Bryan Caplan and David Henderson

September 2005

A Monthly Archive (55 entries)

A Parallel Fallacy

Macroeconomics
Bryan Caplan
How would you respond to someone who said the following? GDP by definition is consumption plus investment plus government spending - C+I+G. Therefore increasing government spending increases GDP. The right answer, of course, is that higher G only increases GDP... MORE

Creative Non-Destruction

Growth: Consequences
Arnold Kling
Amar Bhide writes, Over 30 years after the introduction of minicomputers and more than 20 years after the introduction of microcomputers, the mainframe remains an important category. Total worldwide revenues of large-scale computer processors (or mainframes) amounted to $16 billion... MORE

NRO is 90 Degrees Off

Macroeconomics
Bryan Caplan
When Tom Nugent of National Review Online tells us: Will private borrowers be crowded out [by increased government deficits]? Impossible. The causation is “loans create deposits,” as taught on day one of every traditional money and banking class. The act... MORE

Practicing What I Preach: How I Fight Statistical Discrimination

Information Goods, Intellectual Property
Bryan Caplan
In a recent post, I said: If you really want to improve your group's image, telling other groups to stop stereotyping won't work. The stereotype is based on the underlying distribution of fact. It is far more realistic to turn... MORE

Oil Shale

Energy, Environment, Resources
Arnold Kling
James Hamilton expresses doubts about oil shale. The fact that large quantities of heat are required to obtain a usable fuel from the rock means that this is a far less efficient source of energy than conventional oil. Shell claims... MORE

NRO babble

Fiscal Policy
Arnold Kling
Why does National Review Online embarrass itself with this sort of economic commentary? Budget deficits are only too large if they usurp the private economy’s need for physical capital and labor, thereby precipitating an inflationary surge. So, as long as... MORE

Suckers of the World, Bet!

Information Goods, Intellectual Property
Bryan Caplan
I repeat the adage "All publicity is good publicity" every chance I get. So I shouldn't have needed iSteve to explain why Matthew Simmons was smart to make a sucker bet with John Tierney: What I realize now is that... MORE

Don't Call Me Stupid

Information Goods, Intellectual Property
Bryan Caplan
I've proposed several alternatives to the adverse selection explanation for missing insurance markets. Here's another, with a somewhat Hansonian flavor: In part, people buy insurance so they don't "look stupid" when something bad happens to them. If you get in... MORE

Immigration

Labor Mobility, Immigration, Outsourcing
Arnold Kling
I write, On the issue of poverty and immigration, which Robert J. Samuelson raised, I would ask, "Where would you prefer that people be poor?" That is, do we want to insist that poor Hispanics should remain in their native... MORE

Economists, Non-economists, and Insurance

Behavioral Economics and Rationality
Arnold Kling
Co-blogger Bryan Caplan wonders why people make the insurance choices that they do. I think that insurance is one of those topics on which economists and non-economists are out of synch. People buy extended warranties for appliances, but as commenter... MORE

A Serious Budget

Fiscal Policy
Arnold Kling
I'll bet Ken at ChicagoBoyz had fun putting this together: As one who thinks that taxes are plenty high enough, on the rich as well as on everyone else, and that budgetary problems should be solved by budget cutting, it's... MORE

Males, Females, and College

Economics of Education
Arnold Kling
USA Today writes, Currently, 135 women receive bachelor's degrees for every 100 men. That gender imbalance will widen in the coming years, according to a new report by the U.S. Department of Education. (I got to the story by following... MORE

The Education Gap

Economics of Education
Arnold Kling
Mark Thoma writes, David Brooks says, "Especially in these days after Katrina, everybody laments poverty and inequality. But what are you doing about it? For example, let's say you work at a university or a college. You are a cog... MORE

In Search of Another Theory of Missing Insurance Markets

Information Goods, Intellectual Property
Bryan Caplan
When economists notice that nobody sells insurance for X, they have a standard explanation: adverse selection. Why can't you buy flood insurance? Supposedly, because the highest-risk people will be first in line to buy it, which raises premiums, which encourages... MORE

