I took what felt like a more drunken path than many of my grad school peers to what I eventually settled on as my field of study. At different points, I assumed I would work on environmental justice issues, urban dynamics, environmentally sustainable wool production, the New Deal… I couldn’t have predicted a trajectory ending with my work in applied macroeconomics, finance, and political economy. The downside of writing a dissertation, book, and papers that had little to do with my coursework were mainly efficiency related — I learned a lot about finance, political economy, and crisis from books, and I still managed to graduate in the median number of years for my department (somehow).
One upside, though, was learning about Frank Ackerman’s work. I first encountered it in James Boyce’s Political Economy of the Environment class, back when I thought that would be my thing, and then somehow I kept circling back to it, with an internship here, teaching an environmental economics class there, and the beckoning siren call of a career in policy. The book he co-authored with Lisa Heinzerling — Priceless: On Knowing the Price of Everything and the Value of Nothing — left an indelible impression. It confirmed to me that despite the opportunity costs, a PhD of indeterminate length was valuable for teaching the Pareto Optimal underpinnings of Cost Benefit Analysis (CBA) alone.
In brief, CBA argues that policies (or any action) can be evaluated by comparing the costs (however they are measured) with the benefits of a given course of action. This is fine if I’m deciding between getting takeout or cooking dinner when I’m stressed about work, but it gets insidious when costs and benefits accrue to different parties. Taken to its extreme, an action can ‘pass’ CBA if the beneficiaries are well enough compensated that they could compensate the losers for the costs… but there’s no requirement the winners do so. Under this rubric, polluting the environment while I extract its material benefits and then moving my family out of the danger zone will pass, if I could theoretically pay off all the residents for their trouble.
Learning this was a red pill/blue pill moment for me as a first-year grad student who sometimes wondered what I’d gotten myself into. Priceless has much more to recommend it — it takes on the dirty details of how value is ascribed to the priceless, considers political implications, etc etc — and for a sophisticated dive into valuation theory, it’s also a great read. Ackerman’s work — a tiny sampling includes work on recycling, climate change policy, institutional design — is smart, humane, and worthy of your time.
I was also lucky enough to meet Frank on a few occasions. He gave several seminars at UMass while I was there, and they were always smart, funny, and devastating, as soon as you wrapped your head around the implications. He was a kind and brilliant guy, and the world is a poorer place since his passing on July 15, 2019. I miss him already.
Nina Quinn Eichacker 