Bryan Caplan and David Henderson

July 2013

A Monthly Archive (78 entries)

Nudge, Policy, and the Endowment Effect

Behavioral Economics and Rationality
Bryan Caplan
Last week, Maxim Lott solicited my thoughts on Obama's "nudge team."  Here's what I would have told him if I hadn't been on vacation:"Nudging" is a great idea.  We should start by ending existing hard paternalism in favor of gentle... MORE

I've read a few of the comments on my Forbes.com article about minimum wages, and there seems to be a lot of agreement that one of the real problems is that executives are overpaid. If that's true, then I have... MORE

Guess Who's Second-Guessing

Cost-benefit Analysis
Bryan Caplan
A single-issue website laments:It is just depressing to witness academics confining the discussion of complex issues within the parameters of pre-existing public opinion. What's the point of possessing vast knowledge of any subject if one chooses to then limit themselves... MORE

The Economics of Self-Imposed Price Ceilings

Business Economics
David Henderson
About once every two weeks, I drive to Costco for my favorite fast food per dollar: the famous Costco hotdog. It's priced, along with a soda with free refills, at $1.50 plus tax. In Sand City, California, my local Costco,... MORE

New at Forbes: McDonald's and Minimum Wages

Central Planning vs. Local Knowledge
Art Carden
Here's my latest Forbes.com article, which is written in part in response to fellow Forbes.com contributor Laura Shin's question about whether the attention given to McDonald's wages will lead a higher minimum wage. I highlight what is, I think, one... MORE

David Kennedy needs to understand a key paragraph in Hayek's "The Use of Knowledge in Society" There are so many things I like about Chapter One of David M. Kennedy's book, Freedom from Fear. I blogged about the book yesterday.... MORE

How U.S. Steel Helped Break Down Racism

Labor Market
David Henderson
In 1919, U.S. Steel Pulled a Branch Rickey My economic historian friend, Jeff Hummel, has recommended for years that I read David M. Kennedy's Freedom from Fear: The American People in Depression and War, 1929-1945. Kennedy is a first-rate historian... MORE

Twitter vs. Flying Cars

Growth: Causal Factors
David Henderson
You've probably heard that line from Peter Thiel: We wanted flying cars, instead we got 140 characters. That line expressed his disappointment about how technology has turned out. Now, when rich libertarian entrepreneurs, especially ones I admire as I do... MORE

Bastiat on Baseball

Business Economics
David Henderson
Without question, advancing a runner to the next base makes it easier for the runner to score. You can literally see the runner move to the next base. That's easy. But as Bastiat declared, ""Stop there! your theory is confined... MORE

Friday Night Video: Grover Norquist on Immigration

Labor Mobility, Immigration, Outsourcing
David Henderson
Grover Norquist has been amazingly effective with his tax pledge that he has gotten almost all Republican Senators and Members of the House of Representatives to sign. It turns out that he has thought a fair amount about immigration too.... MORE

What To Do With What You Did Over Your Summer Vacation (2013 Edition)

Human Capital: Returns to entrepreneurs, skills, etc.
Art Carden
Over the weekend, I spoke at the IHS Scholarship and a Free Society seminar at Chapman University. This week, I spoke and helped lead discussions at the Intercollegiate Studies Institute's American Freedom Institute. At the end of May and beginning... MORE

UPDATE BELOW: Last week, my wife and I saw the movie, "42." It's about Branch Rickey, general manager of the Brooklyn Dodgers, hiring Jackie Robinson to play baseball for him in the mid to late 1940s. I recommend the movie.... MORE

In researching a piece I'm writing, I came across an excellent article by Paul Krugman, written in 1996, at the height of his "explain economics to non-economists" era. It's titled "The CPI and the Rat Race." He starts by pointing... MORE

The sticky label of 'Social Darwinism'

Economic Philosophy
Alberto Mingardi
Advocates of the market economy are often dismissed as heartless and deaf to the needs of the poor. "Social Darwinism" seems to be a label perfectly tailored to convey such an alleged preference for efficiency over humanity. The concept, as... MORE

Nowrasteh on Sowell and Immigration

Labor Mobility, Immigration, Outsourcing
David Henderson
Alex Nowrasteh of the Cato Institute, one of my favorite Cato Institute writers (although the list of my favorites is long) has published two excellent critiques of one of my favorite Hoover Institution writers, Thomas Sowell. In Alex's July 19... MORE

Averages and Margins: A Teaching Moment

Labor Market
David Henderson
UPDATE BELOW: OMG. Even economist Paul Krugman screwed up on this one. A Facebook friend provided a link to the following article from 2009 by John Carney and Vincent Fernando. It's titled "French: The Most Productive People In The World."... MORE

We Calculate: You Decide

Energy, Environment, Resources
David Henderson
Patrick J. Michaels and Paul C. "Chip" Knappenberger have figured out a marvelously clever way of showing the effects of various levels of carbon reduction on the temperature 2050 and by 2100. They use a term called "climate sensitivity" and... MORE

Is royalty the most absurd thing?

