Bryan Caplan and David Henderson

April 2007

A Monthly Archive (90 entries)

Mental Health Institutions and Prisons

Economics of Crime
Arnold Kling
Bernard Harcourt writes, we should not be surprised that there are so many persons with mental illness behind bars today. We deal with perceived deviance differently than we did in the past: instead of getting treatment, persons who are viewed... MORE

College Admission Statistics

Economics of Education
Arnold Kling
Andrew Samwick writes, I've taken a 5-school moving average by rank here to make the graph more readable. By rank 11, we're at an acceptance rate of about 20%. By rank 21, we're above 30%. In the low- to mid-30s,... MORE

Division of Labor in Graphic Novels

Microeconomics
Bryan Caplan
Bismark is often quoted as saying that "People who like sausages and legislation should never watch either being made." (The actual line isn't as catchy: "Laws are like sausages, it is better not to see them being made.") If your... MORE

Inteview with Nassim Taleb

Economic Methods
Arnold Kling
Russ Roberts interviews Nassim Taleb. It's one of the most fascinating interviews in Roberts' series. One implication of Taleb's thinking is that we are overconfident in our ability to manage risk. Burt Malkiel, who is arguing from a more traditional... MORE

Would Ageless People be Libertarian?

Political Economy
Arnold Kling
The point is raised by a commenter on Futurepundit. curing aging will not make us immortal in the true sense of the word. We can still die due to accidents, homicide, and suicide. The word immortality is not appropriate. I... MORE

Wake Forest Liberty and Society Seminar

Economic Education
Bryan Caplan
This summer, I'll be giving my first series of IHS Liberty and Society lectures. The seminar is at Wake Forest University, June 2-8. The bad news: The application deadline is over. The good news: You can still email conference organizer... MORE

Farm Subsidies: The Dirty Truth

Behavioral Economics and Rationality
Bryan Caplan
Here's the best survey I've ever seen on farm policy. Big findings: Farm subsidies are extremely popular. Respondents had to choose between the following positions: A. It is not consistent with the American way to have a whole sector of... MORE

Do the Overweight Pull Their Weight?

Economics of Health Care
Bryan Caplan
A result from Kate Bundorf that (a) I'd like to believe, (b) Seems logical in light of basic micro, but (c) Still strikes me as implausible: Who pays the added costs associated with high rates of obesity? Most health insurance... MORE

Page-ing Robin Hanson

Books: Reviews and Suggested Readings
Arnold Kling
I just finished The Difference, by Scott E. Page. I cannot tell whether he has new ideas, or simply weird packaging for ideas that are not very new. He talks so much about prediction markets, sources of cognitive bias, and... MORE

Get the Best Education in the World, Absolutely Free!

Economics of Education
Bryan Caplan
Here's Robin Hanson making a point I always tell my labor students: The best education in the world is already free of charge. Just go to the best university in the world and start attending classes. Stay as long as... MORE

The Next Book I Won't Be Writing

Books: Reviews and Suggested Readings
Bryan Caplan
About a year ago, I asked blog readers to help me pick a title for my book. Now Justin Fox is offering me a catchy title and co-author: I'm thrilled to announce that Bryan and I will be collaborating on... MORE

How Irrational are Voters?

Political Economy
Arnold Kling
My co-blogger's Myth of the Rational Voter has gotten well-deserved thumbs up from Greg Mankiw and Tyler Cowen. Tyler raises some issues, including 3. Voters are less irrational in many northern European countries. I don't agree with their socialistic view... MORE

The Efficient Markets Hypothesis: Act As If It's True

Finance: stocks, options, etc.
Bryan Caplan
DeLong also links to an excellent piece by Justin Fox. Bottom line: The Efficient Markets Hypothesis has its problems, but even so, low-cost index funds remain your best bet: The message that the behavioral finance guys have for investors is... MORE

Most Bizarre Sentence Ever?

