John Quiggin

The University of Queensland | UQ · School of Economics

Looking at the role of solar photovoltaics in the energy transition is reminiscent of the paradox arising from the clash of an irresistible force and an immovable object. In this note, it will be argued that the irresistible force of low‐cost solar generation will win out over the apparently immovable obstacles.

Working Nation is not the radical break with the existing policy framework implied by Albanese’s pre-election rhetoric. However, restoring a meaningful definition of full employment as an objective of government policy is a step in the right direction.

This chapter examines the relationship between trade unions and Basic Income. Organized labour’s orientation towards Basic Income can be characterized as a combination of indifference and outright hostility, punctuated by several interesting and important examples of support. We describe the key dimensions of this relationship, with reference to hi...

The 2022–2023 review of the Reserve Bank of Australia, published in March 2023, was a missed opportunity to reconsider the currently dominant framework for monetary policy. This framework, based on strong central bank independence and reliance on adjustments to central bank interest rates to achieve a 2–3% inflation target, has performed poorly at...

In this paper, a model of competition in supply functions is used to analyse the relationship between market power and inflation. The model encompasses a range of market structures with Cournot and Bertand competition as polar cases. To the extent that inflation is driven by demand shocks, firms with market power are likely to respond by increasing...

Increasingly, irrigation infrastructure upgrades have been regarded in global policy as a solution for both water scarcity and low agricultural productivity. However, these technical “fixes” may ultimately prove to be dangerous shortcuts that do little to address the concerns of irrigators, Indigenous People, environmental groups, and local communi...

How large is Australia's fiscal space? Blanchard (2019) shows that as long as the real interest rate R $R$ is below the real growth rate G $G$, a government can sustain a positive primary deficit with a constant (or even declining) ratio of public debt to GDP. In this article, we explain the neutral real interest rate and the reasons for its declin...

The concept of global public goods has played an increasingly important role in discussions of sustainable development. Prominent examples include control of pandemic disease and mitigation of climate change. In this paper, it is argued that poverty alleviation should be considered as a global public good. The feasibility of a global Basic Income i...

Interest in the foundations of the theory of choice under uncertainty was stimulated by applications of expected utility theory such as the Sandmo model of production under uncertainty. The development of generalized expected utility models raised the question of whether such models could be used in the analysis of applied problems such as those in...

The term ‘neoliberalism’ is widely used and often misused and misunderstood. Properly understood, it is the ideological underpinning of the era of financialised capitalism which emerged from the economic crises of the early 1970s and remained dominant for the rest of the twentieth century. Its central theme was the idea that markets, particularly f...

This policy brief provides an assessment of key policy and technical issues, opportunities and options and provides recommendations to support Queensland Government in the design and delivery of the Queensland Climate Action Plan (QCAP) toward net-zero emissions.1 The findings herein are based on presentations and discussions by leading experts fro...

We derive representations of incomplete preferences in terms of willingness-to-pay measures. The paper demonstrates how these representations can be used to determine whether preferences are incomplete. We also study local approximations to incomplete preference structures and how attitudes to ambiguity affect willingness-to-pay measures.

Universities aspire to offer students a transformative experience, but rarely spell out the nature of this transformation. In this essay, L. A. Paul and John Quiggin frame the successful university education as transformative in the philosophical sense. They explain the way that a successful college education can be understood as generating an indi...

In this paper, we develop the concept of the strategic industry supply curve, representing the locus of Nash equilibrium outputs and prices arising from additive shocks to demand. We show that the standard analysis of partial equilibrium under perfect competition, including the graphical representation of supply and demand, due to Marshall, can be...

Ambiguity in the ordinary language sense means that available information is open to multiple interpretations. We model this by assuming that individuals are unaware of some possibilities relevant to the outcome of their decisions and that multiple probabilities may arise over an individual’s subjective state space depending on which of these possi...

Historically, water resource policy in the Murray–Darling Basin (Basin) has taken a pro-farmer orientation leaving the environment to become the residual claimant. Around 1990, the attention was focused on minimizing overuse that led to on-farm productivity losses and developing a market for water to help define opportunity costs of water in irriga...

This paper shows how dual concepts of risk-aversion, developed by Chambers and Quiggin may be extended to the case of state-dependent preferences, whether or not these preferences are autocomparable in the sense of Karni. We characterize autocomparability as a special case. We show how standard comparative static results, originally derived for the...

This paper begins with the observation that the constrained maximisation central to model estimation and hypothesis testing may be interpreted as a kind of profit maximisation. The output of estimation is a model that maximises some measure of model fit, subject to costs that may be interpreted as the shadow price of constraints imposed on the mode...

We show that if sophisticated institutional managers and individual investors perceive tail-risks differently, then a new explanation for the pricing kernel puzzle emerges. We show, by example, that even a tiny difference in tail-risk perception by the two investor types can explain the pricing kernel puzzle.

The large discrepancy between the pay of chief executive officers (CEOs) and their subordinates within organizations is attracting increasing attention and controversy. While there is evidence that this pay disparity may be contributing to rises in societal income inequality (and thus the range of associated social ills), there is little understand...

