Bryan Caplan and David Henderson

June 2006

A Monthly Archive (73 entries)

A Few Good Laughs About Happiness

Behavioral Economics and Rationality
Bryan Caplan
Here's a pretty funny interview (free registration required) with Lord Richard Layard on happiness research. Highlights: Layard's big thing is taxation. He is convinced that paying taxes makes us really happy and that if we paid more we would be... MORE

Is Bush Stupid?

Politics and Economics
Bryan Caplan
The answer, according to an article in the latest issue of Political Psychology is: In absolute terms, no way: ...Bush is definitely intelligent. The IQ estimates range between 111.1 and 138.5, with an average around 125. That places him in... MORE

Critique My First Serious Survey

Politics and Economics
Bryan Caplan
I've never written a serious survey before. Sure, I wrote the Libertarian Purity Test twelve years ago, but that was just for fun. But now I've written a first draft of a survey on which my co-author Ilya Somin and... MORE

Divisions on Immigration

Labor Mobility, Immigration, Outsourcing
Arnold Kling
Jerry Bowyer writes, If 200 years from now America will be filled with people who know and love the ideas of Jefferson and Madison -- but these people are overwhelmingly dark skinned -- will this be good or bad? That's... MORE

Kaplin's Simplifiid Speling

Economics and Culture
Bryan Caplan
Greg Mankiw speculates that a world language will emerge, it will be either English or Chinese, and smart money says English will win. The interesting thing to me is that is it hard to become literate in either of the... MORE

Medical Technology

Economics of Health Care
Arnold Kling
Glenn Reynolds asks for my comments on a book by Andy Kessler. I'll pass on that, but speak to the general thesis that medical technology will advance rapidly in the coming years. I am generally optimistic about medical technology, but... MORE

CofA Watch

Books: Reviews and Suggested Readings
Arnold Kling
Crisis of Abundance made a list of ten "books that drive the debate" recommended by the National Chamber Foundation, a group of business leaders. The full list: 1. Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy, by... MORE

Bartlett's Theory of Political Dynamics

Political Economy
Arnold Kling
Bruce Bartlett writes, The fact is that a lot of people who get into politics don't really have any ideology... Rather, their only concern is which party will give them the best chance of winning. Secondarily, they are concerned about... MORE

Trust Cues

Economic Methods
Arnold Kling
My latest essay summarizes some ideas I've been blogging about lately. An empirical argument attempts to convince you using logic and observation. A trust cue threatens you with loss of membership in a valuable group unless you take a given... MORE

Stock Indexing Empire Strikes Back

Finance: stocks, options, etc.
Arnold Kling
John C. Bogle and Burton G. Malkiel write, We concede that there is some evidence, based on numbers compiled by Ibbotson Associates, that long-run excess returns have been earned from dividend-paying, "value" and small-cap stocks -- albeit returns that are... MORE

Milton Friedman Video

Economic Education
Arnold Kling
From the 1970's, a great half-hour interview. Thanks to Robert Lawson for the pointer.... MORE

An Economist's Guide to Happier Parenting

Economics and Culture
Bryan Caplan
Happiness research hits a lot of nerves, but the finding that kids don't make people happier may be the unkindest cut of all. As a proponent of having more kids, I could make methodological objections, but the truth is, I... MORE

Religion as a Basis for Trust

Behavioral Economics and Rationality
Arnold Kling
I have been lucky that my last two book purchases both proved interesting--I think I saw both mentioned on Arts and Letters Daily, so it's not all luck. I have mentioned Frederick Crews' Follies of the Wise. I just finished... MORE

Don Boudreaux has come up with the first new way to explain the folly of the minimum wage I've read in years: Allow me here to spin the core argument -- that minimum-wage legislation prices many low-skilled workers out of... MORE

Expect to Live Longer than Your Life Expectancy

Economics of Health Care
Bryan Caplan
I've long thought that life expectancy statistics were odd. Encyclopedias treat nation's life expectancies as numbers on par with square mileage. But in reality, doesn't this require a bunch of assumptions about future health developments? At least according to Wikipedia,... MORE

