Bryan Caplan and David Henderson

June 2005

A Monthly Archive (49 entries)

Energy Legislation

Energy, Environment, Resources
Arnold Kling
Alan Reynolds writes, Ethanol already gets an indefensible tax break at the pump of 51 to 71 cents a gallon, but Congress now wants to compel everyone to add it to their tanks. But doing so would leave us with... MORE

The Economics of Woody Allen

Economic Philosophy
Bryan Caplan
Many people feel that death makes life meaningless. The religious use this to sell the afterlife, and the irreligious use it to rationalize depression. Woody Allen can hardly get his mind of the subject: Life is full of misery, loneliness,... MORE

Too many smart people?

Labor Market
Arnold Kling
In a comment on the preceding post, Andrew Whitacre, who wrote the original rant, speculates, There are too many smart people for too few smarts-required jobs, just like there've never been enough English professorships for all the English majors who... MORE

Over-qualified?

Economics of Education
Arnold Kling
This rant struck me, mostly because it is strikingly consistent with my 22-year-old's experience. Dear current Management-Generation of Cubicle Land, please understand that: 1. My generation was misinformed—by elders and fortune—about the value of our college degrees. $120,000 of your/our... MORE

Tabarrok and Caplan at WSJ.com

Microeconomics
Bryan Caplan
Today I had a debate (well, more of an amiable public dialogue) with Alex Tabarrok at the Wall Street Journal's Econoblog. The topic: Non-Levitt freakonomics. Check it out here.... MORE

Vertical Supply, Vertical Demand?

Labor Market
Arnold Kling
Michael Mandel points to a blog post that claims we will face a severe nursing shortage. As usual, there is a government study supporting such a claim. In Learning Economics, I derided the notion of a labor shortage (in this... MORE

Acting "As If" Hanson's Right

Economics of Health Care
Bryan Caplan
Last week I went to the doctor for an ear infection. Did I die from the hypocrisy? No, I knew from childhood experience that ear infections are one of the few things doctors can easily cure. Of course, my first... MORE

Personal Saving and Corporate Saving

Macroeconomics
Arnold Kling
Perhaps Jan Loeys and others at J.P. Morgan have the solution to some macroeconomics puzzles. The real driver of this saving glut in recent years has been the corporate sector. Between 2000 and 2004, the switch from corporate dis-saving to... MORE

Eminent Domain

Regulation and Subsidies
Arnold Kling
Both Gary Becker and Richard Posner weigh in. Becker writes, Is eminent domain a desirable principle in the 21st century? In the 18th, 19th, and early 20th centuries, governments did rather little, so there was not much to fear from... MORE

Housing Bubbles? A Fact and a Thought

Finance: stocks, options, etc.
Bryan Caplan
James Hamilton's got my attention on housing bubbles. One of his many interesting observations is that population growth may explain a lot of the variation in real estate appreciation: It's noteworthy that over the last 5 years, the three states... MORE

Fiscal Policy: Flipping the Presumption

Macroeconomics
Bryan Caplan
Since the 1970's, one of the main controversies in macroeconomics has been whether nominal variables affect real variables. A classic example: Does the inflation rate (a nominal variable) affect employment (a real variable)? The answer that emerged from this debate... MORE

Libertarian Credo

Politics and Economics
Arnold Kling
In reaction to the Supreme Court's decision backing city seizure of property, Don Boudreaux writes libertarians reject the notion that the state is something other than a human institution deserving more credence, respect, deference, and trust than is commonly given... MORE

Who has Socialized Medicine?

Economics of Health Care
Arnold Kling
Nick Weininger wonders In debates about health care it is often assumed by all sides that the US has the least socialist, most free-market health care system of any modern developed country... But is that premise true? ...It seems clear... MORE

Graduate students would do well to heed Tyler Cowen's career advice. His council definitely helped me during my early years as an assistant professor. You could even call me his protege. But then and now I think his advice tends... MORE

Calling Dr. Econ

Economics of Health Care
Bryan Caplan
A doctor weighs in at Catallarchy on my debate with Arnold. He's got some good questions for us at the end, which I hope to answer during the course of the week.... MORE

Heckman interview

Economics of Education
Arnold Kling
I strongly second Don Boudreaux' recommendation to read this interview with James Heckman. A few excerpts (but do go read the whole thing): what do the GEDs earn? They earn what high school dropouts who do not get GEDs earn,... MORE