Politics and Economics
Alberto Mingardi
Art Carden uses a brilliant tweet by Neil deGrasse Tyson to point out the absurdity of royalty: "A curious tradition -- to look at a newborn baby and say to yourself, 'Because of your DNA, one day you will rule... MORE

Eminent Domain's Contribution to Detroit's Downfall

Central Planning vs. Local Knowledge
David Henderson
George Mason University law professor Ilya Somin has an interesting post on the contribution of eminent domain to Detroit's decline. He discusses the infamous 1980s case of Poletown. Much earlier, before the infamous 1967 Detroit riot, there was another instance... MORE

But Did it Toast?

Austrian Economics
Art Carden
Yesterday, I offered a few thoughts on "I, Pencil" and related projects with a link to Thomas Thwaites' "Toaster Project" TED Talk. In evaluating students' essays on this, I was struck by how many people wrote that Thwaites "succeeded" in... MORE

The Absurdity of Royalty

Economics and Culture
Art Carden
The world is aflutter with news of the Royal Baby. In a tweet, Neil deGrasse Tyson points out the absurdity of royalty: "@neiltyson: A curious tradition -- to look at a newborn baby and say to yourself, 'Because of your... MORE

Thoughts from the hospital

Central Planning vs. Local Knowledge
Alberto Mingardi
I am just back from an unplanned vacation in a hospital. In a very fundamental way, I know I was lucky. I live in Milan, in Lombardy (9.7 million people, GDP per capita € 33.500), where we enjoy good quality... MORE

I, Toaster: Revisited

Austrian Economics
Art Carden
One of my favorite TED Talks is Thomas Thwaites' explanation of how he tried to build a toaster from scratch. It's an excellent example of the lesson taught by Leonard E. Read in "I, Pencil." A couple of the organizations... MORE

Robin Hanson on Questions

Economic Philosophy
David Henderson
In a post today, George Mason University economist Robin Hanson reports on an interesting interview with Bill Raduchel. The whole interview is interesting, by the way. Robin highlights Raduchel's conclusions about, when he was "assistant dean of admissions for Harvard... MORE

Daniel Kuehn on Questions about Funding Sources

Revealed Preference
David Henderson
Ad hominem is contextual. Daniel Kuehn, a frequent commenter on this blog, defends Senator Barbara Boxer's questioning of who funds the Institute for Energy Research, the organization under whose auspices Bob Murphy testified on Thursday. His general point is that... MORE

Friday Night Video: Murphy on the Optimal Carbon Tax

Energy, Environment, Resources
David Henderson
This is Bob Murphy's testimony on the optimal carbon tax, given Thursday, July 17, 2013. It's excellent. His written testimony is here. The best my Senator, Barbara Boxer, chair of the committee, came up with was to attack not... MORE

Noah Smith on Wealth and Efficiency

Cost-benefit Analysis
David Henderson
In a recent post on how "normal people" think about economics, Noah Smith writes something that I strongly disagree with: In a certain sense, the normal people's approach makes more sense than that of the economists. We are an incredibly... MORE

Coming Attractions for Next Week

Econlog Administrative Issues
Art Carden
Here are a few things I'll be writing about next week: 1. Thomas Thwaites' Toaster Project. Here's the TED Talk. My students had to watch this recently and write an essay about it. It's "I, Pencil," but with toasters. Sort... MORE

Meta-Measuring Signaling

Cost-benefit Analysis
Bryan Caplan
Tyler has probably just posted his best piece on educational signaling ever.  Unfortunately, I leave for vacation today, so I won't write a detailed response.  My quick take: Tyler now tacitly admits the force of many of my arguments, so... MORE

Four Big Facts About Hiring and IQ

Economics of Education
Bryan Caplan
Many economists seem to think that IQ-based hiring is effectively illegal in the U.S.  O'Keefe and Vedder are two prominent voices, but plenty of mainstream labor economists say the same.  The more I read about this topic, though, the more... MORE