We analyze financial markets in which agents face differential constraints on the set of assets in which they can trade. In particular, the assets available to each agent span a partition of the state space that can be strictly coarser than the partition spanned by the assets available in the market. We first show that the existence of differential...

Justification logics are a family of modal logics whose non-normal modalities are parametrised by a type-theoretic calculus of terms. The first justification logic was developed by Sergei Artemov to provide an explicit modal logic for arithmetical provability in which these terms were taken to pick out proofs. But, justification logics have been gi...

A variety of forms of basic income (BI) have been proposed, including universal payments, guaranteed minimum incomes and negative income taxes. The relative merits of these proposals have been the subject of some debate. Much of the confusion surrounding the issue can be resolved by the observation that, in terms of their effect on the final distri...

This paper analyzes the diffusion of neoliberal policies from the UK to Australia and New Zealand, and then to the Asia-Pacific region. The analytical framework employed is the world systems model developed by Immanuel Wallerstein. The primary focus of attention is the spread of public-private partnerships (PPPs) modelled on the UK Private Finance...

Economists have recently proposed a theory of identity economics in which behavior is understood to be shaped by motivations associated with identities that people share with others. At the same time psychologists have proposed a theory of identity leadership in which leaders' influence flows from their creation and promotion of shared identity wit...

The aim of this article is to provide an overview of the economic problems of toll roads and to suggest solutions to those problems. The major difficulty to be confronted is that of ‘unscrambling the egg’, that is, of dealing with the complications created by past policy mistakes, which have been locked in through long-term toll road contracts.

Australia is planning to take action to tackle climate change via improvements in light vehicle fuel efficiency. The proposed light vehicle emissions standards are expected to reduce petroleum use as well as greenhouse gas emissions from passenger vehicles, sports utility vehicles and light commercial vehicles. Consumers of light vehicles, includin...

In the real world, there can be constraints on rational decision-making: there can be limitations on what I can know and on what you can know. There can also be constraints on my ability to deliberate or on your ability to deliberate. It is useful to know what the norms of rational deliberation should be in ideal contexts, for fully informed agents...

The central theme of this article is the observation that improvements in information and communications technology (ICT) and in labour quality represent ‘embodied’ technological progress, as distinct from the ‘disembodied’ residual represented by multifactor productivity (MFP) growth. The seeming paradox of continued labour productivity growth com...

We introduce linguistic ambiguity into a principal–agent contracting framework. Contracts are drafted in a common language. Nevertheless, the principal and the agent may ultimately disagree about the terms of the contract that apply ex post. We presume that both parties are ambiguity averse and for tractability reasons that their preferences take a...

The problem of climate change is one of the most critical issues facing modern societies. Economics is crucial in assessing the costs and benefits of various proposed responses to climate change, and in designing policies that encourage the adoption of the most cost-effective responses. In particular, economic analysis is needed to assess the appro...

In this note, it is shown that in a Bayesian model with unawareness of impossible (probability zero), or vanishingly improbable, events, awareness can only change after such an improbable event has actually been observed.

Given the large and increasing bushfire threat to lives and property in Australia, there is a need for economic evaluation of risk mitigation policies that can be implemented by governments and homeowners. Three broad policies applicable for existing at-risk communities are evaluated: expanded use of landscape-scale prescribed fire; home ignition z...

During the recent economic crisis, Keynesian ideas about fiscal stimulus briefly seemed to form the basis of a new expert consensus about how to deal with demand shocks. However, this apparent consensus soon collapsed into a continuing dissensus, with important consequences for policy. Neither conventional bargaining accounts nor existing theories...

We consider an evolutionary approach to how awareness is determined in games where players are not necessarily aware of all possible strategies. We begin with the standard notion of evolutionarily stable equilibrium, in which potential players pursue a fixed strategy. This constitutes a minimal level of awareness, since players are not required to...

This paper draws on recent developments in the theory of choice under uncertainty to model anomalies in intertemporal choice. Cognitive limitations leading to hyperbolic discounting and magnitude effects in intertemporal choice may be described in terms of bounded awareness, and represented by phenomena familiar from visualization software such as...

Climate risk represents an increasing threat to poor and vulnerable farmers in drought-prone areas of Africa. This study assesses the maize adoption responses of food insecure farmers in Malawi, where drought-tolerant (DT) maize was recently introduced. A field experiment, eliciting relative risk aversion, loss aversion and subjective probability w...

Thought experiments are commonly used in the theory of behavior in the presence of risk and uncertainty to test the plausibility of proposed axiomatic postulates. The prototypical examples of the former are the Allais experiments and of the latter are the Ellsberg experiments. Although the lotteries from the former have objectively specified probab...

The agricultural sector is commonly regarded as one of the most vulnerable to climate change. Current understanding of the impact of climate change on this sector relies on the underlying assumptions about farmers' possible responses to weather variability, including changes in crop choice, input combinations and land management practices. Many pre...

Risk and uncertainty issues have been long addressed by members of AARES, reflecting the importance of the issue in agriculture, particularly in Australia. Members have been among the most innovative developers of methods and insights, around the world, as is reflected in the many publications in journals beyond the domestic shores. It seems, given...

