Bryan Caplan and David Henderson

April 2004

A Monthly Archive (21 entries)

Uncovered Interest Parity

Finance: stocks, options, etc.
Arnold Kling
Brad DeLong wonders, U.S. interest rates are low relative to those of other major countries (save Japan). Where is my uncovered interest parity? Here is what Brad is thinking. If I own dollars today and want to invest in bonds... MORE

Social Security a Diamond in the Rough?

Social Security
Arnold Kling
In this essay, I examine at length Peter Diamond's arguments for Social Security as it exists currently. An excerpt: I doubt that elderly people who maintain their assets in lump sum format rather than as annuities are as irrational as... MORE

Indian Labor Productivity

International Trade
Arnold Kling
I'm at a conference put on by the Milken Institute, and hence the light blogging. At one session on outsourcing and jobs, Clarence Schmitz, the CEO of an outsourcing firm, said that they had anticipated needing 1.2 Indian workers to... MORE

Gender Differences

Income Distribution
Arnold Kling
Alex Tabarrok points to a paper by Uri Gneezy, Muriel Niederle, and Aldo Rustichini showing that although women solve a particular class of problems about as well as men on average, men improve their scores more than women when there... MORE

Health Care Productivity

Economics of Health Care
Arnold Kling
Tyler Cowen has an interesting post on the comparison of the productivity of medical care in the U.S. vs. other countries. One brief excerpt: Americans pay more but get better health care in return. We die sooner because we eat... MORE

Drug Tax

Regulation and Subsidies
Arnold Kling
Glenn Reynolds pointed to an interesting talk by Charles Whitebread on the history of the drug war. In the face of possible Constitutional opposition to what they wanted to do, the people in Congress who supported the Harrison Act came... MORE

Welfare State Free Lunch?

Fiscal Policy
Arnold Kling
In his New York Times column last week, Jeffrey Madrick referred to the work of Peter Lindert on the ability of countries to grow in spite of welfare state distortions. Lindert's argument can be found in Why the Welfare State... MORE

My latest essay is on these topics. There are three layers to the argument against paternalism. The first layer is purely libertarian, which says that government compulsion of individuals is always wrong. The second layer is utilitarian, which says that,... MORE

Trade and the WTO

Arnold Kling
Andrew Rose has a paper entitled, Do We Really Know that the WTO Increases Trade?. His succinct Executive Summary: "No." It turns out that membership in the GATT/WTO is not associated with substantially enhanced trade, once standard factors have been... MORE

Defending Social Security

Social Security
Arnold Kling
In the March 2004 issue of the the American Economic Review, Peter Diamond defends the structure of Social Security. (I cannot find the article on the web, unfortunately.) He argues that in the absence of Social Security, individuals would save... MORE

Asymmetric Price Adjustment

Microeconomics
Arnold Kling
Andrew Chamberlain points to a Ph.D thesis by Matt Lewis on search costs and asymmetric price adjustment. The idea is that firms face a kinked demand curve (more elastic for price increases than for price cuts), because consumers search when... MORE

Textbook Pricing

Economics of Education
Arnold Kling
Are textbooks overpriced? This newspaper story looks at the issue. Rep. David Wu (D-Ore.) in November introduced a bill requiring to General Accounting Office to investigate the high price of college textbooks and whether publishers are marketing the same books... MORE

Presidents and Jobs

Macroeconomics
Arnold Kling
How many jobs can a President create? Former Clinton Administration economist Jeffrey Frankel says that "The answers don't fit into a stump speech." He writes, [The Democratic Presidential candidate's] proposals are good economics, and they come by their populist ring... MORE

Outsourcing Winners and Losers

International Trade
Arnold Kling
When you open up trade opportunities, will the benefits go to people with high incomes or people with low incomes? Brad DeLong walks through the logic that says that if foreigners have a comparative advantage in high-income occupations (such as... MORE

Housing Bubble, Again

Finance: stocks, options, etc.
Arnold Kling
Brad DeLong links to this scare piece, although I don't know why. The article is not particularly well researched. For example, the author writes, What makes the current frenzy especially dangerous is that every relevant institution has an incentive to... MORE

Market for Body Organs?

Regulation and Subsidies
Arnold Kling
Alex Tabarrok looks at the issue of how to increase the availability of organs for transplant. In the minds of many, financial incentives for organ donation means rich people buying up kidneys being hawked on eBay by the desperately poor...Two... MORE

Social Security and Demographics

Social Security
Arnold Kling
Zimran ("Winterspeak") Ahmed points to a survey article by The Economist of issues raised by the aging of the population. This survey will argue that the promises governments have made to people retiring today are too large to be met... MORE

Bundling II

Microeconomics
Arnold Kling
I extended my thoughts on bundling with this essay. What George Stigler showed is that ordinary intuition about bundling is wrong. Your intuition is that the reason that the seller engages in bundling is to force you to buy something... MORE

Jobs Come Marching

Labor Market
Arnold Kling
In my favorite musical, The Music Man, there is climactic scene in which the mayor calls for Professor Harold Hill to be tarred and feathered. "Where's the band?" the mayor shouts rhetorically. "Where's the Band?" Whereupon the boys in the... MORE

Affective Forecasting Errors

Behavioral Economics and Rationality
Arnold Kling
Psychologist Daniel Gilbert finds that people tend to erroneously forecast how events will affect their happiness. He argues that people choose to act on the wrong information when they predict, for example, whether they will enjoy a particular vacation spot.... MORE

Oil Econ, Once More

Energy, Environment, Resources
Arnold Kling
I really like Edward Lotterman's latest. No one studies elasticities of demand for oil more than OPEC. Its leaders know that in the very short term — i.e., a few weeks or months — a 10 percent price hike may... MORE

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