Bryan Caplan and David Henderson

April 2008

A Monthly Archive (84 entries)

A High-Wage Equilibrium

Labor Mobility, Immigration, Outsourcing
Arnold Kling
A commenter points me to Will Wilkinson's post where he links to The Economist Intelligence Unit's ranking of Denmark as the best country to do business. About the Danish labor market, they write The system combines low non-wage labour costs... MORE

Overqualified: What's the Deal?

Economics of Education
Bryan Caplan
From Richard Rothstein at Cato Unbound:College graduates are, in fact, not in short supply. Indeed, some college graduates are now forced to take jobs requiring only high-school educations. The Bureau of Labor Statistics projects that, for the next decade, only... MORE

Rat-ta-ta-ta-tat

Economic History
Bryan Caplan
Admittedly I'm a sucker for a period piece, but World War I dogfight drama Flyboys has the most exciting aerial combat scenes I have ever seen. See it - it's way better that you'd expect. P.S. Get ready for the... MORE

A Meditation on Minarchy

Political Economy
Arnold Kling
Charles Kessler writes, continued growth of government is not inevitable. But a word of caution: Neither is big government’s demise inevitable. Sometimes conservatives and even libertarians predict that big government is doomed. Some point to modern technology as the savior:... MORE

How to Be Mr. Popular When You're Old

Economics and Culture
Bryan Caplan
When I'm old, I want to be the octogenarian that the Young Turks come to with their crazy new ideas. I don't want to be the senior professor that the whippersnapper assistant profs avoid. Above all else, I never want... MORE

Kuran on Simon: A Fitting Epitaph

Growth: Causal Factors
Bryan Caplan
From Timur Kuran's introduction to Julian Simon's posthumous The Great Breakthrough and Its Cause:What turned out, sadly, to be our last meeting took place in early January 1998, in Chicago, during that year's convention of the American Economic Association. Between... MORE

Environmental Disasters

Energy, Environment, Resources
Arnold Kling
According to Iain Murray's new book, the worst disasters come from environmental policy. It is remarkable the magnitude of the harm caused by government relative to the harm caused by the private sector from which it protects us. My co-blogger... MORE

Important Data on Access to College

Economics of Education
Arnold Kling
From an column in the Chronicle of Higher Education. Among high-school students who graduated in the bottom 40 percent [UPDATE/correction]: in a comment, Adelman writes that this is the bottom 20 percent] of their classes, and whose first institutions were... MORE

The CNN Model of Violent Conflict

Behavioral Economics and Rationality
Bryan Caplan
Why do countries and groups within countries engage in large-scale violent conflict? Social scientists' knee-jerk impulse is to look for objective conflict of interest: It's about land, oil, or whatever. But if you watch a standard news channel like CNN,... MORE

I while back I argued that it's easy to detect media bias from headlines alone. A recent NYT piece on life expectancy makes my point for me better than I ever could. The facts: U.S. life expectancy for all income... MORE

Jim Hamilton Uses Murray Rothbard's Favorite Epithet

Energy, Environment, Resources
Bryan Caplan
I never thought of these two economists at the same time, until Hamilton called the 2005 Energy Bill "monstrous"!As a result of ethanol subsidies and mandates, the dollar value of what we ourselves throw away in order to produce fuel... MORE

Euro Bet II x3: The Bet's On

Politics and Economics
Bryan Caplan
Mark Steyn's graciously accepted my latest Euro bet, along with David Henderson and EconLog reader Rafiv. (Rafiv, I will need to know your full name and location to seal the deal with you; just let me know and we're on).... MORE

Insiders, Outsiders, and Voting Behavior

Political Economy
Arnold Kling
Tyler Cowen writes, real world political debate is not fundamentally a macro-cosm of the thought processes of a smart person, or of one smart person debating another. The politics of confrontation usually turn ugly. Since my father's death, I have... MORE

Euro Bet II: Win Mark Steyn's Money

Politics and Economics
Bryan Caplan
Here's an especially specific claim in Mark Steyn's America Alone:The U.S. government's National Intelligence Council is predicting that the EU will collapse by 2020. I think that's a rather cautious estimate myself. Ever since September 11, I've been gloomily predicting... MORE

Western Culture: Crisis of Confidence?

