who responded, 21 disagreed with the statement that subsidies for coal plants would grow the economy, with 13 disagreeing strongly. The remaining economist was uncertain about the impact. Among those who disagreed with the statement, the problem of the negative external cost of coal pollution was raised in comments multiple times.

Economists who disagreed with the statement also talked about the way subsidies distort the market in the absence of positive externalities, with the public sector picking certain projects over others that do not provide a net benefit to society. Multiple economists also talked about how renewable energy sources that have positive social benefits would be a better target for subsidies than nonrenewable resources with net negative social benefits.

The Ohio Economic Experts Panel is a panel of over 40 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists.

What is “economics” and why do we care about it in public policy?

When you hear the term “economics,” what images are conjured to your mind? If you’re like most people, you probably think of stacks of dollar bills, shops, and generally the study of commerce. 

This definition of “economics” comports with the definition put forth by Merriam-Webster: “a science concerned with the process or system by which goods and services are produced, sold, and bought.” But this isn’t the only way people think of economics.

An alternative definition for “economics” is “the study of how humans make choices under conditions of scarcity.” This definition focuses on the root word “economize,” which centers on the concept of gaining the most value using the resources one has.

A simple supply/demand model illustrates this conception of economics. Suppliers will create as much of a product as they can until the value they can recoup from sales on the market falls below the cost to produce a product. Consumers will consume more and more of a product until the cost to purchase the product exceeds the value they receive from the product when consuming it.

Though dollar values are often the easiest way to conceptualize value, they are not the only thing that people economize. Another example is time. Surveys like the American Time Use Survey give us a snapshot into how people economize their personal time, one of the most scarce resources people have.

Similarly, economists have turned their focus to a range of topics that people don’t necessarily associate with dollars and cents. This ranges from Gary Becker’s studies of whether discrimination can be statistically detected to Steven Levitt’s study of whether sumo wrestlers throw games. 

Understanding economics as the study of human behavior under conditions of scarcity is a helpful framework for people who want to apply economic models to public policy problems. For instance, in our genuine progress indicator study, we estimate the value of unpaid housekeeping and child care and compare it to other sectors of the economy. Even though dollars don’t change hands when someone cleans their house or spends time caring for a child, value is created the same way it would be if a housekeeper were hired or a child care service were utilized. The thing being traded, though, instead of dollars, is time.

Understanding economics in this broader sense helps us to use economic models to improve welfare in new ways. We can’t understand the child care system in a comprehensive way by just looking at the formal market for child care: this market interacts with an informal market that provides a large amount of the child care throughout the country.

In the same way, we cannot understand energy markets without understanding the external costs borne by consumers and the public due to how energy markets function: how pollution impacts public health and environmental assets not involved in the direct economic transaction.

In our genuine progress indicator study, we monetize all of these impacts. But there are other ways to use an economic framework to understand public policy. The Human Development Index does this by focusing on welfare as a collection of basic needs, namely income, education, and health. Subjective well-being measures do this by focusing on welfare as self-reported assessments of personal happiness. Any of these can be maximized given other resources we have.

It’s easy to think of “economics” as the study of dollars and cents. And that is one way to think of it. But when we open our mind and accept that people economize a range of things that are important to living a good life, we start to understand the power of this framework for someone who cares about public policy.

How can Ohio fight climate change today?

The Union for Concerned Scientists has an incredible interactive map that provides county-by-county projections for how temperatures will change in the United States over the 21st century.

Historically, most of Ohio experiences 11-25 days when the heat index is above 90 degrees Fahrenheit, which is the threshold at which sun stroke, heat cramps, and heat exhaustion start to pose a threat to risk groups. These days have been a little more common in counties on the southern border and a little less common in northeast Ohio.

The Union for Concerned Scientists projects that by 2050, much of northern and eastern Ohio will be experiencing about 40 days over 90 degrees barring significant action to curb climate change, over double the current rate. Central, southern, and western Ohio will fare worse, cracking 50 days over 90 degrees by midcentury.

