Essays on Policy Evaluation from an Environmental and a Regional Perspective

This dissertation consists of three essays, which explore how public policies influence household and firm behavior, and the impact policies could have on environmental outcomes. The essays examine how households respond to price-based policies, the impact information disclosure policies could have on environmental outcomes, and finally the influence of normative appeals and non-pecuniary strategies on behavioral outcomes. Understanding these adjustments in the behavior of the agents is particularly important for policy design and for legislators who intend maximize societal benefit. The first essay, titled Matchmaking Between Vehicle Miles Traveled and Fuel Economy: the Role of Gasoline Prices, studies a potential effect of gasoline prices that has been over- looked in the literature. Due to heterogeneity in demand for vehicle miles traveled (VMT), when gasoline prices increase, the increased cost of operating an inefficient vehicle are greater for households that drive more. Thus, in equilibrium, after an increase in the gasoline prices there should be a stronger matching from households, based on their VMT, to the fuel economy of the cars they own. Potentially, this matching effect could save 15% of US gasoline consumption, even with no effect on individual VMT and no effect on the vehicle fleet. Using confidential data from the National Highway Transportation Survey, the effect of higher gasoline prices on such assortative matching is estimated using a variety of econometric models. For all the different model specifications, the matching effect is significant and quite robust. This is the first study to analyze this re-allocation or matching effect. The second essay, titled Evaluating the Effectiveness of an Environmental Disclosure Policy: an Application to New South Wales, examines the impact of an environmental information disclosure policy on environmental outcomes. The main purpose of introducing an environmental information disclosure strategy is to reduce informational asymmetries and put pressure on firms to reduce emissions. This paper studies the impact of such a policy on air quality in New South Wales, Australia. A regression discontinuity design is employed and the results show that the pollutant concentration levels were not significantly affected after the implementation of the policy. Empirically, the estimates of the effects under the discontinuity-based Ordinary Lease Squares (OLS) model have the opposite sign for some of the pollutants relative to the estimates from the basic OLS model. Therefore, basing conclusions on the OLS results will engender incorrect inference. Discontinuity-based results are robust to different model specifications. The third essay, titled What Determines Citizen Trust: Evaluating the Impact of Campaigns Highlighting Government Reforms in Pakistan, explores how normative appeals and awareness campaigns could influence societal and political trust. This project is in collaboration with Musharraf Cyan and Michael K. Price. The purpose of this study is two-fold. Firstly, the impacts of exposure to violence and conflict on general levels of trust, measures of life-satisfaction, and attitudes towards formal and informal institutions are examined in the province of Khyber Pakhtunkhwa (KPK), Pakistan. Secondly, the impacts of targeted messages, which were designed to inform the citizens regarding new government reforms (aimed at increasing transparency, protecting and strengthening private property rights, and improving service delivery), on general levels of trust and attitudes towards institutions are studied. For the analysis an in-person survey was designed, which was conducted in randomly selected villages throughout KPK. Empirical results show that exposure to violence has a negative impact on trust and measures of life-satisfaction and has positive effects on formal institutions. The results also suggest that the awareness campaigns affected trust levels and perceptions about the quality of public services positively. Moreover when the eeffects are allowed to differ based on exposure to conflict, important heterogeneity is identified. The results are robust to different model specifications