Bryan Caplan and David Henderson

November 2006

A Monthly Archive (81 entries)

Discovering Alan Fiske

Behavioral Economics and Rationality
Arnold Kling
Columnist Andrew Cassel writes The rules of supply and demand aren't inherently more difficult to fathom than those that apply to, say, politics, or cooking, or sports. Yet while most people have no trouble wrapping their brains around these subjects... MORE

Tyler Cowen on Economic Turbulence

Growth: Consequences
Arnold Kling
He writes, Economists Clair Brown, John Haltiwanger and Julia Lane...note [that] job turnover and firm disappearance have positive effects, in the aggregate...As workers lose jobs in one niche or sector, they gain in another, moving on to better jobs and... MORE

Tyler Cowen on Mexican Immigration

Labor Mobility, Immigration, Outsourcing
Arnold Kling
He writes, Mexican immigrants used to have higher-than-average levels of education, but today the average male Mexican migrant has lower-than-average education by Mexican standards... A better immigration policy would tighten the border, while allowing in more legal immigrants from Mexico... MORE

The Social Psychology of Gender Bias

Behavioral Economics and Rationality
Bryan Caplan
Over at Overcoming Bias, the smartest man I know argues that we underestimate the quality of women's lives - and overestimate the quality of men's lives - because the genders have different propensities to complain. Women who complain get a... MORE

Where Economists Agree

Politics and Economics
Arnold Kling
According to Robert Whaples, the overwhelming majority (87.5%) agree that the U.S. should eliminate remaining tariffs and other barriers to trade. Even more (90.1%) disagree with the suggestion that the U.S. should restrict employers from outsourcing work to foreign countries.... MORE

Milton Friedman: The Man Who Laughs

Economics and Culture
Bryan Caplan
Mark Skousen has a great picture and a great story about one of Milton's last big laughs. Don't miss it! P.S. In Forbes (registration required), Skousen explains that Galbraith was Photoshopped into the picture as a joke.... MORE

Families and Inequality

Income Distribution
Arnold Kling
My latest essay collects a lot of my thoughts on inequality. Since World War II, our economy has evolved in ways that reinforce the financial differences between strong families and weak families. As the earnings of women have risen, "assortive... MORE

According to the NYT, libertarians ruled Washington during the Clinton era: FOR years, the Clinton wing of the Democratic Party, exercising a lock on the party’s economic policies, argued that the economy could achieve sustained growth only if markets were... MORE

Difference in Deference

Economics of Education
Bryan Caplan
Over at Overcoming Bias, Robin Hanson amusingly contrasts the abject deference the public gives to physicists with the stubborn defiance the public gives to economists: Consider how differently the public treats physics and economics. Physicists can say that this week... MORE

The Stern Swindle

Energy, Environment, Resources
Arnold Kling
Concerning the discount rate assumptions used in the Stern climate review, Partha Dasgupta writes, suppose, following the Review, we set delta [the rate of subjective time preference] equal to 0.1% per year and eta [the elasticity of marginal utility with... MORE

Taxes vs. Philanthropy

Income Distribution
Arnold Kling
The New York Times' Louis Uchitelle writes, When it comes to wealth, one in every 325 households had a net worth of $10 million or more in 2004, the latest year for which data is available, more than four times... MORE

Does Happiness Research Raise Happiness?

Behavioral Economics and Rationality
Bryan Caplan
There's a mini-literature on whether the study of economics causes people to become more selfish. Has anything been written on whether the study of happiness causes people to become more happy? My guess is that studying happiness doesn't cause happiness.... MORE

The Entrepreneurial Society

Books: Reviews and Suggested Readings
Arnold Kling
In my latest essay, I write, Continental Europe is set up to preserve large public sectors, large banks, and large corporations. For individuals, the promise is stable jobs, a stable business environment, and collective sharing of the costs of unemployment,... MORE

Are Husbands Really Like Potatoes?

Labor Market
Bryan Caplan
When men's incomes go up, everyone expects the demand for wives to go up as well. If average male income rises, men have to offer women a piece (maybe a large piece) of the increase if they want to attract... MORE

Journalism, Blogging, and Truth

Information Goods, Intellectual Property
Arnold Kling
David Warsh writes, Classified advertising, especially help-wanted and houses for sale, near-monopolies for daily newspapers for more than a century, have been especially hard-hit. Consolidation in the once-exotic world of trade magazines has been the rule. Significant revenues from other... MORE

Gary Becker on the Minimum Wage

Labor Market
Arnold Kling
He writes, Controversy remains in the United States (and elsewhere) over the effects of the minimum wage mainly because past changes in the U.S. minimum wage have usually been too small to have large and easily detectable general effects on... MORE

