Bryan Caplan and David Henderson

February 2012

A Monthly Archive (124 entries)

Diamandis and Kotler

Books: Reviews and Suggested Readings
Arnold Kling
The book is Abundance: The Future is Better than You Think. I think it is a must-read. 1. I am skeptical of Peter Thiel's view that regulation is holding back progress. I recall Ray Kurzweil's remark that regulations are like... MORE

Sumner on the Mystery of Bernanke

Monetary Policy
Bryan Caplan
Scott Sumner is the latest intellectual detective on the Bernanke case.  The crucial clue is a 2003 piece by Bernanke himself, which states:Ultimately, it appears, one can check to see if an economy has a stable monetary background only by... MORE

Planned vs. Emergent

Austrian Economics
Arnold Kling
Gerald O'Driscoll talks about an important difference between planned systems and emergent orders. (It takes a while for him to get started, so you might skip through the first 8 minutes or so.) Planning works well for institutions with definite,... MORE

"The Case Against Education" Webinar Tonight

Books: Reviews and Suggested Readings
Bryan Caplan
Tonight I'm running a Students for Liberty webinar on my book in progress, The Case Against Education.  Anyone can join at zero price.  Q&A follows the seminar.  If you've got questions about the magic of education, ability bias, the sheepskin... MORE

The March Issue of Reason Magazine

Books: Reviews and Suggested Readings
David Henderson
Rarely do I take the time any more to read through the whole of a magazine. But I've been traveling in Asia and I found time to read most of the March issue of Reason. It's superb. Here are just... MORE

What Is the Female Marriage Penalty?

Family Economics
Bryan Caplan
Married women earn less than single women.  In the NLSY, married women make 10% less, even after controlling for education, experience, IQ, race, and number of children.  How is this possible?As I explained in my post on the male marriage... MORE

Peter Thiel on Regulation and Progress

Regulation
David Henderson
Peter Thiel gave an interesting talk at the International Students for Liberty Conference earlier this month. In it, he claimed that few sectors other than the relatively unregulated IT sector have had substantial progress decade by decade. He mentioned, for... MORE

Solar Power Update

Energy, Environment, Resources
Arnold Kling
MIT Technology Review reports, By the end of the decade, manufacturers in the United States could make solar panels that are less than half as expensive as the ones they make now. Would that be so impressive? Compared with Moore's... MORE

The Chetty Teacher Study and the Hill Criteria

Economic Methods
Arnold Kling
This article discusses a study by Raj Chetty, John Friedman, and Jonah Rockoff on the effect of teacher quality on subsequent earnings. This is a study that has been cited a lot recently, by Alex, among others, as evidence that... MORE

What Is the Male Marriage Premium?

Family Economics
Bryan Caplan
Married men make a lot more money than single men.  In the NLSY, married men make 44% extra, even after controlling for education, experience, IQ, race, and number of children.  How is this possible?There are three competing economic explanations.  Each... MORE

Test the Predictions - Or Check the Assumptions

Economic Methods
Bryan Caplan
Where do economists draw the line between science and dogma?  In most cases, they say something like this: "A model is scientific if and only if it makes true testable predictions."  Perhaps this is why Arnold was dissatisfied by my... MORE

Schools of Macro

Arnold Kling
Simon Wren-Lewis offers a take on this phenomenon from a Keynesian perspective. Pointer from Mark Thoma. My latest essay begins to offer a different take. There are now so many versions of "what's wrong with the economics profession" that, with... MORE

Is Repo Lending Inherently Unstable?

Finance: stocks, options, etc.
Arnold Kling
The blogger at Synthetic Assets (Carolyn Sissoko, I assume) writes, Liquid assets are supposedly "safe" - but for the problem that liquidity itself is inherently ephemeral. How precisely do the regulators imagine that collateral posted by a systemically important financial... MORE

Microcredit versus Immigration

Labor Mobility, Immigration, Outsourcing
David Henderson
When people try to think of ways to ease global poverty, they seldom mention migration. They tend to instead think of things like microcredit. There is nothing wrong with microcredit (the lending of small sums of money to poor entrepreneurs).... MORE

The Elusive Pricing Model for Journalism

Information Goods, Intellectual Property
Arnold Kling
Joshua Gans discusses a pricing model for long-form journalism that appears to be i-tunes-ish. Put simply, $0.99 makes sense in the world of $0.99 but it is less clear it will carry the weight in the would of free. I... MORE

