Bryan Caplan and David Henderson

August 2011

A Monthly Archive (115 entries)

Media Bias and Asymmetric Insight

Behavioral Economics and Rationality
Arnold Kling
Megan McArdle writes, What bias does--in science, in media, in any situation where information is gathered--is affect what questions you ask. McArdle suggests that you tend to be skeptical of findings that go against your point of view, but you... MORE

Krugman, Landsburg, Pangloss, and Fixed Costs

Behavioral Economics and Rationality
Bryan Caplan
Krugman:Think of the government budget as involving tradeoffs similar to those an individual household makes. On one side, there are all kinds of things the government could be doing, from dropping freedom bombs to providing children with dental care; think... MORE

What I Thought, at Age 16, Academia was Supposed to Be

Economics of Education
David Henderson
And the company offers a treasure trove of traditional academic content that undergraduates paying $50,000 a year may find nowhere on their Club Med-like campuses. This past academic year, for example, a Bowdoin College student interested in American history courses... MORE

From the original - and surprisingly Snicketesque - Pinnochio: "Tomorrow your five gold pieces will be two thousand!" "Two thousand!" repeated the Cat. "But how can they possibly become so many?" asked Pinocchio wonderingly. "I'll explain," said the Fox. "You... MORE

The Knowledge-Power Discrepancy

Central Planning vs. Local Knowledge
Arnold Kling
Susan Hockfield writes, Rebuilding our manufacturing capacity requires the demolition of the idea that the United States can thrive on its service sector alone. We need to create at least 20 million jobs in the next decade to offset the... MORE

The Economics of Gifts

Cost-benefit Analysis
David Henderson
The Institute for Humane Studies did an interview with George Mason University economist Chris Coyne just before Valentine's Day on the economics of gifts. Chris lays out one of the standard claims that economists have made about gifts: that to... MORE

Top Economist's Headache

Cost-benefit Analysis
David Henderson
In my tribute to the late Bill Breit of Trinity University, I promised to retell a story from my book, Making Great Decisions in Business and Life, co-authored with Charley Hooper. Here it is: A Nobel prize-winning economist was to... MORE

Don't miss Tyler Cowen's excellent post on the size versus the length of fiscal stimulus.  Key passages:For all the talk of a "large stimulus," you don't hear much about a "longer stimulus."... Ideally a stimulus employs some idle labor, stops... MORE

Aphorism of the Day

Economic Philosophy
Bryan Caplan
An economic model is just a story without any holes in it.  A good economic model is a credible story without any holes in it.P.S. Why The Lord of the Rings is a great story but a terrible model.... MORE

Notes from My Tea Party Talk

Economic Philosophy
David Henderson
Last Thursday I gave a talk to the Tea Party Patriots of Monterey County. I had not had much connection with local tea partiers since the speech I had given at their July 4 event in 2009. My talk was... MORE

The Monetary Policy Debate

Monetary Policy
Arnold Kling
David Leonhardt is insightful. you would also find a sizable group of economists who thought the Fed could and should do far more than it was doing. This group, known as doves, tilts liberal, though it includes conservatives as well.... MORE

A Questionable Video

Economic Education
Arnold Kling
I took a break from the basic economic concepts to record this video. I am leaning against encouraging my students to watch it. Regular readers of this blog may enjoy it.... MORE

Kipper- Und Wipperzeit Update, August 28

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Nick Rowe writes, The Tea Party makes life difficult for the Lender of Last Resort, because the Tea Party wants some sort of guarantee it will get its money back. And that guarantee can never be made cast-iron. If it... MORE

Guitar Felons

Business Economics
David Henderson
Federal agents swooped in on Gibson Guitar Wednesday, raiding factories and offices in Memphis and Nashville, seizing several pallets of wood, electronic files and guitars. The Feds are keeping mum, but in a statement yesterday Gibson's chairman and CEO, Henry... MORE