Energy in 2050

Energy, Environment, Resources
Arnold Kling
Ron Bailey looks at an article by MIT chemist Daniel Nocera. Nocera suggests, assuming heroic conservation measures that would enable affluent American lifestyles, that "conservative estimates of energy use place our global energy need at 28-35 TW in 2050." This... MORE

Shylock Was Robbed

Economic Philosophy
Bryan Caplan
The best way to experience Shakespeare is on t.v. with the English subtitles on. Read Shakespeare, and you miss the visual cues; watch it performed, and you can't make out the words. My latest foray into Shakespeare is the Al... MORE

Ezra and Elasticity

Economics of Health Care
Bryan Caplan
Carefully read Ezra Klein's piece on why Health Savings Accounts (HSAs) won't slow the growth of health care spending. Long story short: 5% of the population consumes 50% of the health care. To significantly cut costs, you've got to restrain... MORE

Distribution of Health Care Spending

Economics of Health Care
Arnold Kling
Looking at a graph of the distribution of health care spending, Ezra Klein writes, HSAs and their brethren like to pretend that by forcing caution on when you get a test for strep throat, we can significantly effect health costs.... MORE

Culture or Institutions?

Institutional Economics
Arnold Kling
Someone at The Economist blog Free Exchange writes, Everyone now agrees that "institutions matter", but this is partly because "institutions" is a catchall word that can include almost anything anyone cares about, if one squints hard enough and tilts one's... MORE

The Real Meaning of Thanksgiving

Economic Education
Bryan Caplan
The worst thing about Thanksgiving is the boredom. Fortunately, there's a great solution: Treat your captive audience to a slice of economic controversy. Immigration? Inequality? Polygamy? It's all good. Now if, like me, you're having Thanksgiving with a bunch of... MORE

The Envy of the World

Growth: Causal Factors
Bryan Caplan
I just re-read a series I wrote on envy and the history of economic growth, and with the benefit of hindsight, there are few posts I'm prouder of. What do you think about a book inspired by... "What Took You... MORE

Do Experts Know More? A Childish Counter-Example

Behavioral Economics and Rationality
Bryan Caplan
I usually think that experts are more likely to be right than laymen. But Tyler's blog on "expert advice" on how to make kids eat vegetables gives experts a bad name: 1. Try many times -- fifteen or more --... MORE

Polygamy: Facts Not Fear

Economics and Culture
Bryan Caplan
Arnold writes: I suspect that a major factor driving envy of the rich is a deep-seated male fear of losing the mating game. My hypothesis is that the irrational resentment that many men feel over the high pay of CEO's... MORE

Social Security Crisis Worldwide

Social Security
Arnold Kling
A report by the Center for Strategic and International Studies says, The UN projects that the ratio of working-age adults (aged 15 to 64) to elderly (aged 65 and over) in the developed world will drop from 4.5 to 1... MORE

Polygamy, Jealousy, and Social Peace

Labor Market
Arnold Kling
Bryan discusses a blog post by Gary Becker on polygamy. Randall Parker sent an email pointing to a response by Steve Sailer (I cannot figure out a permalink, you may have to search for it). Monogamy is a cartel formed... MORE

Becker on Polygamy

Labor Market
Bryan Caplan
I lectured on polygamy this morning; then, by pure coincidence, I came across Gary Becker's latest word on the subject. Highlight: Some oppose polygyny because they believe too many women would be "swept off their feet" by smooth-talking actual or... MORE

My Take of Milton Friedman

Political Economy
Arnold Kling
is this essay. On questions of public policy, Friedman's answer was always that it is better to allow individuals to make their own decisions than to impose government fiat. His opponents were always in the position of arguing that government... MORE

Overblown: Pessimistic Bias Foiled Again

Books: Reviews and Suggested Readings
Bryan Caplan
I just read a good chunk of John Mueller's Overblown: How Politicians and the Terrorism Industry Inflate National Security Threats, and Why We Believe Them. It's a mighty blow against the most powerful form of pessimistic bias that's afflicted the... MORE

Save Your Breath

Microeconomics
Bryan Caplan
Jane Galt raises a great question: [H]ow bad would something have to be before I would challenge it? I have, on occasion taken stands against bigotry that were potentially dangerous to myself--telling my project manager, for example, that his racist... MORE

On Milton Friedman

Political Economy
Arnold Kling
Brad DeLong writes, Friedman was a pragmatic libertarian. He believed that -- as an empirical matter -- giving individuals freedom and letting them coordinate their actions by buying and selling on markets would produce the best results. It was not... MORE

Bernanke to Friedman

Macroeconomics
Bryan Caplan
Here's what my teacher Ben Bernanke told Milton Friedman on his 90th birthday: Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna:... MORE

Cato Unbound Update

Behavioral Economics and Rationality
Bryan Caplan
My reply to my critics is up at Cato Unbound, and the followup conversation is now underway. My favorite part: To turn Friedman's argument around, I think that he's the one with an unrealistic, stilted psychology that's "vulnerable to caricature... MORE

So Larry Summers was Right?

