Analyzing Smart Growth Strategies for Energy Reduction in California

Expected Role of Urban Form Features in Addressing Smart Growth Policy Issues

Read the paper assigned for this project thoroughly to answer the following questions:

1. Smart growth strategies are widely accepted as a set of policy choices to bring down energy usage in California. Describe in your own words and in the context of the paper the expected role of the urban form features in addressing this policy issues. (One or two paragraphs)

• Talk about what “smart growth” means.
• Explain with examples.
• Discuss their roles.

2. Residential sorting (self-selection) issue: Explain why you think the common urban-form features of a location, namely residential density, jobs-housing balance can, potentially, be endogenous in the demand model for vehicle miles traveled. (One paragraph)
• Discuss why error term may simultaneously affect both dependent and independent (urban form features) variables because household choose their locations.

3. Often gasoline tax (or tax on fuel cost per vehicle miles traveled) can have an immediate impact on the demand for VMT and thus, can serve as a strong disincentive for private transportation. Provide a rationale for or against gasoline tax as opposed to slow change in people’s behavior through land use (urban form) changes.
• Provide points supporting fuel tax and against fuel tax.
• Provide points supporting land use policies and against land use policies.

4. Explain briefly and in your own words, what you understand about MacFadden’s theory of hierarchical choice.
• Talk about how house hold choose homes, starting from top geographic level to the lowest geographic level.

5. Carefully explain, in your own words, how the MacFadden’s theory justifies a three stage least squares (3SLS) modeling approach to resolve (i) endogeneity and (ii) multicollinearity.
• Discuss how it kills multicollinearity.
• Discuss how it addresses endogeneity by recognizing housing preferences in to multiple structural equation models with each equation estimated using instrumental variables.

6. Write down the complete theoretical (3SLS) specification of the structural demand model for vehicle miles traveled used in the paper. Do NOT carry out any estimation yet.
• Write all the four equations with beta0, beta1, beta2……etc.

7. Provide a very brief narrative description of the data set. Your description must include discussion on various hierarchical levels (eg. household, census tract, county, metropolis, etc.) of data and their sources, size of the sample, etc. (No table please).
• Discuss data set in brief as per the above guideline.

8. Now carry out the estimation of the OLS model, using the data file with 7696 observations. This is the first model of the structural equation (2) and is elaborated in the beginning of Section 5. Present your results in a separate table. Interpret, using the actual numerical values the causal impact of the following variable on vmt: price, resden, jobpc, and transitpc.
• Place your STATA in the Appendix.
• Write formal interpretations (in the body of the report) of the above four variables in the present context.

9. In order to gauge the impact of how multicollinearity affects the estimation, replicate the analysis carried out in sub-section 5.2. Here you will need to use both data files – one with 5474 observations and theother with 7696 observation. Note that the data file with 5474 observations
has the urban?form variables (popden, resden, and empden) and are all from the same spatial scale, which is census tract. The data file with 7696 observations has the urban form variables (resden, jobspc, transitpc) and are all from different hierarchical scales, namely census tract, county, and metropolis. Present a summary your findings in your own words.
• Place your STATA output in the Appendix.
• Provide a summary discussion of the findings (in the body of the report).

10. Now carry out the 3SLS estimation of the four-equation structural model. Compare and interpret  your results with your OLS results focusing particularly on the following variables: .price, resden, jobspc, and transitpc.
• Provide, in your own words, a good comparison of the OLS and 3SLS models.
• Provide formal interpretations.

11. Carry out the analysis in sub-section 5.4 of the paper that compares land use policy and fuel tax policy. Report your findings clearly but briefly.
• Please the work you have done on 5.4 in the body of the paper.
• Offer some interesting thoughts on your findings in your own words to conclude.