Bryan Caplan and David Henderson

February 2006

A Monthly Archive (58 entries)

Why Experiments are Misleading

Behavioral Economics and Rationality
Bryan Caplan
Tyler Cowen discusses an interview with Harvard's Mullainathan, in which he talks about a bank's randomized marketing experiment: “What we found stunned me,” he says. “We found that any one of these things had an effect equal to one to... MORE

Eternal Temptation

Microeconomics
Bryan Caplan
I just found out that my Internet service provider sells its services on a lifetime basis. For a $300 lump-sum payment, I will never have to worry about quarterly service fees OR domain registration for my website again. Should I... MORE

Thou Shalt Be Leftist

Economics and Culture
Arnold Kling
Is that the 11th Commandment? My latest essay wonders if Jews have a Moses Complex Not every misfortune that occurs in society is a replay of Pharaoh's enslavement of the Jews. The Exodus narrative can always be tried on, but... MORE

Economics of Free Parking

Regulation and Subsidies
Arnold Kling
Daniel B. Klein writes a review of The High Cost of Free Parking, by Donald Shoup. Shoup shows that the magnitudes are huge. About 87 percent of all trips in the U.S. are made by personal motor vehicles, and parking... MORE

China's Stationary Bandits

Public Choice Theory
Arnold Kling
Minxin Pei writes, The Chinese state remains deeply entrenched in the economy. According to official data for 2003, the state directly accounted for 38 percent of the country’s GDP and employed 85 million people (about one third of the urban... MORE

Red-Handed Ratchet Effect

Economic History
Bryan Caplan
Robert Higgs is famous for his analysis of the "ratchet effect." As Higgs explained in his Crisis and Leviathan, governments expand during crises, then conveniently fail to return to their initial size after the crisis ends. Of course, it's possible... MORE

Lenin and Goebbels: Can You Tell Them Apart?

Economic History
Bryan Caplan
You probably can, but mostly because Lenin is such a terrible writer: Goebbels: Bourgeois social theory is primarily concerned with the individual. It is thus essentially determined by pity, or compassion, or the Christian love of one's neighbor or similar... MORE

Economic Nationalism, once more

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Don Boudreaux writes, Now consider a slightly different example in which I live, not in Virginia, but in Maine on the U.S. side of the Canada-U.S. border. My neighbor is a Canadian living in Canada. He mows my lawn; I... MORE

Back in the day, I was one of the research assistants for the Collected Works of Hayek. Frankly, the more I read, the less impressed I was. Among other things, Hayek spends a lot of time unconvincingly blaming socialism on... MORE

Less Stumped

Microeconomics
Bryan Caplan
The high bidder called my wife this morning, suggesting that his price could come down. When he found out the price we paid, he asked a lot of questions, and exclaimed "You got a great deal!" So perhaps his strategy... MORE

Stumped

Microeconomics
Bryan Caplan
A dead 80-foot tree was leaning precariously toward our house, so my wife asked three tree-cutting firms to submit bids. The spread was absurdly wide: $1900, $875, and $3200 for the same job. How is this possible? The quality and... MORE

My NPR Debut

Labor Market
Arnold Kling
was pretty uninspired. In the middle of a four-minute segment on the public's fears about jobs, I get about 15 seconds to talk about "make-work bias," which is the term my co-blogger uses for the public's fear about processes that... MORE

You're Not Fooling Anyone: The Futility of Libertarian Euphemisms

Information Goods, Intellectual Property
Bryan Caplan
Yesterday GMU had a mini-debate between Dan Klein and Pete Boettke on "Is It Time to Retire the Label 'Austrian Economics?'" Dan said Yes; Pete said No. Dan's proposal, roughly, was to (a) expand the set of heroes to include... MORE

Dilbert Learns Oil Econ 101

Energy, Environment, Resources
Arnold Kling
The cartoon is here. Thanks to Lynne Kiesling for the pointer.... MORE

Rename Austrian Economics?