While many people and community leaders in Ohio have an interest in reducing climate change, the problem is a global one that local action cannot ameliorate on its own. This is why agreements like the Paris Accord are so important: climate change is a problem that can only be tackled at the level of international cooperation.

That being said, Ohio may have its hand forced to reduce carbon emissions. The Biden Administration has made climate change a priority and will have similar tools to the Obama administration to push states to reduce carbon emissions. These usually focus on setting carbon emission goals and leaving it up to states to decide how they will meet these goals.

If the Biden administration promulgated a plan like this, Ohio would have to meet carbon reduction goals as a part of a national plan to reduce carbon emissions.

In a study my firm released in the summer, we analyzed three different approaches Ohio can take to reducing carbon emissions: a renewable portfolio standard, a cap-and-trade system, and a carbon tax.

A renewable portfolio standard is pretty close to a classic command and control regulation. The state sets guidelines for what percentage of power in the state needs to be generated from renewable sources of energy and utilities comply. Ohio had a fairly popular renewable portfolio standard passed over a decade ago that has been watered down since.

Cap-and-trade and carbon tax policies are more market-oriented approaches to reducing carbon emissions. A cap-and-trade program caps the amount of carbon that can be released in the state, then auctions off rights to emit this carbon to companies. This means that emitters need to balance the cost of buying emission rights against the cost of reducing emissions, incentivizing them to develop cost-effective approaches to reducing carbon emissions.

A carbon tax works similar to a cap-and-trade program, but rather than setting a cap on the amount of carbon emitted, it sets a price for emitting carbon that then creates an incentive for emitters to reduce emission so they don’t need to pay that price.

In our study, we found all three of these approaches to be much more effective than the status quo at reducing carbon emissions. If Ohio wants to do its part to fight climate change, it has three good options to do it with.

This commentary first appeared in the Ohio Capital Journal.

What can Ohio do about childhood lead exposure?

On Monday, a group of medical researchers published an original investigation in JAMA Pediatrics examining the individual and community-level blood lead levels in children across the United States.

As reported in the Ohio Capital Journal, this study found Ohio’s rate of blood lead elevation in children well over double the national average and higher than every other state with data aside from Nebraska.

In a world in which everything seems to be a political issue, reducing lead poisoning in children seems like an obvious problem to rally resources around whatever your political affiliation may be. And the economics of the problem justify intervention well.

Altarum, a Michigan-based nonprofit health and health care research and consulting firm, estimates the lifetime economic burden of lead exposure in Ohio at $2.8 billion. These costs are borne in the form of reduced lifetime productivity, increased spending on health care, education, and social assistance, and premature mortality.

Luckily, governments have options to reduce lead hazards for children. One option is controlling current lead hazards through strategies such as treating paint, dust, and soil with lead contamination and replacing old windows. According to Altarum, a half-billion dollar lead hazard control program would help about 50,000 households and 64,000 children and would yield $660 million in gross benefits, a return of $1.40 in benefits for every $1 spent on lead abatement.

Outside of paint, childhood lead exposure also comes from lead pipes. Governments can therefore also reduce lead exposure by replacing homeowner and utility lead service lines for those without lead. According to Altarum, a $170 million lead service line replacement program in Ohio would replace 25,000 lines, help protect 32,000 children, result in $230 million in gross economic benefits, and result in a return of $1.40 in benefits for every $1 spent on replacing lead pipes.

Additionally, the Environmental Protection Agency has issued standards for renovation, repair, and painting, requiring lead-safe work practices. Since enforcement for Environmental Protection Agency standards often falls to state government, this can be another cost-effective tool for reducing lead exposure for children. Altarum reports that a $74 million enforcement program could impact 200,000 renovations, protect 11,000 children, and yield $220 million in gross benefits, a return of $3 in benefits for every $1 invested in the program.