Act Libertarianism and Rule Libertarianism

Books: Reviews and Suggested Readings
Arnold Kling
Robert Frank writes, Personal autonomy will always be compromised unless all problems stemming from activities that cause harm to others are resolved efficiently. That is from p.196 of his latest book, The Darwin Economy. So far, I have just read... MORE

Bill Breit, RIP

Political Economy
David Henderson
I just learned from Don Boudreaux that economist Bill Breit died on Thursday. He was 78. I first heard of him in the fall of 1971 when I was doing a make-up year in undergrad economics and one grad economics... MORE

The Picoeconomics of Education

Economics of Education
Bryan Caplan
Economists who study education usually look at the effect of individuals' education on individual income - the standard "microeconomic" approach.  But economists who study education also look at the effect of countries' education on country income - the "macroeconomic" approach. ... MORE

Me on Willis Report Today

Monetary Policy
David Henderson
I'll be on the Willis Report on Fox Business Channel today to give my thoughts on this morning's speech by the "The Bernank." Or should we call him "Central Bank Bernank?" I'll probably discover my inner Scott Sumner as well... MORE

Are Twin Studies "Pretty Much Useless"?

Family Economics
Bryan Caplan
The latest Slate features a new critique of twin studies by Brian Palmer, entitled "Double Inanity: Twin Studies Are Pretty Much Useless."  Palmer starts with the standard guilt-by-association critique: Galton, the founder of twin studies, "coined the term 'eugenics' and... MORE

What's the Big Story?

Growth: Causal Factors
Arnold Kling
Tyler Cowen writes, the Japanese economy was more dependent on productivity gains in the first place. As those gains start to slow down or dry up, it bites harder and more quickly. I want to talk about three big stories... MORE

But Why Would Greg Mankiw Adopt?

Economics of Education
Arnold Kling
Timothy Taylor writes, My solution is my own introductory textbook, "Principles of Economics." The second edition of this text is out this fall through Textbook Media, Inc. The pricing works this way: $17 for access to an online e-textbook which... MORE

Do We Need all this Expectations Hoodoo?

Macroeconomics
Arnold Kling
Michael Woodford writes, expectations can be shaped far more effectively by speaking directly about future policy, rather than leaving it to be inferred from actions that have no definite implications for the future. Words speak louder than actions? Woodford is... MORE

Experimenting with Teaching Videos

Economics of Education
Arnold Kling
These are for my high school classes, where I teach AP statistics and AP economics. I am trying to do my version of Khan Academy. My hope is that the students can watch these on their own, and then I... MORE

The Economy as Machine

Economic Methods
Arnold Kling
Paul Rosenberg writes, But when she turned to private discussions with 21 leading progressive economists, she was delighted to find a much more coherent use of one particular metaphor. The dominant metaphor in public discourse is a conservative one -... MORE

Poor Have Higher Time Values than We Thought

Economics of Health Care
David Henderson
What I call health policy orthodoxy is committed to two propositions: (1) The really important health issue for poor people is access to care and (2) to insure [sic] access, waiting for care is always better that paying for care.... MORE

Leon Panetta: Wars Will Go On Forever

Cost-benefit Analysis
David Henderson
At a speech that Defense Secretary Leon Panetta gave at the Naval Postgraduate School in Monterey yesterday, I posed the following question: Good morning, Mr. Secretary. I'm David Henderson, an economics professor here in the Graduate School of Business and... MORE

Immigration and Crime: Tell Me What You See

Economics of Crime
Bryan Caplan
Compare these GAO statistics on "Federal Prison Illegal Alien Inmates" (p.23) to the Bureau of Justice Statistics table on the "Number of Sentenced Inmates in Federal Prisons" (p.10).  Both sets of figures come from c.2003.  Tell me what you see.... MORE

The Value of the Right of Legal Entry Into the U.S.

