New faculty member brings passion for environmental economics

When Matthew Kahn was nine years old, in the early 1970s, he wrote a letter to then-President Gerald Ford to inquire about the details of Ford’s “Whip Inflation Now” economic program.

“At a very young age I was already thinking about inflation,” Kahn laughed. Rather than a substantive reply, however, Kahn received an autographed photo of the president.

His enthusiasm for economics was hardly dampened. When Kahn was a teenager, his father charged his son with reading the New York Times.

“I could tell that economics was really important in explaining what was going on at that time, in the early ’80s. Economics appeared to be everywhere on the front page, and I thought that it could help me understand the world.”

Drawing parallels

Today, the environmental and urban economist’s research is focused on China. A book he co-authored on the topic, Blue Skies over Beijing: Economic Growth and the Environment in China (Princeton University Press, 2016), is slated for publication in May.

Kahn’s view is an optimistic one: Although many of China’s major cities are suffering the consequences of heavy industry and the resulting pollution, he predicts that many of its coastal cities should experience environmental progress as the country’s economy moves away from heavy manufacturing toward cleaner sectors.

His argument uses the historical evolution of American cities as a comparison.

“In some of my earlier work I was really interested in Pittsburgh,” he said. “It was a place where the golden goose in the 1950-60s was heavy steel. And steel created middle class jobs and a booming economy but also pollution, so there was a tension there.”

Kahn is also fascinated by California’s coastal cities where a very different economy has taken root revolving around quality of life.

“In Los Angeles and San Francisco, the golden goose is the brain; it’s being a productive, happy person. With a great quality of life, cities can attract and retain skilled workers — the Elon Musks — and that creates incentives for mayors to deliver green space, blue skies and clean water. My new book brings the same logic to bear, and we predict a similar dynamic will soon play out in China’s rich coastal cities.”

“I view myself as a free market environmental economist. I am very passionate about the environment but a believer that with capitalism — through setting up the rules of the game well — we can achieve the win-win of protecting our environment and having a robust economy. I’m one of many micro-economists thinking about how we set up these rules of the game.”

A warm welcome

Kahn is currently a visiting professor of economics and spatial sciences at USC Dornsife but will come onboard full-time in August. Previously Kahn taught at Columbia, Tufts, Harvard and Stanford Universities, and most recently he spent nine years at UCLA.

“I’m delighted to have Professor Kahn joining our economics faculty,” said USC Dornsife Interim Dean Dani Byrd. “In addition to his superb research on urban economics and sustainability, he will bring his commitment to undergraduate education and his tremendously engaging teaching style to students in one of Dornsife’s largest programs.

“Given the critical importance of economics to understanding current environmental challenges, the impact of Professor Kahn’s research combined with the value that he places on a liberal arts education perfectly suit Dornsife’s educational and research mission.”

Joshua Aizenman, Robert R. and Katheryn A. Dockson Chair in Economics and International Relations, and professor of international relations and economics, agreed.

“Professor Kahn has a keen interest in China and other emerging markets, as well as social capital in the context of economic history. Matt’s creativity, scholarship and the wide interdisciplinary overreach of his work puts economics at USC at the frontier of applied research dealing with three intertwined challenges: urbanization, the environment and development.”

Kahn said he was attracted to USC Dornsife because of its commitment to the Pacific Rim and issues related to Asia, which will continue to be part of his work.

“Economics at USC has always been very strong in technical fields like econometrics and theory. I’ve joined the department to help the university embark on urban economics and applied fields, applying the tools of econometrics and theory to real-world issues. There are really important questions out there, but you can only intelligently approach them if you’re rigorously trained. USC has this potential for the best of both worlds.”

A commitment to teaching and collaboration

In Fall 2015, Kahn taught an environmental economics class at USC Dornsife and is teaching urban economics this Spring. He appreciates the smaller class sizes and the caliber of his students.

“As someone who is passionate about undergrad teaching, I had a great first semester at USC. I’m teaching fewer students than I taught at UCLA and I’m getting to know them better on an individual level.”

Kahn is also excited to collaborate with researchers in USC Dornsife’s Spatial Sciences Institute (SSI).

“I am very interested in which cities will be able to adapt to climate change. What I need from SSI are students that are really well trained in geographic information systems (GIS). The rise of spatial sciences has allowed me to do better research, and because USC is so strong in this area I’m going to devote more of my time to it.”

He plans to initiate a new undergraduate research project on the economic impact of forest fires. Since L.A. is both very dry and surrounded by forests, he wants to explore how fire risks are exacerbated by climate change — and how that affects air pollution in the city and by extension health risks for children and the elderly.  

“I can only do that if I have a good GIS team for mapping the spatial distribution of fires and the resulting effects on elevating particulate levels.”

Inside and outside the classroom

Ten years ago, Kahn started his blog Green Economics, in part because “my wife told me to put it there so I’m not randomly talking about it at dinner.” Since then, the educator has written 4,000 entries and developed a national following.

“I started the blog because I wanted to continue to write books and peer-reviewed papers, but I also want to be a bit more of a public intellectual. We just launched a Twitter page for the USC Dornsife economics department.”

When he’s not writing or researching, Kahn enjoys spending time with his 14-year-old son, a keen fencer, and his wife Dora Costa, an economist at UCLA and a frequent writing collaborator.

“There’s a lot of talk about economics in our house. I’m also a Lakers fan, and I follow the NBA very closely.”

One of the big themes of his life’s work, he says, revolves around this question: When people move to cities to earn a higher income, do they actually gain a higher quality of life if cities are polluted, congested and dangerous?

“My work asks, how do we set up incentives such that cities offer a high quality of life for everyone, not just the rich, in both the developed and developing world?”

Stay tuned.

Read Matthew Kahn’s op-ed in the Harvard Business Review on coastal cities: hbr.org/2016/01/rising-sea-levels-wont-doom-u-s-coastal-cities