Bryan Caplan and David Henderson

October 2007

A Monthly Archive (88 entries)

Where I'll Be... If I Really Exist

Economic Philosophy
Bryan Caplan
I'm off to the inter-disciplinary Social Philosophy and Policy conference on "Aggregation in Moral and Political Philosophy." What makes the conference interdisciplinary? Me! Yep, it's 14 philosophers and one economist. Still, if I return wondering if I'm a brain in... MORE

The Rojas Effect

Microeconomics
Bryan Caplan
For Halloween, here's the true, spooky story of how I met Fabio Rojas: In the Fall of 1989, young Rojas, a freshman at UC Berkeley, was assigned the roommate from hell. (No, not me!) The roommate was emotionally abusive and... MORE

Another One of My Health Care Debate Peeves

Economics of Health Care
Arnold Kling
As you see in the comments on this post, the Left has an answer to my concern that Medicare is the fiscal equivalent of the Titanic. The answer is, "We need to control health care costs!" Of course! Why didn't... MORE

Race, Marriage, and Poverty

Income Distribution
Arnold Kling
Walter Williams writes, There's one segment of the black population that suffers only a 9.9 percent poverty rate, and only 13.7 percent of their under-5-year-olds are poor. There's another segment of the black population that suffers a 39.5 percent poverty... MORE

How to Debate Happiness

Behavioral Economics and Rationality
Arnold Kling
Tyler Cowen will be one of the protagonists at the Economist debate in New York on November 10th. The proposition is "America is failing at the pursuit of happiness." For the affirmative will be Jeff Sachs and Betsey Stevenson. For... MORE

Gregory Clark, Aubrey de Grey, and Warren Buffett

Finance: stocks, options, etc.
Arnold Kling
have little in common, but all were mentioned in today's Washington Post. Robert J. Samuelson writes on Clark. Clark's theory is controversial and, at best, needs to be qualified. Scholars do not universally accept his explanation of the Industrial Revolution.... MORE

The Personal is Political

Political Economy
Arnold Kling
Reuters reports, Karl Marx, who complained of excruciating boils, actually suffered from a chronic skin disease with known psychological effects that may well have influenced his writings, a British expert said on Tuesday. ...hidradenitis greatly reduced his self-esteem," said Shuster,... MORE

Good News, Bad News

Income Distribution
Arnold Kling
Ricardo Hausmann sees the silver lining. According to the latest gender related statistics published in the 2007 World Development Indicators (WDI) by the World Bank, the gaps between the sexes are going through a major shift worldwide. In 2006, literacy... MORE

More Passengers on the Titanic

Economics of Health Care
Arnold Kling
Kevin Drum writes, here's an idea: expand Medicare (or create a similar program) to cover every person in America under the age of 21. And then let them keep it as they grow older. In ten years everyone under 31... MORE

IQ, Race, and History

Economic History
Arnold Kling
Michael H. Hart's book, Understanding Human History, probably first came to my attention via Tyler Cowen. In his conclusion, Hart writes (p. 416), The central hypothesis of this book is that genetic differences between human groups (in particular, differences in... MORE

Expressing Economic Ideas

Economic Education
Arnold Kling
Although it's a painful download, Tyler Cowen's talk on economics blogging is really outstanding. It runs quite counter to the angst that seems to be showing up lately on Greg Mankiw's blog. One question that Tyler addresses is, "Why economics?"... MORE

Just Plain Good: From Black Power to Black Studies by Fabio Rojas

Books: Reviews and Suggested Readings
Bryan Caplan
I never would have expected to enjoy a book about black studies, especially one that refrains from pointed criticism of the field. But things don't always work out as I expect. Yes, I've got a confession to make: I really... MORE

Me Versus the Economic Consensus

Economic Methods
Bryan Caplan
Tyler Cowen has a challenge for me:Dan's key point is that you, in fact, differ radically from the professional consensus (as Arnold writes as well) and that the argument is self-undercutting if you simultaneously erect expert consensus as a relevant... MORE

Do as Dan Does, Not as He Says

Books: Reviews and Suggested Readings
Bryan Caplan
Dan Klein closes his critique of The Myth of the Rational Voter with recommendations for the next edition:1. Soften the emphasis on beliefs and bias. Go more with bents. 2. Drop all “rational” talk. Just go with terms like folly,... MORE