Economics and Culture
Bryan Caplan
From Mark Steyn's paranoid but enviably well-written America Alone:The question for today's Europe is whether the primary identity of their fastest-growing demographic is Muslim or Belgian, Muslim or Dutch, Muslim or French. That's where civilizational confidence comes in: if "Dutchness"... MORE

Flight of the Red Balloon: Don't Believe the Hype

Economics and Culture
Bryan Caplan
The one good thing about this boring, boring movie was walking out!... MORE

Modern Recessions

Macroeconomics
Arnold Kling
Robert Hall writes, One of the most important facts about the modern recession is at all sectors of the labor market slacken at the same time. . .Each of the seven major sectors—even including government—were recruiting to fill far fewer... MORE

Political Economy Lessons for the World Bank

Institutional Economics
Arnold Kling
Some major league teachers. Nobel Laureate Douglass North writes, Our political history emphasizes modifications to natural state institutions in the 18th century that led to concern within the elite that political competition would inevitably lead to consolidated political control by... MORE

Bet Bleg

Economic Methods
Bryan Caplan
Who knows enough about the data to say how many of the 15 rematch bets Ehrlich would have won?... MORE

Is Ehrlich the Least Hansonian Thinker Ever?

Economic Methods
Bryan Caplan
Tyler says that John Rawls is the "least Hansonian thinker" ever. But perhaps Paul Ehrlich is a better candidate. Here's what he (and his wife) have to say about betting:Steve and Paul indulged in this betting foolishness in the first... MORE

The Simon-Ehrlich Rematch: Was There Any Wheat Amongst the Chaff?

Energy, Environment, Resources
Bryan Caplan
You've probably heard about the famous Simon-Ehrlich wager, but did you know the Ehrlich asked for a rematch? Paul Ehrlich and Steve Schneider proposed to bet $1000 on each on the following:1. The three years 2002-2004 will on average be... MORE

Income Distribution Reality

Income Distribution
Arnold Kling
In his new book Unequal Democracy, Larry Bartels writes (p.7), families at the 20th percentile experienced declining real incomes in 20 of the 58 years...by comparison, families at the 95th percentile have experienced only one decline of 3% or more... MORE

Fiscal Reality

Social Security
Arnold Kling
Some numbers from the proposed Budget for 2009 for the Federal government. I try to divide non-security spending crudely into necessary spending (courts, justice, Treasury, the mysterious "other" mandatory spending) and "worthy causes" (things that are really discretionary). Update: Figures... MORE

Riding Tigers by James Schneider: The Best 21st Century Novel You Haven't Read

Books: Reviews and Suggested Readings
Bryan Caplan
James Schneider, my best friend from Princeton, has written my favorite novel of the 21st century, entitled Riding Tigers. I'd compare it to A Confederacy of Dunces. It's a coming-of-age story filled with quirky characters, a plot that keeps you... MORE

Correction: Men, Women, Kids, and Happiness

Family Economics
Bryan Caplan
After blogging this...If you look at the data - the same GSS data you favorably cite - you'll see that kids usually have a smaller negative effect on the happiness of moms than the happiness of dads. The natural inference... MORE

Loose Mortgage Credit

Finance: stocks, options, etc.
Arnold Kling
Atif R. Mian and Amir Sufi write, We demonstrate that high 1996 latent demand zip codes experience a dramatic relative reduction in mortgage denial rates during this time period. Simultaneous with the reduction in denial rates, high 1996 latent demand... MORE

Credit Spreads and the Fed

Finance: stocks, options, etc.
Arnold Kling
John B. Taylor and John C. Williams write, the spread on August 9 was 25 basis points above the pre-August 9, 2007 average. That is 7 times the standard deviation before August 9—more than a 6-sigma event. The mean through... MORE