The Plight of the Poor

Income Distribution
Arnold Kling
William Easterly writes (also can be found here) , The poor have neither the income nor political power to hold anyone accountable for meeting their needs--they are political and economic orphans. The rich-country public knows little about what is happening... MORE

Austrian Economists and the mainstream

Austrian Economics
Arnold Kling
Pete Boettke highlights that Frederic Sautet asks, Why Aren't Austrians at the Discussion Table [Our thanks to Pete Boettke for correcting this attribution in a comment below.] • H1: We are simply delusional as to what Austrian economics (AE) can... MORE

On Happiness

Behavioral Economics and Rationality
Arnold Kling
Johan Norberg writes, A classic mystery in the happiness studies is that lottery winners are not much happier than the rest of the population. It’s not just the money that makes high-earners happier than low-earners—more important is their way of... MORE

Crashing Into Stereotypes

Information Goods, Intellectual Property
Bryan Caplan
I normally wouldn't want to watch a movie in which "A series of racially charged events connects the lives of a disparate lot of Los Angelenos," (full review here) but the reviews of Crash were so glowing that I made... MORE

Economic Literacy

Economic Education
Arnold Kling
The online Wall Street Journal hosts a discussion with Russell Roberts and William Polley on the topic of economic education. Roberts writes, Whenever I teach a seminar on basic economics, I always survey the audience: What proportion of the American... MORE

Planning vs. Improvisation

Growth: Causal Factors
Arnold Kling
In this essay, I write After Hurricane Katrina, the United States faced a shortage of gasoline, caused by the disruption of refining capability. My worst fears were that panic would break out, and Americans would rush to fill their tanks,... MORE

Multicollinearity and Micronumerosity

Economic Methods
Bryan Caplan
R.J. Rummel's critique of a Cato study set off a big bloggers' debate about the value of think tanks. The following passage in Rummel's critique got my attention: This correlation is meaningful for the kind of regression analysis Gartzke did,... MORE

Small vs. Large Businesses

Business Economics
Arnold Kling
In this essay, I write Small organizations are the size of hunter-gatherer bands. The behavior of each individual can be monitored and constrained by the group, using instincts that are deeply embedded by evolution into our social psychology. Members want... MORE

Foresee the Empty Nest

Microeconomics
Bryan Caplan
I've been arguing for quite a while that most people - including us dads - would be selfishly better off if they had more kids. Parents focus too much on how exhausted they are now, and forget how lonely they're... MORE

Cynicism: Some Value-Added

Economics and Culture
Bryan Caplan
According to Oscar Wilde, "The cynic knows the price of everything and the value of nothing." Since I believe that Robin Hanson's new short essay on cynicism is free but well worth the read, I can't agree.... MORE

Personality and Politics: New Evidence from Germany

Politics and Economics
Bryan Caplan
I'm convinced that economists have a lot to learn from personality psychology. For example, personality is a great predictor of occupational choice. Librarians are highly introverted, and salesmen are highly extraverted, just as you'd expect. Preferences matter, Becker and Stigler... MORE

How I Feel About Think Tanks

Politics and Economics
Arnold Kling
Among many posts, Virginia Postrel writes, Think tanks, unlike universities, are supposed to influence public policy, not to produce knowledge for its own sake. This discussion started with Daniel Drezner, and continued in other places. You might catch up by... MORE

The Cynical Optimist

Economic Philosophy
Bryan Caplan
Yesterday Robin Hanson, Tyler Cowen, Alex Tabarrok, and I had lunch at Morton's to celebrate Robin's tenure. As the guest of honor, Robin picked the main topic of discussion. His choice: Cynicism - what it is, who's got it, and... MORE

