Seminar: Environment-Enhanced Momentum and Demand for Environmental Quality

Speaker: Alberto Salvo

Alberto Salvo is an Associate Professor of Economics at the National University of Singapore. His research interests include Energy & Environmental Economics, Industrial Organization, and Applied Microeconomics in general. His current research falls under the broad theme: “Individual Behavior, the Environment, and Socioeconomic Outcomes.” He studies how the behavior and incentives of economic agents, such as households, workers and firms, interact with scarce environmental resources, such as air and water. He collaborates across disciplines, including atmospheric sciences and environmental health. His recent work focuses on Asia’s under-studied and globally critical environment and society.

Abstract: We develop a dynamic contest model to investigate how environmental factors shift worker incentives, effort, and transitions in equilibrium. The theory predicts that an adverse environment enhances the momentum of an early win and shows how the demand for environmental amenities can be inferred from dynamic behavior. We test and apply our theory to high-profile tennis matches in Australia and China and find that heat and pollution enhance strategic momentum. Relative to cooler and cleaner environments, an elite worker’s disutility from an additional battle at temperatures above 27 Celsius is $4,000; the disutility from a battle at PM2.5 levels above 200 ug/m3 is $12,000. Our structural approach links contest theory to environmental valuation and is amenable to quantifying agents’ disutility from adverse environmental shocks more broadly.

Location: Warren Hall 175 


Applied Economics and Management, Dyson

Cornell Institute for China Economic Research (CICER)