Maggie Mahar vs. Arnold Kling

Economics of Health Care
Arnold Kling
She is a market-hating health care expert. She writes, Just as the U.S. spends more per person on healthcare than any other country in the world on healthcare, healthcare expenditures in Massachusetts surpass spending in every other state. And this,... MORE

Random Things to Read

Income Distribution
Arnold Kling
Terry J. Fitzgerald in the Minneapolis Fed Review: Fringe benefits have become an increasingly important part of employee compensation over the past 30 years. The BLS estimates that benefits currently account for about 30 percent of employer costs for employee... MORE

What Nordhaus Said in 2002

Cost-benefit Analysis
Bryan Caplan
Economists are great at "predicting" events after they happen. Unfortunately, the real trick is predicting events before they happen. Friedman thus deserves extra credit for foreseeing stagflation. Donald Wittman deserves extra credit for foreseeing the base closings bill. Now I'd... MORE

It Wasn't Nurture - Trust Me!

Behavioral Economics and Rationality
Bryan Caplan
My basic model of children is that they are extremely honest adults. They say what they think, not what they are supposed to think. So what am I to make of the following incident? The scene: Sunday night at 8:10... MORE

Piling On

Political Economy
Arnold Kling
Dan Klein writes, If it happened that it was the sociologists who were relatively enlightened and libertarian, while economists were relatively foolish and statist, Bryan would have said Sociologists represent the more “rational” answers to questions. Let me start with... MORE

Masonomics Bloggers

Econlog Administrative Issues
Arnold Kling
Some of the Mason bloggers (other than Cowen, Tabarrok, Hanson, Caplan, Kling, Roberts, and Boudreaux): Faculty bloggers include Austrian Economists (Boettke, Coyne, Leeson, Sautet). Adam Smith Lives (Peart) Neuroeconomics (Saletta) I am told that some of the Tax Policy bloggers... MORE

Econometric Confirmation Bias

Economic Methods
Arnold Kling
Russ Roberts writes, Edward Leamer’s indictment of modern econometrics, “Let’s take the ‘con’ out of econometrics” is the best known critique of our habits as empirical economists but it has not been taken to heart by the profession. There are... MORE

Dan Klein Dissects The Myth of the Rational Voter

Books: Reviews and Suggested Readings
Bryan Caplan
Last week at George Mason, Dan Klein delivered a lengthy critique of my book at Pete Boettke's seminar. Now Dan's kindly made the full text of his statement available here. His praise on the first page is effusive enough to... MORE

Mortgage Fraud

Finance: stocks, options, etc.
Arnold Kling
Moody's plotted the rate at which recent mortgages are going into default within the first 9 months of issuance, and it is quite high. Look at the graph at Calculated Risk, reproduced by James Hamilton. When I was at Freddie... MORE

Is Chinese Growth Credible?

Cross-country Comparisons
Bryan Caplan
I've long been skeptical of Chinese growth numbers. I don't doubt that China's economy is growing rapidly, but year after year of 10% growth seems incredible. In addition to the generic argument for doubting extreme numbers, we have the long... MORE

Classic Economics

International Trade
Arnold Kling
A 2-1/2 minute video lesson, from Milton Friedman. It is based on the story I, Pencil, by Leonard Read. Thanks to Don Boudreaux for the pointer.... MORE

Mason Blogger Bleg

Econlog Administrative Issues
Arnold Kling
One of the things about my Masonomics essay is that I did not mention a lot of Mason bloggers. Could you leave comments with your blogs? I want to publish a list, and I'd prefer not to miss any. I... MORE

Can Becker Save the Chicago School?

Behavioral Economics and Rationality
Bryan Caplan
Has Gary Becker re-discovered what the Chicago School is all about? Here's Becker turning his back on Milton Friedman back in 1976:I find it difficult to believe that most voters are systematically fooled about the effects of policies like quotas... MORE

Profit-maximizing employers should be gender-blind, right? Well, not quite. If, given all other information, women are less profitable to employ at a given wage than men, then profit-maximizing employers can't afford be gender-blind. That's the great lesson of the theory... MORE

Shrewd labor economics from the latest issue of Entertainment Weekly:For an actor, speaking out about contract demands may seem like a smart PR or legal move, but the strategy can often backfire in Hollywood when it comes to landing the... MORE

You Might Be An Economist If You Laugh At These Jokes

Economics and Culture
Bryan Caplan
In fact, if you don't laugh at these jokes, I wonder whether you're really one of us.... MORE

Did Literalism Saved the World?