O'Reilly and Dobbs to Obama: Be More Socialist

Energy, Environment, Resources
David Henderson
I'm sitting in my hotel room in Chiang Mai, Thailand watching The O'Reilly Factor. I might as well have been watching Amy Goodman's Democracy Now! The content was almost indistinguishable. O'Reilly and Dobbs were saying that Obama should be taking... MORE

Charles Murray Watch

Income Distribution
Arnold Kling
From Esquire, August 29, 1978: THE DANGEROUS ARROGANCE OF THE NEW ELITE by David Lebedoff -- For the first time, the author contends, there is emerging in America an intelligent elite that genuinely mistrusts the basic tenets of democracy. The... MORE

Discussing Innovation with Alex Tabarrok

Growth: Causal Factors
Arnold Kling
About 18 minutes into the conversation, we get into the topic of innovation in higher education. He thinks we might see a winner-take-all market for professors, and we might see it happen sooner than you think. A podcast version... MORE

Foreclosure Paperwork

Finance: stocks, options, etc.
Arnold Kling
Lifted from the comments: If the shoe were on the other foot, if people who had obviously paid their mortgages were being thrown out of their homes because of some trivial defect in the loan documentation, would these same commenters... MORE

How Real Wage Increases Have Been Understated

Labor Market
David Henderson
Over the years, In discussing the alleged decline in real U.S. median wages, I've pointed out that there are two important ways in which the growth in real wages has been understated: (1) The inflation adjustment used to compare wages... MORE

Charles Murray Watch

Economics of Education
Arnold Kling
Helen Ladd writes, when first measured in the early 1940s, the gap in reading achievement between children from high and low income families was about 0.60 standard deviations. It subsequently more than doubled to 1.25 standard deviations by 2000. These... MORE

Headsets

Arnold Kling
From a NYT blog: People who constantly reach into a pocket to check a smartphone for bits of information will soon have another option: a pair of Google-made glasses that will be able to stream information to the wearer's eyeballs... MORE

Griswold on Immigration and the Welfare State

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Dan Griswold's "Immigration and the Welfare State" was my favorite in the Cato Journal immigration symposium.  Highlights:False stereotypes notwithstanding, immigrants have an awesome work ethic:The typical foreign-born adult resident of the United States today is more likely to participate in... MORE

Life Among the Thetes

Income Distribution
Arnold Kling
Matt Yglesias writes, stagnating real working-class wages are calculated by using a meaningless overall average rate of price inflation. Some things--college tuition, apartments in Manhattan, health care--have gotten more expensive much faster than average. This means that people who buy... MORE

Cato Journal Immigration Symposium Round-Up

Cost-benefit Analysis
Bryan Caplan
I've now read the full Cato Journal immigration issue cover-to-cover.  Leaving aside my lead article, here are my brief reactions:1. Gordon Hanson, "Immigration and Economic Growth."  Pretty good, especially on the interaction between high-skilled native labor and low-skilled immigrant labor:One... MORE

MMT

Money
Arnold Kling
A reader asked me for my thoughts on so-called Modern Monetary Theory, as described here, for example. As I understand it, the central dogma of MMT is that a government that prints its own currency and accepts that currency as... MORE

Another Book Review

Books: Reviews and Suggested Readings
Arnold Kling
This one I actually plan to finish. It's The Start-up of You, a self-help business book by Reid Hoffman and Ben Casnocha. Hoffman is famous as the founder of Linked-In, although in my circles Casnocha is better known. They write,... MORE

Tattoos and the Labor Market

Information Goods, Intellectual Property
Bryan Caplan
According to this amusing diagram in Cracked, facial tattoos mean "I will never have a job that pays taxes."  Many economists would presumably insist, "It's not causal.  The kind of people who tattoo their faces just have low productivity."  I... MORE

Bryan and Scott respond, sort of

Labor Market
Arnold Kling
Bryan responds to my question. Scott Sumner also responded in the comments on my original post. My question is how to reconcile low employment with low unit labor costs. Presumably, low unit labor costs would cause labor demand to be... MORE

An 84-Word Reply to Arnold

Behavioral Economics and Rationality
Bryan Caplan
Arnold says:I challenge any supporter of the sticky-wage story (Bryan? Scott?) to write a 500-word essay explaining how this graph does not contradict their view. If employment fluctuations consisted of movements along an aggregate labor demand schedule, then employment should... MORE

