Bryan Caplan and David Henderson

December 2012

A Monthly Archive (65 entries)

Hail Bob Murphy

Economic Methods
Bryan Caplan
My inflation bet with Bob Murphy, unlike David's, doesn't mature until January 1, 2016.  David as usual is a model of gentlemanly conduct, but other observers are cackling with glee at Bob's defeat.  This is frankly deplorable.  Bob deserves far... MORE

My Inflation Bet with Bob Murphy

Monetary Policy
David Henderson
I was going to wait until I officially won my inflation bet with Bob Murphy before announcing it here, but because Brad DeLong and Paul Krugman, each in his own special style, have already announced my win, I'll address it... MORE

Where Tiebout Goes Wrong

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
The Tiebout model implies that local governments will be redistribution-free and waste-free.  If you find these predictions absurd - and you should - local governments must violate one or more assumptions of the Tiebout model.  What are the key violations?1.... MORE

Nominations for Top Economic Stories of 2012

Energy, Environment, Resources
Garett Jones
Here are three, all good news, more possible:1.  QE3, all hail Scott Sumner.  The ECB's unconventional easings to banks and sovereigns deserve mention as well.  Perhaps someone will make a lot of money betting on high average inflation in the... MORE

I used to think that the title of this blog post derived from baseball great Yogi Berra. But I have also seen it attributed to Danish physicist Neils Bohr. (By the way, have you ever noticed that when people quote... MORE

A Question of War and Peace: Some Answers

Economic History
Bryan Caplan
Before Christmas, I asked EconLog readers for responses to the following test question:"There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest in... MORE

Bahrain Travelogue: Friendliest People on Earth?

Economics and Culture
Garett Jones
Last week I visited my GMU colleague Omar al-Ubaydli.  Omar now lives and works in Bahrain, a quick drive over the King Fahd Causeway from Saudi Arabia. A few of Omar's other friends from around the world joined in the visit so... MORE

...the welfare state as social insurance.  After all, if you know how your kids are going to turn out, what's there to insure against?  Sure, you'd like to grab resources from other people--the raiding party has a long history--but it's only... MORE

Pinpointing Gun Households: A Research Idea

Economics of Crime
David Henderson
I'm guessing that most of you have heard about the Westchester County, New York newspaper that published a comprehensive list of all the households in Westchester, Rockland, and Putnam counties that were listed with the government as containing a resident... MORE

How Would We Really Treat Mutants?

Behavioral Economics and Rationality
Bryan Caplan
In the X-men comics, t.v. series, and movies, normal humans instinctively treat super-powered mutants with fear and disgust.  The popular mutant policy options are: (a) register them as deadly weapons, (b) preemptively imprison them, or (c) kill them one and... MORE

Henderson on Stossel Pre-Election

Economic Education
David Henderson
In the last week of October, Sallie James of Cato and I taped a segment with John Stossel. The whole show is up on line and the segment we are on starts at about the 29:45 point and goes to... MORE

A Question of Educational Discrimination: Some Answers

Economics of Education
Bryan Caplan
Last week I posted the following final exam question:Some sociologists have argued that discrimination on the basis of educational credentials should be illegal.  What do the human capital and signaling models of education predict about the effect of such a... MORE

While I was vacationing in Orlando, the Economist ran an exuberant article on online education.  Most of the piece is too vague to be wrong, but this passage calls for a bet: Clayton Christensen, a Harvard Business School professor and... MORE

Merry Christmas to All

David Henderson
I couldn't figure out how to rotate: the picture not the cat.... MORE

Payday for Behavioral Economics

Behavioral Economics and Rationality
David Henderson
Do retirement savings policies--such as tax subsidies or employer-provided pension plans--increase total saving for retirement or simply induce shifting across accounts? We revisit this classic question using 45 million observations on savings for the population of Denmark. We find that... MORE

The Joy of Microwaves

Cost-benefit Analysis
David Henderson
When our microwave oven broke down a few weeks ago after almost 15 years of faithful service, it got me thinking about how valuable microwaves are to my family, which led to thinking about the consumer surplus we get from... MORE

Expanding Megabanks: Is Impatience the Cause?

