Bryan Caplan and David Henderson

August 2008

A Monthly Archive (83 entries)

What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
The September-October issue of The American. The articles have not yet started dribbling from the dead-tree version to the web site. You can leave aside the article that editor Nick Schulz and I contributed, which is an expansion of the... MORE

A Deeper Look at Economic Bias

Behavioral Economics and Rationality
Bryan Caplan
Economists and the public systematically disagree; but can they at least agree about which problems are bigger than others? To check, I returned to the Survey of Americans and Economists on the Economy. (Yes, I do talk about this survey... MORE

My Campaign-Season Pledge

Political Economy
Arnold Kling
Readers have noticed that my tone has been relatively bitter the last several months. One possible reason is that the election campaign is heating up. To me, political campaigns are not sacred events, to be eagerly anticipated and avidly followed.... MORE

Public Opinion About Trade in the Muslim World

Cross-country Comparisons
Bryan Caplan
A new World Public Opinion survey of Muslims in seven nations finds that solid majorities favor globalization and trade:Asked about "globalization, especially the increasing connections of our economy with others around the world," majorities in six of the seven nations... MORE

Mining Mill

Politics and Economics
Bryan Caplan
Thanks to Gerald Gaus' critique of The Myth of the Rational Voter (part of a full forthcoming issue of Critical Review on the book), I've discovered a fun passage from one of my least-favorite thinkers, J.S. Mill. I knew that... MORE

Tyler deserts Hayek

Institutional Economics
Arnold Kling
Tyler Cowen writes, In my view we do have duties to behave more responsibly at the dinner table but the simple admonition "eat less meat" will do. In this context, "behave more responsibly" means "waste fewer resources and leave more... MORE

Fear of Looking Rich Redux

Economics and Culture
Bryan Caplan
A while back I questioned Robin Hanson's view that virtually everyone wants to imitate the rich in order to raise their status. Robin recently told me that he's "updated," so I'll stop calling it "Robin Hanson's view." But I still... MORE

Public Goods, Externalities, and Education

Books: Reviews and Suggested Readings
Arnold Kling
Bruno S. Frey and Reiner Eichenberger write, externalities are not technologically but rather socially determined. There are no inherent properties of a good or service producing external effects, therefore, citizens have to use the political process to determine what is... MORE

Since people are starting to respond to my actual six questions, I thought I'd return the favor: Questions: 1. Are markets for ideas/culture less subject to market failure than other markets? Why or why not? For pure entertainment, probably yes.... MORE

Charles Murray and the Dilemmas of Education

Economics of Education
Arnold Kling
After reading Real Education, by Charles Murray, I decided that there are three dilemmas in education. 1. What do we do about inequality in incomes depending on education levels? 2. Should the curriculum be designed by experts or emerge in... MORE

News Reporting and Falsehoods

Behavioral Economics and Rationality
Arnold Kling
Concerning campaign smears, Sam Wang and Sandra Aamodt write, Journalists should avoid presenting both sides of a story when one is false - and take into account how readers' brains process the disagreements. The following four rules can guide their... MORE

Three Quick Takes

Income Distribution
Arnold Kling
I beg to differ with PGL, Martin Feldstein, and Steve Pearlstein. First, PGL: Gee – the [Social Security] Trust Fund will have $5 trillion in bonds earning interest. What that means is that over the past decades, Social Security has,... MORE

Fragmentation of States

Political Economy
Arnold Kling
Eric Posner writes, People should be more worried than they are by the fragmentation of states. . .in recent years, the main cause has been, essentially, ethnic separatism. . .the resulting nation states can be too small to govern themselves... MORE

The Myth of the Rational Voter Now in Paperback

Books: Reviews and Suggested Readings
Bryan Caplan
The paperback version of my book is now in stock at Amazon, for the low low price of $12.21. It's got a new introduction, including a reply to several prominent reviews. I think my favorite is my response to Daniel... MORE

Questions for Civil Libertarian Economists

Economic Philosophy
Bryan Caplan
Virtually all free-market economists are civil libertarians, staunch advocates of freedom of speech, religion, and the like. But in my experience, virtually all economists who eschew the "free-market" label are civil libertarians, too. Economists disagree about whether laissez-faire is the... MORE

Arnold Kling and Russ Roberts

Austrian Economics
Arnold Kling
We discuss his new book, The Price of Everything, and spontaneous order vs. central planning and design. Perhaps the most interesting part of the discussion concerns the issue of how to view political decisions. One tends to view them as... MORE

Are Refineries Really a Bottleneck?

