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The Cost of Living

U. of C. economist Don Coursey has made a career out of asking simple but provocative questions: Why do we want a clean environment? What is fair treatment? How much is a tree worth? Some of those questions may not be as simple as he thinks.


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Economists have a reputation not for asking simple questions but for giving simple answers--for knowing the price of everything and the value of nothing. Supposedly they spend their professional lives trying to fit the human variety into a handful of preconceived notions. Don Coursey, of the University of Chicago's Harris Graduate School of Public Policy Studies, says he got over that early.

"I'll never forget working as a graduate student at the University of Arizona with a professor who was looking at minimum wages for migrant workers. We couldn't figure out why the workers themselves favored a minimum-wage law. It didn't make sense. They were already getting paid less than the proposed minimum, so if the law forced their pay higher than the work was worth, growers would find cheaper ways to get the crops in--machines, more skilled labor, somehow change the process--and the result would be less work for the migrant workers.

"That's the standard economic argument about minimum wage. So what was going on?" Instead of assuming the workers were stupid, he and his professor went and talked to them. "And we found that they weren't ignorant at all. These were people maybe 30 years old--they looked like 70. They knew they didn't have a chance. Their answer was, in effect, "You stupid economists. We know that only a few of us will benefit from the minimum wage. But those few will be able to send their children to high school and get them out of here.' They were looking at the world in a much more Nietzschean way than we had imagined. Their answer was so different from our expectations."

The experience jolted Coursey out of his fascination with the abstruse mathematical models of econometrics. "I realized that the tools we have are light-years ahead of the data. I should be as interested in what people are actually doing as in the formal mathematical modeling of what they might do."

Since then Coursey has focused on collecting basic information and asking questions that people assume they know the answers to. In the year and a half he's been at U. of C. this academic grunt work has gotten him into the headlines twice: first with a study of what we spend to save different endangered species, and then, last fall, with a study looking for historical evidence of environmental racism in Chicago.

He's also made waves at the Harris School. "One of the classic student gripes there is the required two quarters of statistics," says a graduate of the school, David Hammond. It's also a gripe for faculty, who must contrive to teach serious math to classes containing everyone from math phobes to whizzes. "So Coursey took it on as a personal challenge. He volunteered to take the class nobody wanted and said he would make it interesting and useful. His early-morning classes are legendary. He's at the building an hour and a half early, he's had three cups of coffee, he's ready to go, he's got all this writing on the board. He's very intense. That pretty much sets him apart from other professors."

Coursey's distinctiveness isn't always obvious. Lanky, earnest, with a full command of the impenetrable jargon of his field, he's quite capable of passing for the kind of public-policy professor whose articles are antidotes to insomnia. So when students and colleagues began to describe him as "provocative" and "intense," I wondered momentarily if we were talking about the same guy.

Then I remembered a remark he dropped into the microphone at a somber and very PC environmental conference held in the Loop last September: twenty years ago, he said, people attending such a conference would have been anguishing over the possible effects of global cooling. That was all--no ideology, no complaint, just a little pebble of disquieting fact.

"He challenges you to think what is fair in your mind," says Andrew Geer, another former student. "He won't tell you his answers. He enjoys playing the devil's advocate." The fairness question is where Coursey's environmental critics hit hard, calling his work "naive" and "academic hairsplitting." If his tenure here so far is any indication, the way Coursey thinks about economics and the environment will be raising hands and hackles for a long time to come.

Coursey's most famous--or infamous--simple question to date resulted in a 17-page paper with the unpromising title "The Revealed Demand for a Public Good: Evidence From Endangered and Threatened Species," which he presented at the national meeting of the American Association for the Advancement of Science in February 1994. "How much are endangered species worth to us?" he asked, and his answer caused the media to flood his office with more than 200 calls that he had to respond to. "For three weeks I couldn't do anything else."

