Bryan Caplan and David Henderson

May 2005

A Monthly Archive (47 entries)

Deadly Medicine and Youthful Rebellion

Economics of Health Care
Bryan Caplan
My colleague Robin Hanson introduced me to contrarian research on both health and the family. The orthodox views, of course, are that medicine is the primary cause for rising life expectancy, and good parenting is the primary cause of happy,... MORE

Arthur Andersen Posthumously Exonerated

Business Economics
Arnold Kling
I found this story interesting. The Supreme Court on Tuesday overturned the conviction of the Arthur Andersen accounting firm for destroying Enron Corp.-related documents before the energy giant's collapse. In a unanimous opinion, justices said the former Big Five accounting... MORE

Don't Do Me Any Favors

Behavioral Economics and Rationality
Bryan Caplan
What do you do if someone you don't like tries to give you an expensive present? Homo economicus would happily take it: "It's not like I signed a contract!" But most people would at least think twice before accepting the... MORE

Two Cheers for the Jedi

Economics and Culture
Bryan Caplan
Warning: Sith spoilers! It's tough to learn that my mentor Tyler Cowen is a Sith Lord, but I should have seen the signs. Only a Sith could watch the ruthless destruction of the Jedi order, then get on his soapbox... MORE

Globalized Education?

Economics of Education
Arnold Kling
James Miller writes, My employer, Smith College, should hire a few score smart Indians to grade for their faculty and in return Smith should expect its professors to spend more time in the classroom. High schools should similarly outsource their... MORE

Foundations of Libertarianism

Politics and Economics
Arnold Kling
James Piereson offers an interesting history of the role of foundations in stimulating political ideas and debates. In the period running from the end of World War II down to the present, conservative philanthropy has gone through at least two... MORE

Retirement Age in Play?

Social Security
Arnold Kling
Bruce Bartlett says it is. He refers to Congressional testimony by Eugene Steuerle, who said, Increase the early and normal retirement ages. We should do this even if there were no long-term imbalance and even if all the saving were... MORE

Political Business Cycles: They're Alive!

Politics and Economics
Bryan Caplan
Twenty five years ago, political business cycles were a hot topic. The idea is that incumbents artificially juice up the economy during election years to improve their chances of re-election. By the time I was in grad school, though, conventional... MORE

Government as a Schelling Point

Institutional Economics
Arnold Kling
Daniel Klein writes, When people think of society at large as the group to which they belong--when they think of having “citizenship,” whether it be in a town, a county, or a country--the logic of coordination leads directly to government... MORE

Motivating Sheep

Microeconomics
Bryan Caplan
Perhaps the greatest truth about human nature that you do not find in the typical economics textbook is that people are sheep. Most human beings don't like to be different from the others around them; they want to fit in... MORE

Daniel J. Benjamin and Jesse M. Shapiro write, Using data from the National Longitudinal Survey of Youth (NLSY), we show that individuals with greater cognitive skills make consumption and personal financial decisions that more closely resemble the predictions of... MORE

The Wealthiest Churches

Economics of Education
Arnold Kling
Here is a list of universities with the highest endowments. Forty-seven have assets of more than $1 billion. The total assets of these top forty-seven is over $150 billion. It appears that California and Texas have their entire state university... MORE

Colonoscopies Cost-Effective?

Economics of Health Care
Arnold Kling
In this essay, I write If you obtain a colonoscopy every five years, starting at age 50, then between age 50 and age 75 you will have 6 colonoscopies. Dr. Arai, quoted above, gives a range of $500 to $1000... MORE

Framing Effects and Memory

Behavioral Economics and Rationality
Bryan Caplan
Economists have heard a fair amount from psychologists about "framing effects." Redescribing your options sometimes changes your choice. Firms would rather advertise the sale of "half-full glasses," than "half-empty glasses," though of course they're the same thing. Aldert Vrij's book... MORE

Start a Business, Young Person

Business Economics
Arnold Kling
Paul Graham says, Most organizations who hire people right out of college are only aware of the average value of 22 year olds, which is not that high... The most productive young people will always be undervalued by large organizations,... MORE

An Infinite Contradiction

Labor Market
Bryan Caplan
David Card has a new study arguing that immigration has basically no effect on the wages of domestic low-skilled workers. This confirms his earlier results on the famed Mariel boatlift, when Castro freed 125,000 Cubans to flee to Miami. Is... MORE

Eminent Domain and Property Rights

Institutional Economics
Arnold Kling
Don Boudreaux and David Barron in a WSJ Celebrity Death Match. Boudreaux says, eminent domain is unnecessary. The fact that housing developers routinely acquire large contiguous plots of land without eminent domain -- that is, by buying individual plots from... MORE

Computerized Medical Records

Economics of Health Care
Arnold Kling
Can politicians improve the efficiency of health care by pushing computerized medical records? I raise questions. The bank owns the data in my checking account because my bank is involved in every transaction that changes my balance. There is no... MORE

Influencing Longevity--"flat of the curve?"