Public Choice Theory
Garett Jones
From Tuesday's Wall Street Journal:Some, like Citigroup Inc. and Bank of America Corp. have embarked on diets of their own.  On the whole, though, the financial system is more concentrated than before the crisis. And Santander, the largest Euro-area bank with... MORE

Henderson on Zingales

Books: Reviews and Suggested Readings
David Henderson
My review of Luigi Zingales's book, A Capitalism for the People, has been published in the latest issue of Policy Review. One of the best parts of his book is the content on cronyism. In case you think this review... MORE

Henderson on Medicare: Bay Area NBC Affiliate

Economics of Health Care
David Henderson
Here is a segment on the Bay Area NBC affiliate based, in part, on an interview with me about the Medicare spending in our future. Hat Tip to the reporter, Sam Brock, for doing his homework.... MORE

Why didn't 19th and early 20th century empires massively raise productivity per worker in their colonies?  Why have the big improvements in productivity almost always happened after the imperialists either left or genuinely turned over power to the locals?  This... MORE

A Question of War and Peace

Economic History
Bryan Caplan
Normal 0 MicrosoftInternetExplorer4 My favorite question from my latest Public Choice final exam:"There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest... MORE

Free Speech for Me but Not for Thee: The Case of Erik Loomis

Economics and Culture
David Henderson
Second Update: Henry Farrell of Crooked Timber has commented below, ending with: "I would be grateful if you could change the original post to reflect these facts." I won't change it, but I will alert readers to his comment. I... MORE

Does An Increase in Supply Lead to Higher Prices

Economic Education
David Henderson
Last week, I received an e-mail from the son of a friend of mine. The son is a student at a school in the Northeast. Here's the relevant part of the e-mail: I took a globalization class this past semester... MORE

Lincoln: Public Choice 101

Public Choice Theory
David Henderson
Honestly, Abe! My long-time friend, Tom Nagle, wrote the following letter to American Way, the American Airlines in-flight magazine, after reading an article on the making of the film, Lincoln. I convinced him that the probability of his getting the... MORE

A Question of Educational Discrimination

Labor Market
Bryan Caplan
My favorite question from my latest Labor Economics final exam: Some sociologists have argued that discrimination on the basis of educational credentials should be illegal.  What do the human capital and signaling models of education predict about the effect of... MORE

Why So Little Exploitation of Developing Countries?

Cross-country Comparisons
Garett Jones
The internet tells me that people in rich countries exploit people in poor countries.  If that's true--a claim I don't deny, since humans are routinely awful to each other--then people in rich countries are really bad at it.  Just like... MORE

Update on OTC Contraceptives

Economics of Health Care
David Henderson
In February, I wrote: Nevertheless, there is a way that the federal government now cuts access to contraceptives in a way that substantially raises the cost. Were the government to get rid of the regulation that does this, women's access... MORE

Postrel on Progress

Growth: Causal Factors
David Henderson
I wish I had been aware of Virginia Postrel's excellent piece on technological progress when I wrote my post yesterday on electricity. In it, she takes on the views of Jason Pontin, my former editor at the Red Herring, and... MORE

ELECTRICITY!

Growth: Consequences
David Henderson
In Praise of Modern Technology Early Saturday afternoon, the electric power at our home in Pacific Grove went out. We were out at lunch when it happened and when I came home, I thought it was a neighborhood-wide thing, something... MORE

The Case Against Education on Who You Know

Economics and Culture
Bryan Caplan
The noble Vipul Naik has been prodding me to address the social networking benefits of education.  Here's my first take on the subject from the current draft of The Case Against Education.Who You KnowAbout half of all workers used contacts... MORE

Independence and Growth

Cost-benefit Analysis
Bryan Caplan
Garett interestingly builds on Lucas' fact that "with the exception of Hong Kong, no massive economic modernization has ever happened in a colony."  Still, I'm unimpressed on multiple levels.1. How about Macao?  If you count so-called "settler societies," then you... MORE

Pre-Assimilation

Economics and Culture
Bryan Caplan
An especially clever argument by Nathan Smith:[G]lobalization has half-Americanized half the world already. 19th-century immigrants may have been racially more similar to America's white native majority, but they were less familiar with democracy, with the English language, with America via movies... MORE

Betting: Automatic Weapons vs. Rental Cars

Economics of Crime
David Henderson
One thing my co-blogger Bryan and I agree on is that proposing a bet is a good way of making people fess up to whether they're really confident, especially about their extreme statements. Bryan might have said it differently than... MORE

Murphy on Frum and Global Warming

Energy, Environment, Resources
David Henderson
Earlier this week, Robert Murphy, a frequent writer of Econlib Feature Articles, had an excellent critique of a piece on global warming by David Frum. Were I to quote all the good parts, I would end up quoting almost the... MORE

Why are Economic Miracles Rare in Colonies?