Growth: Causal Factors
Bryan Caplan
In the past, I've praised Robin Hanson for his literalism. Now a compelling article on Straussian textual interpretation has inspired Robin to propose a new theory of the Industrial Revolution:Modern growth began when enough intellectuals gained status not from ambiguity... MORE

Kahneman

Behavioral Economics and Rationality
Arnold Kling
Daniel Kahneman, the psychologist who won an economics Nobel, talked at Edge.org. Transcript. it turns out that experience utility can be defined in at least two very different ways. One way is when a dentist asks you, does it hurt?... MORE

A Quibble with Tyler

Economics of Health Care
Arnold Kling
Tyler Cowen writes, Two strong points that can be scored against conservatism or market-oriented ideas, as opposed to the Bush Administration. First, state-level tax and spending limits haven't worked out. Second, "the right" doesn't (yet?) have a coherent health care... MORE

Losing to Dani Rodrik

Books: Reviews and Suggested Readings
Arnold Kling
After reading his book One Economics, Many Recipes, I keep imagining myself debating Dani Rodrik...and losing. Kling: I favor limited government. Rodrik: I favor right-sized, adaptive government. Government must select policies and regulations that take into account local history and... MORE

Global Warming: The Experts Speak

Energy, Environment, Resources
Bryan Caplan
Yes, I'm an elitist: When laymen and experts disagree, my presumption is that the laymen are wrong and the experts are right. Whether the subject is economics, toxicology, or global warming, that's my starting point (though not always my ending... MORE

Rodrik on Blogging and Lemons

Economics of Education
Arnold Kling
Dani Rodrik writes, if economists with high opportunity costs of time start to get out, shall we have a lemons problem on our hands? Will eventually the only prolific bloggers remain the ones that are not worth reading? It takes... MORE

Single-Payer: Klein vs. Kling

Economics of Health Care
Arnold Kling
You might think that the fact that I disagree with Ezra Klein about single-payer health insurance is a "dog bites man" story. But read on. Klein writes, We’ve got all these great universal bills passing at the state level, and... MORE

Make-Work Bias of the Macabre

Behavioral Economics and Rationality
Bryan Caplan
A reader calls this the "most bizarre form of make-work bias I have ever seen," and I have to agree: NAJAF, Iraq — At what's believed to be the world's largest cemetery, where Shiite Muslims aspire to be buried and... MORE

The Common Sense of Defense Cuts

Cost-benefit Analysis
Bryan Caplan
As an equal-opportunity offender, I'm finding it harder and harder to keep up with the competition. After arguing that we should cut health spending in half, Robin Hanson now adds that we should do the same with defense spending:But the... MORE

The Inequality Fuss

Income Distribution
Arnold Kling
Some recent posts on the inequality fuss: 1. Greg Mankiw writes If I were a redistributionist, here is what I might propose: A large fixed payment to every citizen, paid at the beginning of every month, financed by a proportional... MORE

Villainy Amok

Economic Philosophy
Bryan Caplan
While we're on the subject of villainy, here's a challenge: Name the villains (presumably fictional) that you most identify with. My top picks:Gollum MagnetoHow about you? P.S. Check out Hero Games' Villainy Amok.... MORE

Doctors' Statistical Ignorance

Economics of Health Care
Arnold Kling
Megan McArdle writes, Take a test for a disease that has a false positive rate of 5%, and a disease prevalence of 1 in 1000--lupus, say. If you test positive in a random assay, what are the odds that you... MORE

Masonomics

Economic Philosophy
Arnold Kling
I try to explain what George Mason economics is all about. If you want to be a Masonomist, you have to lose the we. When people use we in today's politics , they are doing two things. 1. Appealing to... MORE

Lecture on Mechanism Design

Microeconomics
Arnold Kling
He's not a Nobel Laureate, but Al Roth gave a recent lecture at Google on the topic. He talks about job matching and kidney sales as examples. Bonus question: can you name the economist who introduces Roth? Thanks to Greg... MORE

Survey Availability Bias

Behavioral Economics and Rationality
Arnold Kling
What do the following beliefs have in common? A. Belief that Kerry won in 2004, and that a vote-counting conspiracy took place. B. Belief that men have more sex partners than women. C. Belief that epidemiology is equivalent to a... MORE

What Would a Hedonistic Economy Look Like?