These numbers make the efficiency case for investment in lead abatement: Lead poisoning leads to lower productivity, more spending on health care, education, and social assistance, and premature mortality. Interventions that can reduce lead poisoning and these impacts at low cost can thus grow the economy. But lead poisoning reduction can also improve equity outcomes in the state. For instance, the counties with the highest rates of elevated blood lead levels in the state, Cuyahoga, Hamilton, Lucas, and Mahoning, all have rates of elevated blood lead of over 12%, more than twice the state average and six times the national average. They are also many of the counties with both the highest poverty rates and the largest Black populations.

Lead treatment, pipe replacement, and enforcement of Environmental Protection Agency building standards are all cost-effective tools for reducing lead exposure that also can improve equity outcomes. If Ohio wants to do something about lead exposure among children, it has the tools to do so.

This commentary first appeared in the Ohio Capital Journal.

Ohio's economists agree vaccine mandates will boost economy

In a survey published by Scioto Analysis this morning, 25 economists polled unanimously agreed vaccine mandates in long term care facilities and hospitals will grow the economy.

Among those who agreed vaccine mandates would have economic benefits that outweigh the economic costs, many pointed to the evidence around effectiveness of vaccines and how they could lead to herd immunity. Others talked about how this could slow mutation of the virus which would prevent future economic disruptions and would bolster productivity. One respondent pointed to a study in the Journal of Medical Economics which found that vaccines have a high probability of reducing healthcare costs and increasing QALYs compared to doing nothing.

While all 25 respondents agreed there are net economic benefits to vaccination in long-term care and hospital settings, three were uncertain or disagreed the same was true for large companies and another three were uncertain or disagreed the same was true for schools. None of these respondents provided comments with their responses.

The Ohio Economic Experts Panel is a panel of over 40 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists.

How to Fight Bureaucratic "Sludge"

Taxes. Permits. Licensure. Benefits. We’ve all had to interact with the public sector before in ways that were…not that great.

Sure, most Americans are, in fact, proud to pay taxes. We see most of these things that government does as important. But most people also wish it could be done better. Yes, we like that we pay our taxes. Do we like scrounging together a bunch of documents every year to fill out a complicated form or paying someone to do that for us? Not so much.

A lot of government works this way. At the local level, people talk about permitting and the administrative headaches that come with the process. In the world of health and human services, safety net benefits often require hours of paperwork in order to become eligible for. And don’t get us started on driver’s licensing.

This is a topic that Cass Sunstein has called “sludge.” The legal scholar, behavioral economist, and former head regulatory czar for the federal government has been talking for years about the impact that long forms and long lines have had on the lives of Americans. 

These might seem like minor inconveniences, but these costs add up. An afternoon spent at the Bureau of Motor Vehicles for a driver’s license renewal that could take twenty minutes can end up costing someone four hours of their time. If the average wage for an Ohioan in $26 and the average Ohioan needs to renew their driver’s license every four years, that means the Bureau of Motor Vehicles could be costing Ohioans nearly $200 million of time per year due to inefficient licensing practices. 

This does not only exist in the public sector. If you have tried to change a cell phone plan, cancel your cable plan, use a coupon, or many other private-sector practices, you have probably seen sludge and its impact on your time. The difference between the public sector and the private sector, however, is the private sector usually does this to increase profits, while public sector sludge could be reduced at a benefit to everyone.

So what can we do to reduce “sludge?” Sunstein suggests what he calls “sludge audits.” An agency director can direct its division heads to deliver a report on how much time that people spend interacting with their bureaucracy. This can then provide a guide for agency heads to tackle the parts of their processes with the most “sludge” and find ways to reduce the impact of their processes on the public.

By tying the hours to average wages for the region, agencies can also put a dollar figure number on the impact of sludge generated by the agency and subjected on the public. This can provide a handy guide for making process improvements. We may be attached to processes that we currently carry out in a certain way, but if reducing a form from two pages to one page can reduce costs felt by the public by millions of dollars, it’s a lot easier to understand that concrete impact.

The public sector is a key part of the economy. But it can always do better. Reducing costs borne by the public by just interacting with it is a great way for the public sector to improve.