Human Capital: Returns to entrepreneurs, skills, etc.
Arnold Kling
Donna K. Ginther and Shulamit Kahn write, Children create a marked divergence between men and women. For science as a whole, the presence of a pre-kindergarten aged child lowers women’s likelihood of having a tenure track job by 8.1 percent.... MORE

Hail the Victorious Dead

Economic Methods
Bryan Caplan
Milton Friedman's sad passing reminds me of King Theoden's last words in The Return of the King: You have to let me go. I go to my fathers, in whose mighty company I shall not now feel ashamed. ...and makes... MORE

Milton Friedman

Economic Methods
Arnold Kling
Hearing of the death of Milton Friedman, I turned to this biography. What struck me was that Friedman won the Clark Medal, given to the economist under 40 with the most achievements, in 1951. At that time, he had published... MORE

James Webb's Macaca

Income Distribution
Arnold Kling
Senator-elect Webb writes, The most important--and unfortunately the least debated--issue in politics today is our society's steady drift toward a class-based system...America's top tier has grown infinitely richer and more removed over the past 25 years. It is not unfair... MORE

Electoral Deconcentration

Politics and Economics
Bryan Caplan
In the '70's, Naderites put forward various "deconcentration" bills that e.g. capped firms' market shares at 12.5%. Get bigger, get trusted-busted. Brian Doss at Catallarchy has a modest proposal for electoral deconcentration: [W]hy not require that an incumbent’s margin of... MORE

Should Empirics Determine the Curriculum?

Economic Education
Arnold Kling
Edward Glaeser writes, thorough general education requirement on the scientific approach to society would require two courses. First, students should take a course that teaches the crafting of rigorous hypotheses. ... Second, students should take a class on evidence and... MORE

Single Payer in the U.S.?

Economics of Health Care
Arnold Kling
'Jane Galt' writes, There are some serious constraints that I think would have to be considered by anyone trying to design a national health care package: 1) It cannot provide less, or less rapid, coverage than the typical American policy... MORE

Dr. Doom

Social Security
Arnold Kling
Jagadeesh Gokhale writes, As reported by its trustees, Social Security's total imbalance has increased from $10.4 trillion in 2004 to $13.4 trillion in 2006 - a jump of $3.0 trillion in just two years. And Medicare's imbalance has grown from... MORE

Suburban Happiness

Economics and Culture
Bryan Caplan
Counter-examples to the claim that happiness research pushes for left-wing policies keep multiplying. It's well-known that social interaction is an important cause of happiness. Now it looks like suburban sprawl - the bane of leftist land use activitists - is... MORE

Atoms, Bits, and Growth

Growth: Causal Factors
Arnold Kling
David Warsh writes. Atoms make up the rival part of a particular good, that which may be possessed corporeally by just one person at a time -- a banana, say, or a Cuisinart, or a paperback edition of A Tale... MORE

Why Do Sales Taxes Exist?

Tax Reform
Bryan Caplan
Mankiw's post on AMT reform reminds me of yet another simple challenge to the rational, selfish voter model: Since we can deduct state & local income and property taxes on our federal income tax, but not state & local sales... MORE

Elitism: The Lesser Poison

Economic Philosophy
Bryan Caplan
Now we're getting somewhere. Arnold writes: One can argue, as Bryan does, that populism is more dangerous because the people are really, really ignorant. [Actually, I argue that the people are really, really irrational! -B.C.] However, my counter-argument would be... MORE

Elitism or Populism: Pick Your Poison

Economic Philosophy
Arnold Kling
Bryan argues for elitism. In a modern democracy, not only can a libertarian be elitist; a libertarian has to be elitist. To be a libertarian in a modern democracy is to say that nearly 300 million Americans are wrong, and... MORE

The Mirage of Libertarian Populism

Economic Philosophy
Bryan Caplan
There are times and places where most people want more individual freedom than they have. The majority of the citizens of the Soviet Union did not want the state to seize farmers' land, or send Orthodox priests to Siberia. The... MORE

Orwell and War Socialism

Cross-country Comparisons
Bryan Caplan
The Economist blog suggests we give George Orwell a booby prize for his 1941 declaration that World War II proved the superiority of socialism over capitalism: The first award goes, post-humously, to Mr George Orwell, socialist writer, who penned these... MORE

I've been beating up on Analytical Egalitarianism quite a bit lately (see here, here, and here). Now Sandra Peart, a leading proponent of this view, has risen to the challenge. According to Peart, scholars should assume equal human abilities because... MORE

Will the Real Wise Advice Please Stand Up?

