The Cost of Catastrophe
(continued)

Road to Disaster: The map shows the path of the Katrina storm surge as it traveled up the Mississippi River-Gulf Outlet channel. The numbered boxes represent the areas where the level of the storm surge was measured.

M: What about the argument that we only have a single runway at Lindbergh?

Carson: That is not as big a drawback as people think, because San Diego is located in an area where we don’t have weather that radically alters the capacity of the runway. There will, of course, be increased passenger demand over the next 25 years, but all you need are planes averaging a hundred or more passengers. You would need to build more terminals and more parking etc., but you could certainly land the planes without any loss in numbers of passengers.

M: What do you think is driving the call to build a new airport?

Carson: I think there’s a lot of fear. For example, fear that the biotech industry is going to be destroyed due to not having enough air cargo capacity. But whatever limitations there are with regard to Lindbergh, they pale in comparison to the alternatives. It’s not that there aren’t any problems with Lindbergh, it’s just that the alternatives are so much worse. As soon as you talk about building the airport two hours out in the desert, that drives a nail through the heart of the tourism industry. And as for Miramar, the military has made it pretty clear there’ll be no joint-use.

M: How well do economists work with other disciplines?

Carson: At some level, when you work with engineers, it’s cut and dry. There’s a common language in terms of models, mathematics and statistics. It’s often harder with biologists, because their first reaction is often that economists are just concerned with money. But when you work with very high-powered biologists, and this campus has many of them, they instinctively speak the same language of math, of models and probabilities. The political aspects are at some level more difficult because small groups often benefit hugely at the public’s expense. A lot of things that seem irrational from the point of view of public good get passed because the political forces are aligned to make it happen. Economists are often frustrated because politicians and the public don’t look at things in a rational way.

M: You’re listed as a professor of applied economics. What does that mean and what problems have you found most accessible to the application of economics?

Carson: It means that you get your hands dirty with real data and real problems. The department is very well known for its micro theory group, which works in a much more abstract and purely mathematical world. But what’s surprising is that we’re the consumers of their models, which help simplify the world. In the last 10 years, the department has put together a very, very talented group of applied economists and we’ve continued to systematically hire people in this area.

M: What distinguishes an economics department from a business school?

Carson: These days, at very top business schools, often not a whole lot. You’ll see economics and business school students and faculty working on a lot of the same topics. What you’ll tend to see in an economics department is less of an emphasis on how something would affect a particular company’s bottom line, and much more of an emphasis on broader public policy. A typical business school may be trying to figure out what one business can do. In an economics department, you might be trying to predict how a change in government regulation or government tax policy might affect a group of businesses—would they invest more or hire more people, or how would it affect their profits. The focus would be much less on an individual company and more on broader issues.

M: The department is ranked fifth in the U.S. for highest impact research in economics. What does that mean?

Carson: Impact means how often your work gets cited by others, and not necessarily in your own field. My work is often cited by people who work in environmental policy analysis. And there are other examples. Rob Engle, one of our Nobel laureates, has done a lot of work studying stock markets, transaction by transaction. Joel Watson, who works on game theory, has written a book titled Strategy, which is an immensely popular text for M.B.A. students. Mike Machina, a micro theorist, works on risk and uncertainty. His work was originally thought of as brilliant but esoteric. However, years later, it has a huge impact on the insurance industry, since they deal with risk.

M: What led you to an interest in the study of economics?

Carson: It came about in a very roundabout manner. I was born in Mississippi and started out as a pre-vet major and ended up with a degree in French and Political Science. I went to Washington D.C. and worked on various political campaigns. I ended up earning a master’s degree in international relations at George Washington, and had to take intermediate microeconomics from Mary Hullman who was chair of the economics department there. It was the most fascinating subject. She sort of made it come alive. I took more economics classes, and finally went to Berkeley and earned a masters degree in Statistics and later a Ph.D. in environmental economics.

M: Do you enjoy teaching?

Carson: I do. Economics is the largest or second largest major on campus. Our classes tend to be big, and faculty members are very hard on the students. But when the students graduate, they have a reputation in the local community of being really good. I have lots of students who come back years later and tell me how much my class meant to them. Yes. I enjoy teaching.

In March, professors Ken Melville, Richard Carson and Richard Somerville traveled to Sacramento to co-deliver one of the lectures in the UCSD Near You series (ucsdnearyou.ucsd.edu). The topic was the catastrophic repercussions of the ’05 hurricane season, which had culminated in Hurricane Katrina. Ken Melville, a professor of oceanography at Scripps, discussed the mechanics of hurricanes, the current research on air-sea interaction, and the ability to predict their track across water, and toward land. Richard Somerville, a professor of meteorology at Scripps, dealt with the consequences of Global Warming, citing the facts that the Earth system (atmosphere, ocean, land) is warmer now than at any time in the last 1,000 years, and that over the last 3 decades the number of category 4 and 5 hurricanes has nearly doubled. (For more on the effects of Global Warming see Somerville’s work described in our article in the September 2005 issue of @UCSD Magazine. Richard Carson, a professor of economics, tackled the thorny subject of government policy and spending, and how it relates to the economics of catastrophe. For more information on UCSD’s hurricane research go to: ucsdnews.ucsd.edu/hurricaneexperts.asp

Richard Carson, professor of applied economics.
Interviewed by Raymond Hardie

Photography by Manuel Rotenberg