Part of the interest was the sensationalism of his numbers--through the U.S. Department of the Interior we've spent $4,878,056.92 to save each additional Florida panther, but only $2.08 to save one olive ridley sea turtle? Even if the numbers are much less precise than they sound (and they are), six orders of magnitude represent a big difference. And the fact that there are numbers at all carries a whiff of blasphemy. Many people feel that "it is impossible, if not repugnant, to put a price-tag on saving an endangered species," Coursey acknowledges. "After all, how can an analyst put a sterile economic dollar value on the magnificence of seeing a whooping crane? It may be argued that the value of such an experience is infinite."

Coursey won't contest the point, and he's well aware of its strength. "I once calculated that I've spent two years of my life sleeping outdoors," he says. "The thing I like best in the world is a grueling 30-mile hike including a mountain climb. (In my early 20s I could fall out of bed with a hangover and just go, but now I need to have a cup of coffee and read the Times and stretch first.) If I see a cliff I want to see it from the top. I don't want to die and say I missed seeing nature at its toughest or rawest, like the berry at the tree line where the bush has maybe one chance in 50 years to fruit."

But Coursey's point about endangered species is that however passionate we are about them, the time and money we have to save them are limited. Philosophizing about their possible infinite value "will do nothing to save one species or protect one habitat. Only economic initiatives will accomplish these goals. But economic resources are finite. At a practical level of analysis the country must decide how much to spend on protecting endangered species and how to distribute this amount among each endangered plant and animal." What made Coursey's dry study briefly famous was that he caught us in the act of doing the thing we all do but pretend we don't--putting a price on life itself.

It isn't controversial to put a price on strawberries (to take one of Coursey's favorite examples). In the supermarket we don't agonize because the inexpressible pleasure of their taste is priced at 89 cents a pint. We buy or sell them all the time (or decide to get bananas this week instead). And no one insists that strawberries are really worth $39 a pint when every store in town has them for 89 cents.

Setting prices on things gets harder when you don't buy or sell them very often--a strawberry pureeing machine, say. Seeing one for the first time, you may have no idea whether it's worth the asking price. And it gets really hard when you're dealing with something that can't be sold to an individual--what Coursey would call a "public good," like the existence of the last 300 whooping cranes. The individual cranes could in theory be auctioned off, but the species' continued existence--unlike the continued existence of your pint of strawberries--is worth something to everyone.

But what exactly is it worth? If it's not bought and sold, how do you determine its value? The only way is to ask people, and Coursey did so in two different ways: first, he surveyed a random sample of people by mail; second, he calculated what the federal government is actually spending, per additional individual animal, on each threatened or endangered species.

Neither polling nor government spending is as reliable as checking strawberry prices in competing stores. The problem with polling is that we all want everything. Newt Gingrich was right when he objected to the poll showing that 84 percent of the public wants to spend the same amount or more on public broadcasting. It all depends on how you ask the question. More bucks for Sesame Street? Sure. But if they could spend it on 20 Head Start teachers instead? A Florida panther? Wellll . . .

"Taking a somewhat cynical view," writes Coursey, "existing research indicates that if a surveyor wants a particular monetary value for a species there is a way of framing the question to obtain this answer. [Usually this involves mentioning alternative expenditures.] More charitably, the research indicates that different frames will produce different measures of value. These measures of value are often orders of magnitude apart."

Using government expenditures to measure the value of endangered species also has its problems. One is that the figures are incomplete. Coursey could get expenditure data only for 1990, and then only for those endangered and threatened species in the captive-propagation and habitat-expansion programs. Worse yet, the amount of government spending often depends on irrelevant things--what other issues were on the table when the Interior appropriation came up or which lobbyists were at their best that day.

Coursey used the personal and governmental measures as checks on each other. As it turns out, the two match up fairly well. The public tends overall to prefer large animals (aka "charismatic megavertebrates"), and the government tends to spend more money on them. Given a choice, say, between the bald eagle and the Kretschmarr cave mold beetle, the larger carrion eater wins almost every time.

But before you break out the bubbly to celebrate the government's doing approximately what we want for once, Coursey warns that our choices don't necessarily match up with either the scientific view (all genetic information is potentially valuable, and all species are important to the ecosystem) or the official legal view (the value of endangered species is "incalculable' or in practical terms infinite," according to the Supreme Court's interpretation of the Endangered Species Act). Coursey writes, "Both expert natural science and legal opinion suggest that implementation of the Endangered Species Act ought to be carried out in a manner more consistent with the biblical chronicle of Noah"--i.e., save two of everything.