Fun Time: An Exercise in Transaction Cost Economics

Institutional Economics
Bryan Caplan
In case you haven't guessed, I'm not a practical person. I'm more interested in Why than How. I lack what Robin Hanson calls the "engineer's mentality" - the urge to construct a concrete product of use to other people. Once... MORE

Rent Vs. Buy Calculation

Finance: stocks, options, etc.
Arnold Kling
James Hamilton writes, Let's look at a particular property in such a community whose rental income nets the owner $4,000 per year after expenses. If the property price is determined by the condition that the owner must earn a 3%... MORE

Healthy Debate

Economics of Health Care
Bryan Caplan
Arnold makes me want to be a little more careful about my position on health care. By way of background, I'll admit that I get most of this from Robin Hanson. But I was so incredulous when I first started... MORE

Measuring Health Care Effectiveness

Economics of Health Care
Arnold Kling
Co-blogger Bryan and I have been arguing over two issues, one substantive and one methodological Substantive issue: I say that health care probably is effective. He says that there is no evidence that it is effective on average. Incidentally, Paul... MORE

Health Care Administrative Costs

Economics of Health Care
Arnold Kling
In this essay, I argue that improving cost-effectiveness of health care may require higher administrative expenses. How can suppliers be incented to balance costs and benefits in choosing treatment plans? One solution is to study the results of different treatment... MORE

Power of Productivity

Growth: Causal Factors
Arnold Kling
I strongly recommend an interview with William Lewis, author of The Power of Productivity. Lewis discusses how the McKinsey Global Institute set about examining productivity across countries. They wound up looking at what I call the new paradigm in economics.... MORE

From 0 to 50 Trillion in Two Weeks

Economics of Health Care
Bryan Caplan
Two weeks ago I pointed readers toward evidence that the value of health care is small. Now Arnold cites Murphy and Topel claiming that the present value of a cure for cancer is $50 trillion. What gives? Here's what my... MORE

Krugman Comes Out

Economics of Health Care
Arnold Kling
Paul Krugman writes, I like Ted Kennedy's slogan "Medicare for all." It reminds voters that America already has a highly successful, popular single-payer program, albeit only for the elderly. So that is Paul Krugman's health care plan. Medicare for all.... MORE

So Crowded No One Will Go?

Cross-country Comparisons
Bryan Caplan
This Friday, June 17, the Mercatus Center will be hosting French libertarian sensation Sabine Herold. The time: 12:00. The place: Mercatus Board Room, 4th Floor. Sabine's the talk of D.C., so my guess is that this will be a rare... MORE

Benefits of Health Care

Economics of Health Care
Arnold Kling
Kevin Murphy and Robert Topel write, From 1970 to 2000 gains in life expectancy added about $3.2 trillion per year to national wealth, with half of these gains due to progress against heart disease alone. Looking ahead, we estimate that... MORE

Economics of New York City

Information Goods, Intellectual Property
Arnold Kling
The prolific Edward Glaeser writes, 28 percent of Manhattan’s payroll goes to workers in a single three-digit industry. 56 percent of Manhattan’s payroll goes to workers in four three-digit industries. New York’s 20th century success primarily reflects its ability to... MORE

Pseudo-Fads: A Puzzle

Economics and Culture
Bryan Caplan
When people suddenly start changing their behavior in the same direction, economists presume that prices have changed. If we see that people are driving bigger cars, our knee-jerk guess is that the price of gas has fallen. But there is... MORE

Economic Growth Gauntlet

Growth: Causal Factors
Arnold Kling
Fredrik Erixon tosses down the gauntlet. The reason countries are poor is not that they lack infrastructure – be it roads, railways, dams, pylons, schools or health clinics. Rather, it is because they lack the institutions of the free society:... MORE

Book Tag

Austrian Economics
Arnold Kling
Nobody has tagged me (this reminds me of high school dances, somehow), but I'll have a go at it anyway: First, restricting to economic topics. Number of books I own: I would guess around two hundred. Last book I bought:... MORE

In the New York Times, Robin Roner and David E. Rosenbaum write, The average retirement age in 1940 was 68. As recently as 1965, about two-thirds of workers did not begin drawing Social Security benefits until they were 65 or... MORE

I'm not convinced that mild deflation is anything to worry about. It didn't seem to hold back the U.S. economy during the post Civil War, pre-Fed era. But suppose you were worried about it. What could be done to reverse... MORE

Ludwig von Bernanke

Macroeconomics
Bryan Caplan
Where did Ludwig von Mises say the following? [T]he U.S. government has a technology, called a printing press... that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S.... MORE