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
If you let the U.S. deport you "voluntarily," you retain the right to legally enter again at a later time.  For some people, of course, this is an important right.  For most people facing deportation, though, the right of legal... MORE

Politics and Tribalism

Behavioral Economics and Rationality
Arnold Kling
David McRaney writes one of the most insightful paragraphs I have ever read. In a political debate you feel like the other side just doesn't get your point of view, and if they could only see things with your clarity,... MORE

Health Insurance, Fairness Norms, and Unemployment

Behavioral Economics and Rationality
Bryan Caplan
Nominal wages rarely fall - even when there's high unemployment.  Part of the reason is regulation, of course.  But even under laissez-faire, employers have to cope with human psychology.  Almost all workers think that nominal wages cuts are unfair.  And... MORE

Housing Finance in Other Countries

Finance: stocks, options, etc.
Arnold Kling
In the Richmond Fed bulletin, Renee Haltom writes, The United States finds itself on the far end of the spectrum in many aspects of housing. At the funding level, the United States has the most government support of owner-occupied housing... MORE

A Tale of "Voluntary Departure" from the Comments

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
From long-time EconLog reader Tim Worstall: Having been caught up in the US system once "voluntary departure" is anything but. On entering the country on a 10 year, multi-entry, business visa (I owned a small business in the US at... MORE

Price Controls Cause Doctor Shortage in Canada

Economics of Health Care
David Henderson
So I used the Health Care Options Directory on the same government website.This allows you to plug in your postal code and find all family doctors listed within a certain radius. It is a particularly soul-destroying experience. The opening page... MORE

The Return of the Voice of Cold, Hard Truth to All Would-Be Educators

Behavioral Economics and Rationality
Bryan Caplan
More golden advice from Douglas Detterman:[I]f you want people to learn something, teach it to them.  Don't teach them something else and expect them to figure out what you really want them to do.From "The Case for the Prosecution: Transfer... MORE

Media Watch: Man Bites Dog

Economic Education
David Henderson
In my local paper, the Monterey County Herald, this morning, on the front page above the fold is the following headline: "GOP may approve payroll tax hike." It was a shocking headline and the story, by Charles Babington of the... MORE

Transforming Education and Health Care

Economics of Education
Arnold Kling
Marc Andreessen gives his view of the world. It includes, Health care and education, in my view, are next up for fundamental software-based transformation. My venture capital firm is backing aggressive start-ups in both of these gigantic and critical industries.... MORE

The Numerate John Mueller

Economics of Crime
David Henderson
The public has now endured a decade of dire warnings about the imminence of a terrorist atomic attack. In 2004, the former CIA spook Michael Scheuer proclaimed on television's 60 Minutes that it was "probably a near thing," and in... MORE

The Removal/Return Distinction

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Here's a good practical discussion of what the government's removal/return distinction means on the ground.  Suppose you're on the authorities' radar.  You could fight them in court.  But:[I]f one cannot afford to put up such a fight or if one... MORE

Deportations Statistics

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
I've been hearing a lot about Obama's immigration crackdown lately, so I decided to track down some numbers.  The official statistics on deportation run from 1892 to the present.  The key definitions:Removal: "the compulsory and confirmed movement of an inadmissible... MORE

What Happened to the Mixed Economy?

Economic Education
David Henderson
Open up any principles of economics textbook written between the 1950s and the early (and maybe even late) 1970s, and the odds are high that it will say that the United States has a mixed economy. One part of the... MORE

The Efficient, Egalitarian, Libertarian, Utilitarian Way to Double World GDP

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Two words: open borders.  The noble Michael Clemens tells the full story in his new piece in the Journal of Economic Perspectives - ungated.  I'm tempted to blockquote the whole piece, but I'll limit myself to a few highlights (footnotes... MORE

How I Fought Envy, Part 3

Economic Philosophy
David Henderson
Here's the third installment (for the first two, see here and here) in how I have fought my envy over the years (taken from The Joy of Freedom: An Economist's Odyssey.) The third thing that helps me when I feel... MORE

The Fiscal Outlook for U.S. States

Fiscal Policy
Arnold Kling
Jeff Miron writes, The analysis here suggests that some of the recent debate about state fiscal situations has been misfocused. Attempts to reduce the power of government employee unions, or to reduce the generosity of pensions for state and local... MORE