In today's post on AL.com, Scott Beaulier of the Johnson Center at Troy University explains how the River Region Obesity Task Force is looking to measure students' BMIs. A few thoughts: 1. First they came for the beer, but I... MORE

Les Miserables

Economics of Crime
David Henderson
I remember reading an excerpt from Victor Hugo's famous novel in a high-school class in Carman, Manitoba. I came home and told my mother about this story of a man who had been given a long prison sentence for stealing... MORE

On Bastiat and the Edifice Complex

Central Planning vs. Local Knowledge
Art Carden
Last week, I asked my principles of macro students to do the following: Evaluate this argument in light of Frederic Bastiat's essay "What is Seen, and What is Not Seen." You may use the assigned readings and videos, but you... MORE

Gintis on the Evolution of Private Property

Behavioral Economics and Rationality
Bryan Caplan
Herb Gintis' "The Evolution of Private Property" (Journal of Economic Behavior and Organization, 2007) is one of the most fascinating articles I've read in years. (ungated draft)  I'm slightly jealous because I've planned to write a similar piece for a... MORE

Selgin on Gorton

Monetary Policy
David Henderson
One of the best writers in economics, and one of the very best thinkers in monetary economics, is University of Georgia economist George Selgin. I highly recommend his recent critical review of Gary Gorton's recent book, Misunderstanding Financial Crises. After... MORE

Roughead on Sea Power

International Trade
David Henderson
In Monday's Wall Street Journal, Gary Roughead, former chief of naval operations and now a fellow at the Hoover Institution, has a review of Mayday: The Decline of American Naval Supremacy by Seth Cropsey, a former deputy undersecretary of the... MORE

We-e-ee Are NEVER EVER EVER--Running Out of Oil!

Energy, Environment, Resources
Art Carden
Here's an extra credit assignment I gave my principles of macro students last week when we were talking about supply and demand. Fans of Russell Roberts might recognize that this is inspired in part by chapter 1 of The Invisible... MORE

Vegetarianism and Moral Self-Deception

Behavioral Economics and Rationality
Bryan Caplan
Vegetarianism is plagued by apostates as well as hypocrites:[A]ccording to a 2005 survey by CBS News, three times as many American adults admit to being "ex-vegetarians" than describe themselves as current vegetarians. This suggests that roughly 75% of people who... MORE

Recent Reading

Books: Reviews and Suggested Readings
Art Carden
1. Orson Scott Card, Ender's Game. I've misplaced my copy of Foundation and Empire, so I decided to pick up the Ender Quartet. I found Ender's Game difficult to put down at times. The use of children in war presents... MORE

Vegetarianism and Social Desirability Bias

Behavioral Economics and Rationality
Bryan Caplan
Economists love to dismiss surveys: "You can't believe what people say.  You have to look at what they actually do."  Yet we rarely bother to actually demonstrate the unreliability of surveys.  Economists may be pleased to know, then, that two... MORE

Abrams on Investing

Finance: stocks, options, etc.
David Henderson
I was introduced to the stock market when I was 13. I had a bar mitzvah and my father bought me ten shares of something called Bayuk Cigar. I was outside playing stickball, came in for dinner, and my father... MORE

Krugman's Graph on Food Stamps

Labor Market
David Henderson
Check out Paul Krugman's graph of participation in the food stamp (SNAP) program and U6 unemployment. MAKE SURE YOU LOOK ONLY AT THE GRAPH. Don't read his words around the graph. Then ask yourself what you think the relationship is... MORE

Trading With Foreigners: What's In It For Us?

Cost-benefit Analysis
Art Carden
Arguments against international trade and immigration are classic examples of people ignoring Bastiat's lesson and focusing only on what is seen while ignoring what is unseen. What, people ask, is in it for *us* if we trade with foreigners? The... MORE

The Chicago School: What Went Wrong

Economic Philosophy
David Henderson
I have a couple of thoughts to add to Bryan Caplan's recent excellent post on this issue. 1. I think Milton Friedman felt defensive about his libertarian activism. The main reason, I think, was the attitude of his close friend,... MORE

Betting Therapy

Behavioral Economics and Rationality
Bryan Caplan
A great practical idea from Eliezer Yudkowsky:Betting Therapy" should be a thing. You go to a betting therapist and describe your fears - everything you're afraid will happen if you do X - and then the therapist offers to bet... MORE

Misapplying Citizenism?