Austrian Economics
Arnold Kling
Dan Klein says Let me delineate a set of economists, different from but highly inclusive of the Austrian communities. First, consider only those seeing The Distinction between voluntary and coercive as analytically crucial; these economists, inevitably, are wise to the... MORE

Economic Theory for the Socially Perplexed

Information Goods, Intellectual Property
Bryan Caplan
Why is getting along with other people so complicated? Shows like Seinfeld and Curb Your Enthusiasm have explored this question with hilarious results. But last week Rick Harbaugh of Indiana University came to speak at GMU, and convinced me that... MORE

Behavioral Science vs. Happiness Research

Economic Methods
Arnold Kling
Bryan writes, If happiness research can't make behavioral predictions, then behavioral research can't make happiness predictions. Which is as it should be. Books that are based on research designed to predict behavior belong in the Social Science section. Books that... MORE

Honest Measurement

Behavioral Economics and Rationality
Bryan Caplan
Arnold isn't happy about measuring happiness. His objections, and my replies: Happiness research cannot make behavioral predictions at all. It consists of taking meaningless surveys, and the most it can do is make predictions about the "findings" of other meaningless... MORE

A Story that Warms My Heart

Public Goods
Bryan Caplan
Think firemen provide a public good? At least in rural areas, think again: MINNEAPOLIS – Carl Berg failed to pay a $25 annual fee for rural fire protection and, as a result, firefighters let his house burn to the ground... MORE

Economic Nationalism

Political Economy
Arnold Kling
My latest essay: Nationalistic rhetoric about economics is even worse than nationalistic rhetoric about the Olympics. Nationalism about the Olympics is a marketing tool for commercial exploitation, and the harm done is relatively minor. Nationalism about the economy is a... MORE

Measurement Without Measurement

Economic Methods
Arnold Kling
Bryan writes But Arnold's prediction and the happiness literature are actually compatible. I am not going to be trapped into talking about happiness research as if it makes behavioral predictions. Happiness research cannot make behavioral predictions at all. It consists... MORE

Lighten Up on Happiness, Arnold!

Behavioral Economics and Rationality
Bryan Caplan
My co-blogger continues to be unhappy with happiness research. Since no First World happiness researcher would willingly trade places with Third World tribesmen, and Third World tribesmen would willingly trade places with First World happiness researchers, happiness research is "fundamentally... MORE

Lemons for Valentine's Day

Information Goods, Intellectual Property
Bryan Caplan
Match Point, yet another Woody Allen movie about adultery, reminds me of a question I've often wondered about: Why hasn't the lemons problem killed adultery? To be more specific, why would any women want to steal a man who lies... MORE

A Happiness Experiment

Behavioral Economics and Rationality
Arnold Kling
In an issue that's repetitive, pompous, and boring, Forbes touts happiness research. The best tidbit is in this article. Researchers from the University of Illinois and the University of Pennsylvania proclaim with totemic authority that, in a 1985 survey, respondents... MORE

Oil Company Speculators

Energy, Environment, Resources
Arnold Kling
From the Economic Report of the President's energy chapter: Prices on contracts for future deliveries of crude oil (called crude oil futures) indicate that market participants expect oil prices to remain elevated at or near current levels through at least... MORE

Health Care Policy

Economics of Health Care
Arnold Kling
The 2006 Economic Report of the President is available, and the first chapter I turned to was the one on health care. The rising costs of health care are reflected in premiums (employer plus employee share) for employer-provided insurance that... MORE

The European Model

Cross-country Comparisons
Arnold Kling
Fareed Zakaria writes, Talk to top-level scientists and educators about the future of scientific research, and they will rarely even mention Europe. There are areas in which it is world-class, but they are fewer than they once were. In the... MORE

Health Savings Accounts

Economics of Health Care
Arnold Kling
Sebastian Mallaby writes, Even if the administration were determined to shelter out-of-pocket payments using health savings accounts, why make them so generous? It proposes both a tax deduction and a tax credit when money goes into the accounts; savings would... MORE

Drain Our Brains: It's the Law!