Huemer at TEDx

Economic Philosophy
Bryan Caplan
Mike Huemer, my favorite philosopher, spoke at TEDx in Colorado.  Enjoy.... MORE

Maladjustment

Finance: stocks, options, etc.
Arnold Kling
1. Todd Zywicki writes, the average home in foreclosure has been delinquent for 674 days--a delay that has doubled since the exposure of the robo-signing scandal ground the foreclosure process to a halt. In Florida, the time from default to... MORE

Refuted By Events

Behavioral Economics and Rationality
Bryan Caplan
Did the financial crisis of 2008 refute capitalism once and for all?  I was just on Al Jazeera to debate this question.  My opponents - and, I suspect, my host - thought so.  Obviously I disagreed about capitalism.  But even... MORE

Sharks--or Angels?

Information Goods, Intellectual Property
David Henderson
ABC calls it the Shark Tank...Sharks are evolutionarily ancient, the current versions not that much different from when our ancestors diverged from theirs 460 million years ago. They are highly evolved killing machines, programmed for nothing but predation, achieving little... MORE

Segregation

Income Distribution
Arnold Kling
The indispensable Timothy Taylor writes, Take the two most common measures of residential segregation, the "dissimilarity index" and the "isolation index" (both explained further in a moment). Apply them to the 10 largest American cities using Census data The pattern... MORE

When to Be Meek

Cost-benefit Analysis
Bryan Caplan
If you're not getting what you want out of life, people usually advise you to speak up and demand what's coming to you.  You'll never get anywhere just saying "please" and "thank you."  You've got to stand up and assert... MORE

Richard Epstein on Charity and Health Care

Economics of Health Care
David Henderson

Grouchy Book Reviews

Books: Reviews and Suggested Readings
Arnold Kling
In general, I lean toward, "If you don't have anything nice to say, then don't say it." But several books that I was sent to review made me grouchy, because of what they did not include. Note: I could not... MORE

Is the NAIRU 8.5 percent?

Macroeconomics
Arnold Kling
Mainstream macro in the 1970s (which a lot of people seem to have gone back to) held that there was a NAIRU, meaning the non-accelerating inflation rate of unemployment. If unemployment was above that, inflation would fall. If it was... MORE

My Interview at Rockford College

Economic Philosophy
David Henderson
Rockford College philosophy professor Stephen Hicks asks me some questions. Here's the result. Here are the questions: Why did you become an economist or political-economist? Does liberal society need an economic theory, and if so why? Your books: Key themes... MORE

What Bernanke Needed

Politics and Economics
Bryan Caplan
On Matt Yglesias' reading of "Ben Bernanke and the Zero Bound," Laurence Ball is saying that Bernanke needed to be more of a jerk:Former Treasury Secretary and former National Economic Council director Lawrence Summers has always suffered in the eyes... MORE

The Mystery of Bernanke Solved

Behavioral Economics and Rationality
Bryan Caplan
Ben Bernanke was my teacher, and a major influence on my macroeconomic thinking.  When he became Fed chairman, I expected the best of him.  I was sorely disappointed.  His behavior as Fed chairman seemed utterly disconnected from his lectures and... MORE

The Political Report of the President

Politics and Economics
Arnold Kling
Today the Economic Report of the President was released. As I remember the report in past years, the introductory chapter was typically political, while the rest of the report is focused purely on economics. These chapters often have been very... MORE

Brown M&Ms and Hotdogs

Information Goods, Intellectual Property
David Henderson
Russ Roberts has a fascinating video by a great storyteller about why Van Halen had a contract in the 1980s that put a high penalty on having brown M&Ms in the dressing room. I'll leave the reader to watch it.... MORE

A Perverse Incentive for Graduate School

Economics of Education
David Henderson
On a flight from Rochester, New York to Washington Dulles last Friday, I sat beside a young woman who had recently graduated from Penn State and had just started a new job. We got talking about student debt. She told... MORE

Adaptation and Economics

Books: Reviews and Suggested Readings
Arnold Kling
Jason Collins reviews Tim Harford's Adapt. The concept of "normal accidents", taken from a book of that title by Charles Perrow, is compelling. If a system is complex, things will go wrong. Safety measures that increase complexity can increase the... MORE

Nick Rowe's Continuity Question

Macroeconomics
Arnold Kling
He asks, Assume I am an individual household or small firm, and that I have perfectly flexible prices. How am I affected if all the other households and firms around me have sticky prices, and there is a monetary shock... MORE

Matt Zwolinski replies to me on Peter Singer's Drowning Child hypothetical.  Matt:Bryan starts off by questioning whether we really have an obligation to save the drowning child. After all, we'd praise someone who rescued a kid in that way as... MORE

Did Napster Reduce Music Quality?

