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February 2007

A Monthly Archive (73 entries)

Hanson Gets Empirical

Economics of Health Care
Bryan Caplan
Robin Hanson describes four interesting meta-studies on medical research that ought to make you less confident about the latest study that "proves" the wonders of modern medicine.... MORE

What Did Pinochet Know that Cowen Doesn't?

Politics and Economics
Bryan Caplan
With his characteristic fatalism, Tyler tells us:If they put me in charge of a Latin country, I don't think I could deliver superior growth performance. At best I would avoid some of the really stupid mistakes, but I couldn't turn... MORE

Finkelstein on Health Insurance

Economics of Health Care
Arnold Kling
Amy Finkelstein writes, Research I conducted shows that Medicare had a substantial effect on the health-care sector. By 1970, the program caused a 37% increase in hospital spending. This is an enormous number. If I extrapolate from the Medicare experience... MORE

More on Mental Health and Poverty

Human Capital: Returns to entrepreneurs, skills, etc.
Arnold Kling
Bryan wrote, When someone asks me what I would do to eliminate poverty in America, the first thing that pops into my head is the need for industry, thrift, and prudence. It seems that he and I share a common... MORE

The Congressional Budget Office on Health Care

Economics of Health Care
Arnold Kling
Chapin White writes Figure 2 illustrates excess growth in real Medicare spending on physician and clinical services. During the 1970s and 1980s, excess growth was quite high, generally ranging between 4 percent and 8 percent. Beginning around 1990, excess growth... MORE

"Mental Health," Moral Character, and Poverty

Behavioral Economics and Rationality
Bryan Caplan
Arnold writes: Every once in a while, I am asked by somebody what I would do to eliminate poverty in America. The first thing that pops into my head is the topic of mental health. A while back I blogged... MORE

Public-sector Enron

Finance: stocks, options, etc.
Arnold Kling
James Hamilton writes, When I heard about the disastrously irresponsible investments made by the Amaranth hedge fund, my first reaction was, who would be so stupid to have put up the margin requirements for such a scheme? The answer turned... MORE

Mental Health

Income Distribution
Arnold Kling
From an editorial in the Seattle Times: Montana, for example, faces predictions of rapidly rising prison populations; Gov. Brian Schweitzer notes that 93 percent of the state's prisoners are incarcerated in part because of alcohol and drug addiction and 50... MORE

Tom Palmer on Markets

Economic Philosophy
Arnold Kling
He writes Market competition is decidedly unlike the competition of the jungle. In the jungle animals compete to eat each other, or to displace each other. In the market, entrepreneurs and firms compete with each other for the right to... MORE

The Proactionary Principle

Energy, Environment, Resources
Bryan Caplan
I've already defended blanket skepticism about supposedly impending disasters. Here's a neat essay by Max More defending a "Proactionary Principle" against the far more popular "Precautionary Principle." Intro: "We can call this “the” Proactionary Principle so long as we realize... MORE

The Myth of the Rational Voter, Sowell Edition

Behavioral Economics and Rationality
Bryan Caplan
After skewering Obama's views on economic policy, Thomas Sowell (like another guy who bolstered my love of econ when I was a discouraged undergrad) concludes with a ringing denial of voters' rational expectations:But politics is not about facts. It is... MORE

Betting on Longevity

Finance: stocks, options, etc.
Arnold Kling
The Financial Times reports, While someone in the 1840s lived, on average, to 40, today's generation can expect to hit 80, "and for our grandchildren, it could be 160," says [pension economist David] Blake, stabbing a pale green corner of... MORE

Interrupting the Statist Quo

Fiscal Policy
Bryan Caplan
Don Boudreaux's latest observations on "spending addiction" remind me of a line from Phil Gramm that I annually present to my IO class: [I]n the darkest hour of the health care debate, when it looked like Bill Clinton was about... MORE

Economic Turbulence

Labor Mobility, Immigration, Outsourcing
Arnold Kling
From Economic Turbulence, by Clair Brown, John Haltiwanger, and Julia Lane: The basic message here is that businesses with higher-quality work forces and lower churning are more likely [to] survive...Wal-Mart has succeeded with a low workforce quality and high worker... MORE