Energy, Environment, Resources
Bryan Caplan
When I was writing my New York Times column on the gas tax, my editor pushed me to argue that other economists were underestimating the price-sensitivity of the supply of gasoline. I resisted. A wide range of economists seemed to... MORE

The Macro Tangle

Macroeconomics
Arnold Kling
Tyler Cowen writes, The fundamental problem in the American economy is that, for years, people treated rising asset prices as a substitute for personal savings. I think that there are a lot of macroeconomists who instinctively would prefer more U.S.... MORE

Raise Your Standards, Control Yourself

Behavioral Economics and Rationality
Bryan Caplan
Happiness researchers often advise us to follow the Epicurean strategy of lowering our expectations. To quote Tsunami Bomb:Be grateful that you have a brain for thinking, And legs to take you places.But suppose your problem is that you're overweight because... MORE

Hail Scott Adams

Politics and Economics
Bryan Caplan
If you haven't heard, Scott Adams of Dilbert fame has commissioned a survey of professional economists. His explicit hope is to raise the quality of policy:So how does a voter decide which candidate would be best for the economy? [...]... MORE

Liberal Fascism Watch

Economics of Education
Arnold Kling
Shikha Dalmia and Lisa Snell write The only preschool programs that seem to do more good than harm are very intense interventions targeted toward severely disadvantaged kids. A 1960s program in Ypsilanti, Mich., a 1970s program in Chapel Hill, N.C.,... MORE

Remembering '68

Cross-country Comparisons
Bryan Caplan
It's the 40th anniversary of the Soviet invasion of Czechoslovakia. Many Czechs and Slovaks remember, but here's a shocking factoid:In a 2006 visit to the Czech capital, then-president Vladimir Putin expressed Russia's 'moral responsibility' for crushing the Prague Spring. However,... MORE

Is Arnold Getting Happy?

Behavioral Economics and Rationality
Bryan Caplan
I was surprised to hear Arnold say:The way to make yourself really miserable is to compare your salary to that of the most overpaid, incompetent peer or superior. The way to make yourself feel really good is to compare your... MORE

Dissident Economics and Thought Control

Economic Education
Arnold Kling
Tom Green writes, But after three decades of questioning whether the world can continue to support our consumption habits, Rees has had trouble convincing his colleagues in economics that their economic model needs an overhaul. Maybe after three decades of... MORE

Logistics and Telecom Deregulation

Growth: Causal Factors
Arnold Kling
Two more comments on the importance of private sector drivers of economic growth and inequality vs. policy drivers. First, I forgot to mention logistics as a driver of growth. Fed Ex and Wal-Mart represent that. Second, people keep talking about... MORE

Important Economic Drivers of the Past Thirty Years

Income Distribution
Arnold Kling
In a previous post, I questioned the narrative that says that you can describe the past three decades of economic change as resulting from a wave of deregulation. Instead, here are a list of drivers that I think played a... MORE

When Capitalism Ran Amok

Regulation and Subsidies
Arnold Kling
David Leonhardt writes, For three decades now, the American economy has been in what the historian Sean Wilentz calls the Age of Reagan. The government has deregulated industries, opened the economy more to market forces and, above all, cut income... MORE

In Defense of the Obvious

Economic Methods
Bryan Caplan
Writing instructors often attack the use of the words "obvious," "of course," and the like. "If it's 'obvious,'" they mock, "then don't say it!" But giving up these words is easier said than done. I can't imagine giving an econ... MORE

The Soldier and the Capitalist

Political Economy
Arnold Kling
How does the liberal elite view the American military? It seems to me that they view the military as a group of basically evil men, inclined to torture and commit war crimes. It would be better if we could do... MORE

More on the Freddie Mac Risk Management Culture

Finance: stocks, options, etc.
Arnold Kling
From the comments on my chapter.... MORE

Immaculate Estimation

Economic Methods
Arnold Kling
In a very short, satirical paper, James Heckman writes, Provided conditional density (1) is assumed, we do not need to observe a variable in order to compute its conditional expectation with respect to another variable whose density can be estimated.... MORE

Asian Economic History

Economic History
Arnold Kling
At Gene Expression, the bloggers closely follow what might be called the Pomerantz controversy, after the writer of The Great Divergence, where it is argued that Asia and the West were at similar points of development just prior to the... MORE

How Schooling is Like Garbage Collection

Economics of Education
Bryan Caplan
Schooling has a high private financial return. But most people don't finish college; many don't even finish high school. Lots of economists are baffled by these facts, and spin complex theories to explain them. At the same time, however, I've... MORE