Macroeconomics
Bryan Caplan
In Stumbling on Happiness, Daniel Gilbert skewers the belief that money buys happiness - then defends this error as a Noble Lie:If no one wants to be rich, then we have a significant economic problem, because flourishing economies require that... MORE

Two Metaphors for Government

Political Economy
Arnold Kling
On our left, we have George Lakoff, discussing the way taxes ought to be framed. Are you paying your dues, or are you trying to get something for free at the expense of your country? It's about being a member.... MORE

Clark gives Greif Grief

Institutional Economics
Arnold Kling
Gregory Clark goes medieval on Avner Greif. In chapter 2, Greif lays out a formal definition of an institution. This is, “An institution is a system of rules, beliefs, norms and organizations that together generate a regularity of (social) behavior”... MORE

A Theory of Financial Intermediation

Finance: stocks, options, etc.
Arnold Kling
I write, Fundamentally, financial intermediation is about enticing investors to buy securities backed by investments whose risks the investors cannot fully evaluate. The intermediary, such as a bank, hedge fund, or ordinary corporation, specializes in evaluating risk. The investor who... MORE

Nobel Prize in Abstraction

Game Theory
Arnold Kling
From this year's citation While direct mechanisms are not intended as descriptions of real-world institutions, their mathematical structure makes them amenable to analysis. Finding the best of all direct mechanisms for a given problem is often straightforward, and once the... MORE

Villains, Victims, and Heroes

Economic Philosophy
Bryan Caplan
Many of my favorite economists - including Arnold and Tyler - recoil from "villains-and-victims" stories. After a recent lunch, similarly, Robin Hanson panned the movie Blood Diamond in large part because of it is a villains-and-victims story. It's a safe... MORE

The Worlds Oldest Algorithm?

International Trade
Arnold Kling
If you believe Matt Ridley, it's Ricardian comparative advantage. His is one of many answers to the Edge question of What's your formula? your equation? your algorithm?. Other interesting answers from Tooby, Kurzweil, Haidt, and many others.... MORE

Mankiw's Pithiest... Post... Ever.

Economic Methods
Bryan Caplan
I like to see myself as an equal-opportunity offender, but I can't measure up to Mankiw's latest:Consider a person who A. takes an important truth developed by others, B. exaggerates it for dramatic effect, C. as a result, draws public... MORE

Where Nationalism Meets Socialism

International Trade
Bryan Caplan
I was surprised to find this at the Common Dreams News Center ("Breaking News and Views for the Progressive Community"):[R]eal free trade implies not only duty-free movement of goods and capital, but free movement of labour across borders, which neither... MORE

Copyright, China, and Anti-Foreign Bias

Behavioral Economics and Rationality
Bryan Caplan
Rationalization #787 why trade with China is bad: "They're infringing our copyrights! Their government is doing nothing to stop it. We've got to impose sanctions until they get tough." When Americans infringe American copyrights, we throw up our hands. "What... MORE

Senator McCain on Health Care

Economics of Health Care
Arnold Kling
He asks some rhetorical questions For all the grandiose promises made in this campaign, has any candidate spoken honestly to the American people about the government's role and failings about individual responsibilities? Has any candidate told the truth about the... MORE

Alex Tabarrok doubts there's much discrimination against right-wing academics; I beg to differ. Now I'm getting some support from a surprising source: Though he's still making up his mind, Larry Summers is moving from a Tabarrokian starting point to a... MORE

Tim Kane's New Blog

Behavioral Economics and Rationality
Bryan Caplan
Tim Kane has launched a new blog, and it looks promising. Kane's the primary author of the 2007 Index of Economic Freedom (which finds its way into Greenspan's new book), a Garett Jones co-author, and a comic book fan to... MORE