Subjective Relative Measurement

Economic Methods
Arnold Kling
John Quiggin writes, Suppose you wanted to establish whether children’s height increased with age, but you couldn’t measure height directly. One way to respond to this problem would be to interview groups of children in different classes at school, and... MORE

Height and Happiness

Behavioral Economics and Rationality
Bryan Caplan
Tyler relays a Kling-esque critique of happiness research from John Quiggan: Suppose you wanted to establish whether children’s height increased with age, but you couldn’t measure height directly. One way to respond to this problem would be to interview groups... MORE

The Myth of the Rational Voter, Posner Edition

Behavioral Economics and Rationality
Bryan Caplan
When I was a junior at UC Berkeley, I wasn't sure if I should stick with economics after graduation. Then I started reading a lot of Richard Posner, and my love of econ was reborn. Fifteen years later, he's still... MORE

A Fun Stupid Question

Energy, Environment, Resources
Bryan Caplan
Daylight savings time is going to be longer this year. When I heard this, I started laughing about the following stupid question: "Will it be good for plants?"... MORE

Earth to Educators: People Hate School

Economics of Education
Bryan Caplan
Brad DeLong raises an important puzzle: One would have thought that the rise in the value of a sheepskin from a 30% lifetime wage premium over a high-school diploma in 1975 to a 90% premium in 2005 would have called... MORE

Church and State

Political Economy
Arnold Kling
In In this essay, I coin a term civil societarian. The stereotypical libertarian might cite Ayn Rand and exalt the independent individual. Instead, a civil societarian would cite Alexis de Tocqueville, and his observation that "Americans of all ages, all... MORE

"Pro-Gamer Groups Oppose Dungeons & Dragons"

Political Economy
Bryan Caplan
When I was a young nerd, a local busy-body told my mom that I shouldn't be allowed to play Dungeons & Dragons because "It's devil worship." Such complaints continue to this day. But I do have one thing to say... MORE

My family subscribes to both XM and Sirius satellite radio. The reason is that XM has a deal with the manufacturer of my car, and Sirius has a deal with the manufacturer of my wife's car. When I heard of... MORE

The Median Household

Income Distribution
Arnold Kling
Anne Kim, Adam Solomon, Bernard L. Schwartz, Jim Kessler, and Stephen Rose write, the “real” middle class is made up of households in their prime working years, ages 25-59, 75 percent of whom are couples and 56 percent of whom... MORE

Drug Patents

Information Goods, Intellectual Property
Arnold Kling
This week's econtalk, featuring Richard Epstein talking about patent issues with respect to pharmaceuticals, I found to be really taxing mentally. I have thought a great deal about these issues, yet Epstein was talking faster than I could absorb. Also,... MORE

Where Does the Money Go?

Economics of Education
Arnold Kling
Greg Mankiw writes, Harvard tuition is about $30K (not counting room and board). Assuming 4 classes each of the two 12-week semesters and 3 class hours a week in each class, one finds that each hour class at Harvard costs... MORE

Marriage and Inequality

Income Distribution
Arnold Kling
Stephanie Coontz writes, In 2001, University of Texas psychologist David M. Buss and colleagues compared mate preferences based on national surveys taken for several decades beginning in 1939. Their research, published in the Journal of Marriage and Family, found that... MORE

Simply Wonderful

Behavioral Economics and Rationality
Bryan Caplan
It's time to officially declare Ben Casnocha a Wunderkind. Here is his brilliant post on the simplicity of losing weight, becoming a better writing, becoming a better entrepreneur, and being a good parent. The punchline: Note that just because something's... MORE

How Redistribution Really Works

Income Distribution
Bryan Caplan
From Olaf Gersemann's Cowboy Capitalism: In the United States 41.4 percent of the cash transfers go to the poorest 30 percent of the population.Typical American indifference to the fate of the poor, right? Well, if that's American indifference, then what's... MORE