Scioto Analysis Releases Most Accurate Measure of Poverty in Ohio to Date

This morning, Scioto Analysis released the Ohio Poverty Measure, the most accurate measure of poverty in the state of Ohio to date.

“The Ohio Poverty Measure draws on poverty measures in California, New York City, Oregon, Virginia, and Wisconsin that use American Community Survey data to assess the state of poverty and how safety net measures, taxes, and local cost of living effect them,” said Rob Moore, principal for Scioto Analysis and co-author of the study.

The study found that in 2018, about 9.7% of Ohioans were in poverty and 3.7% of Ohioans were in “deep poverty,” defined as having less than half the income to meet the poverty threshold. The 9.7% poverty rate is below the 12.9% poverty rate reported in the Official Poverty Measure and the 10.4% rate reported in the Supplemental Poverty Measure.

“Improved measures of poverty such as the Ohio Poverty Measure tend to show lower rates of poverty in low-cost states like Ohio due to cost of living adjustments that don’t show up in the Official Poverty Measure,” said Moore.

The measure also found estimates for local poverty rates. According to the measure, the lowest-poverty regions of the state were suburban northwest Franklin County and Delaware County along with the suburban communities of the Twinsburg area in greater Akron and the Strongsville area in greater Cleveland, all with poverty rates under 4%. Meanwhile, the highest-poverty regions in the state were in urban Cleveland, Toledo, and Cincinnati, with poverty rates exceeding 20%.

Poverty rates also varied by demographic groups. While only 8% of seniors in Ohio were in poverty under the measure, about 13% of children were in poverty. White Ohioans only had a poverty rate of 8%, which was lower than all other demographic groups, especially Black Ohioans, who had a poverty rate approaching 23%.

This measure also provides an estimate of the impact of safety net measures. According to the study, an estimated 150,000 Ohioans were pulled out of poverty by the Earned Income Tax Credit, 110,000 Ohioans were pulled out of poverty by SNAP (formerly the “food stamp” program), and nearly 100,000 Ohioans were pulled out of poverty by child and child care tax credits.

The Ohio Poverty Measure improves on past poverty measures in the state by combining the more nuanced approach of the Supplemental Poverty Measure with more fine-grained data collected by the American Community Survey.

“The Official Poverty Measure is based on an outdated definition of poverty: the cost of food times three,” said Moore, “The Ohio Poverty Measure uses consumer spending as a baseline then makes adjustments based on local cost of living, taxes and transfer payments, and unavoidable expenses, providing the most accurate snapshot of poverty in Ohio to date.”

What would the public health and safety impacts of cannabis legalization be in Ohio?

Last Monday, a panel of state officials approved ballot language for recreational cannabis legalization in the state of Ohio, clearing the way for backers to begin collecting signatures for the initiative. According to reports, the ballot language for this initiative is similar to a bill introduced by state Reps. Casey Weinstein and Terrence Upchurch to legalize recreational cannabis in the state.

I have written previously about the most obvious impact of cannabis legalization in Ohio: hundreds of millions of dollars in new revenue. But tax revenue isn’t the only likely impact of recreational cannabis legalization.

First, many hope that legalization of recreational cannabis will reduce the size of Ohio’s black market in cannabis sales. While other states have not seen a precipitous decline in black market activity and may have even seen increases in black market cannabis sales, Colorado did see a large decrease in cannabis-related crime after legalization of recreational use and sales. 

If Ohio’s marijuana-related arrest rate falls as much as Colorado’s does in the time period after recreational legalization, Ohio could be making 18,000 less marijuana-related crimes per year after legalization.

An exception to this rule was arrests for driving under the influence, which actually increased after legalization. The positive news, though, is that cannabis-related traffic fatalities were flat over this time period, suggesting that it may have been an increase in training to detect cannabis influence that drove this change, not an increase in actual frequency of driving under the influence of cannabis.

A more indisputably negative impact of cannabis legalization in Colorado is cannabis-related hospitalizations. Colorado saw a 100% increase in cannabis-related hospitalizations after cannabis was legalized in the state. These numbers also only capture the short-term effects of legalization. Longer-term impacts of more widespread cannabis use will not be detected for years to come.