Some of My Best Friends Aren't Liberal

Labor Market
Bryan Caplan
Ken Arrow scoffs at charges of academic discrimination against non-liberals: It’s hard for me to judge, of course, but I must say that my department contains a number of Republicans. And they were appointed by a democratic group, whose members... MORE

Privatization in India

Institutional Economics
Arnold Kling
Gurchuran Das writes, the old centralized bureaucratic Indian state is in steady decline. Where it is desperately needed -- in providing basic education, health care, and drinking water -- it has performed appallingly. Where it is not needed, it has... MORE

Ten Ideas Worth Thinking About

Behavioral Economics and Rationality
Bryan Caplan
A couple years ago, someone asked me to write a list of ten interesting ideas. I just stumbled across it again today, and I still like what I wrote. If you like it too, you'll probably enjoy my book. 1.... MORE

Popular Opinion

Economic Methods
Arnold Kling
Bryan writes, If virtually everyone just argues for whatever position he was born into, a truth-seeker should hold the gladiators for popular views to higher standards. I have a slightly different way to arrive at this position. Consider the following... MORE

If Medicare were a Country...

Economics of Health Care
Arnold Kling
Laurence J. Kotlikoff and Christian Hagist write, European critics of the U.S. health care system often focus on the private provision of health care and health insurance. Yet the more important difference between the United States and other developed countries... MORE

Intellectual Gladiators

Economic Methods
Bryan Caplan
I'm no sports fan, but it's pretty clear that countries with more people win more Olympic medals. The obvious explanation is that people typically play for the country they were born into, and the ten best basketball players in China... MORE

Challenge to Cowen and Gilbert

Behavioral Economics and Rationality
Arnold Kling
I hereby challenge Tyler Cowen and Daniel Gilbert to debate whether happiness research constitutes an empirical science. Tyler pointed to this essay by Gilbert. if the Red Sox and the Yankees were scoreless until Manny Ramirez hit a grand slam... MORE

I Hate Monetary Theory

Macroeconomics
Arnold Kling
Bryan writes, People adjust their borrowing to interest rates all the time. But cash balances? That's hard to believe. Who cares? In practice, the Fed has its famous three tools--the discount rate, the reserve requirement(s), and open market operations. In... MORE

What Responds to Interest Rates?

Macroeconomics
Bryan Caplan
In our continuing dialogue, Arnold observes that: The Fed supplies bank reserves. Mechanically, it goes into the "repo" market, which is the market for loans collateralized by Treasury securities. When the Fed wants to expand the money supply, it goes... MORE

Bryan's Right

Macroeconomics
Arnold Kling
He's right that with zero interest elasticity, the Fed could still expand the money supply. Just think of the old helicopter drop. However, I do not think that Bryan's personal money demand function is the ultimate determinant of interest elasticity.... MORE

Back to the Macro Text

Macroeconomics
Bryan Caplan
Arnold writes: The textbook answer, which Bryan gave but rejected, is that interest rates go up, the demand for money falls, and the fall in the demand for money acts like an increase in the supply of money--nominal GDP goes... MORE

Macroeconomists Behaving Badly

Macroeconomics
Arnold Kling
I can't believe what I've been seeing in the thread that Bryan started here and updated most recently here. So far, if this were a question on an intermediate macro test, nobody gets full credit.... MORE

Russ Roberts Gets Szaszian

Behavioral Economics and Rationality
Bryan Caplan
Russ Roberts gets Szaszian on the latest EconTalk. The topic: Intermittent Explosive Disorder. Russ speaks better than I could after a lifetime of Toastmasters (no ahs, no umms), but if you'd rather read than listen, go here.... MORE

Two weeks ago I emailed Mankiw a question about fiscal policy, referencing one of my previous posts. Mankiw replied (June 7). Then Brad DeLong responded to Mankiw (on June 15, updated June 17). DeLong's post in turn apparently provoked a... MORE