By the way, not all experts agree that people's choices diverge so sharply from the scientific view. Tim Sullivan, chairman of conservation biology at the Brookfield Zoo, points out that, in practice, dollars spent on a charismatic megavertebrate often help save habitats that shelter less charming but equally crucial species. "Species are mascots for habitat," is how the Illinois Nature Conservancy's director of science and stewardship, Steve Packard, puts it. More encouraging still, most people in Coursey's poll said that their biggest reasons for preserving species were "health of the ecosystem" and "balance of nature." Yet the brief descriptions included in the poll don't tell you much about how each species fits into its ecosystem: the "Bee Creek cave harvestman," for instance, is identified only as a "pale yellow-brown, eyeless spider" that "occurs in Texas." Sullivan thinks that if people were given more information on the spider's ecological importance they might well rate such creatures higher.

So our choices may not be so bad. But they are choices. And by rubbing our noses in them, Coursey fortifies his basic presupposition that Noah is a poor role model: "The country will never have sufficient resources to save all endangered and threatened species," he insists. "Practical reality resembles [not Noah's ark but] Noah managing an ark on a budget constraint. This budget constraint may exclude some animals from the ark. It may also result in unequal berthing accommodations on the ark."

Sullivan is uncomfortable with this kind of talk. "Yes, we have to make choices, but that doesn't mean we have to write off some species. I don't believe in saying we can let a species go. I approach it from the point of view of maintaining the health of the ecosystem and diversity across all ecosystems." Other responses to Coursey's study share this flavor of denial. Some advocates of the Florida panther were furious that the $4 million-per-panther figure had been made public. A Chicago Tribune editorial suggested that Coursey's study meant we should focus on saving whole ecosystems--true but evasive, since all ecosystems may not fit on the ark either.

Yet one of Chicago's most accomplished environmentalists--the Nature Conservancy's Steve Packard--describes Coursey's study as "the kind of sensible, practical, down-to-earth thinking we need a lot more of. I think we can't save everything, and I think we have to choose. We don't save all the genetic alleles [variations]. We can't even study them. What are the genes of our rare local spider populations? Well, forget it. And they're easier to study than nematodes or bacteria.

"Not only do we have to decide in terms of dollars, I think of it every day in terms of how I spend my time. Dozens of projects come across my desk every day that I can't do anything on or that I can budget just one phone call on and that's all.

"When we set up the Volunteer Stewardship Network [now up to 4,847 volunteers on 37,554 acres, supported by two paid staff] we said we would support people working in places that had been identified in the Illinois Natural Areas Inventory or places of demonstrably equal value. A tremendous number of people called up and said, "Well, there's this nice place near my house. It's pretty good. I'd like to restore it as part of VSN.' And we said, no. We had to. There's only so much time to answer people's phone calls or questions. We can teach 20 people how to burn a prairie, but not 400.

"You can say, "I'm Noah and I'm going to save everything--even every blade of grass. After all, what if there's some unique and valuable mold on that leaf?' If that's your attitude you'll be a poor steward of the land, because a lot of things will go extinct while you're working on something less important. I think Don Coursey is trying to tell us that that attitude isn't good enough anymore."

As an economist, Coursey is unsurprised by the need to choose. His paper simply points out what our choices have been so far: "Congress is buying protection of animals in a manner consistent with the median desires of the public. Let the public beware."

In an earlier paper, "The Demand for Environmental Quality" (December 1992), Coursey asked another simple question: what determines whether we want a clean environment? "I went into this project expecting to find a lot of factors involved," he says. When economists analyze other kinds of purchases they don't usually find people's choices dominated by a single factor. "It would be a shock to discover that there was only one main reason for your choice of shoes to buy, instead of a combination of where you live, how much money you have, your age, and your taste. But in the case of buying an improved environment, income was the most important variable. Others were at best distant seconds." Also-ran variables he looked at included (in the U.S.) the cost of cleanup and the dissemination of information and (internationally) the degree of democracy, literacy, and population density.

