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May 2015

A Monthly Archive (72 entries)

"Forcing" the GOP to accept needles

moral reasoning
Scott Sumner
Here's a revealing (and very sad) Politico article on the drug epidemic in "red states." It wasn't supposed to happen here. Not in Austin, a one-doctor-and-an-ice-cream-shop town of 4,200 in southeastern Indiana, nestled off Interstate 65 on the road from... MORE

This is Scary

Politics and Economics
David Henderson
In our discussion about "designer babies," I took on Dan Klein's main argument against them--that we might get super achieving babies and, thus, lose our coherence with the past. In the comments on my post on this topic, Dan raised... MORE

Looking for AD in all the wrong places

Macroeconomics
Scott Sumner
Here's a typical story about the economy, this one from the Washington Post: When oil prices began to dive in October, analysts and investors spoke of an economy poised for a higher gear: Cheaper prices at the pump amounted to... MORE

A Problem with Criminal Law

Economics of Crime
David Henderson
It seems as if there's a strong case for the federal government to charge Hillary Clinton with a fairly serious crime. See here for more details. A former prosecutor named Andy McCarthy states: Given that Congress's array of campaign finance... MORE

Why Should We Worry About Stock Bubbles?

Finance: stocks, options, etc.
David Henderson
A number of commenters on my proposed bet with Bob Murphy seem to have missed the point. Rather than respond to each of them in comments that I know few people will read, I'm responding here. Various people have argued... MORE

Over at TheMoneyIllusion I discuss a new paper by James Bullard, et al, on the case for NGDP targeting. The Wall Street Journal reported some additional comments by Bullard: He said his model is consistent with the Fed maintaining its... MORE

A Proposed Bet for Bob Murphy

Finance: stocks, options, etc.
David Henderson
As regular readers of Econlog probably know, I had a bet with Bob Murphy a few years ago about inflation and I won. Bob is a good sport and he paid up. I follow this part of co-blogger Bryan Caplan's... MORE

Greece and Detroit

Scott Sumner
In a recent post I claimed that it made no sense to talk about NGDP at the global level. In the comment section Nick Rowe argued that one might be able to come up with a meaningful estimate of global... MORE

Uber banned in Milan too

Competition
Alberto Mingardi
Uber has been banned in different countries in Europe, including Germany, France, and Spain, where the company has evolved its business model in the direction of transporting goods. As you may know, we Italians are often latecomers to new trends:... MORE

Systematically Biased Beliefs About Inequality

Behavioral Economics and Rationality
Bryan Caplan
I am a behavioral political economist.  I think most political economy models are worthless.  Unless you start with empirically sound assumptions about voter cognition and motivation, you're wasting your time - and the time of everyone who reads you.  What... MORE

A Bettor's Tale

Behavioral Economics and Rationality
Bryan Caplan
Here's a great yarn of betting and political irrationality courtesy of EconLog reader Mathieu Giroux, used with his permission. My Uncle, like the vast majority of people living in North America, is not a fan of the idea of open... MORE

Madrid turns left - and Europe too?

Eurozone crisis
Alberto Mingardi
Spain voted on Sunday in a number of administrative jurisdictions. These were local elections, so one should not underestimate the local peculiarities that may have influenced the outcome. However, the big news is that the Popular (Christian-Democrats) and the Socialist... MORE

Get Over Yourself

Behavioral Economics and Rationality
Bryan Caplan
I don't worry much about what other people think about me.  My detractors attribute this to a severe case of Asperger's, but I've got a competing two-part story.  Part 1: We live in an evolutionarily novel anonymous society, so most... MORE

Henderson's Law of Heroic Movies

Economics and Culture
David Henderson
Dan Klein, with whom I've been arguing about designer babies lately, recently suggested that I post about an article I wrote for Reason 26 years ago: Henderson's Law of Heroic Movies. The Introduction "David, I rented a movie for tonight... MORE

Questions that don't get asked very often

Monetary Policy
Scott Sumner
I don't recall many articles written by neoconservatives discussing how certain aspects of modern global instability might have been caused by US intervention. Perhaps that's because they favor intervention. I don't recall reading many articles written by progressives discussing how... MORE

John Nash, RIP

Obituaries
David Henderson
The famous game theorist John Nash and his wife Alicia were killed in a traffic accident yesterday in New Jersey. He was 86. I met him and had lunch with him when he came to speak at the Naval Postgraduate... MORE

Should We Fear Progress?