Information Goods, Intellectual Property
David Henderson
One purely consequentialist argument that defenders of tough copyright laws have made is that without strong enforcement of copyright, the incentive to produce new high-quality music will be lower than otherwise. The argument makes sense on its face and the... MORE

How Legal Is Free-Range Parenting?

Family Economics
Bryan Caplan
Law professor and free-range dad David Pimentel carefully reviews the legality of free-range parenting.  Just one case:In State v. Hughes, a father was convicted in a bench trial for leaving his 5-year-old daughter in the air-conditioned cab of his pickup... MORE

The Orphan Not Adopted

Family Economics
Bryan Caplan
From Dan Carroll, blogger and adoptive father of a former orphan from Ethiopia:The pattern of behavior from the US Department of State (DOS) is to shut down adoption programs from countries that do not participate in the Hague Convention for... MORE

The Hill Criteria and the Stimulus

Economic Methods
Arnold Kling
This week's IGM forum is on whether the stimulus produced more jobs. Most of the panelists agree that it did. I wonder how many of the panelists are familiar with the Bradford Hill Criteria for making inferences based on observational... MORE

Imagine Grateful Welfare Recipients

Behavioral Economics and Rationality
Bryan Caplan
Imagine the following scenario: Recipients of food stamps, unemployment insurance, Medicaid, and student loans suddenly start expressing daily heartfelt gratitude to the taxpayers who provide for them.  The eager proponents of these programs stop angrily demanding more.  Instead, they spend... MORE

Rand vs. Human Weakness

Economic Philosophy
Bryan Caplan
I didn't want to goad Krugman by quoting Ayn Rand against him.  So I waited for one day to pass.  This passage from Galt's speech is one of Rand's best:"It's only human," you cry in defense of any depravity, reaching... MORE

Japanese Voluntarism to Solve Social Problems

Labor Market
David Henderson
The effort to clean up and shut down Japan's crippled, leaking Fukushima Daiichi nuclear power facility will be long and dangerous. Just this week, two more workers in their 30s and 40s were reportedly exposed to potentially deadly amounts of... MORE

What If the Stranger Is a Drowning Child?

Economic Philosophy
Bryan Caplan
I regularly appeal to the moral intuition that we have a strong obligation to leave strangers alone, but little obligation to help them:What are you morally forbidden to do to a stranger?  You may not murder him.  You may not... MORE

Krugman, Human Weakness, and Desert

Behavioral Economics and Rationality
Bryan Caplan
Krugman makes fascinating concessions to David Brooks:David says,I don't care how many factory jobs have been lost, it still doesn't make sense to drop out of high school.True enough. But suppose we apply the same logic to another problem, say... MORE

Problems with Henry George's Single Tax

Taxation
David Henderson
Bryan Caplan makes a good point with his and Zac Gochenour's search-theoretic critique of Henry George's tax on the value of unimproved land. It's similar to a point that Charles Hooper made in his bio of Henry George in The... MORE

A Search-Theoretic Critique of Georgism

Tax Reform
Bryan Caplan
Economist Henry George famously advocated a 100% (or near 100%) "Single Tax" on the unimproved value of land.  Many modern tax economists, most notably Joseph Stiglitz, conclude that George's logic was sound: Since the unimproved value of land is perfectly... MORE

Conversation with David Weinberger

Books: Reviews and Suggested Readings
Arnold Kling
Below is a teaser. The full conversation is here. Nick Schulz and I discuss with him Too Big to Know, his new book. Yes, there will be a podcast version. I just need a place to put it--my own web... MORE

How to Cut the Cost of Contraceptives by Regulating Less

Economics of Health Care
David Henderson
In his "compromise" with Catholic critics, President Obama has said that various church-affiliated employers don't have to provide a contraception benefit in their insurance plans. However, insurance plans will have to provide such a benefit separately and must not charge... MORE

Regional Variations in the Recession

Labor Market
Arnold Kling
Atif Mian and Amir Sufi write, The aggregate demand channel for unemployment predicts that employment losses in the non-tradable sector are higher in high leverage U.S. counties that were most severely impacted by the balance sheet shock, while losses in... MORE