A Basic Economic Lesson

Income Distribution
Arnold Kling
In the latest econtalk, Russ Roberts just speaks himself. The result may be my favorite of all of his podcasts. If you had just one hour to learn essential, basic economics, listening to this talk would be the way to... MORE

Peasants vs. Nomads

Books: Reviews and Suggested Readings
Arnold Kling
I review Philip Carl Salzman's Culture and Conflict in the Middle East. I write, Salzman sees differences between growing crops and raising livestock. Growing crops fosters a society rooted in the soil, with strict hierarchy and strong, predatory central government.... MORE

Stepping on Will's Toes

Economics and Culture
Bryan Caplan
Will Wilkinson's not too happy with my lecture on "Selfish Reasons to Have More Kids." Frankly, we seem to be talking past each other, but I think it's worth trying one more time. From his latest comments, point-by-point:There are perfectly... MORE

Wilkinson and Shirky

Information Goods, Intellectual Property
Arnold Kling
Want to see two bright, good-looking guys discuss economics and media? Then watch the latest episode of Free Will, with Will Wilkinson interviewing Clay Shirky. The topic is one of my favorites, and these are two of my favorite thinkers.... MORE

Do I Step on Libertarian Toes?

Economic Methods
Bryan Caplan
Once again, Robin's doing what he does best: get meta. I've argued that Sylvia Hewlett hurt her book sales by stepping on her friends' toes without reaching out to potential allies. But if that's what I think, says Robin, isn't... MORE

Assortative Living

Political Economy
Arnold Kling
Reviewing a book by Bill Bishop, Alan Ehrenhalt writes, there is one simple statistic, rightly seized on by Mr. Bishop, that is difficult to explain away. It is this: In 1976, less than a quarter of the American people lived... MORE

I Still Hate Monetary Theory

Macroeconomics
Arnold Kling
On an earlier thread, a commenter wrote: 1) What happens to the value of the dollar when new forms of money, like credit cards, are introduced? I expect you'd say that the value of the dollar would fall, but this... MORE

Diminishing Returns and Life

Behavioral Economics and Rationality
Arnold Kling
Tyler Cowen recently solicited topics, and I peeked. Here was one: More "meta" stuff -- how to read, how to think, how to write, etc. Tyler's tricks on being a prolific, successful academic. My tip is to pay attention to... MORE

Two New Fun Lectures

Economics and Culture
Bryan Caplan
I've just uploaded two new talks to my "Fun Lectures" webpage: 1. Lecture notes for my Friday FEE/GMU Econ Society seminar, "Selfish Reasons to Have More Kids." If you were at the talk, reports on any change in your desired... MORE

I Just Got $100,000 Worth of Consumer Surplus!

Economics of Health Care
Bryan Caplan
I've been a pitiful figure the last six months. My feet have been hurting so much that I practically abandoned all walking on paved surfaces. I've been teaching class sitting down. I even started wearing real shoes. Desperation drove me... MORE

Creating a Life: Why Bad Publicity Wasn't Good Publicity

Information Goods, Intellectual Property
Bryan Caplan
I really enjoyed Sylvia Hewlett's Creating a Life, but feminists were outraged. (Check out all the 1-star reviews on Amazon). Normally, I'd expect all this negative publicity to be great for sales. All publicity is good publicity, right? But Hewlett's... MORE

A Cerebral Defense of Gun Rights

Economic Philosophy
Bryan Caplan
Arthur Brooks' finding that gun owners are markedly happier ("[C]ontrary to the implication of Mr. Obama's comments, for many Americans, happiness often does indeed involve a warm gun") reminds me of another gem by philosopher Michael Huemer, "Is There a... MORE

Almost all economists ridicule the notion that - at its current margin - the U.S. government can raise revenue by cutting taxes. Well, let me put forward a promising new candidate for a free lunch tax cut: Much lower taxes... MORE

The Quick Fix: For the Love of God, Give Every Haitian a Green Card

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Rising food prices don't mean a lot in the U.S., but in places like Haiti, they're a disaster:Saint Louis Meriska’s children ate two spoonfuls of rice apiece as their only meal recently and then went without any food the following... MORE