Let Immigration Be My Hammer

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
I'm a big fan of immigration, and an old saying warns us that, "If your only tool is a hammer, everything looks like a nail." So you might be inclined to chuckle if I promoted immigration as a cure for... MORE

More on the Roots of the Bailout

Regulation and Subsidies
Arnold Kling
Stan J. Liebowitz says that the road to mortgage crisis was paved with good intentions. Concerning a Boston Fed study that purported to find mortgage discrimination, he writes, Most politicians jumped to support the study. "This study is definitive," and... MORE

Charles Murray's Solution to Signaling

Economics of Education
Bryan Caplan
It looks like Charles Murray embraces the signaling model of education:Outside a handful of majors -- engineering and some of the sciences -- a bachelor's degree tells an employer nothing except that the applicant has a certain amount of intellectual... MORE

The Anti-Hansonian Heuristic

Economic Methods
Bryan Caplan
I often disagree with people who know more about a given topic than I do. For example, the typical economist who works in Industrial Organization is familiar with a lot more current antitrust research than I am. Robin Hanson notwithstanding,... MORE

The Roots of the Freddie-Fannie Bailout

Regulation and Subsidies
Arnold Kling
The Village Voice reports, [Secretary of Housing Andrew] Cuomo's predecessor, Henry Cisneros [moved] the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families. Cuomo raised that number to 50 percent and dramatically hiked GSE... MORE

Government Dependency

Social Security
Arnold Kling
John B. Shoven and Gopi Shah Goda touch the third rail. the Normal Retirement Age for Social Security in 2004 would have to be at least 71 (using lowest number in the table) and more likely 73 or 74 (using... MORE

Questioning a Talking Point

Social Security
Arnold Kling
Andrew Biggs writes, First, Sen. Obama says, "Social Security has lifted millions of seniors and their families out of poverty. Without it, nearly 50 percent of seniors would live below the poverty line." This is a common talking point, but... MORE

The Risk Animal

Finance: stocks, options, etc.
Arnold Kling
Nassim Taleb discusses financial markets and our inability to avoid crises. He describes risk as like a predatory animal that always succeeds in finding the weakest quarry on which to prey. That's the same idea that I try to get... MORE

Subsidies

Regulation and Subsidies
Arnold Kling
Robert H. Frank writes, Adopting some variant of a tax on carbon, as both leading presidential candidates have proposed, would help eliminate this discrepancy. That would set the stage for our next president to explain to other leaders why eliminating... MORE

Freddie Mac: My Chapter

Business Economics
Arnold Kling
I've said that I think that someone should write a book about Freddie Mac. Here is my chapter.... MORE

A Guy in the Wrong Profession

Political Economy
Arnold Kling
I just heard about this story. When Landmarks Association of St. Louis embarked on an ambitious plan to create a tourism-oriented architectural center downtown, Larry Cohn said he wanted to help and eagerly pledged $500,000. After two years of planning,... MORE

Massachusetts Health Reform Failure

Economics of Health Care
Arnold Kling
Steffie Woolhandler, Benjamin Day, and David U. Himmelstein write, Meanwhile, few of the near-poor uninsured seem able to afford even the newly subsidized policies, and the federal funds providing the bulk of the subsidies are set to expire in 2008.... MORE

Climate Change Discussion

Energy, Environment, Resources
Arnold Kling
At Cato Unbound, Jim Manzi argues for low-cost solutions to climate change. Joseph Romm makes the case that we are headed for catastrophe if we do not do anything. My sense is that over the past year, the debate has... MORE

Oil Econ 101 Revisited

Energy, Environment, Resources
Arnold Kling
Robert Higgs writes, If we were talking about bananas, everybody would see immediately the foolishness of seeking “banana independence.” Nobody would fall for half-baked arguments about our addiction to foreign bananas or our love affair with banana bread. It’s obviously... MORE

Your Planners at Work

Social Security
Arnold Kling
Andrew Biggs writes, Over the next twenty years, fully 60 percent of total entitlement spending increases will stem from population aging. It is not until 2045 that per-capita health care spending growth becomes the majority factor. (See figure 3, which... MORE

The Case for Planning

Political Economy
Arnold Kling
James K. Galbraith writes, The job of discipline belongs to governments. And they must act not only on behalf of today's citizens but of all those yet to come - of those who need clean food and water, of those... MORE

We Don't Need No

Economics of Education
Arnold Kling
Charles Murray says, Young people entering the job market should have a known, trusted measure of their qualifications they can carry into job interviews. That measure should express what they know, not where they learned it or how long it... MORE

How Evil is that Sheep?