ATTENTION: Szasz Prize Change of Venue

Behavioral Economics and Rationality
Bryan Caplan
I was just notified that the Szasz Prize ceremony has been moved from the Cato Institute in D.C. to the Harper Library at the GMU Law School in Arlington. The day and time remain the same: September 21, 6 PM.... MORE

The Best of Szasz

Behavioral Economics and Rationality
Bryan Caplan
People occasionally ask me what Thomas Szasz's best works are. The optimal introduction is The Untamed Tongue. It's a book of aphorisms that cuts to the heart of his philosophy of mind. If it doesn't make you worry that there's... MORE

Greed and Price-Gouging

Economics of Education
Arnold Kling
Robert M. Dunn complains, The disparities in college endowments are enormous. As of mid 2004, Harvard, Yale, and Princeton had average endowments of $14.9 billion, while three private institutions of similar size, George Washington University, Georgetown, and American University, averaged... MORE

But I Still Disagree with Brad DeLong

Business Economics
Arnold Kling
when he writes, Shouldn't the fact that WalMart finds it more efficient to be a bureaucracy of 1.5 million people--rather than to split itself up into 15,000 companies of a hundred employees each--make Arnold Kling a little hesitant in his... MORE

Maybe Brad DeLong is Right

Fiscal Policy
Arnold Kling
From the Washington Times: House Majority Leader Tom DeLay said yesterday that Republicans have done so well in cutting spending that he declared an "ongoing victory," and said there is simply no fat left to cut in the federal budget.... MORE

The Russian Soul

Politics and Economics
Bryan Caplan
I came across these interesting thoughts from Soviet emigre Jamie Glazov in FrontPage magazine: [T]he governments of a people are a result of the neuroses of the people they rule. I was born in the Soviet Union. While I cherish... MORE

Tyler Cowen's Tight Constraints

Politics and Economics
Arnold Kling
Tyler Cowen suggests four problems for policy research to solve. In several cases, his constraints on the solution are significant. For example, he wants to see A good health care plan that is practical, not too far from politically feasible,... MORE

In 1995, Sachs and Warner published "Economic Reform and the Process of Global Integration," one of my favorite "big think" papers on growth. The punchline: Basically any country can achieve decent growth by avoiding a handful of really stupid policies.... MORE

Bait and Switch: The Cynic's Argument for Gas Tax Cuts

Energy, Environment, Resources
Bryan Caplan
Lots of economists in the blogosphere have been arguing about the effects of cutting gas taxes on the price of gas. Here's James Hamilton's summary, which ends with the following: [E]lasticities are never really zero, and are easy to underestimate... MORE

Economists under-represented?

Politics and Economics
Arnold Kling
Matthew E. Kahn writes, If economists would be such a useful addition to Congress as we remind our colleagues that there are “no free lunches” and that all actions have unintended consequences, why have we made so few inroads here?... MORE

Evolution vs. Intelligent Design

Business Economics
Arnold Kling
In my latest essay, I write, While I have little faith in individual corporations, I have more faith in decentralized market processes. For example, although I have no admiration for any oil company in particular, I believe that we will... MORE

Escaping the Envy Trap

Growth: Causal Factors
Bryan Caplan
Lately I've been speculating that a high informal envy tax in primitive tribes was an important reason why growth was so slow for so long. I've also argued that this is equilibrium behavior. Jane Galt then raises the interesting question... MORE

Emotionomics

Behavioral Economics and Rationality
Bryan Caplan
Economists are growing more and more interested in the emotions. My colleague Dan Houser, for example, tells me that interesting experiments on guilt and cooperation are underway, and it wasn't hard for me to track down some examples: see here... MORE

This Explains It

Public Choice Theory
Arnold Kling
This piece by Brad DeLong helps illuminate his world view. After giving a litany of Katrina-related institutional failures at the local, state, and Federal level, he concludes we should be surprised. Fema is a bureaucracy. A bureaucracy is designed to... MORE