True Insults and False Compliments

Behavioral Economics and Rationality
Bryan Caplan
A petition at the Economist's View accuses ABC of insulting the intelligence of the American people. I'd like to respond by accusing the petition's signatories of complimenting the intelligence of the American people. And at least ABC seems to have... MORE

Economic Policy for Humans? What Thaler and Sunstein Miss

Behavioral Economics and Rationality
Bryan Caplan
Thaler and Sunstein's latest piece provides a perfect illustration of what's wrong with "sophisticated" critiques of laissez-faire. They begin sensibly enough:In the past 20 years, there has been a growing interest in cutting-edge research that has come to be called... MORE

Best Advice I've Heard in Months

Labor Market
Bryan Caplan
Well, it doesn't apply to me, but it's still great advice:One piece of advice for young women. Do a whole lot of planning early on. Be as strategic about your personal life as you are about your career. And find... MORE

Why I am an Austro-Keynesian

Austrian Economics
Arnold Kling
A commenter on an earlier post points me to Steven Horwitz: As excess supplies of money work their way through the market, they cause differential effects on prices. Some go up by a lot, some only by a little. These... MORE

Behavioral Economics Ready for (Sub) Prime Time?

Regulation and Subsidies
Arnold Kling
Richard H. Thaler and Cass R. Sunstein write, government would achieve simplified transparency by requiring all lenders to provide borrowers with an electronic file that contains, in standardized form, information on every feature of the contract. Instead of fine print,... MORE

Childlessness and Regret

Books: Reviews and Suggested Readings
Bryan Caplan
I just finished Sylvia Ann Hewlett's fantastic Creating a Life: Professional Women and the Quest for Children (used copies on Amazon going for as little as 8 cents!). This book is full of great material on a wide range of... MORE

Book Club Worthy

Books: Reviews and Suggested Readings
Arnold Kling
On page 139 of Second Nature, Haim Ofek writes, In close analogy with the female role in sex selection, customers (of both sexes) seem to be highly inquisitive about the merchandise they seek to acquire; thus collecting information, checking warranties,... MORE

Bill Cosby: Underrated

Economic Philosophy
Bryan Caplan
As a small child, I loved Bill Cosby, but when I became a man, I put aside childish things. But a few minutes ago, while perusing a list of Cosby quotes, I decided I was right the first time. A... MORE

Reducing Ignorance, Facilitating Irrationality?

International Trade
Bryan Caplan
The Cato Institute is making it really easy to discover politicians' voting records on free trade. With the click of a button, for example, we can find out the trade positions of Dorgan and Wyden, the demagogues who bedeviled Robin... MORE

The Rationality of Iran

Behavioral Economics and Rationality
Bryan Caplan
Is support for organ markets in the blood? One of the world's most articulate defenders of organ markets is a second-generation Iranian - and guess what else?Only one country in the world has eliminated the shortage of transplant kidneys. Only... MORE

The Muddle that is Macro

Macroeconomics
Arnold Kling
Without irony, Greg Mankiw points to both John Makin, arguing in the Wall Street Journal for loose money, and Martin Feldstein, arguing the next day for tight money. Meanwhile, today's Washington Post has a story with a typical headline: Economy's... MORE

Married with 19 Kids = Single & Childless

Economics and Culture
Bryan Caplan
Happiness researchers usually find that kids have a negative effect on happiness. By the time the result gets blogged, it's tempting to say, as Will Wilkinson does, that "children make us miserable." But how big is the estimated effect of... MORE

West Virginia's got the lowest level of economic freedom in the U.S. What's the reason? Newly-minted WVU Ph.D. Claudia Williamson traces it to West Virginians' serious historical misconceptions in her chapter in Russ Sobel's edited volume, Unleashing Capitalism: Why Prosperity... MORE

What I'm Reading (Slowly)