Economic Philosophy
Bryan Caplan
Check out my new guest post on Open Borders.  I expect it to provoke considerable anger, but critics should read my exact words.  I chose them carefully, and did my best to avoid giving undue offense.  In any case, please... MORE

Tyler's Breakdown

Economics of Education
Bryan Caplan
Today Tyler has a lengthy reply to my Twitter challenge:Would you state your human capital/ability bias/signaling point estimates using my typology?Unfortunately, Tyler gets off track almost immediately:[Bryan] does not clearly define the denominator there: is it percentage of what you... MORE

Robin Cook's Mistaken Idea about Pooling Risk

Economics of Health Care
David Henderson
I'm on vacation in Hawaii and just finished the first novel I've read in months. It's Marker by Robin Cook. While it's a real page turner and I enjoyed it, I found the ending, which I began to anticipate halfway... MORE

Long-time readers of EconLog will know that most of the common objections to increased immigration are simply wrong. For review, here's Ben Powell's explanation of how immigrants don't wreck our economy, take our jobs, or depress wages. Still, one of... MORE

Economics at the University of Chicago is no longer very different from economics at other top programs.  What happened?  The proximate cause was lack of a strong instinct of memetic self-preservation.  The ultimate cause, though, was that the Chicago School... MORE

Krugman: Where's Your Evidence?

Economic Education
David Henderson
Paul Krugman writes: Cut through the noise and fog, and it is true that Democrats broadly want to redistribute income down, and Republicans want to redistribute income up He gives zero evidence for either claim. Does he have any? I... MORE

Althaus on War and Informed Opinion

Behavioral Economics and Rationality
Bryan Caplan
Sam Wilson's results on war and income don't surprise me, but I think Art is misinterpreting them.  Income is a decent proxy for political knowledge, and Scott Althaus ably summarizes the subtleties of political knowledge and foreign policy in his... MORE

A popular saying during the Civil War was that it is a "rich man's war but a poor man's fight." On July 4, Neil DeGrasse Tyson tweeted: July 4th, USA: The Star Spangled Banner, Fireworks, the 1812 Overture, Air Shows... MORE

The Roots of Signaling Denial

Behavioral Economics and Rationality
Bryan Caplan
The signaling model of education fits first-hand experience.  It fits the psychology of learning.  It explains otherwise very puzzling facts like the sheepskin effect.  There are few theories in economics harder to doubt.  But many economists continue to do so. ... MORE

Numeracy and Risk in Air Travel: A Personal Account

Behavioral Economics and Rationality
David Henderson
Months ago, my wife and I made plans to fly from San Francisco to Honolulu on Sunday, July 7. Of course, we didn't know that the day before there would be a big airline crash in San Francisco. Should that... MORE

Last summer, during one of my first meals at Samford University, I thought I had stumbled upon clever choice architecture at one of the drink dispensers. You can get water by pushing your cup against a lever, but getting soda... MORE

The Mosquito Bite Analogy

Behavioral Economics and Rationality
Bryan Caplan
Free-market economists often lament the difficulty of communicating their ideas to a popular audience.  Why?  Because the free-market prescription is often, "Government should leave the problem alone.  Trying to fix it only makes it worse."  How is anyone supposed to... MORE

The Silence of the Bets

Cost-benefit Analysis
Bryan Caplan
Last week's post on "Bets, Portfolios, and Belief Revelation" sparked a long list of responses: Tyler (here, here, plus a ton on Twitter), Alex, Robin, Eli Dourado, and more.  Adam Gurri kindly aggregates here.  The quick version of my view:... MORE

Will autarchy save the Galapagos biodiversity?

Property Rights
Alberto Mingardi
In the Galapagos, the authorities understandably exhort the population to conserve the amazing natural legacy of the islands. But I notice that they also stress the need to move towards agricultural self sufficiency, establishing a priority lane for local products.... MORE

In Case of Revolution, Climb Into a Hole

Cost-benefit Analysis
Bryan Caplan
In 1968, Abbie Hoffman published Revolution for the Hell of It.  Five years later, this silly title inspired David Friedman to include a chapter called "Revolution Is the Hell of It" in his Machinery of Freedom.  I remember Friedman's words... MORE

Statism for Freedom

Economic Philosophy
Bryan Caplan
Normal 0 false false false MicrosoftInternetExplorer4 Libertarians' odd openness to using immigration restrictions to protect American freedom has me thinking.  There are many statist policies that could indirectly lead to more libertarian policy.  If you're open to one, you... MORE

If you have been following the news on unpaid internships lately, you will have noticed that they're becoming increasingly at risk legally. Here's an excerpt from a recent news story in USA Today: The controversy over unpaid internships escalated recently... MORE