Of Vigilantes and Warriors

Economic Philosophy
Bryan Caplan
Remember my pacifism debate with Ilya Somin?  No offense to Ilya, but I heard that our hosts invited Robert Bidinotto first.  Bidinotto refused, I'm told, because he's now focused on writing novels.  And what's his novel about?  A vigilante.  But... MORE

Republicans and Technocrats

Politics and Economics
Bryan Caplan
On Monday, Brad DeLong told us that two months in the Clinton administration convinced him that...America's best hope for sane technocratic governance required the elimination of the Republican Party from our political system as rapidly as possible.I'm tempted to say,... MORE

My Worst Parenting Mistake on Freakonomics

Economic Philosophy
Bryan Caplan
Freakonomics features a quorum of economist-parents on the "worst parenting mistake they ever made."  My previously blogged position on parenthood and regret seemed to tie my hands, but I tried to wriggle out with careful choice of words:My closest thing... MORE

Response to Thomas Boyle

Regulation
David Henderson
Commenter Thomas Boyle points out the following counterexample to Steve Horwitz's claim that the price of almost everything, in labor hours, has fallen: In 1947, the airplane [the Piper Cub] sold for $2,400, or about $25,000 adjusted for inflation to... MORE

Shaky Banks

Finance: stocks, options, etc.
Arnold Kling
Tyler Durden writes, if one were to be told that a bank has a Tangible Common Equity ratio of under 2%, the logical response would be that said bank is a goner. Yet both Credit Agricole and Deutsche Bank are... MORE

Roundabout Production

International Trade
Arnold Kling
Timothy Taylor writes, Here's a table combining several studies, showing a rise in foreign value-added in exports from 18% in 1970 to 24% in 1990, 27% in 1995, and 33% by 2005. This is a sign of longer global supply... MORE

From David Friedman's essay "Laissez-Faire in Population: The Least Bad Solution" (1972):Additional evidence on consumer rationality can be found in secular fertility trends. Over the long term, the net cost of rearing children has been rising because of the movement... MORE

Good News and Bad News on the Jobs Front

Politics and Economics
Arnold Kling
Investor's Business Daily reports that employment at Federal regulatory agencies increased 5 percent between March of 2010 and March of 2011.... MORE

Steve Horwitz on Cost of Living

Growth: Consequences
David Henderson
LearnLiberty has an excellent short video featuring St. Lawrence University economics professor taking on the myth that the cost of living has risen over the years. He does it in two ways: 1. First, he looks at the prices of... MORE

Robert Frost and Michele Bachmann on Walls

Labor Mobility, Immigration, Outsourcing
David Henderson
Frost: Before I built a wall I'd ask to know What I was walling in or walling out, And to whom I was like to give offence. Something there is that doesn't love a wall, That wants it down.' From... MORE

How I Fought Envy, Part 2

Economic Philosophy
David Henderson
I promised in my post two days ago to tell the other two steps I used, and, truth be told, still occasionally must use, to fight my envy. Here's the next passage from my book, The Joy of Freedom: An... MORE

Should We Forget the Production Function?

Macroeconomics
Arnold Kling
That is the question that occurred to me after reading Tyler Cowen. If the employers don't want you at the high wage, and don't want you at the low wage, what might your perceived MP be, temporarily or not? MP... MORE

Betty Yee's Outrageous Untruth

Taxation
David Henderson
Having just returned from my vacation in Canada, I got around to reading tax advocate Betty Yee's side of the "Amazon tax" issue. Yee is a member of the California Board of Equalization. I had argued against the tax but... MORE

Supply, Demand, and the Rise of the Man-Child

Family Economics
Bryan Caplan
Consider a traditional society where all the men sell their labor and all the women keep house.  You might think there's only one market, but there are actually two: The labor market and the mating market.  Men use their wages... MORE

Paul Krugman's Switch on the Housing Bubble

Macroeconomics
David Henderson
From advocate to opponent. Advocate: The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when... MORE