Economic Philosophy
David Henderson
As I mentioned in a comment on Bryan Caplan's response to Dan Klein, the further I get away from Dan Klein's piece on "designer babies," the less persuaded I am. That glide path has continued. Virtually all of Dan Klein's... MORE

A Note on Johann Hari

Regulation
David Henderson
In yesterday's post on drug addiction, I referenced work by British journalist Johann Hari. I knew nothing about his background. A regular reader of Econlog contacted me to tell me that in his past he committed plagiarism and has admitted... MORE

In 2009, Glenn Greenwald wrote, for the Cato Institute, a study of the effects of drug decriminalization in Portugal. Among his findings were that drug usage actually decreased among various populations. Greenwald writes: In fact, for those two critical groups... MORE

All transactions are two-sided. However in most cases the market for the object being sold is impacted much more strongly than the market for the object being purchased. If a huge new silver mine started selling silver on the open... MORE

Murphy on Interpersonal Utility Comparisons

Microeconomics
David Henderson
Bob Murphy has done a huge service by laying out clearly the economic reasoning behind my conclusions (here and here) that: (1) you can't make interpersonal utility comparisons and (2) utility is ordinal, not cardinal. His piece is not long... MORE

When to Head for Your Bunker

Cost-benefit Analysis
Bryan Caplan
Two strangely divergent reactions:1. When economists discuss worst-case macroeconomic scenarios, they often say stuff like, "Head for your bunker," "Dig a hole and jump in," and "Hopefully you've been hoarding canned goods."2. When foreign policy experts discuss worst-case war foreign... MORE

Am I Out of Date? I Don't Think So

Microeconomics
David Henderson
David Friedman writes in a comment on my post on interpersonal utility comparisons: Von Neuman [sic] showed how to cardinalize utility most of a century ago, so your statement that utility is ordinal not cardinal is long out of date.... MORE

Aggregate demand is fundamentally a monetary concept, linked to each country's monetary unit. Only in a few cases, such as the eurozone, does it make sense to talk about aggregate demand as a regional concept. Indeed in the eurozone, aggregate... MORE

Unlock the School Library

Cost-benefit Analysis
Bryan Caplan
If you could change the K-12 curriculum in one small way, what would you change?  My pick: Unlock the school library.  By this I mean...1. Give kids the option of hanging out at the library during every break period.  2.... MORE

Tyler Cowen on Interpersonal Utility Comparisons

Economic Philosophy
David Henderson
One of the things we are most sure of in economics is that you can't compare utility, marginal or otherwise, across individuals. Utility is ordinal, not cardinal. Which is why I don't understand Tyler Cowen's post this morning. He leads... MORE

A consumption tax is a wealth tax

Taxation
Scott Sumner
When I advocate a (progressive) consumption tax to replace our current income tax system, some commenters reply that wealth provides benefits beyond consumption, such as peace of mind and security. I think that's true, but to me it seems to... MORE

Great Rules for Discussion

Behavioral Economics and Rationality
David Henderson
I've been reading more about the "Deflategate" case than I ever would have imagined. It's not because I'm a Patriots fan or a Patriots hater. I'm neither. It's not because I'm a football fan. I'm not really; I don't tend... MORE

Designer Babies Are Nothing to Fear: A Reply to Dan Klein

Behavioral Economics and Rationality
Bryan Caplan
I'm delighted that Dan Klein is engaging my defense of designer babies.  Here's my reply, point-by-point.  Dan's in blockquotes, I'm not.The idea that technology will enable designer babies fills me with apprehension. My apprehension over designer babies would be great... MORE

Politi-Obfuscate

Taxation
David Henderson
Bill Gates stated yesterday: The highest economic growth decade was the 1960s. Income tax rates were 90 percent. He stated this on CNN's Fareed Zakaria GPS. Politifact's Punditfact decided to check the truth of Gates's statement. To their credit, they... MORE

Imagine living in a country where the top 30% of the population had roughly 25 times as much wealth per person as the bottom 30% of the population. That seems pretty unequal, doesn't it? Now suppose the same statistics applied,... MORE

