Geoscience Reference
In-Depth Information
Fig. 16.2
Time paths for behavioral shocks in zip code 90071 (% deviation from baseline)
Figure
16.2
reports our translation of the Tables
16.1
and
16.2
results into shocks to
behavioral variables related to activity in zip code 90071. For the event year (year 1)
our behavioral shocks are based on the survey results for the mean incentives required
to immediately resume business in the financial district (final row of Table
16.2
). We
interpret the results for incentives required to purchase professional services, vacation,
food, and electronic products as elucidating vertical shifts in willingness to pay for
these products, scaled to reflect 90071's share in LA County output of these
commodities.
15
We interpret the job incentive as the wage premium required to
maintain a given labor supply to the affected region. We implement this in
LA-DYN as time-specific shocks to
F
(
M
)
, scaled to reflect 90071's share of the
LA-County wage bill.
In calculating the time paths for our model shocks, we begin by noting that the
Table
16.2
results for mean required incentives relate to the event year only. Our
simulation runs over 12 years. To infer behavioral shocks for the remaining years,
we use the decay rates for the “percentage who are still waiting” reported in
Table
16.1
. In calculating the decay rate between 2013 and 2014, we use Table
16.1
15
LA-DYN models demand for LA County commodities by agents in three regions: LA County,
the rest of the U.S., and the rest of the world. Demands by agents located outside LA County are
modeled via constant elasticity demand schedules. Following Giesecke et al. (
2012
), we model
declines in willingness to pay by these agents as vertical shifts in these schedules. For agents
located within LA County, we follow Giesecke et al. (
2012
) in modeling the product incentive
shifts described in Fig.
16.2
as fear-induced wedges driven between willingness to pay for LA
County goods and willingness to pay for the competing product sourced from the rest of the U.S. or
the rest of the world.