Economic Philosophy
Bryan Caplan
And in any policy debate, I don't assume that the people on my side intellectually are somehow morally superior or more honest. In any particular case I usually give that 50-50. --Tyler Cowen, July 31, 2008 This essay is not... MORE

Kids, Opera, and Local Status

Family Economics
Bryan Caplan
Rich families are once again having lots of kids (see here, here, and here). From Time:While 34.3% of married women ages 40 to 44 had four or more children in 1976, only 11.5% did in 2004, according to the Current... MORE

There's No Evidence Like No Evidence

Behavioral Economics and Rationality
Bryan Caplan
Here's an especially wise observation by David Balan:So then I asked him whether by "no evidence" he meant that there have been lots of studies directly on this point which came back with the result that more chemo doesn't help,... MORE

Optimal Citation in the Google Age

Information Goods, Intellectual Property
Bryan Caplan
One of the best examples of path-dependence is the format of academic citations. Who cares what city a book was published in? Who ever did? But in the google age, tradition is even sillier. Volume numbers? Page numbers? These days,... MORE

Tom Strong, Compelling Coasean Comics Character

Economics and Culture
Bryan Caplan
With The Watchman movie coming out in March, you're going to be hearing an awful lot about the writing of Alan Moore. Despite all the publicity, though, his lesser-known Tom Strong series won't be getting much attention. And that's a... MORE

Creative Capitalism Gets Moldbugian

Institutional Economics
Arnold Kling
I sent a post of my own to Creative Capitalism. If a government were truly trying to maximize profits, then it would be managing a country in such a way as to increase its wealth. ...A poorly-run country, such as... MORE

The Right Reaction to Bubbles: Easy Come, Easy Go

Finance: stocks, options, etc.
Bryan Caplan
First it was the dot-com bubble. Now it's real estate. In ten years, it will be something else. In each case, the price of a major asset goes way up for no good reason, then comes back down. In each... MORE

The Secret of Good Games

Economics and Culture
Bryan Caplan
Next week, I'll be in Indianapolis for GenCon, the world's biggest gaming convention. Which reminds me of one of my pet theories: The best games are inter-disciplinary, combining economics and psychology. Games of pure strategic reasoning like chess are dry.... MORE

Freddie Mac: The Book

Finance: stocks, options, etc.
Arnold Kling
The Washington Post reports, Rep. Henry A. Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, has asked the mortgage finance giants Fannie Mae and Freddie Mac whether they know of any White House involvement in the recent... MORE

Hummel on Central Banking

Monetary Policy
Bryan Caplan
Hummel follows up on my post on the (relative) efficiency of modern central banks:Here are my three reasons, given somewhat sporadically in my lecture, for the better performance of central banks in developed countries since the 1980s: 1. Highly developed... MORE

Antitrust for Hong Kong?

Regulation and Subsidies
Bryan Caplan
When the Lion Rock Institute asked me to sign its petition against possible antitrust laws for Hong Kong, the decision was a no-brainer. After all, I oppose antitrust laws. At best, antitrust laws are unnecessary, legislating outcomes that free competition... MORE

Bryan Finally Takes My Recommendation

Books: Reviews and Suggested Readings
Arnold Kling
Bryan writes, When Scott Page's book The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies came out, I assumed it would be a flabby, politically correct snooze-fest. Over a year ago, I wrote, My guess... MORE

Freddie Mac's Whistleblower

Business Economics
Arnold Kling
A Freddie Mac Press release says, The story is apparently based on the word of David Andrukonis, a former employee who was involuntarily terminated in 2005. It describes a memorandum – one we can't confirm the existence of, one we... MORE

Scott Page Makes Diversity Respectable

Economic Methods
Bryan Caplan
Confession: When Scott Page's book The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies came out, I assumed it would be a flabby, politically correct snooze-fest. Since I don't like flabby, politically correct snooze-fests, I... MORE

Edison Schools' Failure

Economics of Education
Arnold Kling
The American Prospect Gloats, Edison learned what career educators have always known: Managing schools isn't as simple as it first might seem. The idea behind for-profit public education was that districts would turn over school budgets to Edison, plus supplemental... MORE

Political Pluralism

Political Economy
Arnold Kling
Nicholas Lemann discusses a book by Arthur Fisher Bentley on political theory that came out one hundred years ago. Under Bentley’s rules, you can’t talk about public opinion, because there is no such thing as “the public” (there are only... MORE

Gelman's Graphical Treat

Politics and Economics
Bryan Caplan
Andrew Gelman, King of Charts and Graphs, and author of Red State, Blue State, Rich State, Poor State, has prepared an exclusive set of statistical pictures just for Econlog readers. Gelman's graph shows CNN's exit poll data, broken down by... MORE