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
If you want to get a U.S. student visa, you're supposed to demonstrate "nonimmigrant intent." As one immigration lawyer puts it: "the student must have 'nonimmigrant intent' – that is, an intention to return to their home county and not... MORE

Credentialism Trap Rejoinder

Human Capital: Returns to entrepreneurs, skills, etc.
Arnold Kling
Bryan writes, If Arnold's story is right, there wouldn't really be a trap. Some firms are bound to be run by people who value profits more than pride in their alma mater. These firms will do what Arnold recommends: Hire... MORE

Credentialism versus Signaling

Human Capital: Returns to entrepreneurs, skills, etc.
Bryan Caplan
Arnold's not too happy about credentialism: I remember hearing a company founder in the Dotcom era saying that he only wanted to hire MBA's from top schools. I thought to myself that this was silly. When you are a start-up,... MORE

Gresham's Law of Comments

Econlog Administrative Issues
Arnold Kling
I want to remind all commenters to read The Civility Plea. It is remarkable how strong the inverse correlation is between the harshness of one's rhetoric and the value of what one is saying. From now on, I want to... MORE

Creative Destruction of the Telegram

Growth: Consequences
Bryan Caplan
My grandpa sent me a telegram to congratulate me on my college graduation. Even then, I thought it was weird. Thirteen years later, the market has finally pulled the plug on telegrams: Well, now nothing is worth a telegram. Western... MORE

The Trade Deficit

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Don Boudreaux writes A trade deficit isn't debt. My young son, for example, received for Christmas several Chinese-made toys. These were bought with cash. If the Chinese toymakers invest their newly earned dollars in, say, that factory in Utah, the... MORE

Decline in Cancer Deaths

Economics of Health Care
Arnold Kling
The New York Times reports, The number of cancer deaths in the United States has dropped slightly, the first decline in more than 70 years, the American Cancer Society is reporting today... The decline occurred in 2003, the latest year... MORE

Credentialism Trap?

Economics of Education
Arnold Kling
Now Bryan writes, It is also important for employees to be conscientious and conformist. And while we can accurately assess someone's intelligence with a short IQ test, it's a lot harder to find out how conscientious and conformist someone is.... MORE

New and Exciting Economics

Political Economy
Arnold Kling
Tyler Cowen asks what is the most interesting work in the economics profession today? He gives a few answers, one of which is World Bank data on corruption and governance. I would broaden that to political economy and institutional economics... MORE

Galbraith vs. the Internet

Economic History
Arnold Kling
From my latest essay, The death of the entrepreneur was greatly exaggerated. Over the past two decades, the strength of entrepreneurialism has been unmistakable. The economy has been much more dynamic than Galbraith would have predicted. Many of the industrial... MORE

Name My Book, Part II: Vote on the Finalists

Books: Reviews and Suggested Readings
Bryan Caplan
If you know anything about my book, you'll wonder why I'd use democratic means to select the title. The main answer, of course, is that Econlog readers are the rational voter exception that proves the irrational voter rule! Here's my... MORE

What Does Education Signal? Answering Arnold's Challenge

Human Capital: Returns to entrepreneurs, skills, etc.
Bryan Caplan
Arnold raises a common objection to the signaling model of education: My problem with the signalling model of education is that it suggests that there is a huge unexploited profit opportunity for employers and employees who can come up with... MORE

Samwick, Thoma, and Pearlstein on Health Care Policy

Economics of Health Care
Arnold Kling
Here are a couple of new pieces on health care policy, with my comments.... MORE

Individual Creativity

Behavioral Economics and Rationality
Bryan Caplan
So this is why I always hated working in groups!... MORE

An Implausible Randian Correlation Checks Out

Economics and Culture
Bryan Caplan
One of the countless criticisms of Ayn Rand's novels is that she makes all her heroes good-looking and all her villains ugly. That's not quite true - Floyd Ferris is known as "that good-looking scientist" - but it's close. It... MORE

Mmmm... Lunch

Information Goods, Intellectual Property
Arnold Kling
A story in the Washington Post says, A Verizon Communications Inc. executive yesterday accused Google Inc. of freeloading for gaining access to people's homes using a network of lines and cables the phone company spent billions of dollars to build.... MORE