Empiricism and Global Warming

Energy, Environment, Resources
Arnold Kling
I am reading Frederick Crews' The Follies of the Wise, which collects essays he has written over the years attacking creationists, UFO believers, Freudians, and others. The common thread is his unrelenting empiricism. Greg Mankiw exposed my skepticism on Global... MORE

Jason Furman x 2

Economics of Health Care
Arnold Kling
I had never heard of Jason Furman until today, when I encountered him twice. First, he shows up on Greg Mankiw's blog, where Greg touts this paper. In fact, if we turned our irrational health tax subsidies right-side up–by curbing... MORE

Fixed Costs: The Moderate Case for Extremism

Cost-benefit Analysis
Bryan Caplan
Does cost-benefit analysis always council against extremism? In a reply to Arnold, Mankiw seems to argue that it does: I am not a scientist and am therefore agnostic about a lot of issues surrounding global warming. Suppose I assign a... MORE

Carbon Tax Club?

Energy, Environment, Resources
Arnold Kling
Greg Mankiw asks everyone to join what he calls The Pigou Club, by which he means economists who favor carbon taxes or gasoline taxes. The idea is that instead of taxing stuff that we want more of--work, saving, risk-bearing--we should... MORE

Competitive Manipulation

Politics and Economics
Bryan Caplan
Arnold's carved out an intermediate position about who's responsible for bad policies. Yes, the public currently opposes e.g. raising the retirement age. But: It depends on how the issue is framed. When Al Gore framed it during his acceptance speech... MORE

The Future of Mass Media

Information Goods, Intellectual Property
Arnold Kling
Jim Pinkerton writes, Every country with ambitions on the international stage will soon have its own state-supported media. ...In addition, around the world, states will want to "help" their media. Not satisfied with what the free market is bringing about,... MORE

Errors in Charitable Giving

Behavioral Economics and Rationality
Arnold Kling
Tyler Cowen reports on some disturbing research. For example, Donors to charities, it seems, do not behave rationally. Increasing evidence shows that donors often tolerate high administrative costs, fail to monitor charities and do not insist on measurable results Tyler... MORE

The Comedy of Monopoly

Economic Education
Bryan Caplan
I just came across a chuckle-worthy piece by Russ Roberts on Monopoly - the game, not the market structure: Monopoly is the ultimate zero-sum game. You profit only by taking from others. The assets of its world are fixed in... MORE

IQ, Achievement Motivation, and Culture

Labor Market
Bryan Caplan
Arnold writes: My guess is that someone with a high IQ in an adverse cultural setting will not necessarily be healthy and wealthy. Someone with an average IQ in an achievement-oriented cultural setting will tend to achieve a lot. Both... MORE

Take the Test

Political Economy
Arnold Kling
I have a test to see whether you are a conservative. It has six questions. For example, Do you believe that the flaws and imperfections of human beings are reflected in government? See how you do.... MORE

A Simple but Revolutionary Investment Idea

Finance: stocks, options, etc.
Arnold Kling
Jeremy Siegel writes, Fundamental indexation means that each stock in a portfolio is weighted not by its market capitalization, but by some fundamental metric, such as aggregate sales or aggregate dividends. Like capitalization-weighted indexes, fundamental indexes involve no security analysis... MORE

I am not an IQ-ist

Income Distribution
Arnold Kling
I think of Bryan as an IQ-ist. To me, IQ-ism is the doctrine that IQ determines many things in life, including income and health. I take the view that cultural and emotional factors matter. On cultural matters, see Judith Harris'... MORE

I am not a Populist

Political Economy
Arnold Kling
Bryan asks, Arnold, do you really think that Miron's proposals would appeal to a majority of Americans? Raising the retirement age to seventy? It depends on how the issue is framed. When Al Gore framed it during his acceptance speech... MORE

Global Warming and Model Dependence

Energy, Environment, Resources
Arnold Kling
J.S. at Environmental Economics writes, We all are aware of the well-funded campaigns to discredit the science of global warming, and I’m the last one who wants to add more uncertainty to the mix. He points to this set of... MORE

Woof!