The Hours and Behavior Problems

Cost-benefit Analysis
Bryan Caplan
Hofferth and Sandberg's "How American Children Spend Their Time" (Journal of Marriage and the Family, 2001) doesn't only estimate the effect of time usage on academic achievement.  It also estimates how the way kids spend their days affects their behavior. ... MORE

Daniel Klein on "Designer Babies"

Family Economics
David Henderson
My friend Dan Klein, also a friend and colleague of Bryan Caplan at George Mason University, has sent me a guest post on designer babies. He disagrees profoundly with Bryan's optimism about the prospects for genetic engineering even if government... MORE

About 90% of the macroeconomics you read in the media is pop macro, which basically caters to the prejudices and ignorance of the average reader. For instance, I recently did a post discussing the media's focus on "currency manipulation" (as... MORE

Friday Night Audio: Christy "Versus" Emmanuel

Energy, Environment, Resources
David Henderson
A friend recently recommended Russ Roberts's Econtalk episode in which he interviews climatologists John Christy and Kerry Emmanuel in front of a large audience at the University of Alabama in Huntsville. I listened to it and followed along with the... MORE

3 Fun Quotes from Ayatollah Khomeini

Economic History
Bryan Caplan
Khomeini's retrospective deontological case for the Iran-Iraq War:[W]e do not repent, nor are we sorry for even a single moment for our performance during the war. Have we forgotten that we fought to fulfill our religious duty and that the... MORE

Representative Dave Brat (Republican, Virginia), writing in The Daily Signal, objects to members of Congress who want to expand the pool of eligible recruits by accepting illegal aliens. His argument is not simply that they're illegal. Whether you think that... MORE

Reallocation and growth

Macroeconomics
Scott Sumner
I was recently chatting with Caroline Baum about "never reason from a price change" and she mentioned an example from 1986 that I had forgotten. Then I realized it also related to the concept of "re-allocation," which is frequently discussed... MORE

Genetic Engineering Is Reproductive Freedom

Economic Philosophy
Bryan Caplan
Will contraception lead to a dystopian society?  It depends.  If governments control individuals' contraception, then yes.  If individuals control their own contraception, then no.  The same goes for genetic engineering.  In the hands of the government, it would be a... MORE

Low hanging fruit and the inequality question

Income Distribution
Scott Sumner
Increasing economic inequality has become one of the trendy issues in economics, mostly for the wrong reasons. I've pointed out that inequality pundits tend to rely on income data, which doesn't measure what they assume it measures---economic inequality. This discussion... MORE

The Hours and Academic Achievement

Family Economics
Bryan Caplan
Adults love controlling the way kids spend the hours of the day.  What's the payoff for all their meddling?  Hofferth and Sandberg's "How American Children Spend Their Time" (Journal of Marriage and the Family) provides some fascinating answers for kids... MORE

Surviving on the Margin

Economic Education
David Henderson
In response to my recent post "A Game of Margins," in which I emphasized the importance of thinking on the margin, Facebook friend Marshall Beerwinkle sent me the following story: David, I just read your post, A Game of Margins.... MORE

California Water Numbers

Energy, Environment, Resources
David Henderson
Apparently we are supposed to be worried about fracking depleting water in California. ThinkProgress reports that Despite Historic Drought, California Used 70 Million Gallons Of Water For Fracking Last Year. Similar concerns are raised by RT, Huffington Post, and even... MORE

The Opposite of What Robin Says

Behavioral Economics and Rationality
Bryan Caplan
I often disagree with my dear friend Robin Hanson, but his latest post on happiness strikes me as a full 180 degrees wrong.  Robin begins by discussing fascinating research on the divergence between what people choose and what makes them... MORE

Rebuttal to Jeffrey Sachs on Sovaldi

Business Economics
David Henderson
One of the big breakthroughs in economics was the "Marginal Revolution" of the 1870s, when economists figured out that the value of something is not the same as the cost. The value of Sovaldi to many people is far above... MORE

Civil and Economic Liberties Under the Shah

Economic History
Bryan Caplan
Here are two striking passages from Abbas Milani's The Shah.  Civil liberties under the Shah:The Shah's crucial decade from 1965 to 1975 was also critical for the regime's cultural politics.  Iran in this period was a discordant combination of cultural... MORE

If you ask me, the single most consequential political act of my lifetime is likely to be President Obama's decision to throw the Bowles-Simpson recommendations under the bus. That may have destroyed the last chance to prevent a budget train... MORE