Revisiting Goldin and Katz

Growth: Causal Factors
Arnold Kling
David Autor and Daron Acemoglu have a long review article. Much of it is focused on shifting from a model in which there are only two skill levels (high and low) to a more nuanced model, with at least three... MORE

The Boudreaux Plan to Save the NYT

Regulation and Subsidies
Bryan Caplan
Don Boudreaux, Master of economic ridicule, gets one step closer to unseating Grand Master Frederic Bastiat.  When the NYT calls to raise the minimum wage, Don replies:In the same spirit of demanding that government improve people's economic well-being simply by... MORE

Obamacare Shortages: Why Aren't We Going Sputnik?

Economics of Health Care
Bryan Caplan
This is the most pessimistic prediction I've seen about how Obamacare will quickly lead to severe rationing of medical care:The greatest threat to the health-care overhaul might not be the Supreme Court, which is scheduled to hear challenges to the... MORE

The Optimal Scapegoat

Behavioral Economics and Rationality
Bryan Caplan
When people complain about politics, they rarely focus on bad ideas, bad policies, or even bad situations.  Instead, the typical complainer focuses on bad people.  Every now and then, these bad people have proper names, like "Bush" or "Obama."  But... MORE

Limited Liability and Banking

Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen says that they do not go well together. If a shareholder invests a dollar in a big bank, why not make that shareholder liable for the first $1.50 -- or more -- of losses as insolvency approaches? In... MORE

Happy Birthday, Eugen and Julian

Austrian Economics
David Henderson
As the NBER web site points out, February 12 is the birthday of economists Eugen Bohm-Bawerk and Julian Simon. Here is the bio of Bohm-Bawerk in The Concise Encyclopedia of Economics. One highlight from that bio: Böhm-Bawerk was also one... MORE

What is Bernanke Saying About Housing?

Finance: stocks, options, etc.
Arnold Kling
Ben Bernanke says, the housing sector continues to suffer from serious imbalances--a marked excess supply for owner-occupied housing accompanied by a stronger rental markets. If this is true, then there must be some institutional barriers to converting housing stock from... MORE

The Puzzling Ethics of Emergency Care

Economic Philosophy
Bryan Caplan
The disdain most Americans feel for illegal immigrants appalls me, but it does not surprise me.  What does surprise me: Even though Americans will call a person a "criminal" for accepting a job from a willing employer, they still think... MORE

Sabrina Tavernise writes, Professor Reardon is the author of a study that found that the gap in standardized test scores between affluent and low-income students had grown by about 40 percent since the 1960s, and is now double the testing... MORE

Match the Passage to the Book

Books: Reviews and Suggested Readings
Arnold Kling
Below are passages taken from the introductory material to two books. Your job is to match the passages with the books. The two books are: A. Ameritopia, a best-seller by talk-show host Mark Levin. B. Why Capitalism?, by distinguished monetary... MORE

Ozimek on the Sheepskin Effect

Economics of Education
Bryan Caplan
I think the sheepskin effect is strong evidence in favor of the signaling model of education.  Modeled Behavior's Adam Ozimek's not so sure:[W]hat does it tell you about someone when they have invested a lot of money into college, come... MORE

Rent Control

Price Controls
Arnold Kling
Peter Dorman writes, In fact, advocates for rent control have taken Econ 101 (most of them), but they just disagree on how large the positive and negative impacts are. The purpose of economics should be to help us think clearly... MORE

W. Allen Wallis: An Appreciation

Labor Market
David Henderson
I gave a talk last night at the University of Rochester. The talk was titled "Do We Need to Go to War for Oil." It was nice to catch up with friends in Rochester and former colleagues: John Long and... MORE

Wealth and the Output Gap

Macroeconomics
Arnold Kling
Tyler Cowen writes, There is still not enough talk of wealth effects in current macro debates, as they are invoked only selectively. Scott Sumner writes, I'm missing something blindingly obvious, as Jim Bullard, David Andolfatto and Tyler Cowen (who also... MORE

Another Frustrating Education Study

Economics of Education
Arnold Kling
From Richard Arum and others. They find that employment outcomes of college graduates are positively related to student performance on the Collegiate Learning Assessment (CLA). Who cares?. As Bryan points out, this sort of study confounds ability with learning, which... MORE