Economics of Health Care
Arnold Kling
In a review of Robert Fogel's Escape from Hunger, Angus Deaton writes, Today, movements in life expectancy in rich countries are driven by trends in chronic disease among those over 50—infant and maternal mortality rates are no longer important—so that,... MORE

Is that a Fact?

Regulation and Subsidies
Bryan Caplan
Reading William Greider is one of my guilty pleasures. Credit where credit is due: The guy can write. And the content is interesting, blending fun facts about the economy with bizarre interpretations thereof. Sometimes, however, I wonder whether his "facts"... MORE

Detect Lie

Information Goods, Intellectual Property
Bryan Caplan
In the game Dungeons & Dragons, there is a magic spell called detect lie (or at least there was back in the first edition). A couple of my favorite high school gaming sessions revolved around the player characters flinging accusations... MORE

Underground Economy

Growth: Causal Factors
Arnold Kling
Doug Campbell writes, Schneider in 2003 published "shadow economy" estimates (defined broadly as all market-based, legal production of goods and services deliberately concealed from the authorities) for countries including: Zimbabwe, estimated at a whopping 63.2 percent of GDP, Thailand's at... MORE

Neuroeconomics

Behavioral Economics and Rationality
Arnold Kling
One of the most interesting survey articles I've seen in a long time came out in the recent Journal of Economic Literature, although apparently it's been kicking around for a couple of years. It is by Colin Camerer, George Loewenstein,... MORE

Proportionate Belief

Politics and Economics
Arnold Kling
In this essay, I argue that what I call the Law of Proportionate Belief...states that one should believe in a certain proposition or policy prescription in proportion to the arguments for that position. ...What I most despair of is finding... MORE

Class Consciousness

Arnold Kling
Nathan Newman writes, when the New York Times sets out on a multi-week series on "class" in America, it is shocking to see the authors writing so stupidly about the issue... What Marx argued was that the nature of capitalism... MORE

Past Performance and Probability

Finance: stocks, options, etc.
Bryan Caplan
Half-Sigma has an interesting comment on my "Four Bad Role Models." Merely looking at past performance of stocks is not a sufficient basis for saying that stocks will outperform Social Security. One of the basic mantras of investing is that... MORE

From Religion to Real Estate

Regulation and Subsidies
Bryan Caplan
My colleague Larry Iannaccone is not just the world's expert on the economics of religion. He's also got some intriguing views on real estate. Cars have been mass produced on assembly lines for a long time, and the cost savings... MORE

Four Bad Role Models

Finance: stocks, options, etc.
Bryan Caplan
Some Nobel prize-winning economists keep investing foolishly even though they know better, according to a recent L.A. Times article. Here are their statements, ordered from bad to worse: Harry Markowitz, father of modern portfolio theory, put half of his assets... MORE

More on Activist Medicine

Economics of Health Care
Arnold Kling
About the case I discussed earlier where a young woman received extensive services for eye inflammation, Ben England writes, Activist care in an academic setting is a little different than activist care in general. To be trained as a physician... MORE

crisis of abundance

Economics of Health Care
Arnold Kling
After looking at health care data for a long time, my point of view on our system is expressed in this essay. I define activist medicine as procedures, treatments, and consultations that have a low probability of affecting the outcome.... MORE

Aren't You Cold?

Microeconomics
Bryan Caplan
I wear shorts about 10 months per year, and I live near Washington DC. Judging from the number of funny looks I get, and the number of times perfect strangers stare at me and ask "Aren't you cold?," my behavior... MORE

Questioning Medical Privacy

Economics of Health Care
Arnold Kling
Richard Posner writes, The second motive for privacy, however—the desire to conceal discreditable facts—is more questionable from a social standpoint. In order to make advantageous transactions, both personal (such as dating or marriage or being named in a relative’s will)... MORE

Does Unified Government Mean Big Government?