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Mankiw's dogs Tobin and Keynes just got a playmate... a bulldog named Caplan.... MORE

Is Civilization the Product of Global Warming?

Energy, Environment, Resources
Bryan Caplan
Patri Friedman has written the most interesting thing I've read on global warming in years: I think humans naturally tend to a more anthrocentric viewpoint, where civilization arose because we had evolved enough to create it. It is fascinating and... MORE

Question for Arnold

Political Economy
Bryan Caplan
Arnold's sounding like a bit of a populist: Miron writes as if the main issue is between Democrats and Republicans. Instead, the issue is Inside vs. Outside the Beltway. It is inside the beltway that these spending cuts are "unthinkable"... MORE

Net Neutrality, Again

Regulation and Subsidies
Arnold Kling
Tim Swanson has a set of links, including one to wise essay by Martin Geddes. Network neutrality makes competition and consumer welfare dependent on law and lobbying, not natural competition. So you’ve chosen the area in which the telcos are... MORE

Outside-the-Beltway Mentality

Fiscal Policy
Arnold Kling
Jeff Miron proposes spending cuts, The grand total from this list is $300 billion annually, roughly the deficit projected for 2006. Normal economic growth would therefore mean surpluses in the near future, should these cuts occur. To deal fully with... MORE

Wisdom of Crowds?

Behavioral Economics and Rationality
Arnold Kling
I really like this Jaron Lanier essay. The collective is more likely to be smart when it isn't defining its own questions, when the goodness of an answer can be evaluated by a simple result (such as a single numeric... MORE

Interviewed on Health Care

Economics of Health Care
Arnold Kling
I spoke here. one of the recommendations in the book -- and this is probably unusual from a libertarian perspective -- is that the government charter some kind of commissions analogous to what the UK has called their "National Institute... MORE

Are Immigrants "Ordinary People"?

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
A while back I polemically asked, "Are low-skilled Americans the master race?" The targets of my ridicule called me an elitist. But my elitism is nothing compared to this gem from Dennis Mangan: All of his [Mankiw's] academic theorizing about... MORE

Mankiw's Got Class

Income Distribution
Bryan Caplan
Greg Mankiw's posted a short class autobio. Highlight: My parents made what must have been a significant financial sacrifice for them to send me to a good private school, where most of the other kids were from families higher up... MORE

As a corollary to the proposition that all institutions must be subordinated to the law of equal freedom, we cannot choose but admit the right of the citizen to adopt a condition of voluntary outlawry. If every man has freedom... MORE

I believe that IQ matters quite a lot for earnings, and that a lot of education is mere signaling. But I've recently reached an epiphany about the relationship between these two heresies. Note that the two heresies are distinct. You... MORE

Economists Overconfident?

Behavioral Economics and Rationality
Arnold Kling
Randall Parker points to this article. [Erik] Angner, an assistant professor of philosophy at the University of Alabama at Birmingham (UAB), published a paper, “Economists as Experts: Overconfidence in Theory and Practice,” in a recent edition of the Journal of... MORE

Net Neutrality?

Regulation and Subsidies
Arnold Kling
Greg Mankiw writes, After reading these two pieces [on proposals to force Internet carriers to be "neutral"], I am inclined to give the edge to Litan, in part because his piece is more infused with economic reasoning and in part... MORE

Mankiw on Fiscal vs. Monetary Policy

Macroeconomics
Bryan Caplan
The noble Mankiw has a thoughtful reply to a question from me about the effect of fiscal and monetary policy on nominal GDP. (The question is based on one of my old posts): How far off is the vertical LM... MORE

Economic Dynamism

Cross-country Comparisons
Arnold Kling
Edmund Phelps writes, An informal cross-country analysis of those economies that I have conducted with Gylfi Zoega examined three measures of economic performance: the employment rate (relative to the working-age population), the unemployment rate (relative to labor force), and labor... MORE

Are You Big Enough to Tolerate Polygamy?