Climate risk represents an increasing threat to poor and vulnerable farmers in drought-prone areas of Africa. This study assesses the maize and fertilizer adoption responses of food insecure farmers in Malawi, where Drought Tolerant (DT) maize was recently introduced. A field experiment, eliciting relative risk aversion, loss aversion and subjectiv...

This paper draws on recent developments in the theory of choice under uncertainty to model anomalies in intertemporal choice. Cognitive limitations leading to hyperbolic discounting and magnitude effects in intertemporal choice may be described in terms of bounded awareness, and represented by phenomena familiar from visualization software such as...

Recent literature has examined the problem facing decision makers with bounded awareness, who may be unaware of some states of nature. A question that naturally arises here is whether a value of awareness (VOA), analogous to value of information (VOI), can be attributed to changes in awareness. In this paper, such a value is defined. It is shown th...

We propose a notion of a sub-model for each agent at each state in the Heifetz et al. (2006) model of interactive unawareness. Presuming that each agent is fully cognizant of his sub-model causes no difficulty and fully describes his knowledge and his beliefs about the knowledge and awareness of others. We use sub-models to motivate the HMS conditi...

Although expected utility (EU) theory is a powerful tool for the analysis of decision under risk, it has long been known that individual behavior, in both experimental and market settings, deviates from the predictions of simple EU models. These violations of EU predictions were largely disregarded until the late 1970s, when a variety of alternativ...

Grant and Quiggin (Econ Theo 54:717–755, 2013a, J Econ Behav Organ 93:17–31, 2013b) suggest that agents employ heuristics to constrain the set of acts under consideration before applying standard decision theory, based on their restricted model of the world to the remaining acts. The aim of this paper is to provide an axiomatic foundation, and an a...

Since the mid-1970s, Australian economic policy has been dominated by market liberalism, also called neoliberalism and economic rationalism. Neoliberalism created the preconditions for the global financial crisis and, repackaged as ‘austerity’, ensured that the crisis became a sustained depression engulfing most of the developed world. Despite some...

Introduction Since the mid-1970s, Australian economic policy has been driven by a set of ideas based on the claim that a market economy, with minimal government regulation, will outperform any alternative. The central goal of policy has been to reduce the scope and extent of government activity, with the aim of promoting productivity growth. The do...

At a time when neoliberal and conservative politics are again in the ascendency and social democracy is waning, Australian public policy re-engages with the values and goals of progressive public policy in Australia and the difficulties faced in re-affirming them. It brings together leading authors to explore economic, environmental, social, cultur...

The construction of national accounts by Colin Clark and others was a major contribution to, and assisted the documentation of, the prosperity of the second half of the 20th century. In the 21st century, the crucial problem is to account for the value of information. Information is, naturally a public good, even though it is costly to produce. More...

We consider the optimality of liquidated damages contracts in a setting of contractual ambiguity and potential for disputes. We show that when parties are ambiguity averse enough, they will optimally choose liquidated damages contracts and sacrifice risk sharing opportunities.

In 2012, Australia took the major step of introducing a carbon price, involving the creation of a system of emissions permits initially issued at a fixed price. Carbon Pricing brings together experts instrumental in the development, and operation, of Australia's carbon policy who have played a significant role in the broader debate over climate cha...

The problem of climate change has been described as 'a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen' (Stern, 2007, p. i). Among the factors that make climate change a difficult problem, arguably the most important is uncertainty about the future course of climate change, and the effect of policies a...

In this chapter, it is argued on the contrary that the RET is not merely complementary to the carbon market, but is a welfare-improving policy, even after the introduction of the carbon price. The central argument is that, because of political resistance to carbon pricing, the price has been set at a level that is below that of the optimal path, an...

More than a third of humanity lives in regions with less than 1 million liters of fresh water per person per year. Population growth will increase water demand while climate change in arid and semi-arid areas may reduce water availability. The Murray-Darling Basin in Australia is a region where water reform and planning have been used to reduce con...

We analyze the setting of access prices for a bottleneck facility where the facility owner also competes in the deregulated downstream market. We consider a continuum of market structures from Cournot to Bertrand. These market structures are fully characterized by a single parameter representing the intensity of competition. We first show how the e...

In this paper, it is argued that differential awareness plays a crucial role in the operation of financial markets. The interaction between awareness and arbitrage is crucial in explaining both beneficial and harmful financial innovations. Financial crises may be explained as the result of sudden changes in awareness, which may be exogenous or endo...

Since the Australian government introduced the Higher Education Contribution scheme (HECS) in 1989, a number of countries have adopted income contingent loans (ICL) as a method of financing higher education. The advantages of income contingent loans have been thrown into sharper relief by the crisis surrounding student loan debt in the United State...

This chapter presents a simple model of income contingent loans. It is shown that, under plausible conditions, income contingent loans are superior to (i) market loans under asymmetric information, and to (ii) tax-funded provision. In particular, if individuals expect to repay the loan in full, then reducing labor participation does not remove the...