Politics and Economics
Bryan Caplan
New evidence confirms my suspicion that divided government leads to smaller government. The latest news: A policy analysis by Stephen Slivinski, director of budget studies at the Cato Institute, finds that: "Total government spending grew by 33 percent during Bush’s... MORE

Rent-Seeking in Sin City

Public Choice Theory
Bryan Caplan
Here's a great passage in Sin City: The Hard Goodbye that didn't make the movie: In this town just about anything you can name that's worth doing is against the law. It works out better for everybody this way. Cops... MORE

Should Economists Go to Finishing School?

Economic Education
Bryan Caplan
People don't like economists, and they don't listen to us. Economists who want to influence public opinion often connect the two problems. Maybe if we had tact, manners, and warmth, we wouldn't turn off our audience. And if we didn't... MORE

Siegel for the Long Run

Growth: Causal Factors
Arnold Kling
An interesting interview with Jeremy Siegel. In 50 years the United States will be more aged than all of Florida is today, but we will be, existing in a younger world. So, what I see is exactly the same pattern.... MORE

Health Care and the Poor

Economics of Health Care
Arnold Kling
In this essay, I look at some data. The United States spends more on the average poor person than [other advanced] countries spend on the average person. In fact, the MEPS data understate spending in the United States, in part,... MORE

Don't Clean That Plate

Economics of Health Care
Bryan Caplan
Economists have been joining the bandwagon against obesity. Part of me suspects that this is one of those problems that feels worse if people talk about it. The more people lament obesity, the more unaesthetically obese people I notice. Every... MORE

The President and Economic Advice

Politics and Economics
Arnold Kling
What is it like trying to advise the President on economics? Russ Roberts interviews Greg Mankiw, who recently left the Council of Economic Advisers to return to Harvard. Roberts: What is your perception of the President as a consumer of... MORE

What's the Real Interest Rate?

Finance: stocks, options, etc.
Arnold Kling
A Treasury Department paper says This paper has developed alternative approaches for projecting the long-term Social Security real interest rate, including an examination of historical data and estimation of yield curves for the Treasury inflation-indexed market. The examination of historical... MORE

Hours Worked in Europe vs. the U.S.

Labor Market
Arnold Kling
Alberto Alesina, Edward Glaeser, and Bruce Sacerdote write, we show, in an accounting sense, that legally mandated holidays can explain 80 percent of the difference in weeks worked between the U.S. and Europe and 30 percent of the difference in... MORE

Economics, Standing on One Foot?

Economic Philosophy
Arnold Kling
Andrew Samwick writes, Economics consists of exactly two ideas: optimization and equilibrium. Optimization is the process by which all economic agents--households, workers, firms, governments--achieve their objectives subject to constraints on their resources. It leads to the familiar condition that an... MORE

Probability and Medicine

Economics of Health Care
Arnold Kling
Richard Friedman writes, The truth is that random events can make or break us. It is more comforting to believe in the power of hard work and merit than to think that probability reigns not only in the casino but... MORE

Consumer Reports and the FDA

Regulation and Subsidies
Arnold Kling
Alex Tabarrok writes, The FDA currently works on a paternalistic model: One choice to rule them all. But another approach, what I call the Consumer Reports model, would meet the needs of diverse health-care consumers much better. Consumer Reports doesn’t... MORE

Martyrs and Gamers

Economics and Culture
Bryan Caplan
Silviu Dochia at Corner Solution has an insightful critique of my recent post on Larry Iannaccone and the market for martyrs. In the conclusion of my original piece, I wrote: In other words, for every person willing to die, there... MORE

Learning vs. Persistent Mistakes

Tax Reform
Arnold Kling
Andrew Chamberlain writes thanks to arbitrage, rational people stand to profit when irrational people let prices and wages stray from efficient levels. That’s what justifies the economist’s assumption of rationality—a small number of rational profit-seekers keep markets rational as a... MORE

May Day Mourning

Economic History
Bryan Caplan
Jonathan Wilde at Catallarchy has orchestrated a moving and edifying May Day blog extravangaza on the dark history of communism. Catallarchy has gone the extra mile here, offering twelve fine short essays, and leading off with R.J. Rummel, Nicholas Weininger,... MORE

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