Economics and Culture
Bryan Caplan
From Brad DeLong: I don't know what I am going to say. I'm tempted to try a comparison of four intellectuals at four different moments in western print-culture: William of Occam, Niccolo Machiavelli, Adam Smith, and Tyler Cowen.... MORE

Taking Out the Competition

Microeconomics
Bryan Caplan
Two resolutions of the take-out paradox that I'm not buying: 1. Fairness, best expressed by Nathan Smith: Maybe different prices for take-out and dine-in would be perceived as "unfair" by customers, and undermine business. Or maybe the restaurateurs themselves feel... MORE

Rodrik and Economic Policy Reform

Political Economy
Bryan Caplan
I cherish my negative inspirations - the thinkers who clearly and cogently champion positions I think are completely wrong. So I'm pleased to see that one of my favorite negative inspirations, Dani Rodrik, has taken to the blogosphere. I keep... MORE

My Take on Take-Out

Microeconomics
Bryan Caplan
Thanks for some excellent comments on the take-out paradox. On reflection, Arnold's beverage-centric explanation seems more important than the one Tyler and I agreed on over lunch. But you be the judge: Dine-in patrons provide an important advertising benefit for... MORE

Unequal Income Distribution in the World

Books: Reviews and Suggested Readings
Arnold Kling
Diane Coyle, in a new book The Soulful Science, writes Branko Milanovic points out that more than a third of Brazilians are richer than the poorest 5% of French people. He calculates a 10% probability that French aid to Brazil...will... MORE

My Guess on Take-Out

Microeconomics
Arnold Kling
Bryan asks why don't people open high-end restaurants without a dine-in option? As far as I can tell, such restaurants are virtually non-existent. I'll make my guess. In restaurants, the analogy with "follow the money" is "follow the beverages." For... MORE

The Missing Take-Out

Microeconomics
Bryan Caplan
Almost every restaurant does take-out these days. Funny thing is, they usually charge as much for take-out as they do for dine-in. How is that possible? Dine-in requires servers and a lot more real estate. Shouldn't it be cheaper? As... MORE

Non-normal Distributions

Energy, Environment, Resources
Arnold Kling
David A. Shaywitz reviews Nassim Taleb's views on randomness. The problem, insists Mr. Taleb, is that most of the time we are in the land of the power law and don't know it. Our strategies for managing risk, for instance--including... MORE

Robert Solow on Model-Building

Economic Methods
Arnold Kling
William J. Polley points to Solow's essay, which first appeared in 1997. A few excerpts and my comments.... MORE

Average vs. Marginal

Economics of Education
Arnold Kling
In the Milken Institute Review, Kevin Lang writes, Is teenage motherhood one of the means by which poverty is passed from generation to generation, or are both teenage motherhood and adult poverty consequences of the same childhood disadvantages? There are... MORE

Government is not going away

Political Economy
Arnold Kling
In an interview, Jonathan Rauch says, When you get right down to it, there doesn't seem to be really much of a constituency in this country for reducing the size of government in painful or unpleasant ways. Even Barry Goldwater,... MORE

David Colander on Graduate Study in Economics

Economic Education
Arnold Kling
The book is The Making of an Economist, Redux. It provides facts, analysis, and opinions of the graduate programs at top economics departments. I'll excerpt a few sentences, and then I'll add my opinion of what I would like to... MORE

The Economics of Recycling: A Child Could Understand

Books: Reviews and Suggested Readings
Bryan Caplan
When I read to my kids, I rarely editorialize. I figure that if they want my opinion, they'll ask. But when we read Where Does the Garbage Go? this morning, I had to speak up. As you could guess, the... MORE

Tyler Cowen Channels Uwe Reinhardt

Economics of Health Care
Arnold Kling
Tyler Cowen writes, Let's say a patient pays $1000 to a doctor, but half of that sum is fraudulent pricing brought on by patient irrationality, non-transparency, fear of death, and fraud. Sound familiar? The real social cost is what the... MORE

I was born into a family of tax consumers. My father was an engineer for a defense contractor during the last decades of the Cold War. My mom was a substitute teacher for the public schools, though she did spend... MORE

Write Your Calhounian Class Autobiography

Income Distribution
Bryan Caplan
Last year, I convinced quite a few econo-bloggers to post their "class autobiographies." (Here was mine). One thoughtful reader suggested that it would have been more fruitful to build on John Calhoun's theory of class. For Calhoun, the relevant classes... MORE