Economics and Culture
Bryan Caplan
I just saw the season finale of Big Love, HBO's path-breaking dramatic series about a family of polygamists. I can't remember the last time I saw such a fresh artistic depiction of capitalist acts between consenting adults. I won't give... MORE

Boudreaux Class Autobio

Income Distribution
Bryan Caplan
My boss, Don Boudreaux, has posted his class autobio. As you would expect, the man who rules me and my fellow professors with an iron hand grew up with a silver spoon in his mouth: I’m the only of my... MORE

Feldstein vs. Nordhaus

Energy, Environment, Resources
Arnold Kling
If you want to reduce gasoline consumption or carbon emissions, should you use a tax or tradable rights? Martin Feldstein argues for tradable gasoline rights (TGR's). The government would decide how many gallons of gasoline should be consumed per year... MORE

Class and Poverty

Income Distribution
Arnold Kling
I put my views in an essay. When people care about their own children, there is bound to be some inequality. A friend of ours has worked in his parents' store since his early teens, and he probably has averaged... MORE

My Future Calhounian Class Autobio

Income Distribution
Bryan Caplan
The most interesting comment I've gotten about class autobiography comes from James at Degrees of Freedom: I'm not a big fan of this theory of class, largely because it doesn't do what class theories are supposed to do according to... MORE

Global Warming, con't

Energy, Environment, Resources
Arnold Kling
A new study says Three top climate researchers claim that the greenhouse gases already in the atmosphere should have warmed the world more than they have. The reason they have not, they say, is that the warming is being masked... MORE

Bloggers' Class Autobios

Income Distribution
Bryan Caplan
Quite a few bloggers took the bait and wrote their class autobiographies. Here are all the ones I'm aware of: Me Arnold Mark Thoma Alcibiades Chris Dillow Steve Miller Dennis Mangan James Don Boudreaux All of which confirms the conclusion... MORE

My Case for Single-Payer Health Care

Economics of Health Care
Arnold Kling
In an op-ed picked up by the Providence Journal, I write, I am not among the many who believe that single-payer health care is the best solution. However, I think that an experiment with single-payer coverage [by a single state]... MORE

Global Warming Question, Con't

Energy, Environment, Resources
Arnold Kling
Here are a couple of more references on decarbonization: John Whitehead shows a trend decline of about 2 percent per year in the U.S.(we are decarbonizing faster than most of the world). Jesse Ausubel (last chart) shows a graph which,... MORE

Global Warming Question

Energy, Environment, Resources
Arnold Kling
What accounts for the relationship between total world GDP and world average temperature? For background, here is some data on GDP, from chapter 5 of Brad DeLong's Macroeconomics textbook (I did the multiplication to get the last column). yearworld population... MORE

My Rejoinder to Michael Tanner

Economics of Health Care
Arnold Kling
Cato's Michael Tanner writes, There is no doubt that Americans spend more on health care than any other country. But why is that necessarily a bad thing? There is no “right” amount to spend on health care or anything else.... MORE

Doesn't Academia Already Have De Facto Free Immigration?

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
A number of economists have pledged their support for free immigration for professors in response to a challenge my Matt Yglesias. I'm happy to sign on. But I'm rather puzzled by this whole discussion. Correct me if I'm wrong, but... MORE

Skepticism About Junk

Economic Methods
Bryan Caplan
No snarl intended, Arnold. I'm a big fan of Cox and Alm, too. But just pointing to basic numbers only gets you so far. Cox and Alm can show that living standards are rising, but if you want to figure... MORE

A Fundamental Health Care Issue

Economics of Health Care
Arnold Kling
I call it the health gap. I wanted to believe (A), that American health care actually is more effective than international comparisons of longevity would suggest. ...Many people would like to believe (B), that Americans could receive the same health... MORE

Nation-building Debated

Institutional Economics
Arnold Kling
Max Borders makes a case that nation-building can work. What's more, while institutions can and usually do develop or evolve over time -- much in the same way that DNA evolved from auto-catalytic processes and from simpler amino acids, and... MORE

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