Books: Reviews and Suggested Readings
Arnold Kling
Second Nature, by Haim Ofek. It was written in 2001. It tries to address some puzzles in evolution and in ancient economic history. For example, why is the human brain overdeveloped, in the sense that it is larger than necessary... MORE

In The Logic of Life, Tim Harford tries to figure out why rents in New York and other trendy urban locations are so high. You might think that the rents are high because the wages are high. But adjusting for... MORE

Econ Prof Lead Character in New Movie

Economics and Culture
Bryan Caplan
The most fascinating characters in the world are econ profs, but you'd never guess this from watching feature films. So on one level I'm happy to see that The Visitor, which arrives in theaters tomorrow, dares to make its protagonist... MORE

Following up on my last question, what would it take to make you take a spammer seriously? Imagine that one email scam in 10,000 was genuine. How could a complete stranger from Micronesia convince you even to read his email,... MORE

I've previously argued that you usually need extensive educational credentials just to get an interview for anything more than a low-status job. It strikes me that there is a similar problem if you have a new product and want to... MORE

Merle Kling

Political Economy
Arnold Kling
His obituary is in today's St. Louis Post-Dispatch. Merle Kling, retired provost, dean and professor of political science at Washington University, died Tuesday (April 8, 2008) at Barnes Extended Care in Clayton... Mr. Kling's tenure as dean covered the Vietnam... MORE

Will Goolsbee Last?

Politics and Economics
Bryan Caplan
I don't know how I got on Hillary's emailing list, but it's not without some entertainment value. It looks like she's trying to get Austan Goolsbee fired for privately avowing what I've called "felicitous hypocrisy" about NAFTA. Will Hillary succeed... MORE

Blogs and Books

Books: Reviews and Suggested Readings
Bryan Caplan
Suppose you're writing a popular book. You expect to finish in two years. Your goal is to maximize sales of the book. What's your optimal blogging strategy? Don't mention it until the book is about to be released? Tireless self-promotion... MORE

My Views on Optimal Family Size: Some Clarifications

Economics and Culture
Bryan Caplan
Kerry Howley has some thoughtful doubts about my ongoing debate with Will Wilkinson. And happily they're easy to address one at a time: 1. Here's Kerry:I’m perplexed, though, by Bryan’s statement that “most people are hyper-aware of the important arguments... MORE

Daniel Klein on Libertarianism

Political Economy
Arnold Kling
For an encyclopedia, he writes, In the eyes of the libertarian, everything the government does that would be deemed coercive and criminal if done by any other party in society is still coercive. For example, imagine that a neighbor decided... MORE

American Excess

Income Distribution
Arnold Kling
From a longer essay on Inequality and Excess: I feel awkward and defensive when the subject of economic inequality comes up. The fact is that I cannot say that I feel comfortable with the levels of inequality and excess that... MORE

Be Careful What You Wish For

Political Economy
Arnold Kling
Dean Baker writes, Remarkably, the Post editorial writers seem to be the only ones who have noticed that the Senate "Foreclosure Prevention" bill will give banks an incentive to carry through foreclosures. The bill would give a $7,000 tax credit... MORE

American Mugabe, Revisted

Economic History
Bryan Caplan
Remember last year's blogosphere debate on whether FDR was an "American Mugabe"? I just came across a 1997 piece by Robert Higgs that I should have been quoting in my defense. But late is better than never. His thesis:In retrospect... MORE

Don Boudreaux raises a deep question I've often asked myself:But if I were a pro-regulation and high-tax kinda guy, why would I dispute the claim that America's economy has performed remarkably well for everyone even since 1973? Why would I... MORE

Don't Stop, But Look Before You Leap

Behavioral Economics and Rationality
Bryan Caplan
Once again, Arnold is going overboard in his opposition to happiness research. It's one thing to say that (a) "happiness" has more than one meaning, or (b) that there's more to life than happiness, or (c) that a longer time... MORE

Please Stop

Behavioral Economics and Rationality
Arnold Kling
Will Wilkinson writes, I just got Arthur Brooks’ new book Gross National Happiness in the mail. Brooks quite rightly points out that happiness research doesn’t really do much to support conventional liberal policies, and he gives it a right-wing spin,... MORE