Poverty, Math Assessments, and Spending in Maryland

Economics of Education
Arnold Kling
Spending data for the 2005-2006 school year can be found at the National Center for Education Statistics. Data for the total number of students, the total number of FARMS students (free and reduced meals, an indicator of poverty), and the... MORE

Two from Will Wilkinson

Behavioral Economics and Rationality
Arnold Kling
He suggests that there are no limits to growth. In a special issue of the American Economic Review about thirty years ago, some physical chemists wrote that once the energy problem is solved, nothing is scarce. If material X is... MORE

Martin Wolf on Political Economy

Political Economy
Arnold Kling
He writes, But what is a confiscatory government? It is just a government run by profit-maximizers. ...There have to be rules, ethical norms and institutional constraints governing profit-maximizing behavior, to ensure that the maximization operates for the social good. Of... MORE

Gelman's Great Book

Politics and Economics
Bryan Caplan
Andrew Gelman has turned his eagle-eyed research on the American voter into an excellent book, Red State, Blue State, Rich State, Poor State. (The book's website is here). If you ever doubted the value of empirical research, this book will... MORE

Two Talks on Voter Irrationality

Behavioral Economics and Rationality
Bryan Caplan
Two of my best book presentations are now online. Here's a serious, scholarly version (video) at the Collège de France. Here's a funny, popular version (audio only) at the Foundation for Economic Education. Or at least the first is what... MORE

Two weeks ago, I relayed the following story:Yesterday at the FEE seminar, I got to hear the excellent Jeff Hummel thoroughly debunk the crazy Rothbardian view that fractional reserve banking is "fraudulent." It was a fun (and funny) lecture, but... MORE

Shiller's Rapid Response to the Subprime Crisis

Books: Reviews and Suggested Readings
Arnold Kling
Robert Shiller has a new book, The Subprime Solution, due out in three weeks. [UPDATE: if you can't wait for the book, you can go to Mark Thoma is showing a Youtube.] The publication process has gone incredibly quickly. Obviously,... MORE

An Economic Disaster?

Macroeconomics
Arnold Kling
In a meandering interview, Russ Roberts and Robert Barro talk about disasters. Barro wonders why, given history, we would presume that the probability of an economic disaster is low. I guess short-term history for the United States, meaning the last... MORE

The Best of Solzhenitsyn

Economic History
Bryan Caplan
Aleksandr Solzhenitsyn's passing reminds me of my favorite passage from his writings:But let us be generous. We will not shoot them. We will not pour salt water into them, nor bury them in bedbugs, nor bridle them up into a... MORE

Of Human Design but not of Human Intent

Books: Reviews and Suggested Readings
Arnold Kling
Christopher Howard writes, Some of the largest tax expenditures today appeared as early as 1913...few people actually benefited...The original income tax applied only to the wealthiest 2 percent of Americans. By the late 1930's, only about 6 percent of Americans... MORE

Should You Lose Sleep Over Global Catastrophic Risks?

Cost-benefit Analysis
Bryan Caplan
I've finished the Bostrom-Cirkovic edited volume on Global Catastrophic Risks. The book is a fun read, but it ultimately failed to scare me - and I'm the author of one of the chapters! Out of a long list of conceivable... MORE

The Demand for Ectogenesis

Family Economics
Bryan Caplan
Ectogenesis basically means the creation of new human life without pregnancy. Instead of incubating the fetus in a mother's womb, there'd be an artificial incubation tank. Prospective parents would go through the first stages of in vitro fertilization; but instead... MORE

More Real-time Education Research

Economics of Education
Arnold Kling
Michael Rizzo does New York. He finds no difference in school spending between schools "above the line" (high pass rates relative to their poverty index) and those below the line. However, the regression line appears to do a very poor... MORE

Moral Philosophy

Economic Philosophy
Arnold Kling
Will Wilkinson and Jesse Prinz. Highly recommended. You could easily spend four years at an Ivy League college and not have a class as interesting as this one. Prinz works through the view that moral values are highly culturally determined.... MORE

My Schooling Chart for Pennsylvania

Economics of Education
Arnold Kling
K DeRosa draws the chart that I proposed. Here is the chart for 497 school districts in Pennsylvania for 2005. On the X axis I have the percentage of students in the district that do not receive free and reduced... MORE

A Worthwhile Read on Fannie and Freddie

Regulation and Subsidies
Arnold Kling
Bob Van Order writes, The 1992 law that set up FF regulation required taking the stress test from the worst regional downturn in the data. We shall surely have a region (the southwest? Florida?) from the current period that will... MORE

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