"The income level of approximately $5,000 per-capita [$4,500 elsewhere in the paper] seems to represent a critical threshold level in explaining the demand for environmental quality," Coursey writes. "Once the income level of $5,000 is reached, interest and expenditures increase with income and the demand for environmental quality usually exhibits the properties of a luxury good."

Luxury good?

"When economists use that word," says Coursey, "they always mean that demand for that good exhibits certain mathematical properties. It means that when your income goes up, you spend more on it, even more in percentage terms than the increase in your income. That's different from food: if your income went up 10 percent you'd spend more on food, but not 10 percent more. In addition "luxury good' sometimes means that there's a threshold level of income below which you wouldn't spend anything on it, like a luxury European sedan.

"And that's how it works for the environment. After a society passes that threshold, for every 10 percent increase in income there's a 25 percent increase in spending on environmental quality. Now 2.5 to 1 is a very high ratio--it's like jewelry or recreational air travel."

Is nature as dispensable in a pinch as a Mercedes-Benz? No, though that's how we've dealt with it in the past. But again, economics is about what we actually do choose, not what we ought to.

Coursey's latest question may be his simplest, and most controversial, yet: "What exactly is fair environmental treatment?" This time the concept of "choice" begins to look even less benign.

Some background: For more than a decade the evidence has been piling up that poor and minority people tend to be stuck with more polluted environments. Nationwide studies in 1987 ("Toxic Wastes and Race") and 1994 ("Toxic Wastes and Race Revisited") by the United Church of Christ Commission for Racial Justice found that "the location of many hazardous waste sites is closely correlated with the location of low income and minority communities," in Coursey's words. But these studies used ZIP code areas for locations, not the smaller and more precise census tracts. And they covered just one slice of time.

Without knowing more history, the 1994 UCC study acknowledged, you can't tell what exactly brought about the correlation between toxic wastes and race. Were the people there first, and had the waste site been imposed on them against their will? That's what we tend to think of as environmental racism. But the correlation could have come about in other ways. As Coursey explained in the summer 1994 issue of FREE Perspectives (the newsletter of the Seattle-based Foundation for Research on Economics and the Environment), "Some histories will document a voluntary tradeoff between housing choice and proximity to a dangerous facility, some will document a housing choice that would not have been made if hazards had been known prior to inhabitancy, and others will document histories of a facility being imposed upon an already populated community. Thus to make scientific claims about the extent of injustice, a detailed history of each hazardous waste site must be evaluated."

In the October 1994 report "Environmental Racism in the City of Chicago: The History of EPA Hazardous Waste Sites in African-American Neighborhoods" Coursey systematized this line of thought, creating six possible historical scenarios:

1. Siting - Danger - People (people move into an area of known danger).

2. Siting - People - Danger (people move into an area that's later discovered to be dangerous).

3. Danger - Siting - People (a dangerous facility is sited, then people move into an area).

4. Danger - People - Siting (people live in an area, then a known dangerous facility is sited near them).

5. People - Siting - Danger (a facility that is not known to be dangerous is sited in a region where people live and is later determined to be dangerous).

6. People - Danger - Siting (for practical purposes, the same as number four).

So far so good. But Coursey's analysis then focuses on individual rather than institutional actions: "One would be hard pressed to call a situation in Scenario 1 racist. In that case, the people voluntarily assumed risk by moving into a dangerous area. [Emphasis added.] Contrast that, however, with a situation within Scenario 6 where a dangerous facility is sited within an existing community. In that case, the potential for racism is much greater. However, even in Scenario 6, decisions were not necessarily racist. There could have been other economic or geographic factors which contributed to a siting decision."

With this conceptual framework in place, Coursey followed UCC's lead by looking at abandoned waste sites in the city that were identified by the EPA under the 1980 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The EPA listed 192 such places, usually old factories, in the city of Chicago. Over the next nine months he and four graduate students (Geer, Hammond, Christine Hagerbaumer, and Betsy Mendelsohn) got a number of surprises. The first was how hard it was to get information on the sites. The EPA couldn't find any files at all for 36 (15 percent) of the 192. Another 34 turned out not to be sites but irrelevant things like the home address of a corporate president. And historical information on the rest was often scant. The group took a random sample of 30 from the remaining 122 and set out to find out both the pollution history and the demographic history of each. Their final report includes sections on African American migration to Chicago, industrial trends, and the growing knowledge of the dangers of industrial pollution.

