Our applied economics research addresses pressing societal challenges by using advanced econometric tools to analyze economic and social issues. We focus on areas in economics beyond agribusiness, providing rigorous, evidence-based insights that inform public policy and improve economic outcomes.

2024: Ongoing research

Random Forests for Benefit Transfer

Robert J. Johnston (Clark U.) and Klaus Moeltner (VT)

We show how Machine Learning tools called Random Forests and Local Linear Forests can be a more accurate and efficient alternative to standard estimation techniques in analyzing meta-regression models (MRMs) to predict societal benefits related to enhanced environmental conditions.

The general framework of using existing meta-data to predict economic values is referred to as Benefit Transfer (BT). BT via MRM is the most common approach within federal agencies to determine the societal value (in dollars) of changes in environmental conditions and services. BT estimates are critical inputs to Benefit-Cost Analyses for environmental policies and rulemaking. The stakes for BT to generate accurate estimates are high, given the large amounts of both taxpayer dollars and industry profits affected by large-scale environmental policies.

Our approach improves model fit and reduces confidence intervals for out-of-sample predictions by an order of magnitude compared to existing methods.  The steep reduction in uncertainty for environmental benefits sharpens agencies’ decision tools and rules, reducing the risk of sub-optimal policy designs. We presented the new approach to the U.S. Environmental Protection Agency (EPA), who is already considering adopting it for future rulemaking.

Undocumented Immigrants and the Growth of Hispanic Entrepreneurship

We examined the factors behind the surge in self-employment among Hispanic immigrants over the past two decades, focusing on the role of undocumented immigrants.

Although the surge in self-employment among Hispanic immigrants is often celebrated, there is limited understanding of the drivers behind this trend and its policy implications. Our paper addresses this gap by exploring the underlying causes.

Policymakers need to understand the true nature of Hispanic business growth in order to allocate resources effectively and address vulnerabilities in the informal economy. Additionally, this research underscores the importance of studying undocumented entrepreneurs to better assess their performance and growth potential.