“A Tale of Boom and Bust in New Mexico.”
Dr. Meghan Starbuck
The current world energy situation is rapidly changing the economic conditions in America and around the world. As the price of energy increases new sources of energy will be exploited. It is reasonable to predict that New Mexico will see a new boom period in energy production. Rising prices and expectations of rising demand over a substantial period of time is inducing increasing production of energy from all sources. In New Mexico, these conditions are likely to cause increased production of fossil fuels and of uranium for nuclear energy production. However, if history is any guide, this new boom period will not last—and when this boom eventually busts what will the impact on New Mexico be? Much of it depends on how the communities involved in the resource extraction choose to spend the wealth of the new boom.
Emotions Matter: Horse-Race Bettors Rely on More than Expected Values
Jeremy J. Sierra, Michael R. Hyman
Gaming behavior is a misunderstood consumer activity, in part because researchers view it as economically irrational. After all, most bettors know that the house wins on average (i.e., traditional expected value calculations for bets made against the house are negative), yet they continue to gamble. Horse-race wagers in the U.S., for example, exceed $15 billion annually. If bettors know long-run positive returns are unattainable, then how can their wagers have net positive value to them? Cognitive theories of decision making under uncertainty ignore how betting decisions are made; for example, bettors tend to disregard long-run probabilities, yet these theories assume decisions are based on numerical odds. Bettors disobey the axioms in expected utility models even when probabilities are knowable.
Talking Points
Ground was broken on the Foxconn Maquila, which when completed, will be the largest maquila in Mexico, employing 20,000 workers. Foxconn will be located just across the border from Santa Teresa and should serve as a magnet for suppliers on both sides of the border. The Las Cruces unemployment rate is hovering at 3.8 percent, tying again the record for lowest unemployment rate on record.
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