Growth: Causal Factors
Garett Jones
A decade ago, Robert Lucas noticed a pattern:The economic progress that has come to Asia and Africa came after the colonial empires were dismantled. To put it another way, Lucas claims that with the exception of Hong Kong, no massive economic... MORE

The Case Against Education: The Project Evolves

Economics of Education
Bryan Caplan
In the last Table of Contents for The Case Against Education, chapter two is "Useless Studies with Big Payoffs: The Puzzle Is Real."  After writing this chapter for three months, I realized I had to split the discussion.  Now there... MORE

The Economics of "Right to Work"

Labor Market
David Henderson
I was at a conference last weekend at which one of the participants, from Michigan, was excited about the Michigan legislature's passage of a "right to work" law. I started to share his excitement. On the other hand, some libertarian... MORE

Tyler Cowen often calls Alex Tabarrok the best truth-tracker in Carow Hall.  With good reason.  When I ask Alex questions, he's consistently careful, direct, and accurate.  When I investigate his assertions, they check out.  I trust Alex - even when... MORE

It's often wise to pay more attention to marginal tax rates than to average tax rates.  If you can make your first $100 tax free but the 101st dollar is taxed at a marginal rate of 99% you'll probably decide... MORE

WSJ's "Roll Your Own" Deficit Reduction

Fiscal Policy
David Henderson
The Wall Street Journal has on its site a list of options for reducing the projected $1-trillion-plus federal budget deficit for 2020. It's a list of cuts in discretionary spending, cuts in so-called "entitlement" spending, and increases in taxes. I... MORE

Absurdities of the Tiebout Model

Public Choice Theory
Bryan Caplan
Economists across the political spectrum embrace the realism of the Tiebout model.  The model's intuition: At the level of local government, there are many consumers (i.e. residents and businesses), many suppliers (i.e. localities), and low switching costs - all the... MORE

Does money influence research outcomes?  We're used to hearing this question when it comes to pharmaceutical research and the same question is surely relevant to research in monetary economics.  Central banks like the Fed, the ECB, and the BoE do... MORE

People hate the property tax more than other taxes. There are fairly regular "tax revolts" against the property tax, many of which are based on local or statewide referenda. Property tax limits, whether imposed by referenda or by state legislatures,... MORE

After I finished my last post, parenting life lessons kept coming to mind.  Ten more:1. You cannot be a bad spouse and a good parent.2. Do not let your kids ignore you.  If your words call for a response, immediately... MORE

How starting with a progressive tax system and cutting everyone's taxes by the same percent gives you a regressive tax cut. We all know what a regressive tax is: it's one that takes a higher percentage of income from low-income... MORE

My eldest sons just turned ten, which means I've been a father for ten years.  Ergo, it's time to inventory the top things I've learned from my decade of experience.  In no particular order:1. Kids are a consumption good, and... MORE

Blaming the Person Offering you the Best Deal

Labor Market
David Henderson
I saw a woman on Stossel tonight who works for McDonald's. She said she was paid $8 an hour, but felt she deserved $15. I thought: Wait a minute, McDonald's isn't the only company not paying you $15 an hour:... MORE

Friday Night Video: Harvard Tries to be Hip

Economics and Culture
David Henderson
This doesn't quite match the U.S. Olympic swim team version, but it's not bad. Check out Greg Mankiw boogeying at about the 3:00 point. Go Greg!... MORE

Often over the last few years, President Obama has blamed the Bush cuts for a large part of the deficit. He's right. But he often gave the impression that they went primarily to "the rich." Of course, he didn't mean... MORE

Blatant Incompetence

Behavioral Economics and Rationality
Bryan Caplan
Last spring I asked EconLog readers about the obviousness of on-the-job incompetence.  Most people thought incompetence was very obvious indeed.  It turns out that this view is widespread.  The General Social Survey asks:In your job how easy is it for... MORE

School, Work, and Connections Bleg

Economics of Education
Bryan Caplan
I'm looking for research on the extent to which people make useful career connections in school - high school, college, grad school, whatever.  My sense is that the economy is so big and diverse that people rarely (a) end up... MORE