Savings, Capital Gains, and Income

Finance: stocks, options, etc.
Arnold Kling
Tyler asks many commentators argue that capital gains on homes and equities, as well as expenditures on education, should count toward the national savings rate. But are those savings "as good" -- from a macroeconomic point of view -- as... MORE

[Warning: Sith spoilers!] Whenever I meet a promising new graduate student, it isn't long before I mention the practical importance of backwards induction. (For a short definition, see here; for a longer treatment, check this out). "What's your career goal?"... MORE

Health Care Commentaries

Economics of Health Care
Arnold Kling
Steven Pearlstein writes, For most Americans, providing health care ought to be different from selling soap; they won't tolerate doctors acting like commissioned salesmen and investment bankers. And if that means having less market competition and more regulation in the... MORE

The Latest Oil Shock

Energy, Environment, Resources
Arnold Kling
According to James Hamilton, The sustained run-up in oil prices has coincided with a large increase, not decrease, in world oil production. World oil production had previously fallen off in response to the lower demand brought about by the recession... MORE

Thinking vs. Feeling

Politics and Economics
Arnold Kling
In a rambling essay, I write I view economics as training in thinking. That does not mean that you lose your empathy with people. It means, however, that you pay attention to the consequences of policies, regardless of their motives.... MORE

France and Germany

Institutional Economics
Arnold Kling
Anthony de Jasay argues that French and German welfare state policies are based on a belief that the distribution of the national income is the government's business as well as its natural prerogative, and that whatever it happens to be,... MORE

Give Me Your Tired, Your Young...

Fiscal Policy
Bryan Caplan
Americans have severe misconceptions about what the welfare state does. They believe that it cares for the poor. But in fact, it primarily cares for the old. I shared this misconception before I studied economics. My undergraduates have it before... MORE

Krugman's Got a Point, But I've Got a Better One

Economics of Health Care
Bryan Caplan
Arnold Kling remarks: All I can think of is the public digesting Paul Krugman's argument that we spend more money on health care than countries with socialized medicine, we have the same longevity as those countries, therefore socialized medicine is... MORE

Yes Donald, Beliefs About Economics Do Affect Policy Preferences

Behavioral Economics and Rationality
Bryan Caplan
The last issue of Econ Journal Watch featured my critique of Donald Wittman, followed by his reply to my critique. (For more, see here). I think the most bizarre part of Wittman's reply is his claim that it doesn't matter... MORE

Stat Fight, Con't

Economic Methods
Arnold Kling
Bryan says, a fair number of papers have a lot of data points. So rejecting the null hypothesis of no effect is pretty easy. Moreover, it is fairly common in both literatures to discuss the magnitude of the effect, not... MORE

Stat Fight

Economic Philosophy
Bryan Caplan
Arnold Kling takes issue with the "Deadly Chicago Econometrics" underpining a couple of my favorite empirical literatures. I'm from Princeton, not Chicago, but I think Arnold's mostly off the mark. Charge #1: A fundamental fallacy in classical statistics is to... MORE

Libertarians and Blogging

Politics and Economics
Arnold Kling
Warren Meyer answers the question of why so many libertarians blog. Finally, since libertarianism is really about celebrating dynamism and going in a thousand different directions as each individual chooses, in some sense the Internet and blogging are not only... MORE

Real News in Neuroeconomics

Behavioral Economics and Rationality
Arnold Kling
While the press is back to wallowing in Watergate, the big news in economics was a small experiment. In the game, investors were allotted 12 monetary credits, each worth 40 Swiss centimes (32 US cents), and asked to decide how... MORE

Medical Guidelines Commission?

Economics of Health Care
Arnold Kling
In this essay, I write the effectiveness of activist medicine can only be judged in a statistical sense. To know whether the procedures were appropriate, you have to know the distribution of outcomes that occurred when those procedures were used... MORE

Deadly Chicago Econometrics

Economic Methods
Arnold Kling
Bryan's post on the statistical findings about parenting and health care reminds me of what we at MIT used to call "Chicago econometrics." A fundamental fallacy in classical statistics is to say, "Therefore, we accept the null hypothesis." The classical... MORE

Macro Reading List

Macroeconomics
Arnold Kling
Tyler Cowen writes, I will be teaching Ph.d. macro this fall. Here is a draft of my reading list. Comments are open and further suggestions are welcome I think that macro tends to get too buried in theory. I like... MORE

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