Inflationary Disagreement

Macroeconomics
Bryan Caplan
Mankiw, Reis, and Wolfers have a neat empirical paper on beliefs -and disagreement - about inflation: In most standard macroeconomic models, people share a common information set and form expectations rationally. There is typically little room for people to disagree.... MORE

Computers, Growth, and Google

Growth: Causal Factors
Bryan Caplan
Back in the early 90's, growth economists kept quoting Solow on the puzzling failure of the computer to boost productivity: "We see the computer age everwhere except in the productivity statistics." On my train ride home from NYC, I read... MORE

Hayek and Fusionism

Political Economy
Arnold Kling
Ed Feser writes, The foundation of Hayek's thought is an emphasis on the severe limitations on human knowledge, especially where human social institutions and other complex phenomena are concerned. For Hayek, even the knowledge we do have is dispersed and... MORE

McFadden on the Prescription Drug Program

Economics of Health Care
Arnold Kling
Nobel Laureate Daniel McFadden writes, My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these... MORE

Ed Stringham Won Us $25,000!

Austrian Economics
Bryan Caplan
It's a very ancient saying, But a true and honest thought, That if you become a teacher, By your pupils you'll be taught. --The King and I I've long nagged my students to enter essay contests. So I'm especially pleased... MORE

Social Security and Global Warming

Energy, Environment, Resources
Arnold Kling
Mark Thoma writes, Here's what I've noticed. Some of the same people who argue there's too much uncertainty about the climate 75 years in the future to justify drastic action now use the so-called crisis in Social Security funding 75... MORE

The U.S. as a Health Care Spending Outlier

Economics of Health Care
Arnold Kling
The McKinsey Global Institute reports, In a study comparing the United States and the United Kingdom, Aaron showed that the United States has four times the number of CT scanners per person, and performs four times the number of scans... MORE

Interesting Experiment in Education

Economics of Education
Arnold Kling
Po Bronson reports, Blackwell split her kids into two groups for an eight-session workshop. The control group was taught study skills, and the others got study skills and a special module on how intelligence is not innate. These students took... MORE

More on Weitzman and Global Warming

Energy, Environment, Resources
Arnold Kling
My latest essay: Weitzman implicitly shares my concern with climate models. Obviously, we have nothing to worry about if the models are too pessimistic. If it turns out that over the next decade global temperatures edge down, or rise more... MORE

I recommend An Internet broadcast featuring Brian Doherty. He argues that libertarianism was so unfashionable in the 1940's and 1950's that the process of natural selection was bound to yield quirky individuals. He sees the link between economics and libertarianism... MORE

Rational Autocrats

Political Economy
Arnold Kling
Another terrific audio interview by Russ Roberts. In this case, he talks to political scientist Bruce Bueno de Mesquita. Basically, his outlook on the world is that autocrats are rational, and they do what is best in order to maintain... MORE

The Malthusian Trap

Growth: Causal Factors
Arnold Kling
Tyler Cowen chews, but does not swallow, a new paper by Greg Clark. Clark writes, we can test empirically whether the average person in 1800 was any better off than the people of 10,000 BC on any dimension, and the... MORE

Weitzman on Global Warming

Energy, Environment, Resources
Arnold Kling
I love Martin Weitzman's paper. From his conclusion: On the political side of the Stern Review, my most-charitable interpretation of its urgent tone is that the report is an essay in persuasion that is more about gut instincts regarding the... MORE

The CEA on Exchange Rates

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
From the 2007 Economic Report: the Chinese intervention does not systematically change the relative real prices between the United States and China. Had the Chinese government not intervened, Chinese domestic prices would have remained the same in terms of yuan... MORE

The CEA on Productivity

Growth: Causal Factors
Arnold Kling
From the 2007 Economic Report of the President: the surge in productivity in the late 1990s appears to be a story of growth in industries making and using IT capital...efficiency growth since 2000 has been particularly strong in the high-tech... MORE

Asymmetric Sell-Outs

Behavioral Economics and Rationality
Bryan Caplan
Brian Doherty's history of libertarianism reminded me of a pattern that's struck me before : When wars break out, there are far more doves who "sell out" and support the war than hawks who "sell out" and oppose the war.... MORE

Five Big Health Care Questions

Economics of Health Care
Arnold Kling
My latest essay: Somehow, health insurance has become a social fetish. I could travel to the far reaches of the globe, and almost everywhere I would find merchants where my credit is good and my dollars are welcome. But here... MORE

Phelps on Culture and Dynamism

Growth: Causal Factors
Arnold Kling
New Nobel Laureate Edmund Phelps writes, The values that might impact dynamism are of special interest here. Relatively few in [France, Germany, and Italy] report that they want jobs offering opportunities for achievement (42% in France and 54% in Italy,... MORE

What Do We Know About Climate Preferences?