The Feeling is Mutual

Political Economy
Arnold Kling
Brad DeLong writes, America's best hope for sane technocratic governance required the elimination of the Republican Party from our political system as rapidly as possible. DeLong's dream of technocratic governance is some people's nightmare. I think the solution is what... MORE

How I Fought Envy

Economic Philosophy
David Henderson
I totally agree with Bryan Caplan's post on envy. Well done, Bryan. And I can say from personal experience that I fought it in myself. Some excerpts from my chapter, "Whose Income, Who's Distributing?" in my The Joy of Freedom:... MORE

Hard-Wired Envy

Behavioral Economics and Rationality
Bryan Caplan
If people envy people richer than themselves, I say we should fight envy, not inequality.  A number of people have objected that "Envy is 'hard-wired.'"  They're right - but it doesn't matter.Why not?  Most, if not all, of our emotions... MORE

A Review of My Review

Behavioral Economics and Rationality
Bryan Caplan
From Noah Smith's review of my review of The Happiness Equation:Caplan's solution probably wouldn't work. Michael Lewis describes something like this in Liar's Poker, in which no one at his company ever mentions money, bonuses are kept secret, etc. The... MORE

NCH Podcast

Growth: Consequences
Arnold Kling
Paul Howard and I discuss the New Commanding Heights. That is, education and health care are taking over a larger share of the economy, and this is an important phenomenon for political economy.... MORE

Freedom for Happiness

Behavioral Economics and Rationality
Bryan Caplan
From my WSJ review of Nick Powdthavee's The Happiness Equation: Mr. Powdthavee deserves credit for concluding his book with some of the big questions: "Is happiness overrated?" "Should government force people to be happy?" But he neglects the many ways... MORE

Last week, Mitt Romney, in a rare moment of passion, said that "corporations are people." Of course, they're not. But if you watch the 20-second YouTube, you'll see from context that he wasn't really saying that. He was really saying... MORE

Thoughts on the New Commanding Heights

Economic Education
Arnold Kling
1. From Paul Howard. Government policy both encourages consumer spending in health and education and protects providers in those industries through licensing requirements that reduce competition from lower-cost or higher-quality providers (charter schools, retail clinics, etc.). 2. From John Goodman.... MORE

A Day That Should Live in Infamy

Regulation
David Henderson
Today is the 40th anniversary of President Nixon's announcement of price controls on the American economy. He imposed an immediate freeze on all wages and prices that lasted for 90 days. Then he went through the various phases of control,... MORE

Stop Coddling Warren Buffett

Income Distribution
Arnold Kling
He writes, Last year my federal tax bill -- the income tax I paid, as well as payroll taxes paid by me and on my behalf -- was $6,938,744. That sounds like a lot of money. But what I paid... MORE

Sounds Like PSST

Macroeconomics
Arnold Kling
From the introduction to a new paper by Paul Beaudry and Franck Portier: Changes in measured macroeconomic activity are mainly driven by changes in the volume of trade between individuals. There are two types of causes to changes in volume... MORE

10:1

Cost-benefit Analysis
Bryan Caplan
Hawks love the analogy between defensive war and individual self-defense.  But as I keep saying, there's a big difference: so-called "defensive war" almost always involves the deliberate or reckless killing of innocent bystanders.  Why They Die: Civilian Devastation in Violent... MORE

Clive Crook on Monetary Policy

Monetary Policy
Arnold Kling
He writes, The past few weeks have settled, to my satisfaction at least, a long-running debate on this very topic. Rather than targeting inflation, central banks should keep nominal incomes growing on a pre-announced path: say 5 per cent a... MORE

The Age of Government Dependency

Economics of Health Care
Arnold Kling
Timothy Taylor writes, moving back the retirement age could have a large effect in addressing the financial problems of Social Security, but would have a much smaller effect in helping Medicare. Read the whole thing. The reason that raising the... MORE

