University of Rhode Island, Department of Environmental & Natural Resource Economics
AAEA Activities: Annual Meeting Selected Paper Presenter
Tom Sproul has recently completed his PhD in Agricultural and Resource Economics at University of California, Berkeley, and this fall will be an Assistant Professor in the Environmental and Natural Resource Economics Department at the University of Rhode Island. His research background is in Environmental Economics and Agricultural Policy, with a focus on Microeconomic Theory.
Tom’s dissertation research is about the effects of risk and uncertainty on environmental and agricultural policy. In his paper, “Accidents Happen: The Effect of Uncertainty on Environmental Policy Design,” he shows how classical environmental policies of Pigouvian taxes, pollution abatement subsidies, and systems of tradable permits must adapt to uncertainty, in order to regulate environmental accidents like the recent BP spill in the Gulf. He considers a risk-neutral, accidentally polluting industry and identifies three policies that lead to the optimal solution: strict liability, a stochastic subsidy, and a mandatory mutual insurance scheme. The subsidy policy may be very costly to taxpayers, especially when prevention affects the probability of accident occurrence, and strict liability may be excessively draconian; polluters are also victims and liabilities must exist regardless of adherence to professional standards of care. He proposes a new liability-pooling scheme, which plays a similar role to tradable pollution permits in that riskier firms subsidize safer ones in expectation.
Last year at the AAEA Annual Meeting in Denver, Tom presented his work on “The Economics of Nested Insurance: The Case of SURE.” In that work, he evaluates the SURE program in the 2008 Farm Bill, and shows how nested disaster insurance may only benefit the most risk-neutral farmers. For farmers that are more risk-averse, the added payments are structured such that they add considerable variability over standard crop insurance, so they are of little value in an expected utility framework. He also found the meetings to be a great venue for meeting and collaboration with co-authors who are based in other parts of the country.
Tom’s current research interests include mechanism design, risk modeling, insurance, risk management, and agricultural finance. His work on risk and insurance is not only informed by his background in Microeconomic Theory, but also by professional experience. Before starting his PhD studies, he underwrote Property, Casualty, and Specialty insurance in Northern California. In addition to his academic pursuits, Tom enjoys traveling, sports, and computer programming.
This post is part of an ongoing series of profiles of AAEA members. Have a suggestion for a future profile? Send them to Info@aaea.org.