Cost-benefit Analysis
Bryan Caplan
Suppose you surveyed a random sample of Americans with the following question: "Overall, would you rather the climate in the area you live got warmer, got cooler, or stayed the same?" Has such a survey ever been done? My guess... MORE

The Triumph of Libertarianism: Brian Doherty's Radicals for Capitalism

Books: Reviews and Suggested Readings
Bryan Caplan
I've been reading drafts of Brian Doherty's history of modern libertarianism since 1994. Now this remarkable labor of love - winningly titled Radicals for Capitalism, is, at last, complete. And it rocks. Even though I've repeatedly read earlier versions of... MORE

World GDP and Global Warming

Energy, Environment, Resources
Arnold Kling
Jonah Goldberg writes, Earth got about 0.7 degrees Celsius warmer in the 20th century while it increased its GDP by 1,800 percent, by one estimate. How much of that 0.7 degrees can be laid at the feet of that 1,800... MORE

Inequality

Income Distribution
Arnold Kling
At Cato Unbound, Alan Reynolds and his critics debate inequality statistics. So far, Reynolds and Gary Burtless have weighed in. For those interested in the topic, Brad DeLong has a reading list. I have an uneasy feeling that the people... MORE

Oil is Oil

Energy, Environment, Resources
Arnold Kling
Shame on Reason for giving us this essay on "terror-free" oil. I usually give Citgo a pass because most of the company's profits wind up on the hands of the Venezuelan government, headed by the socialist, Castro-loving, anti-globalization, and virulently... MORE

Milton Friedman on Big Business vs. Freedom

Regulation and Subsidies
Arnold Kling
In the context of Wal-Mart's joining the crowd that wants government to fix health care, Don Boudreaux reminds us of this quote from Milton Friedman. The two chief enemies of the free society or free enterprise are intellectuals on the... MORE

The Most Interesting Blog Comment I've Ever Read

Behavioral Economics and Rationality
Bryan Caplan
No offense, Econlog contributors, but it's a reaction to Robin's post on deprogramming at Overcoming Bias: The difference between the exit counselors and [famous deprogrammer] Ted Patrick seems to be one of commitment, much like what Pavlov worked on for... MORE

Planning vs. Experimentation

Business Economics
Arnold Kling
Hal Varian writes, it is simple to run a controlled experiment with a Web page. Amazon can show a different page layout to every hundredth visitor and determine in a few days whether the new design increases sales. Similarly, a... MORE

Britain's Bureaucratic State

Economics of Education
Arnold Kling
Theodore Dalrymple writes Schools may no longer exclude disruptive children—that would be the very opposite of social inclusion—so a handful of such children may render quite pointless hundreds or even thousands of hours of schooling for scores or even hundreds... MORE

Have sexual harassment laws (and their stricter enforcement) noticeably reduced the probability of co-workers marrying? Have they noticeably reduced the probability of people getting married at all? If the workplace is one of the main places where people meet, it's... MORE

Feynman's Question

Growth: Causal Factors
Arnold Kling
Nick Schulz points to a lecture in 1963 by physicist Richard Feynman. The best web reference I can find for it is here. Some time ago, in about 1949 or 1950, I went to Brazil to teach physics. There was... MORE

Radical Health Care Reform

Economics of Health Care
Arnold Kling
Ezekiel J. Emanuel and Victor R. Fuchs write, [Most health care reform plans] prop up the sagging employment-based insurance system, with all its inefficiencies and inequities, and preserve the second-class income-tested programs such as Medicaid... The country needs comprehensive reform.... MORE