I am Not as Turned On

Books: Reviews and Suggested Readings
Arnold Kling
More Sex (Steven E. Landsburg's new book), did not turn me on as much as it did Bryan (see here and here). I would give it a mixed review. I think that a good teacher could use some of the... MORE

A Headline Tells the Single-Payer Story

Economics of Health Care
Arnold Kling
From the Hartford (Ct.) Courant: Universal Care Might Cost State Almost $18 Billion; Proposal Seen As Dead Later in the story, a spokesman for the state's governor is quoted. "If 6 percent of the people need health insurance, the program... MORE

Scrooge and the Junker Fallacy

Microeconomics
Bryan Caplan
Another great section in Landsburg, from the chapter "What I Like About Scrooge": This is a law of arithmetic: if Scrooge eats less, there's more food for someone else. This is a law of economics: if nobody else wants that... MORE

Public Choice Outreach 2007

Public Choice Theory
Bryan Caplan
Get your applications in for the 2007 Public Choice Outreach Seminar, July 12-15. Both faculty and students are excellent, and you'll get to meet many of your favorite bloggers. Apply now!... MORE

Downplaying the Uninsured

Economics of Health Care
Arnold Kling
My Cato friend Michael Cannon writes, I may lose my health policy decoder ring for asking this, but should we really be focusing specifically on covering the uninsured? ...there are other approaches that could purchase more health for the money... MORE

I Coulda Been a Contender

Behavioral Economics and Rationality
Bryan Caplan
For every winner, there are ten people saying (perhaps under their breath) that "I'm as good as him. It could have been me." Now Robin links to a clever study showing that this is more than just self-deception: In our... MORE

Breast Cancer: a Hansonian Tale

Economics of Health Care
Arnold Kling
According to the New England Journal of Medicine: the age-adjusted incidence rate of breast cancer in women in the United States fell sharply (by 6.7%) in 2003, as compared with the rate in 2002. Data from 2004 showed a leveling... MORE

Biases in Evaluation Scales

Economic Methods
Arnold Kling
Elaborating on a point I raised , I am going to make the following conjecture: In an evaluation scale (e.g, rate this professor on a scale of 1 to 5), the mean evaluation is biased toward the middle. Is this... MORE

Papers that look interesting

Economic Methods
Arnold Kling
Glaeser and Sacerdote, suggesting that when rich people are around other rich people, they vote Democratic, but when they are around less-rich people, they vote Republican. Not having read the paper, I'm guessing on the basis of the abstract that... MORE

India's Achilles Heel

Labor Mobility, Immigration, Outsourcing
Arnold Kling
This article would be good to give to freshman econ students--and others. India has technical institutes that seldom have electricity, and colleges with no computers. There are universities where professors seldom show up. Textbooks can be decades old. Instruction is... MORE

Basic Decision Theory

Cost-benefit Analysis
Arnold Kling
From my latest essay: If we give more people MRI's, we reduce type I errors but increase type II errors. If we give fewer people MRI's, we reduce type II errors but increase type I errors. The Maggie Mahars of... MORE

Global Warming vs. the Outside Temperature

Energy, Environment, Resources
Arnold Kling
Today, the high school where I teach had an "environmental awareness" seminar. I walked in during the middle, so I did not catch the woman's name. The kids said that she had worked with Al Gore, and that many of... MORE

Mankiw Defends his Tall Tale

Economic Methods
Arnold Kling
In an email that he gave me permission to quote, Greg writes, Your instrumental variable analogy is good, but your assertion that it is a weak instrument is not. The calculations in the paper establish how good an instrument height... MORE

Does Humility Really Walk on Water?

Cost-benefit Analysis
Bryan Caplan
I just filled out a recommendation form that asked me to rate a student's "humility." Every other attribute I was asked to evaluate - e.g. "Intellectual Ability" and "Integrity" - was positive, so apparently humility is supposed to be positive... MORE

Taxation and Instrumental Variables

Economic Methods
Arnold Kling
Greg Mankiw links to a new paper that he co-authored with Matthew Weinzierl that says, Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This paper shows that the standard... MORE

Becker on Health Insurance

Economics of Health Care
Arnold Kling
Nobel Laureate Gary Becker writes, Long-term health insurance with individual plans is uncommon mainly because health insurance companies cannot force customers to make a long-term commitment. If a person has experienced good health, he may seek a cheaper plan with... MORE