Microfoundations of Unemployment

Labor Market
Arnold Kling
Tyler Cowen writes, Why don't the unemployed lower their wages to find a job? The more tragic you think unemployment is, the greater the puzzle here, and yet the people who stress the tragedy are often least likely to admit... MORE

The Effect of Thumb Sucking on Income

Labor Market
Bryan Caplan
Today I saw The Thumbsucker, a watchable movie about a troubled but talented 17-year-old with a bad thumb sucking habit.  It got me thinking: What's the effect of thumb sucking on income?  If the thumb sucker is flexible enough to... MORE

The Top Political Contributors

Political Economy
Arnold Kling
From Mark Perry. It's mostly labor unions.... MORE

The Voice of Cold, Hard Truth to All Would-Be Educators

Economics of Education
Bryan Caplan
Tyler often insists that, appearances notwithstanding, he's constantly popularizing free-market ideas.  People just have to read him carefully and in the proper frame of mind.I habitually insist that this isn't good enough.  Either you popularize your point bluntly and clearly,... MORE

Ability, Morality, and Prosperity: A Paper and a Report

Growth: Causal Factors
Bryan Caplan
I first crossed paths with my future debate partner, the noble David Balan, when the AER asked me to referee his paper on ability, morality, and economic performance.  The AER ignored me of of course, but years later, a much-revised... MORE

Gender and the New Commanding Heights

Growth: Consequences
Arnold Kling
Don Peck writes, As recently as 2001, U.S. manufacturing still employed about as many people as did health and educational services combined (roughly 16 million). But since then, those latter, female-dominated sectors have added about 4 million jobs, while manufacturing... MORE

Jamie Galbraith Makes an Assumption

Fiscal Policy
Arnold Kling
He writes, But there isn't, in fact, a "long-term deficit problem." So long as interest rates stay below the growth rate, as they are, debt-to-GDP levels eventually stabilize and even decline. The notion that there is a big problem is... MORE

Macroeconometrics: The Science of Hubris

Economic Methods
Arnold Kling
That is my paper in Critical Review, which has a number of papers that I am eager to read. This is the paper where I tear apart the macroeconometric models used to estimate the effects of fiscal stimulus. This is... MORE

The Theory of Time and Frittering

Economics of Education
Bryan Caplan
From Rothbard's biography of Ludwig von Mises, a passage worth remembering:On the publication of his two books in economic history and on the receipt of his doctorate in 1906, Mises ran into a problem that would plague him the rest... MORE

Manning Up's Kay Hymowitz writes the target essay for this month's Cato Unbound.  In the first reaction essay, Jessica Bennett highlights the ways men remain more successful than women:[W]omen will still make up just a third of business-school students and... MORE

Real and Nominal Bond Yields

Monetary Policy
Arnold Kling
A reader emails, I think you'll be surprised when you pull up the 10yr real yield vs inflation expectations. Virtually the entire move in bond yields has come at the expense of the real yield component. 10yr real yield is... MORE

How Capital Regulation Creates Systemic Risk

Finance: stocks, options, etc.
Arnold Kling
Philip Maymin writes, any set of regulations that attempts to assign risk to all securities in the same way for all banks would necessarily create some regulatorily-favored group of securities because the objective algorithm assigned too low an amount of... MORE

Firms are usually picky about who they hire.  But when they spot potential customers, their standard slogan is "Come one, come all."  Sure, there are some exceptions.  A few restaurants still have dress codes, and some rental car companies won't... MORE

Kipper- Und Wipperzeit Update, August 9

Finance: stocks, options, etc.
Arnold Kling
Livio Di Matteo writes In essence, resolving the crisis in confidence needs the current ad hoc approach to be replaced with the structure of a more formal mechanism that will generate the confidence in the world financial system needed to... MORE

Hayek in "Unbroken", Part Two

Central Planning vs. Local Knowledge
David Henderson
Another excerpt from Unbroken (I posted on this yesterday) that illustrates the relative importance of local knowledge, a la Hayek: Many other great runners also enlisted [in the U.S. military during World War II]. When Norman Bright tried to sign... MORE