But the big surprise came at the end, when they mapped the African American population and the existing waste sites for every census year from 1940 through 1990. There was no correlation, so the issue of historical causality never even came up.

"The data do not support the claim of environmental racism," they wrote. "In fact, it tells us just the opposite. For example, [in 1990] the average % black per census tract actually drops from .428 in all census tracts to .396 in census tracts around CERCLA sites, while the average % white increases in tracts with CERCLA locations from .42 to .434. This seems to indicate that whites are more likely to live near CERCLA sites than blacks." As Coursey said at the October press conference where the study was unveiled, "Lots of terrible things have happened to African American communities in Chicago. Disproportionate exposure to hazardous waste sites is not one of them."

This is a shocker, even if it's not the whole story. And Coursey is the first to admit that it's not the whole story: he and another group of students are now looking at active Chicago waste sites identified by the EPA under the Resource Conservation and Recovery Act. (Their report may be complete this month.) If funding continues to be available, he'd like to investigate other likely environmental issues where injustices are suspected to occur, such as lead poisoning, mercury poisoning from fish, siting of landfills and incinerators, and the investigation and enforcement of environmental violations. In the long run he wants to bring all kinds of data about Chicago's population, neighborhoods, hydrology, health records, and environmental quality together in a single powerful model he likens to "a giant club sandwich."

If any environmentalists liked the first ingredient in the sandwich they've kept quiet about it. Local environmental-justice activists who've looked at Coursey's study have two complaints about it. One is its findings, which they don't believe will hold up given further study and better data. (In their view, Coursey and his students, rummaging in the racist haystack of Chicago, managed to pull out a nondiscriminatory needle.) The other problem, for some, is the whole way Coursey thinks about environmental racism, regardless of what facts he turns up.

Coursey says that, knowing what he knows now, he might have started with something other than abandoned waste sites. "I didn't know I was going to be dragged into this debate," he says. But having been dragged in, he won't duck it. He's scheduled to debate environmental justice with Ralph Nader at an April 18 conference in Washington, D.C., that's sponsored by Dun & Bradstreet Information Services, Environmental Data Resources, and the Bureau of National Affairs.

Most environmentalists argue that if Coursey and his students had coordinated their work with the environmental-justice movement's agenda and focused first on current siting disputes they would have found racial disparities. If they had covered the whole metropolitan area they would have found racial disparities, because just looking at Chicago leaves out large numbers of whites who have presumably escaped polluted areas by moving to the suburbs. And if they had appreciated the "racist and classist institutional biases of EPA's program," according to Charlie Cray of Greenpeace, they would have realized that the CERCLA list they used probably has gaps in communities that are poor, or lack clout, or are too busy with other problems to get their neighborhood nuisance on the list.

This last criticism touches a nerve. "It is true that these places get raised as sites because someone called in. No one has gone out and started punching holes in the ground and testing samples all over the area systematically. On the other hand, these calls do generate a paper trail. If racism is involved, they would have to have been thrown away at the very first phone contact. I don't think there is less chance of something being reported in a poorer neigh- borhood than in a richer one. The report might come in sooner [in the rich neighborhood]--but it only takes one."

The results of the study made news, but an investigation of active waste sites or environmental enforcement may well reveal racism. More bothersome to some environmental-justice activists are the study's assumptions. Cray wrote last fall: "Altgeld Gardens [a far southeast-side CHA development] is an area where the issue of environmental racism has often been looked at. . . . AG was built on an old Pullman dump, near existing dumps, a highway and an MSD [Metropolitan Water Reclamation District sludge-drying facility]. It was started as public housing for people, many on welfare, who probably didn't have any other options at the time they moved in. But just because most of the dumps were there first [scenario number two] means it's not a case of environmental injustice, just a problem with housing discrimination? That would be a limited interpretation of what people's "environments' really are! . . . Does this kind of academic hairsplitting really help the activist community move its agenda forward, or can it be used to deny people's sense of injustice?"