In Praise of My Competition: Landsburg's More Sex is Safer Sex

Books: Reviews and Suggested Readings
Bryan Caplan
Since my own book is about to come out, it seems like a bad time to praise the competition. But I'm going to do it anyway. Steve Landsburg's More Sex is Safer Sex is fantastic. Once again, Steve has written... MORE

The Nonprofit Sector

Institutional Economics
Arnold Kling
Gerard Alexander writes, The Independent Sector, which is basically the industry group for nonprofits, reports that the combined annual expenditures of all the not-for-profit organizations required to file Form 990 with the U.S. Internal Revenue Service had grown to nearly... MORE

Climate Preference Survey Pretest

Cost-benefit Analysis
Bryan Caplan
Remember my Climate Preference Survey idea? 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?"Yesterday, I polled a... MORE

Myth of the Rational Voter Now Physically Exists

Books: Reviews and Suggested Readings
Bryan Caplan
My book now physically exists. I held it in my hands. But never fear, there's still time to pre-order. Why not go ahead? Even if you hate the book, the cover alone is worth the price of admission. :-)... MORE

House Prices and Transaction Costs

Finance: stocks, options, etc.
Arnold Kling
The New York Times offers a nifty rent-vs.-buy calculator to go with a David Leonhardt piece on whether or not is a good time to buy a home. Under the "advanced settings," I eliminated the transaction costs from buying a... MORE

Paul Graham on the Distribution of Income

Income Distribution
Arnold Kling
From Mind the Gap. Like chess or painting or writing novels, making money is a very specialized skill. But for some reason we treat this skill differently. No one complains when a few people surpass all the rest at playing... MORE

Paul Graham on Many Subjects

Business Economics
Arnold Kling
I'll just pull quotes from several of his essays.... MORE

Paul Graham on Software Patents

Information Goods, Intellectual Property
Arnold Kling
A commenter on a previous post mentioned a couple of essays by Paul Graham. He is one of my favorite writers, and it's been too long since I visited his site. Here is an essay on software patents. One thing... MORE

Will Wilkinson on Happiness Research

Behavioral Economics and Rationality
Arnold Kling
He writes, the complex biochemistry of good and bad feelings suggests that there are many more than two dimensions even to hedonic well-being, and so trade-offs among them are inevitable. The noise, bustle, and danger of a big city are... MORE

First World Subsidies and Third World Poverty

International Trade
Bryan Caplan
I never touch the stuff, but tomorrow I'm on a panel discussing the coffee trade at the Johnson Center. It's all part of GMU's International Week. While getting ready for the talk, I was pleased to learn that activists concerned... MORE

Subjective Age

Behavioral Economics and Rationality
Bryan Caplan
I just turned 36. But it seems like I was celebrating my 35th birthday three months ago - and asking everyone I knew how old they felt inside. Two universal patterns: 1. Every male I asked feels a lot younger... MORE

Abolish High School?

Economics of Education
Arnold Kling
Robert Epstein writes, although it’s efficient to cram all apparently essential knowledge into the first two decades of life, the main thing we teach most students with this approach is to hate school. In today’s fast-paced world, education needs to... MORE

Robert Fogel Interview

Growth: Consequences
Arnold Kling
An excerpt: we did not get really good control over the techniques for purifying drinking water until about World War I, but we needed everything that was done up to that point to figure out how to do it. Then... MORE

Do Econlog Comments Pass the Rational Expectations Test?

Behavioral Economics and Rationality
Bryan Caplan
Yes! The correct answer to the ice cream demand question is that sales went up by 200%. Here's the histogram of reader's responses: When people gave a range, I took the midpoint. When they gave a lower or upper bound,... MORE

Jason Furman's Health Care Plan

Economics of Health Care
Arnold Kling
Jason Furman writes, What we need is a different approach to encourage cost consciousness in a progressive manner that links the level of cost sharing to income and attempts to use cost sharing to improve systemwide incentives for more effective... MORE

Flynn on the Flynn Effect

Growth: Causal Factors
Arnold Kling
James R. Flynn writes, there is one way an individual can walk a personal path to enhanced cognitive skills. He or she must internalize the goal of seeking challenging cognitive environments -- seeking intellectual challenges all the way from choosing... MORE

You Can Do Anything You Put Your Mind To: A Noble Lie?