Administrative Costs of Medicare

Economics of Health Care
Arnold Kling
John Goodman and Thomas Saving write, raw numbers show that, using Medicare's own accounting, its administrative expenses per enrollee are higher than private insurance. They are lower only when expressed as a percentage - but that may be because the... MORE

Ken Rogoff on the Current Situation

Finance: stocks, options, etc.
Arnold Kling
He writes, Too many decisions, for example the recent withdrawal of monetary stimulus by the European Central Bank and the US Federal Reserve have been predicated on overly rosy growth projections. Read the whole thing. Rogoff and co-author Carmen Reinhart... MORE

The Markets React, and so do I

Finance: stocks, options, etc.
Arnold Kling
In the New York Daily News. When it comes to estimating the probability of a default by the U.S. government, credit rating agencies have no special claim to expertise. The risk of sovereign debt cannot be determined through analysis of... MORE

Nomadism

Growth: Consequences
Arnold Kling
Venkat Rao writes Movement is not expensive if the environment is set up to support it. I am not an extremist or minimalist. I don't want to be living off a few packs on a bicycle for the rest of... MORE

Deception, Detection, and Democracy at GenCon

Behavioral Economics and Rationality
Bryan Caplan
At this year's GenCon, I discovered a thought-provoking game: "Are You a Werewolf?" - a.k.a. "Mafia."  The game's a brilliant exploration of cheating, cheater detection, and democratic information aggregation.  The basic set-up:1. There are 15 players and a moderator.  2.... MORE

Hayek in "Unbroken"

Central Planning vs. Local Knowledge
David Henderson
I just finished reading Lauren Hillenbrand's Unbroken: A World War II Story of Survival, Resilience, and Redemption, on my vacation. I highly recommend it. One excerpt: He [Pete, Louie Zamperini's older brother] told the principal that Louie craved attention but... MORE

A Means A in the Chronicle of Higher Education

Economics of Education
Arnold Kling
The Chronicle reports, The best way to eliminate grade inflation is to take professors out of the grading process: Replace them with professional evaluators who never meet the students, and who don't worry that students will punish harsh grades with... MORE

Daily Kipper- und Wipperzeit Update

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen writes, Arguably it's now a question of who stares down whom. If you do not doubt German resolve, bet on the ECB and lend money to Italy fairly cheaply. If you fear that Italy suffers from its own... MORE

A Self-Help Book

Books: Reviews and Suggested Readings
Arnold Kling
I was sent a review copy of Innovation You, by Jeff DeGraff. A couple of excerpts: p. 181, Ask a family systems therapist what happens when a family member gathers the clan and says, "We have to be honest. Dad... MORE

Liberating the New Commanding Heights

Economics of Education
Arnold Kling
Inside Higher Ed reports, The bill, S. 1250, the Growing Excellent Achievement Training Academies for Teachers and Principals Act, introduced in June, would give grants to states to set up or authorize "academies" for training teachers and principals. The training... MORE

A Stanford Course Where A Means A

Economics of Education
Arnold Kling
Artificial Intelligence, to be taught in the fall by Sebastian Thrun and Peter Norvig. Although you will not get a Stanford certificate, the course promises a certificate that shows how you would have done on Stanford's grading curve. Thanks to... MORE

A Means A, a bit more fleshed out

Economics of Education
Arnold Kling
Pasted in below the fold. Comments welcome.... MORE

Manufacturing and Reality

Labor Market
Arnold Kling
Stephen J. Rose gets it right. The "problem" with manufacturing is mainly productivity growth that permits fewer workers to produce more goods. As workers are freed from having to produce common goods and services, total output expands greatly. For example,... MORE

Social Security Facts

Social Security
Arnold Kling
The Congressional Budget Office calls this an infographic. It answers a lot of frequently-asked questions about Social Security. One of the facts is that the number of workers per beneficiary has fallen from 4.9 in 1960 to 2.8 in 2010.... MORE