The New Deal vs. the Kling Deal

Economic History
Bryan Caplan
I'm frankly puzzled by Arnold's latest take on the New Deal. (That quote is from him, not DeLong as I initially guessed!) I think the New Deal was moderately fascist (i.e., Mussolini light, not Hitler light), but let's leave that... MORE

Collusion in the Classroom

Microeconomics
Bryan Caplan
I grade on a curve. So if all of my students studied 50% less, they might learn less economics, but their grades would stay the same. The students keep studying because they are in a Prisoners' Dilemma - their lives... MORE

The New Deal Legacy

Economic History
Arnold Kling
The online Wall Street Journal arranged a celebrity death match between Brad DeLong and yours truly on the topic of the New Deal. What would have happened in the U.S. without the New Deal? My father answers with one word:... MORE

Politics, Economics, and Religion

Political Economy
Arnold Kling
I write, I find it a challenge trying to persuade religious conservatives to loosen the relationship between their religious beliefs and their political agenda. However, I find it even more of a challenge to deal with the Left, where their... MORE

Russell's Question

Arnold Kling
Jared Diamond wrote Guns, Germs, and Steel as an answer to what he called Yali's question: how did the rich nations turn out be Europe rather than, say, the islands of the South Pacific? Russ Roberts wants to know how... MORE

Cowen Gets Caplanian

Economics of Health Care
Bryan Caplan
When was the last time Tyler Cowen and I agreed? Let's just say it's been a while. But he's just hit the adverse selection nail on the head: When I argue that adverse selection is not the key, I hear... MORE

Globalization and Inequality

Growth: Consequences
Arnold Kling
Tim Worstall writes, The theory is the Stolper-Samuelson Theorem. Stripped to its essentials this says that we would expect the process of globalization to have the following effect: it will lower wages in the US and raise corporate profits (more... MORE

Fighting the Religious Gender Gap

Economics and Culture
Bryan Caplan
The GodMen, a group striving to make religion more masculine, is doing its best to fight the religious gender gap. Will they have any long-term success? Consider me a Doubting Thomas.... MORE

Kidney Bleg

Econlog Administrative Issues
Arnold Kling
Some of you may have read how Virginia Postrel became a kidney donor. It turns out that we have a friend who needs a kidney. Soon. Anyone who has any ideas for helping to find a live donor is welcome... MORE

From Musgrave to Shaviro

Books: Reviews and Suggested Readings
Arnold Kling
I was sent a copy of Daniel N. Shaviro's Taxes, Spending, and the U.S. Government's March Toward Bankruptcy. Our march toward government insolvency is a complex historical event with multiple causes. The central causes involve health care technology and demographics,... MORE

Giving Up, Failing Out, and the Return to Education

Economics of Education
Bryan Caplan
Borrowers rarely default on their loans. Nevertheless, differences in default rates have huge effect on rates of return. Suppose, for example, that two lenders charge 3% interest, but one has a default rate of 1% and the other has a... MORE

The most intellectually serious proponents and fellow travellers of anarchism are, paradoxically, a bunch of stodgy economists. That's one of the lessons of Ed Stringham's new 700-page anthology, Anarchy and the Law: The Political Economy of Choice. This volume brings... MORE

Furman on Social Security

Social Security
Arnold Kling
Jason Furman writes Indexing benefit levels for longevity, the retirement age, or the payroll tax rate goes in the right direction – delivering larger adjustments as people live longer – but only captures a small part of the uncertainty about... MORE

Failure in an Open-Access Order

Institutional Economics
Arnold Kling
Clay Shirky writes, Open systems are a profound threat not only because they outsucceed commercial firms but also because they outfail them. They grow not in spite of failure but because of it. In traditional business, trying anything is expensive,... MORE

Libertarian Principles

Political Economy
Arnold Kling
In my latest essay, I articulate a list. It starts with, 1. We weave a thread of self-reliance into a sturdy fabric of interdependence. By respecting the law, we reinforce impersonal justice. By competing intensely and fairly in an impersonal... MORE

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