Free Disposal

Cost-benefit Analysis
Bryan Caplan
Ed Glaeser says that having kids has positive externalities:[T]here is another reason to subsidize larger families. When parents decide to have kids, they are creating a massive benefit for their children. As much as parents may love their children, they... MORE

Doug Campbell's written a great short history of public choice for Region Focus, the newsletter of the Richmond Fed. Or at least that's what my Inner Megalomaniac thinks, since 50% of this short history is about my work! One highlight:To... MORE

Overtreated

Economics of Health Care
Arnold Kling
My review of Shannon Brownlee's new book. Brownlee proposes the alternative of paying doctors a salary, based on the number of patients that they see. However, I would argue that this would create the opposite incentive. Under a capitation based... MORE

Roberts Rules

International Trade
Arnold Kling
The New York Times turned Russ Roberts loose, along with some other economists, on the Republican Presidential debate. One of Roberts' comments: Mr. Romney is asked if he still supports trade even though we’ve lost 5 million jobs to foreign... MORE

Odyssey Years

Economics of Education
Arnold Kling
David Brooks writes, People who were born before 1964 tend to define adulthood by certain accomplishments — moving away from home, becoming financially independent, getting married and starting a family. In 1960, roughly 70 percent of 30-year-olds had achieved these... MORE

The Nonprofit Boom

Institutional Economics
Arnold Kling
Eugene Steuerle writes, in a few decades we'll find that most people will produce services and products that could be produced as easily in the nonprofit sector as in the profit-making one. Some cities like the District are harbingers of... MORE

Why is Africa Still Under-developed?

Growth: Causal Factors
Arnold Kling
Megan McArdle asks this question more colloquially. there's a whole, very large literature on why Africa is particularly screwed up. The awful climate under which most of it labors. The bad maritime geography: apparently one of the two coasts offers... MORE

Crime Fiction versus Crime Fact

Economics of Crime
Bryan Caplan
I'd guess that fictional serial killers outnumber real serial killers by at least 100:1. After all, how many movies and t.v. shows are there about serial killers - and how many are there in real life? That's hardly surprising -... MORE

The Cultural Relativism of Columbus Apologists

Economic Philosophy
Bryan Caplan
Critics of multi-culturalism often mock its proponents for (a) cultural relativism and (b) disrepecting Columbus. The problem, as I've explained before, is that Columbus was a pioneer of slavery and barbarism. The only way to excuse his behavior is to... MORE

Becker vs. Caplan

Political Economy
Arnold Kling
Gary Becker writes, the evidence that has been accumulated since Schumpeter's book gives good marks to free market systems in promoting the interests of the poor and middle classes, including minorities. And examples abound of corrupt and incompetent government officials... MORE

Malthusian Myopia

Economic History
Bryan Caplan
The Malthusian model is not as crazy as Greg Clark's interpretation of it in A Farewell to Alms (here's Clark's reply; here's my rebuttal, with a second reply from Clark in the comments). But even correctly interpreted, the Malthusian model... MORE

Mandatory Health Insurance?

Economics of Health Care
Arnold Kling
Glen Whitman writes, To enact any mandate, legislators and bureaucrats must specify a minimum benefits package that an insurance policy must cover. Yet this package can't be defined in an apolitical way. Each medical specialty, from oncology to acupuncture, will... MORE

The Golddigger's Dilemma

Economics and Culture
Bryan Caplan
Here's a thoughtful question from an unabashed golddigger:Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But... MORE

My Contigency Plan

Labor Market
Bryan Caplan
After this morning's lecture on the life cycle model, I explained to my students that I'm never going to retire. Why would I give up a decent fraction of my income and most of my social network, when a professor's... MORE

Stanford Marshmallow Experiment

Growth: Causal Factors
Arnold Kling
I went to hear Greg Clark give a noontime seminar at Cato today. He is fairly persuasive in person. One thing about pursuing a line of thought for a long time when most people disagree with you is that your... MORE

What Racism Is

Economic Philosophy
Bryan Caplan
Megan asks, "What is racism?":Part of the problem with talking about race and gender in America is the definition of racism and sexism. Most of us use a working definition of racism and sexism that is something like "Holding (bad)... MORE