Boone and Johnson on the Eurozone Crisis

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Peter Boone and Simon Johnson have what written what I believe is the best analysis of the Eurozone crisis, which on this blog I refer to is as the Kipper- Und Wipperzeit. Thanks to Timothy Taylor for the pointer. I... MORE

A Means A

Economics of Education
Arnold Kling
A few months ago, Ben Casnocha wrote, Maybe 5-10% of high school high achievers should pursue higher education without attending a four year traditional college. This is the "Real Life University" option for entrepreneurial spirits. This is for folks who... MORE

James Bovard on the Peace Corps

Central Planning vs. Local Knowledge
David Henderson
"The toughest job you'll ever love." Robert E. White, Peace Corps regional director for Latin America, told the Senate Foreign Relations Committee in 1970, "In the early days ... it was like a parachute drop. A Volunteer would be told,... MORE

Schools without Classrooms

Economics of Education
Arnold Kling
In the legacy education model, teachers combine coaching, feedback, and content delivery. By coaching I mean advice, guidance, and encouragement. Feedback includes formal grading as well as informal praise and criticism. Content delivery includes lectures and reading assignments. Perhaps the... MORE

Kipper- Und Wipperzeit Update

Finance: stocks, options, etc.
Arnold Kling
Apparently, the resolution of the debt ceiling restored the dollar's status as a safe haven in the eyes of the world's investors. That accelerated the flight from European sovereign debt and European banks. That in turn raised fears in financial... MORE

Summers Way Off on FDR and 1941

Fiscal Policy
David Henderson
But for Hitler and the military buildup up he caused, FDR would have left office in early 1941 a failure, with American unemployment above 15 percent. This is from Lawrence Summers, "More Stimulus Needed For Jobs Crisis," in the Huffington... MORE

Paul Romer on Institutional Reform

Institutional Economics
Arnold Kling
The talk is here. He says things to offend many people, libertarians in particular. For example, he talks about problems that we would call public-choice issues, with for-profit education and health care. That is, he argues that when government is... MORE

GDP and Employment in the Current Cycle

Labor Market
Arnold Kling
The latest GDP revisions have tightened the relationship between employment and GDP in this cycle compared to the unrevised data. Some advocates of an AD-AS story are ready to say, "Nothing structural to see here. The aggregate production function is... MORE

More Thoughts on Metaphors

Political Economy
Arnold Kling
Let me "+1" David Henderson's recommendation of the article by Max Borders. Borders writes, We can no more fix an economy than we can fix a rainforest or a coral reef. I riffed on the metaphor of a rain forest... MORE

The "Amazon" Tax

Taxation
David Henderson
Economists generally think that competition is good. Competition among computer makers causes prices to be lower. So does competition among airlines, rental car companies and insurance companies. Why would competition among tax authorities be bad? But, says the pro-tax side,... MORE

Keynesianism as a ZMP Story

Macroeconomics
Bryan Caplan
I'm not a fan of Tyler Cowen's view that many unemployed workers have Zero Marginal Product (ZMP).  Cowen and Lemke:In essence, we have seen the rise of a large class of "zero marginal product workers," to coin a term. Their... MORE

Compared to What?

Fiscal Policy
Arnold Kling
John Taylor writes, So it is clear that the budget has come a long way from the Administration's first spending proposal--about half way to the House proposal--and it was accomplished without any tax increases. Some are disappointed that Washington did... MORE

How Wage Rigidity is Special

Labor Market
Bryan Caplan
Both nominal wages and nominal housing prices are what economists call "downwardly inflexible."  In most markets, falling demand swiftly leads to falling prices, and surpluses don't last long.  But in labor and housing markets, market adjustment to negative demand shocks... MORE

Metaphors for the Economy

Central Planning vs. Local Knowledge
David Henderson
A much more accurate metaphor for the economy is an ecosystem. We are simultaneously independent and interdependent. We can no more fix an economy than we can fix a rainforest or a coral reef. At best, we can leave it... MORE

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