Behavioral Economics and Rationality
Bryan Caplan
People say a lot of silly things about how belief in the importance of intelligence, true or false, is "dangerous." Today I read one of the few pieces that actually presents some thought-provoking evidence on this point: Carol Dweck's chapter... MORE

Arlo's Single Payer Plan

Economics of Health Care
Arnold Kling
A commenter on a previous post challenged me to design a single-payer health care system. OK, here goes. We can call this the Arlo health care plan (Arlo is my analogue to Tyrone, Tyler Cowen's evil twin). 1. I am... MORE

Medicare, the U.S., and France

Economics of Health Care
Arnold Kling
Jonathan Cohn writes, French universal health insurance works an awful lot like Medicare does in this country. And that's the great irony of how screwy the debate over health care has become in this country. Conservatives always talk about expanding... MORE

Tax-eaters

Income Distribution
Arnold Kling
Robert E. Rector, Christine Kim and Shanea Watkins write Overall, households headed by persons without a high school diploma (or low-skill households) received an average of $32,138 per household in direct benefits, means-tested benefits, education, and population-based ser­vices in FY... MORE

Shlaes on the New Deal

Economic History
Arnold Kling
Amity Shlaes spoke last evening at the American Enterprise Institute. Her topic, which is also the topic of her forthcoming book, was Franklin Roosevelt's New Deal. In her talk, the New Deal comes across less as an economic revolution and... MORE

The Bourgeoisie and the Clerisy

Books: Reviews and Suggested Readings
Arnold Kling
In an interview, Freeman Dyson says, In England there were always two sharply opposed middle classes, the academic middle class and the commercial middle class. In the nineteenth century, the academic middle class won the battle for power and status.... MORE

Ice Cream Demand

Microeconomics
Bryan Caplan
It was 85 degrees in Fairfax last Monday. When I bought an ice cream cone at Ben and Jerry's, I asked the owner how much extra business he was doing that day compared to the typical day in January. What... MORE

Word Inflation: Disappointment Is Not Collapse

Cross-country Comparisons
Bryan Caplan
Arnold's surprise surprises me. 0% growth for one decade during the next four in countries with plenty to eat counts as a "collapse"? I think both Arnold and I would scoff if, say, Krugman claimed that the incomes of the... MORE

Norms and Institutions

Books: Reviews and Suggested Readings
Arnold Kling
From p. 402 of The Bourgeois Virtues by Deirdre N. McCloskey: Associate Justice Holmes declared in the Buck v. Bell opinion of 1927 that "it is better for all the world, if instead of waiting to execute degenerate offspring for... MORE

What is a Collapse?

Political Economy
Arnold Kling
I'm surprised that Bryan, of all people, would ask. If you're looking for a notion of collapse, try here. A society can get stuck in an "idea trap," where bad ideas lead to bad policy, bad policy leads to bad... MORE

Quote of the Day

Growth: Causal Factors
Arnold Kling
Western-style neoclassical economics was designed for settings where national institutions are already in place. In most of the world, they are not. The question is not "market vs. government," but how to strengthen the norms and institutions that will... MORE

Education Against Art

Economics of Education
Bryan Caplan
From Rolling Stone's review of Grindhouse: As the late critic Pauline Kael famously stated, "Irresponsibility is part of the pleasure of all art; it is the part the schools cannot recognize." The whole movie's a fun ride, but Tarantino's half... MORE

Magic Potencies on the Mind as Whole

Behavioral Economics and Rationality
Bryan Caplan
Once a teacher admits that his lessons have little or no practical use, he usually retreats to the view that it doesn't matter what his students learn. The important thing is that students are "learning how to learn." One thing... MORE

One reader tells me that the Wall St. Journal's op-ed page has spent the last twenty years claiming that Europe is on the "verge of collapse." Googling "Wall St. Journal Europe 'verge of collapse'" turns up little or nothing. In... MORE

What's a Collapse? What's a Verge?