Surowiecki's Levy and Peart's Mistake

Economic Methods
Bryan Caplan
In my book, I reference Surowiecki's "guess-the-weight-of-an-ox" anecdote. My colleague David Levy and his co-author Sandra Peart show that isn't quite right. Contrary to Surowiecki, Galton reported the median guess, not the mean - which was reported by Pearson years... MORE

Bon Mot

Political Economy
Arnold Kling
From Alex Tabarrok: In fact, liberalism, meaning classical liberalism, has never been conservative. It began as a movement of the left against feudalistic, conservative insiders and it remains so today.... MORE

More on Journalists

Political Economy
Arnold Kling
Tyler Cowen makes 8 remarks about journalism. The one that most reinforces what I believe is: Journalists tend to favor visible stories and neglect invisible opportunity costs and invisible hand mechanisms, which often but not always puts them against the... MORE

Economic Policy, Energy and Otherwise

Energy, Environment, Resources
Arnold Kling
Megan McArdle points to Scott Adams At the risk of oversimplifying, our current energy policy in The United States involves shooting bearded people. At the risk of stepping on a funny line, I would say that our energy policy is... MORE

Tyler Gets Shocking

Books: Reviews and Suggested Readings
Bryan Caplan
Around the GMU lunch table, we've long joked that we ought to ship Tyler Cowen over to Princeton. At GMU, Tyler's contrarian nature and libertarian instincts wage a daily intifada. The best way to bring peace to Tyler's war-torn mind:... MORE

Prisoners' Dilemma and The Unmentionable

Behavioral Economics and Rationality
Arnold Kling
Garett Jones writes, Are more intelligent groups of people better at cooperating? Repeated prisoner’s dilemma (RPD) experiments run at numerous universities since 1959 may hold the answer. Overall, the tendency is clear: Students at schools with higher average SAT and... MORE

Acemoglu on Growth

Growth: Causal Factors
Arnold Kling
The New Economist quotes from a preliminary draft of a magnum opus from wunderkind Daron Acemoglu on economic growth. The central questions are these: (1) Why did the world economy not experience sustained growth before 1800? (2) Why did economic... MORE

Today's Prize Winner for Overcoming Pessimistic Bias Goes To...

Behavioral Economics and Rationality
Bryan Caplan
Harold James:Nor, following the fastest five-year period of economic growth in human history, are collapsing prices endangering the financial system, as they did during the Great Depression. (emphasis mine)I just lived through the fatest-growing five years in economic history, and... MORE

"Fiscal Responsibility First"?

Fiscal Policy
Arnold Kling
According to the Washington Post (editorial page), this is future President Hillary Clinton on Social Security: "I'm not putting anything on the proverbial table until we move toward fiscal responsibility," she said during Wednesday's debate I really have not been... MORE

Median Voter to Self: Keep Up the Good Work!

Politics and Economics
Bryan Caplan
A recent Gallup poll confirmed the continuation of a 30-year trend: The median voter believes in himself! The question: More generally, how much trust and confidence do you have in the American people as a whole when it comes to... MORE

Carbon Footprints and Central Planning

Energy, Environment, Resources
Arnold Kling
Megan McArdle discusses the issue of whether urban hipsters or suburban ticky-tackies have the more carbon-intensive lifestyle. This is one of those questions for which the answer is too difficult to calculate. For example, there was a story making the... MORE

Scott Adams on the Economic Way of Thinking

Economic Methods
Bryan Caplan
Scott Adams, of Dilbert fame, thinks like an economist - and wants his readers to do the same: I studied economics in college. One thing I’ve noticed is that other people who have studied economics tend to think a similar... MORE

Process Innovation

Growth: Causal Factors
Arnold Kling
G. Pascal Zachary writes, Designers led by Mr. Bohr in Hillsboro, Ore., chose hafnium to replace silicon oxide, the venerable insulator in chips and a material used in making glass. Mr. Bohr also helped to identify new materials, whose identity... MORE

GMU Economics

Institutional Economics
Arnold Kling
In the latest econtalk, Russ Roberts interviews his co-blogger Don Boudreaux. This is a good opportunity for people to catch the distinctive flavor of GMU economics. I like to put it his way: at Chicago, they say "Markets work well.... MORE

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