Timothy Taylor's Instant Economist

Books: Reviews and Suggested Readings
Arnold Kling
Tyler Cowen wrote that it is too elementary for most MR readers but it is well executed and would make a good gift for anyone needing an introduction to economic reasoning. My thoughts: 1. The price is very attractive. I... MORE

The Career Consequences of Failing versus Forgetting

Economics of Education
Bryan Caplan
If you're reading this blog, you probably didn't fail a lot of classes in school.  But I bet that you've totally forgotten a lot of those classes.  I got A's in junior high and high school Spanish, but barely speak... MORE

A Brief Letter on Signaling

Economics of Education
Bryan Caplan
I heard a rumor that a famous economist was asking about my book in progress, The Case Against Education.  So I sent him the following email:I heard you were asking about me at the GMU dinner earlier this week.  I... MORE

How Deserving Are the Poor? Debate Wrap-Up

Economic Philosophy
Bryan Caplan
The resource page for last week's Caplan-Smith debate is now up, complete with full video.  Here's Karl's post-debate statement.  It's basically a more detailed version of his original statement.  But he does introduce two new points I want to answer:1.... MORE

Notes from the Welch-Goldberg Show

Politics and Economics
Arnold Kling
The event was billed as a debate Are Libertarians Part of the Conservative Movement? And, yes, both speakers talked about reversing the question. The format consisted of 4-minute opening statements followed by one-minute responses to questions. It makes for lively... MORE

Fiscal Federalism's Failure

Institutional Economics
Arnold Kling
Below is an excerpt from a video conference with Michael Greve, Reihan Salam, and me on the problems with fiscal federalism in practice. The full half-hour video is here. And, yes, I also created a podcast. It is a good... MORE

Kevin Carey on Innovation in Higher Education

Economics of Education
Arnold Kling
Interviewed by Reihan Salam and me. The thought he expresses below is that online innovators will offer credentials that are initially inferior to college degrees but which will ultimately become superior. The analogy would be with Japanese cars, which initially... MORE

Being Single Is a Luxury

Family Economics
Bryan Caplan
I'm baffled by people who blame declining marriage rates on poverty.  Why?  Because being single is more expensive than being married.  Picture two singles living separately.  If they marry, they sharply cut their total housing costs.  They cut the total... MORE

Murray, Frum, and the Hurricane Analogy

Books: Reviews and Suggested Readings
Bryan Caplan
David Frum's critique of Charles Murray's Coming Apart begins with an analogy:To understand what Murray does in Coming Apart, imagine this analogy: A social scientist visits a Gulf Coast town. He notices that the houses near the water have all... MORE

Who Cares About the Poor?

Income Distribution
Arnold Kling
Scott Winship writes, Whether politicians ignore the poor and pander to the middle class or scare the middle class into thinking they are as bad off as the poor, the result is likely to be the same. Most of our... MORE

Break the Buck!

Finance
David Henderson
Regulators are completing a controversial proposal to shore up the $2.7 trillion money-market fund industry, more than three years after the collapse of Lehman Brothers Holdings Inc. sparked a panic that threatened the savings of millions of investors and forced... MORE

Michael Munger on Self-Interest

Political Economy
Arnold Kling
In this article (for which the publisher charges a mere $36), he writes, We can't seriously think that people are narrowly and permanently self-interested, because the costs of enforcing agreements and constantly guarding against fraud or theft would be overwhelming.... MORE

Don't Judge a Scholar By His Deals

Economic Philosophy
Bryan Caplan
When re-reading my recent critique of Robin Hanson's "dealism," I realized that the following could come off as rather harsh:Robin has spent decades proposing unconventional policy deals.  His track record is an abysmal failure.None of this means, however, that Robin... MORE

Is Iran a Threat?

Behavioral Economics and Rationality
David Henderson
But, say the critics, Iran is different. They have all those mad mullahs over there who don't care about life on earth and simply want to destroy -- fill in the blank -- Israel, the United States, or Israel and... MORE

What Happens When Signaling Gets Cheaper?