Work Hours and Comparative Advantage

Cross-country Comparisons
Arnold Kling
Tim Worstall reports on research that explains the differences between hours worked in the U.S. and Europe. the fact that many German women stay at home to make sauerkraut, while more American women go outside the home to do something... MORE

Abramoff and Rent-Seeking

Public Choice Theory
Arnold Kling
In a long article filled with details, Fred S. McChesney writes Lobbyists are free to petition government on behalf of clients. Indeed, the process is protected by the First Amendment. Accepting money for the exercise of one's First Amendment rights... MORE

Posner on Health Care

Economics of Health Care
Arnold Kling
Richard Posner has some very iconoclastic proposals to reduce excessive spending on health care.... MORE

College and Summer Camp

Economics of Education
Arnold Kling
Bryan writes, I've been defending the signaling model to other economists for 15 years, and always met fierce resistance. Frankly, I think that this resistance mostly stems from a failure of introspection. If you really compare what you learned in... MORE

Mixed Signals: Why Becker, Cowen, and Kling Should Reconsider the Signaling Model of Education

Human Capital: Returns to entrepreneurs, skills, etc.
Bryan Caplan
Gary Becker, Tyler Cowen, and Arnold Kling have all recently criticized the signaling theory of education. If you haven't heard, the signaling theory says that to a significant extent, education does not increase workers' productivity. Instead, the fact that you... MORE

Punk Songs for Classical Liberals

Economics and Culture
Bryan Caplan
Russ Roberts gives me the lead-in I've been waiting for: I was talking to my students last night about inspirational education—writing or music that not only informs but inspires. And I wondered out loud with them about why there isn't... MORE

Insurance versus Charity

Information Goods, Intellectual Property
Bryan Caplan
One of the most effective ways to take the sting out of charity - for recipients and involuntary donors alike - is to give it a new name: "insurance." If you buy fire insurance and your house burns down, you... MORE

The Veterans Administration Model

Economics of Health Care
Arnold Kling
Tyler Cowen and Brad DeLong cite a recent Paul Krugman column that praised VHA health care. I think that it's wonderful that the VHA, which used to be administered poorly, has gotten better. But I am not ready to jump... MORE

More Wood Chip Commentary

Energy, Environment, Resources
Arnold Kling
Robert Zubrin writes Congress could make an enormous step toward American energy independence within a decade or so if it would simply pass a law stating that all new cars sold in the U.S.A. must be flexible-fuel vehicles capable of... MORE

Happy 101st Birthday, Ayn Rand

Economic Philosophy
Bryan Caplan
Would Ayn Rand be proud of how I turned out? Probably not, but I love her just the same. Here's why, and here are details on her contributions to literature, philosophy, and social science. If that doesn't satisfy your Rand... MORE

What Does Education Do?

Economics of Education
Arnold Kling
Tyler Cowen speculates Men are born beasts. But education gives you a peer group, a self-image, and some skills as well. Getting an education is like becoming a Marine. Men need to be made into Marines. By choosing many years... MORE

Lust and Greed

Behavioral Economics and Rationality
Arnold Kling
In this post, Mark Thoma passes along some research findings from brain scans. The pleasure of orgasm, the high from cocaine, the rush of buying Google Inc. at $450 a share --- the same neural network governs all three I... MORE

Fool Me Thrice, and I'll Trust You

Behavioral Economics and Rationality
Bryan Caplan
Amy Perfors at the Social Science Statistics Blog asks a great question: Why does repeated lying work? It's a common truism, familiar to most people by now thanks to advertising and politics, that repeating things makes them more believable --... MORE

More than Corn--it's Wood Chips!

Energy, Environment, Resources
Arnold Kling
Forget Oil Econ 101. Steven Pearlstein writes that the President's State of the Union rhetoric about energy independence, cars running on alternative energy and ending our addiction to Mideast Oil -- that could have come straight from the mouth of... MORE

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