The Tribal Trap

Growth: Causal Factors
Bryan Caplan
I recently argued that the high informal envy tax common to primitive tribes helps explain why economic growth was so low for so long. Matt McIntosh at Conjectures and Refutations faults my story for failing to "really explain the phenomenon... MORE

Gender and Labor Regulation in Sweden

Labor Market
Bryan Caplan
John Ray has an interesting post on the effect of labor market regulations on Swedish women. The most striking finding he reports is that 75% of women in Sweden work in the public sector, compared to 25% of men: Swedish... MORE

Taxes and Prices: In Defense of the Simple Story

Energy, Environment, Resources
Bryan Caplan
Alex Tabarrok chides the man-in-the-street for believing that cutting gas taxes will cut gas prices: Does the lifting of the tax change the demand for gasoline? No. Does it change the physical supply? No. At least not by much in... MORE

Gas Price Variance Up!

Energy, Environment, Resources
Bryan Caplan
With the whole country bemoaning the rise in the average price of gas, a far more economically surprising change has been almost overlooked: The massive rise in the variance of the price of gas. Before the hurricane, the spread between... MORE

Poverty vs. the Moon Mission

Income Distribution
Arnold Kling
A classic rhetorical question is "If we can put a man on the moon, why can't we end poverty?" Russ Roberts attempts to answer. Putting a man on the moon is an engineering problem. It yields to a sufficient application... MORE

What Took You So Long?

Growth: Causal Factors
Bryan Caplan
At the semester's first Philosophy, Politics, and Economics Workshop, Tyler Cowen talked about the political economy of the Mexican village of Oapan. (For all the details, by his Markets and Cultural Voices). According to Tyler, being the political leader of... MORE

Hummel Reviews Woods

Economic History
Bryan Caplan
Jeff Hummel, one of the most knowledgeable historians I personally know, has an interesting review online of Thomas Woods' Politically Incorrect Guide to American History. I haven't read the book, but the review is a fun read. I particularly liked... MORE

Kurzweil Interview

Growth: Consequences
Arnold Kling
Glenn Harlan Reynolds interviews Ray Kurzweil, who generically answers my objection to his forecasts. to achieve the software designs, we need to reverse-engineer the human brain. Here, progress is far greater than most people realize. The spatial and temporal (time)... MORE

Our Vast Oil Reserves

Energy, Environment, Resources
Arnold Kling
From a RAND study: The largest known oil shale deposits in the world are in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming...For potentially recoverable oil shale resources, we roughly derive an upper bound of 1.1... MORE

Education and Income

Economic Education
Arnold Kling
Michael Mandel writes, Four years of falling earnings for the college-educated. That hasn't happened since the 1970s... The only people doing well have advanced degrees. The world has changed. Just college is no longer enough. I'm basically an optimist, but... MORE

Bush's Hate Speech

Microeconomics
Bryan Caplan
The gougers are the most beastly, the coarsest, the most savage exploiters... These bloodsuckers have waxed rich during the hurricane on the people's want, they have amassed thousands and hundreds of thousands... These spiders have grown fat at the expense... MORE

Nasty, Brutish Looting

Public Choice Theory
Arnold Kling
Lee Harris writes, To me, the looting came as no surprise: it was a completely natural phenomenon. It was exactly what my own theory of the social order would have predicted. What else should you expect when a civilized order... MORE

I'm in favor of gas price ceilings

Price Controls
Arnold Kling
The price gouger's best friend is my colleague Don Boudreaux. His latest letter-to-the-editor (he emails these to those of us on a distribution list, whether they wind up published or not) puts it quite succinctly. Byron Kass correctly notes (Letters,... MORE

Dear Prudence

Behavioral Economics and Rationality
Arnold Kling
In the latest blogger celebrity deathmatch, Andrew Samwick writes I will start with a theory advanced most eloquently by a former mentor of mine, Christopher Carroll, who is now a professor at Johns Hopkins. According to his Buffer-Stock Theory, the... MORE

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