Economics of Education
Bryan Caplan
Arnold: My understanding of the signaling model is that it depends crucially on the relative cost of signaling to people with and without the desired trait. You want the cost to be high for someone without the trait and low... MORE

Economists' Self-Conception

Economic Philosophy
Bryan Caplan
Robin grants much of my critique of dealism.  Then he offers a bet:Imagine that economists were surveyed and had to choose how they'd best like to describe economic policy recommendations, as: Morals - Arguing for the morality of actions,Deals -... MORE

Yesterday, co-blogger Arnold Kling referenced my work on the U.S. post-World War II austerity. I had pointed out that Keynesian wunderkind Paul Samuelson had blown it with his prediction of a postwar slump. In the comments, wd40 writes: During WW2,... MORE

The Deal Delusion

Economic Philosophy
Bryan Caplan
Robin Hanson often describes his normative view as "dealism."  Forget talking about "right and wrong."  Lets take people as they are, and help them hammer out mutually beneficial deals.  Robin's latest word on this topic:My closest colleagues seem to mostly... MORE

Lessons from Solyndra

Central Planning vs. Local Knowledge
David Henderson
An even more serious problem concerns the restructuring of the original Solyndra loan guarantee, a move that placed new, private investors at the front of the line in the event of a default. The result was that the government's (i.e.,... MORE

Signaling and Costs

Information Goods, Intellectual Property
Arnold Kling
Bryan writes, when you make signaling cheaper, agents' natural response is to signal more intensely or on another dimension. My understanding of the signaling model is that it depends crucially on the relative cost of signaling to people with and... MORE

Signaling and Vicky Clubs

Economics of Education
Bryan Caplan
Arnold's post on segregation makes several points on the signaling model of education.  I'm here to rebut them.  Arnold's in blockquotes:1. Where Bryan sees college as a useful signaling device for those who are cognitively gifted, I see it as... MORE

Supply, Demand, and Outcomes

Politics and Economics
Arnold Kling
Reihan Salam has had a number of interesting posts recently. Here, he discusses Kevin Carey's analysis of how subsidies to college education ultimately benefit not the consumers but the suppliers. Suppose that you want people to have more high-quality education... MORE

The Austerity of 1946

Economic History
Arnold Kling
John Cochrane writes, I ran across a fascinating article, "A Post-Mortem on Transition Predictions of National Product," in the 1946 Journal of Political Economy, by Lawrence Klein. Klein, who would go on to create the main macroeconomic forecasting models and... MORE

Simpler Frank Knight

Austrian Economics
Arnold Kling
From FastCompany Magazine. "Uncertainty is when you've defined the variable but don't know its value. Like when you roll a die and you don't know if it will be a 1, 2, 3, 4, 5, or 6. But ambiguity is... MORE

Segregation

Economics of Education
Arnold Kling
One of the issues that I have been thinking about since reading Coming Apart is segregation. 1. Where Bryan sees college as a useful signaling device for those who are cognitively gifted, I see it as a useful segregation device... MORE

Five Myths About Free Markets

Political Economy
David Henderson
The talk I gave at Hoover on Wednesday, "Five Myths About Free Markets," is on YouTube. Here it is.... MORE

French versus American Parenting

Behavioral Economics and Rationality
David Henderson
Relax. That's my summary of an article by Pamela Druckerman in today's Wall Street Journal by an American woman who noticed that French kids tend not to be brats to the same degree that American kids are. It's more grist... MORE

Naming the Puppy: Firing Aversion and the Labor Market

Behavioral Economics and Rationality
Bryan Caplan
In fiction (and "reality" television), firing workers almost seems fun.  How many times has Mr. Burns gleefully hissed, "Fire than man, Smithers!"?  In the real world, though, bosses dislike being the bearer of bad news.  They feel guilty when they... MORE

Corporatism

Political Economy
Arnold Kling
Edmund S. Phelps and Saifedean Ammous write, This shift of power from owners and innovators to state officials is the antithesis of capitalism. Yet this system's apologists and beneficiaries have the temerity to blame all these failures on "reckless capitalism"... MORE

No Scott, the future is Portugal

Fiscal Policy
Arnold Kling
Scott Sumner writes, In my view, Japan is the future of the global economy. Not the deflation (I think the Fed will be able to keep inflation close to 2%) but the low real interest rates. In retrospect the 2001... MORE

Good Sentences

Political Economy
Arnold Kling
From Ross Douthat, writing an introduction to a new edition of Robert Nisbet's The Quest for Community. Man is a social being, and his desire for community will not be denied. ... And if he can't find that community on... MORE

My University of Rochester Talk

International Trade
David Henderson
On Thursday evening, Feb. 9, I'll be giving a public talk at the University of Rochester in Rochester, New York. It will go from 7:30 to 9:00, with ample time during that time period for Q&A. The talk is titled:... MORE