Economic Philosophy
Bryan Caplan
Arnold wonders if I'm asking a trick question: Bryan writes, Politicians usually ignore wise advice. Is that a reason not to try to make them take wise advice? Coming from a libertarian (or someone who I thought was a libertarian... MORE

Technocrats and Populists

Political Economy
Arnold Kling
Bryan writes, Politicians usually ignore wise advice. Is that a reason not to try to make them take wise advice? Coming from a libertarian (or someone who I thought was a libertarian a few weeks ago), is that a trick... MORE

What's Wrong With DeLong?

Economic Philosophy
Bryan Caplan
I'm puzzled by Arnold's critique of Brad DeLong: 1. The technocrats occasionally make large errors, which tend to persist far longer than market failures. 2. Even when the technocrats are wise, the political process is never going to coincide with... MORE

Brad DeLong is Fantasy-Based

Political Economy
Arnold Kling
Brad DeLong writes My natural home is in the bipartisan center, arguing with center-right reality-based technocrats about whether it is center-left or center-right policies that have the best odds of moving us toward goals that we all share--world peace, world... MORE

Teaching Economics as Common Sense

Economic Education
Arnold Kling
Walter Williams writes Professors James Gwartney (Florida State University), Richard Stroup (Montana State University) and Dwight Lee (Georgia University), three longtime colleagues of mine, have recently published "Common Sense Economics." It's a small book, less than 200 pages, that addresses... MORE

Planning vs. Trial and Error

Institutional Economics
Arnold Kling
Tyler Cowen quotes Barry Eichengreen. Thus Europe, which had relied on extensive growth in the 1950s and 1960s, had no choice but to switch to intensive growth from the 1970s on. The problem was that institutions tailored to the needs... MORE

Jerry Hausman on Wal-Mart

Growth: Causal Factors
Arnold Kling
At the MIT economics alumni event this morning, Jerry Hausman spoke about his research on Wal-Mart. He says that Wal-Mart lowers prices to consumers primarily by bargaining down the prices charged by suppliers, such as Procter and Gamble. It also... MORE

Robert Hall, Health Care Spending, and Longevity

Economics of Health Care
Arnold Kling
At an MIT economics alumni event today, I had a brief discussion with Robert Hall on health care spending. He argues that (a) health care spending is going to approach 50 percent of GDP by the end of this century,... MORE

Immigration: Has the Public Been Ignored?

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Matt Yglesias is puzzled that my piece in Cato Unbound uses immigration as an example where the public's misconceptions have led to pernicious policies: Strangely, he takes immigration as his main example. If I were trying to devise an example... MORE

Comparing Effectiveness of Health Care Procedures

Economics of Health Care
Arnold Kling
Gail R. Wilensky proposes creating a research center devoted to comparing the effectiveness of medical procedures. The most obvious and direct way to finance at least the public portion of a comparative effectiveness center is through a direct appropriation by... MORE

Since its inception, the slogan of Marginal Revolution has been "Small steps toward a much better world." It turns out, however, that MR's prolific Tyler Cowen doesn't think that policy would improve much even if everyone knew as much economics... MORE

Is Elitism the Answer?

Politics and Economics
Arnold Kling
As Bryan just said, he has a new essay summarizing his forthcoming Myth of the Rational Voter. I agree with some of his diagnosis: if you underestimate the benefits of immigration, or the evidence in favor of the theory of... MORE

Doubt the Vote

Politics and Economics
Bryan Caplan
I've written the lead essay for this month's Cato Unbound. I've got a habit of laughing at my own jokes. My favorite from the Cato Unbound essay: As long as elites persist in unmerited deference to and flattery of the... MORE

Climate Engineering

Energy, Environment, Resources
Arnold Kling
A number of readers have sent in links to articles suggesting that climate engineering may be feasible. For example, T.M.L. Wigley writes, Future climate change may be reduced through mitigation (reductions in greenhouse gas emissions) or through geoengineering. Most geoengineering... MORE