Growth: Causal Factors
Bryan Caplan
Question for Arnold: How bad would things in Europe have to get to count as a "collapse"? Even if their per-capita GDP fell by 50%, they'd still be doing very well by world and historical standards. And it's hard to... MORE

Will Europe Collapse?

Arnold Kling
Bryan comments here and here about Tyler's theory that Europe has better government than the U.S., and thus can afford a larger welfare state. Bryan says that Tyler is using a straw man by suggesting that market-oriented economists see Europe... MORE

Milton Friedman's Isolation

Books: Reviews and Suggested Readings
Arnold Kling
Robert L. Hetzel writes, it is hard to account for the near-consensus in macroeconomics in the post-war period and also the antagonism that met Friedman’s challenge to that consensus. In order to place his ideas in perspective, this section provides... MORE

Sobering Projection

Economics of Health Care
Arnold Kling
Jonathan Skinner writes Fronstin (2006) estimates that a 55-year-old couple in 2006, planning to retire at age 65, would need to accumulate more than $400,000 during the next 10 years in order to afford supplemental health costs, beyond what Medicare... MORE

Overcoming Popularity

Behavioral Economics and Rationality
Bryan Caplan
Eliezer at Overcoming Bias has an interesting anti-majoritarian piece that is very similar to my "Intellectual Gladiators" argument: You can survive by being popular, or by being superior, but alternatives that are neither popular nor superior quickly go extinct. P.S.... MORE

Why Europe Goes Wrong

Politics and Economics
Bryan Caplan
Tyler's piece on Europe also lays down a challenge to American social democrats: They [social democrats] think that enough changes would make America enough like Europe; I do not understand their underlying model of the differences between America and Europe,... MORE

How Europe Goes Wrong

Cross-country Comparisons
Bryan Caplan
Tyler continues to baffle me. Now he's deeply misstating the free-market case against European social democracy: Market-oriented types look at Europe and think it is on the verge of collapse, when it isn't. They can't imagine that it doesn't, in... MORE

The Cause of Corruption

Growth: Causal Factors
Bryan Caplan
Fellow Templeton prize-winner Kevin Schmiesing revisits our Cato dialogue on corruption, culture, and growth. Background: Among the symposium’s exchanges was one between George Mason University economist Bryan Caplan and me about the relative importance of “political culture” and “personal culture”... MORE

Culture of Enterprise Conference

Growth: Causal Factors
Bryan Caplan
Last week, Cato hosted a conference with ISI for Templeton Enterprise Award winners. Full audio and video are available from the Cato website. Don't miss Thomas Woods, one of the smartest and most articulate historians I've ever met, and if... MORE

A Single Person With Doubts About the "Gap Year"

Economics of Education
Bryan Caplan
Arnold writes: I carry around an entrepreneurial idea of an American equivalent of the "gap year," which would be a year of education in between high school and college. This year would involve finding a part-time job, living in and... MORE

Why Not Wrestle With a Pig?

Behavioral Economics and Rationality
Bryan Caplan
I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it.--George Bernard Shaw "The advocates of X are jerks; therefore, X is false" is the classic ad hominem argument. But most of... MORE

Pigou Club Gains

Energy, Environment, Resources
Arnold Kling
A sign that the Pigou Club is gaining traction is that the Washington Post has an article called Tax on Carbon Emissions Gains Support that does not mention Greg Mankiw. The article does, however, quote some real, um, knowledge-challenged people... MORE

Vermont and Secession

Revealed Preference
Arnold Kling
Today's Washington Post contains an op-ed by Ian Baldwin and Frank Bryan on Vermonters' desire to secede from the union. We secessionists believe that the 350-year swing of history's pendulum toward large, centralized imperial states is once again reversing itself.... MORE

Helping the Wrong Side

Economics of Education
Arnold Kling
Iqbal Quadir: The UN should empower the people, not empower their governments. And if they cannot empower the people they can just shut it off. My point is that helping the wrong side is harmful. So if they cannot help... MORE

Leviathan Montgomery

Arnold Kling
A new blog about the county where I live reports, [The County's Chief Executive] proposes a 6.3% increase over the current budget...the county projects an additional 170 personnel work-years over the current year. And, to top it all off, that... MORE

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