The Wisdom of Robin Hanson, #n

Business Economics
Arnold Kling
He writes, My guess is that most intellectuals underestimate just how dysfunctional most firms are. This is part of a discussion of why businesses pay consultants. I think a pretty standard view is that CEOs bring in consultants to help... MORE

My PSST Papers

Macroeconomics
Arnold Kling
The Adam Smith Institute has just released a paper of mine on patterns of sustainable specialization and trade. An excerpt: The PSST approach drops the assumption that production technology is known. Instead, the Smithian division of labour and Ricardian comparative... MORE

My Two Favorite Graphs From Coming Apart

Family Economics
Bryan Caplan
I have a predictably optimistic take on Charles Murray's Coming Apart.  But these two graphs did indeed shock me.  The first contrasts divorce rates for working class ("Fishtown") and professional ("Belmont") whites: Notice: Among professionals, divorce plateaued over three decades... MORE

My PSST op-ed

Macroeconomics
Arnold Kling
in the WSJ European edition. Unfortunately, the patterns of specialization and trade that had emerged five years ago were not sustainable. Many jobs in home construction, durable-goods manufacturing and distribution, and mortgage finance were dependent on housing markets with ever-rising... MORE

The Case for More Skilled Immigrants

Labor Mobility, Immigration, Outsourcing
Arnold Kling
Nick Schulz makes it. According to recent estimates, the stock of human capital is over $750 trillion.6 According to a research report from JP Morgan called "U.S. Recession and Repression Are Only in Our Minds," this is much greater than... MORE

Concerns with the CBO

Politics and Economics
Arnold Kling
The Wall Street Journal reports The inquiries of the Congressional Budget Office, which haven't been made public, concern the CBO's analyses of some of Washington's most complex and controversial measures, including bills on financial regulation, health care, small-business lending and... MORE

"How Deserving Are the Poor?": My Opening Statement

Economic Philosophy
Bryan Caplan
Thanks to everyone who attended last night's debate, and especially to Karl Smith for being such a good sport.  In the near future, I'll put up a webpage of debate resources, including full video.  For now, here's my opening statement... MORE

Rena Henderson on the Komen Controversy

Economics of Health Care
David Henderson
If you've followed the news on the Susan G. Komen for the Cure controversy lately, you know that it has been getting a lot of flak. The foundation had been sending funds to Planned Parenthood to finance breast-cancer screenings and... MORE

Kling on Charles Murray

Books: Reviews and Suggested Readings
Arnold Kling
So, I downloaded Coming Apart. I am not disappointed. It is well argued. In 1963, there just wasn't that much difference between the lifestyle of a highly influential attorney or senior executive of a corporation and people who were several... MORE

Catch Them Doing Something Right

Public Choice Theory
Arnold Kling
It's not the Sunday Outlook, but the Washington Post has a long op-ed that explains some important concepts in public choice. Charles Lane writes, Not surprisingly, much political activity consists of trying to create, or keep, opportunities to collect economic... MORE

What's So Special About Huemer's New Book?

Books: Reviews and Suggested Readings
Bryan Caplan
In the comments, Mark V. Anderson asks:I would like to know why you think this book is so extra-special. I read the first chapter for which you provided the link. It was well written, but I saw nothing there that... MORE

My Hoover Talk Today: Live Stream

Upcoming Events
David Henderson
I just found out that my Hoover Institution talk today to a group of students will be live streamed. It's at 3:10 p.m. EST (12:10 p.m. PST). Here's the link. Topic: "Five Myths about Free Markets."... MORE

David Brooks on Charles Murray

Books: Reviews and Suggested Readings
Arnold Kling
He writes, The truth is, members of the upper tribe have made themselves phenomenally productive. They may mimic bohemian manners, but they have returned to 1950s traditionalist values and practices. They have low divorce rates, arduous work ethics and strict... MORE

A Phony Right: My Letter to the Monterey Herald

Economic Education
David Henderson
Yesterday, the Monterey County Herald, my local paper, ran my letter as the lead letter. I was commenting on this story. Here it is: A 'phony right' Your article Saturday on CSU Monterey Bay students who are unhappy with a... MORE

A Freedman's Moral Intuition

Economic Philosophy
Bryan Caplan
In 1865, a former slave owner mailed a job offer to one of his former slaves.  Here's the highlight of the freedman's response:Mandy says she would be afraid to go back without some proof that you were disposed to treat... MORE

Return to top