The Debaters: A Childishly Long Reply to Will

Economics and Culture
Bryan Caplan
Will Wilkinson has a lot to say about my views about kids - and as you know, I'm never one to avoid a friendly debate. So get ready for my point-by-point reply: 1. Will says I misintepreted his original point.... MORE

Perceived Duty to Have Children, by Gender

Economics and Culture
Bryan Caplan
At risk of provoking more psycho-analysis... In 1996, the GSS asked: If the husband in a family wants children, but the wife decides that she does not want any children, is it all right for the wife to refuse to... MORE

Make them take Basis Risk

Finance: stocks, options, etc.
Arnold Kling
Eric Falkenstein writes, because financial contracts have virtually zero marginal costs, sometimes an inflated 'face value' arises because it is easier to keep adding offsetting ones, rather than extinguishing some and starting over, the way a futures open interest works.... MORE

The Willpower Muscle

Behavioral Economics and Rationality
Arnold Kling
Sandra Aamodt and Sam Wang write, In the short term, you should spend your limited willpower budget wisely. For example, if you do not want to drink too much at a party, then on the way to the festivities, you... MORE

The Virtues of Small Enterprise

Business Economics
Arnold Kling
Paul Graham writes, The average MIT graduate wants to work at Google or Microsoft, because it's a recognized brand, it's safe, and they'll get paid a good salary right away. It's the job equivalent of the pizza they had for... MORE

Is Family Size a Gendered Issue?

Economics and Culture
Bryan Caplan
All-around nice guy Will Wilkinson takes me to task for my defense of Jamie-Lynn Spears. Will starts with a little psycho-analysis:But I’m afraid the theory is at bottom mostly a theory of why Bryan thinks his wife should have more... MORE

Why I Don't Call Myself a "Moderate Austrian"

Austrian Economics
Bryan Caplan
Here's a fair comment on my last post:Then you need to rewrite your article to say "Why I am a moderate Austrian" rather than why you are not an Austrian. Then you could get the substance right, even if you... MORE

Finally, a Pure Bailout

Finance: stocks, options, etc.
Arnold Kling
The Washington Post headline reads Housing Accord Puts Builders First but waits until the last paragraph to explain. Both parties wanted to help home builders and other businesses. Under the agreement, corporations that lose money in 2008 and 2009 would... MORE

Here are my two Laws of Fundamentalism: 1. In any textual dispute between fundamentalists and moderates of the same creed, the fundamentalists are almost always correct. 2. In any substantive dispute between fundamentalists and moderates of the same creed, the... MORE

Why Hitler Chose the Jews

Behavioral Economics and Rationality
Bryan Caplan
A reader sent me an excerpt from a fascinating interview with Hitler (by one Major Josef Hell) on why he singled out the Jews for extermination:When I now broached the question of what the source of his so strongly felt... MORE

What is a Market Economy?

Economic History
Arnold Kling
Troy Camplin writes, In the "Acharnians," Dicaeopolis is in Athens and complaining about the war and how he is "longing hopelessly for peace, loathing town and homesick for my village . . . where you don't hear cried of "Buy... MORE

Regulatory Re-Org

Business Economics
Arnold Kling
Tyler Cowen ponders the theoretical merits of a proposed re-organization of financial regulation. The Fed is smarter than other regulators, the Fed can pay higher salaries, and the Fed has more independence. ...One important question is what kind of relationship... MORE

Higgs on Göring on War

Behavioral Economics and Rationality
Bryan Caplan
This speech by Robert Higgs has a remarkable discussion of Hermann Göring's analysis of war and public opinion:This account comes to us from Gustave M. Gilbert, the German-speaking prison psychologist who had free access to all of the prisoners during... MORE

Economics Appears Late

Economic History
Arnold Kling
Tyler Cowen writes, the absence of a developed economics until the mid-18th century remains a startling anomaly in the history of ideas. Why was that? I would note that the theory of probability also was developed surprisingly late. I think... MORE

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