Coursey has the scientist's instinct to pick a problem like "environmental justice" apart, regardless of the effect on someone else's agenda. His point, in part, is that although the toxic result of each of his six scenarios may be the same, the remedies will be different. If most of the unfair unequal exposure to toxics came about because of illegal racial steering in real estate or segregated CHA developments, then we need more money for fair-housing enforcement or more scattered-site public housing. In that case such measures as the "Environmental Justice Act of 1993," which focuses on industrial siting (and was cosponsored by Senator Carol Moseley-Braun), would not be much help.

Still, there's a hard edge to Coursey's six scenarios that may make even his fans flinch. Jim Schwab, a Chicago planner and author of the new book Deeper Shades of Green: The Rise of Blue-Collar and Minority Environmentalism in America, is no fan. He describes Coursey's six possible scenarios as "a particularly naive construction of the issue. They assume that if you moved in there [scenario number one] it's your fault. That assumes a lot more choice about where these people had to live. You go where prices force you to go. People's choices are sometimes limited.

"The Sun-Times article quoted someone from the waste industry who said that putting an incinerator in [the all-black suburb of] Robbins couldn't be environmental racism because they [city officials] were begging for it. Well, that begs the question of why they're begging--a town with little tax base, high poverty rate, low median income, desperate for a solution. You could say that it's a voluntary move on their part [to welcome the incinerator]--where's the racism in that? The deeper question is, How did they get in that position and their [white] neighbors did not?"

This is an example of Coursey's scenario number six, and his response to Schwab is straight out of Econ 101: "We are all constrained by lack of time and resources. Everyone would like to have more money and a better job and a better place to live--even the richest of us, even Oprah Winfrey. Richer people have a larger scope of possible trades, but they are not "perfectly free' either.

"On another level, especially for black people, there have been other problems--redlining, black zones, etc. We attempt to delineate that history of discrimination in the study. But even including it doesn't change the story that much. If you look at the map [of Chicago racial settlement every ten years] you see that institutional racial discrimination is going on, but not connected with siting."

"I didn't grow up wanting to be an economist," says Coursey. "I had to take it for a college distribution requirement. And what I learned in the first five minutes of my first economics class is still the most important thing. Voluntary exchanges make both parties better off--it's not a zero-sum game. And therefore we should maximize voluntary exchanges."

Sounds OK if you're talking about two guys dickering over the price of a new car. But what about a mother who decides to leave Robert Taylor Homes, where her kids may get shot, and move to Altgeld Gardens, where she fears they may get poisoned? Presumably she's the best judge of where the family is better off. But should she have to make that choice? The environmental-justice movement says no. Coursey doesn't answer the question--in fact he doesn't even seem to have asked himself the question.

What he offers instead is a story from two years ago. "Chrysler wanted to build a new factory for a new minivan line. They found a downtown Detroit lot in a poor minority community--but EPA required that they spend a huge amount of money to clean it up. So Chrysler planned to go to a new site in a green-field [undeveloped suburban] area. The Detroit community went crazy, and eventually they made a deal: Chrysler would spend a limited amount on cleanup and monitoring and build the plant in downtown Detroit. Now you could fly over it and look down and say, "Oh look, environmental racism!' But that could not be further from the truth."

Ultimately what's fair has more to do with how you see the world than with technical details like whether the CERCLA list is biased. "Is it fair that stringent clean-up standards calling for a return to pristine environmental conditions be applied to [poor or minority] communities when they often face other pressing social problems?" Coursey asked in the FREE newsletter. "Is it better to allow these communities the option of containment or limited clean-up and then allow a portion of saved money to be applied to other problems?" Is this a fair question--assuming as it does a voluntary transaction in which both parties wind up better off than before? Or is it an unfair question, because it disregards the institutional racism that put African Americans in that position to begin with? Each side seems awfully sure of the answer.

Art accompanying story in printed newspaper (not available in this archive): Photo/Lloyd DeGrane.


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