On the bright side, despite higher consumption of cannabis in Colorado after legalization of recreational cannabis, there is little evidence this trend has occurred among children as well. Rates of youth cannabis consumption stayed stable after the legalization of recreational cannabis in the state.

Something else policymakers are interested in is the impact of cross-state cannabis consumption. While we do not have much information on what legalization of recreational cannabis in Michigan has meant for consumers in Ohio, researchers at Washington State University have found that legalization Colorado and Washington led to increases in possession arrests in counties bordering these states. This suggests that cross-border consumption is likely taking place.

In addition, researchers at the University of Oregon have estimated that the state of Washington had earned tens of millions of dollars of tax revenue from cross-border shoppers after their own legalization of recreational cannabis. If cross-border shopping from Ohio to Michigan is as prevalent as it was between Washington and Oregon, Michigan may have earned $3 million in taxes from Ohio cannabis shoppers in 2020.

Will Ohio look like Colorado and Washington if it legalizes recreation cannabis? It is hard to say. So far, legalization has meant a larger market, more tax revenue, less arrests, flat youth consumption and traffic fatalities, and more hospitalizations in states that have done so. Policymakers and voters should weigh these considerations when deciding on the fate of recreational cannabis in this state. 

This commentary first appeared in the Ohio Capital Journal.

Do people have the “right” to contract and spread a deadly disease?

From the beginning of the spread of COVID-19, we knew a vaccine would be the most effective tool we would have to stymie its spread, reduce infections, and save lives. While so many things were new about COVID-19, we knew, like with any infectious disease, that vaccine technology would be our best bet for prevention of infection and curbing morbidity and mortality associated with the virus.

But vaccine hesitancy has been brewing for years now. Whether it’s from crunchy yuppie communities trying to shield their children from modern medicine or homeschool fundamentalist households trying to do the same, fringe movements have tried to discredit this technology, largely because people misunderstand the risks involved with it.

These public information problems have bled into the largest public health crisis of the last hundred years. And it is not just fringe groups that are subscribing to vaccine misinformation these days: It is the people crafting policy in our state as well.

Ohio’s House Bill 248, currently in the House Health Committee, proposes law to prohibit basically anyone from requiring any vaccination, not just against COVID-19, and ban anyone from requiring people to tell if they have been vaccinated.

House Bill 253, also in the House Health Committee, proposes a ban on proof of vaccination to enter the state or state buildings.

House Bill 350, currently in the House Civil Justice Committee, proposes a prohibition on people and companies requiring vaccinations or asking for proof of vaccinations.

What is driving these bills? As we have all heard, the FDA has fully approved the Pfizer-BioNTech COVID-19 vaccine, meaning the argument of the “dangers” of vaccination are becoming weaker and weaker. With half the population vaccinated at this point and no serious population-level side effects being reported, it is hard to keep up the argument that these vaccines are unsafe because they are untested.

We know they are saving lives. Death rates from COVID-19 have plummeted since vaccinations began and have been consistently low in Ohio for months, even as hospitalization rates have crept up. So whatever reason the policymakers are making for wanting to discourage vaccinations, it seems to be more pressing to them than keeping death rates low.

In addition to being good for public health, vaccination seems to be good for the economy. The Ohio Chamber of Commerce came forth last week to testify in opposition to House Bill 248, saying that employers should have the power to run their workplaces the way that they wish and hinting that less vaccination would be bad for the economy.

Ultimately, there are some reasons that vaccine mandates should not go too far. There are certain people with compromised immune systems who may not be eligible for vaccination. In that case, regular testing may be a better path. But the idea that the public sector should be intervening to make sure that people have “the right” to contract and spread a deadly virus is laughable at best and extremely dangerous at worst. Let’s hope that cooler heads prevail and that these fringe ideas don’t come to embarrassingly define public policy in Ohio to the rest of the world.

This commentary first appeared in the Ohio Capital Journal.