The idea that "competition among states and regions [...] lays the groundwork for technological progress and economic growth" is almost taboo in the European debate. Perfectly reasonable people, that may favor competition elsewhere, apparently came to the conclusion that competition... MORE

Questions for Independence Day Evening

Political Economy
Art Carden
I thought it best to honor the principles of liberty on Independence Day by reviewing a long defense of the idea that governments' claims to political authority are indefensible. I'm finishing a review if Michael Huemer's The Problem of Political... MORE

A Bet I'd Hate to Win, A Bet Bryan Would Love to Lose

Behavioral Economics and Rationality
Art Carden
I've been influenced by Julian Simon, Robin Hanson, and our own Bryan Caplan when it comes to putting your money where your mouth is, and I've come to agree with Alex Tabarrok that "A Bet is a Tax on Bull****."... MORE

Coase versus Pigou on Independence Day

Central Planning vs. Local Knowledge
Art Carden
As I write this on Wednesday night, I hear the sounds of fireworks going off in the distance. My first thought was "maybe distant fireworks were the 'orange stuff' my son saw that through his window that 'scared [him]' earlier... MORE

In praise of Over-Legislation (the essay)

Regulation
Alberto Mingardi
This very same month in 1853, the Westminster Review was publishing a truly seminal article in the history of classical liberalism: "Over-Legislation" by Herbert Spencer. In his lifetime, Spencer was virtually a household name among philosophers. He has since been... MORE

Henderson on Reinhardt on Goodman and Kotlikoff

Economics of Health Care
David Henderson
In a letter to the Wall Street Journal earlier this week, Princeton health economist Uwe Reinhardt criticizes an earlier op/ed by health economist John C. Goodman and economist Laurence J. Kotlikoff. It was an interesting enough response that I think... MORE

Two decades ago, I spent my summer writing my first academic article.  Topic: "The Literature of Nonviolent Resistance and Civilian-Based Defense" (Humane Studies Review, 1994).  I'm still happy with the result.  The piece begins by noting that conservatives' prognosis for... MORE

Quote of the Day: Alan Reynolds

Taxation
David Henderson
In writing on the recent paper by Robert Rector and Jason Richwine ("The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer"), which found that U.S. governments spend more on households headed by illegal immigrants than those immigrants... MORE

I've filmed a lot of videos for the Institute for Humane Studies' LearnLiberty project. They just released my favorite one today: This is an attempt to address what, I think, is the fundamental pedagogical problem the economics profession faces: the... MORE

Market Distortions Are Lower Bounds

Behavioral Economics and Rationality
Art Carden
A few days ago, I blogged from the Mall of America and asked whether it is "the most bourgeois place on Earth." One commenter pointed out that it's subsidized and actually policed by the Bloomington PD. Neither really surprise me... MORE

Congratulations to Cato Legal Scholars

Regulation
David Henderson
The Supreme Court's term is over, with 75 cases having been argued and decided. It's safe to say that the most significant ones were those decided this week, on the politically fraught subjects of affirmative action, the Voting Rights Act... MORE

Don Boudreaux thoughtfully discusses the putative political externalities of immigration, then ends on a pessimistic note:I have no illusions (I really and truly do not) that anything that I write here, or that I might write in follow-up posts or... MORE

New at the IHS Kosmos Blog: My Productivity Bookshelf

Books: Reviews and Suggested Readings
Art Carden
One of my favorite organizations in the world is the Institute for Humane Studies. This isn't because I do contract work for them or because I won their 2013 Alum of the Year Award. I do contract work for them... MORE

Ben Powell on the Drug War

Regulation
David Henderson
Economics is a science of means and ends. Thus, the question for economics is whether the means--drug prohibition--is effective in promoting the ends of greater health, safety, and productivity, as well as lower violence and criminal justice costs. In "The... MORE

Bets, Portfolios, and Belief Revelation

Behavioral Economics and Rationality
Bryan Caplan
Adam Ozimek just reminded me that I still need to refute the Tyler Cowen/Noah Smith view that "portfolios reveal beliefs, bets reveal personality traits and public posturing."  Smith's version:It's a mistake that most people make (myself often included!), and that... MORE

Why Don't Dying Firms Raise Prices?

Cost-benefit Analysis
Bryan Caplan
"Demand is more elastic in the long-run than the short-run."  It's a textbook truism.  Implication: Raising prices is often a bad idea even if profits instantly rise.  In the long-run, demand will get more elastic, and the price-gouging firm will... MORE

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