Becker on Latin American Crime

Institutional Economics
Arnold Kling
Gary Becker, a Nobel Laureate in part for his work on the economics of crime, discusses Latin America's problem. I would recommend that they use both the "stick" and the "carrot" to fight crime. The "stick" included apprehending more criminals,... MORE

The Mankiw Column Fortune Didn't Want You to Read

Politics and Economics
Bryan Caplan
It's called "Why Some People Shouldn't Vote." And if you think you've anticipated his whole argument, you're probably wrong. At least I was.... MORE

Dexter: Beyond Good Intentions

Economic Philosophy
Bryan Caplan
A cliche of literature is the sympathetic character who does bad things. The moral of the story is usually that as long as you mean well, you basically get a pass. Showtime's got a new series that turns this cliche... MORE

Election Prediction: Voting will be Irrational

Behavioral Economics and Rationality
Arnold Kling
One of Bryan Caplan's faves, Michael Huemer, writes, Normally, intelligence and education are aides to acquiring true beliefs. But when an individual has non-epistemic belief preferences, this need not be the case; high intelligence and extensive knowledge of a subject... MORE

My Favorite Example of a Biased Statistic

Economic Methods
Arnold Kling
In a column pointing to research findings on a variety of topics, William Saletan includes The richer the country, the lower the ratio of male-to-female promiscuity. In no country is the ratio of male-to-female promiscuity measured in an unbiased manner.... MORE

Who's On Your Shoulder?

Economic Methods
Bryan Caplan
Ezra Klein engages in some interesting introspection: Nowadays, I know that folks from that end will be looking to cut apart my ideas, I have to protect my points against their insights which, in turn, means I absorb their insights.... MORE

What Austrian Brain Drain?

Austrian Economics
Bryan Caplan
Degrees of Freedom has an incisive critique of my Austrian brain drain allegation: If Austrian economics and mainstream economics were both equally persuasive, we should still expect to see far more libertarians who were persuaded by mainstream economics than libertarians... MORE

David Cutler on Health Care

Economics of Health Care
Arnold Kling
I went to Cato to hear leading health care economist David Cutler and others discuss Pay for Performance (if you go to the link in a couple of days, you should be able to view the event). Beforehand, Robin Hanson... MORE

Diego Comin, William Easterly, and Erick Gong write, The finding of this paper is a simple one: centuries-old technological history still matters today. The most surprising part of the finding is just how old the history can be and still... MORE

Labor Quality and the Wealth of Nations

Growth: Causal Factors
Arnold Kling
Tyler Cowen writes, Gregory Clark, an economics professor at the University of California, Davis, identifies the quality of labor as the fundamental factor behind economic growth. Poor labor quality discourages capital from flowing into a country, which means that poverty... MORE

Bastiat in Fairfax?

Economic Education
Bryan Caplan
My chairman Don Boudreaux continues to hone his sense of economic ridicule: If, unlike me, you accept the logic of Ms. Lee's argument that it's wrong to let American consumers buy goods made by workers who toiled under government-regulatory standards... MORE

The Cost of Accidents

Regulation and Subsidies
Arnold Kling
Aaron S. Edlin and Pinar Karaca Mandic write, This study is an attempt to provide better estimates of the size (and sign) of the aggregate accident externality from driving. To begin, we choose a dependent variable, insurer costs, that is... MORE

How to Fight Global Warming

Energy, Environment, Resources
Arnold Kling
I elaborate on the idea of using man-made climate change to fight climate change, whether man-made or not. Climate engineering, or what I call Operation Sunscreen, would mean trying to alter the heat absorption properties of the atmosphere. The goal... MORE

Essay Contests: Worth the Risk

Economic Education
Bryan Caplan
Professors don't get paid for good essays, but students do! The truth about essay contests is that the number of submissions is usually absurdly low considering the size of the prizes and the opportunity cost of students' time. Your latest... MORE

More on Fundamentalist Divorce

Economics and Culture
Bryan Caplan
I went back to the drawing board on fundamentalist divorce rates to check out a couple readers' hypotheses. The findings: 1. Excluding people who have never been married, fundamentalists are - as the stereotype would predict - less likely to... MORE

Samuelson: Blame the People

Behavioral Economics and Rationality
Bryan Caplan
Robert Samuelson launches a pointed attack against the good sense of the American people: The Catch-22 of American democracy is this: A government that mirrors public opinion offends public opinion by failing to do what it promises. People then conclude... MORE

Channeling de Soto in Iraq

Institutional Economics
Arnold Kling
Peter Schaefer writes, all societies have rules otherwise they would descend into anarchy. And the basis of all consensual laws (as opposed to imposed) is the customary or informal rule-sets that have been evolving with the society. These rule-sets must... MORE

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