David Brooks's Conservative Future Out of a Job

Information Goods, Intellectual Property
Garett Jones
Derek Khanna, the author of the important policy brief on the excesses of copyright law, has been fired by the Republican Study Committee. The brief, which the RSC pulled from their website, is here. From the Examiner: The staffer who wrote... MORE

Decadent Parenting

Family Economics
Bryan Caplan
More on decadent parenting from the intro of Selfish Reasons to Have More Kids:To be brutally honest, we're reluctant to have more children because we think that the pain outweighs the gain. When people compare the grief that another child... MORE

Global Utilitarianism and Airport Security

Cost-benefit Analysis
Bryan Caplan
Garett's main point - air travel terrorism has enormous social costs counting the effect on foreign policy - is clearly correct.  The straightforward implication: Mildly reducing the risk of terrorism with major inconvenience for air travelers easily passes a cost/benefit... MORE

If I Were a Global Utilitarian...

moral reasoning
Garett Jones
...I'd probably push for an incredibly stringent anti-hijacker policy.  After all, the last time a few individuals hijacked U.S. planes, it genuinely caused a war in Afghanistan and substantially raised the probability of a war in Iraq.  Massive loss of civilian... MORE

Kidphobia: Decadent, or Just Misguided?

Cost-benefit Analysis
Bryan Caplan
The U.S. birthrate is falling, and Ross Douthat largely blames decadence: [W]hile the burdens on modern parents are real and considerable and in certain ways increasing, people in developed societies enjoy a standard of living unprecedented in human history, and the... MORE

Roth Conversion Bleg

Finance: stocks, options, etc.
Bryan Caplan
Greg Mankiw's rarely-offered financial advice has put me in a mild panic: [I]n light of the fiscal situation we are facing, I will pass along one tidbit.  Consider converting some of your retirement savings into a Roth IRA. Over the past few years, I... MORE

Competition is a Hardy Weed

Business Economics
David Henderson
Pillar #10 of my "Ten Pillars of Economic Wisdom" is: Competition is a hardy weed, not a delicate flower. I thought of that when I read Steven Denning's recent article on the recent bankruptcy of Monitor. It's titled, "What Killed... MORE

How Many Bad Loans Did Fannie and Freddie Originate?

Efficient Markets Hypothesis
Garett Jones
Trick question: None, zero, zilch.  By law, Fannie and Freddie can't originate loans--they can only buy or guarantee loans that have already been made by actors in the private sector.  This is no small point, but it's a point that... MORE

Immigration Policy and the World Values Survey

Behavioral Economics and Rationality
Bryan Caplan
Over at Open Borders, Nathan Smith shares his preliminary immigration policy empirics from the World Values Survey.  Out of 48 countries surveyed, the people of Vietnam (?!) favor the fewest restrictions on immigration, and the people of Malaysia favor the... MORE

Ignatius Reilly on Character and Education

Economics and Culture
Bryan Caplan
A Confederacy of Dunces' unemployed anti-hero, Ignatius Reilly, explores the tension between the school ethic and the work ethic in a conversation with his long-suffering mother:"I doubt very seriously whether anyone will hire me.""What do you mean, babe? You a... MORE

Popcorn Pork

Fiscal Policy
David Henderson
As the late Professor Olson might have observed, the popcorn subsidy will likely become fiscal law because almost no one, other than the popcorn growers, will notice. Being a small lot, they have all the incentive they need to lobby... MORE

Mr. Sumner Goes to Washington

Public Choice Theory
David Henderson
Scott Sumner has posted an interesting story about his trip to Washington last week. Some highlights along with my comments in square brackets: 6. During the day I attended a bunch of foreign policy panels. It was interesting to see... MORE

Reviewing Mark Zandi's Newest Book

Finance
Garett Jones
My latest book review for Barron's is here ($, probably).  Zandi's Paying the Price adds some value; this post excerpts some positive parts of the review:"Regulatory, legal, and policy uncertainty was holding business back." That's author Mark Zandi, Moody's Analytics chief... MORE

A Critique of Wisdom

Economics and Culture
Bryan Caplan
Almost ten years ago, philosopher Roderick Long wrote an uncommonly wise piece on political correctness.  The opening commands my instant assent:There are two ways of letting political correctness control your mind. One is to reject viewpoints, not because they're false,... MORE

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