Labor market blues

Labor Market
Scott Sumner
Here's Free Exchange: The unemployment rate as expected fell to just 5.4%, much less than economists predicted a year ago. Last July I said: I believe the unemployment rate (6.1%) is the most informative. There is still some slack, but... MORE

My Hoover Institution colleague John Cochrane has highlighted an excellent speech by James McAndrews of the New York Federal Reserve Bank. It's titled "Negative Nominal Central Bank Policy Rates: Where Is the Lower Bound?" There's a lot of meat in... MORE

Milan is hosting the 2015 Expo fair. I live and work in Milan, and thus I hope it goes well: that the fair attracts visitors (apparently some 10 million tickets have been sold) and brings many to enjoy the beauties... MORE

Markets > Polls > GOP pundits

Politics and Economics
Scott Sumner
Back in 2012 there was a lot of discussion about how forecasters who relied on polls, such as Nate Silver, made much more accurate election predictions that many GOP pundits, who seemed engaged in little more than wishful thinking. I... MORE

What Obligations Does Freedom of Speech Carry?

Economic Philosophy
David Henderson
Kenneth Grubbs, a friend on Facebook and press secretary for Dana Rohrabacher, a Congressman representing the 48th Congressional District of California, writes: The right to free speech also means acknowledging when to remain silent--a discipline Pam Geller never mastered. [Ken... MORE

The Government of Bad Manners

Behavioral Economics and Rationality
Bryan Caplan
We teach children to say "Thank you" when others help them - even if the others are socially expected to help them.We teach children to say "I'm sorry" when they've needlessly harmed others - even if the harm was done... MORE

Suppose I wanted to claim that almost all Americans favor lower taxes on the rich. How would I show this? Easy, conduct a public opinion poll asking what the highest income tax rate should be. Here's an example from 2012:... MORE

The Neighborhood of Happiness

Behavioral Economics and Rationality
Bryan Caplan
I've long maintained that raising your income only has a small positive effect on your happiness.  Csikszentmihalyi and Hunter's "Happiness of Everyday Life" (Journal of Happiness Studies, 2003) finds that your neighborhood's income's effect on your happiness is highly irregular. ... MORE

A Game of Margins

Economic Education
David Henderson
When I teach my Ten Pillars of Economic Wisdom, I spend a lot of time on the pillar "Economic thinking is thinking on the margin." I go into how so many issues are issues of margins. I apply it all... MORE

How would we know if we won the War on Poverty?

Income Distribution
Scott Sumner
Ross Douthat recently made this observation: 1.) The modern welfare state has succeeded in substantially cutting our country's poverty rate. This is a point that both right and left sometimes obscure, the right because it complicates a simple "we fought... MORE

Orwell as Public Choice Socialist

Books: Reviews and Suggested Readings
Bryan Caplan
There really ought to be a paper on George Orwell and Public Choice.  Thanks to Loyola University senior Michael Makovi, there finally is.  He's done a great job - "George Orwell as Public Choice Economist," forthcoming in The American Economist,... MORE

Free trade and the Expo in Milan

Trade Barriers
Alberto Mingardi
In 1851, the London Great Exhibition was promoted by Prince Albert and a Royal Commission that included, among others, William Gladstone and Richard Cobden, the great apostle of free trade who conducted the campaign that led to the abolition of... MORE

Because Freedom

Economic Philosophy
Bryan Caplan
Lately I've heard libertarians ridiculed because their argument against some law boils down to, "Because freedom."  Why shouldn't we have inheritance taxes?  Because freedom.  Why shouldn't we ban handguns?  Because freedom.  Why shouldn't we have an affirmative consent standard for... MORE

Lemieux Defends Google

Industrial Organization
David Henderson
Antitrust arguments are especially unpersuasive in fluid and innovative high-tech markets. Google did not even exist 20 years ago. In the late 1990s, the dominant search engine was Alta Vista. Veronica, another major Internet search engine, had just recently gone... MORE

Pizza shop worker Devin Jeran was excited about the raise that was coming his way thanks to Seattle's new $15 an hour minimum wage law. Or at least he was until he found out that it would cost him his... MORE

Yes, falling oil prices were like a tax cut

Fiscal Policy
Scott Sumner
In late 2014, many pundits claimed that falling oil prices were like a tax cut---in the sense that they put more dollars in the pockets of consumers. Note that they were referring to the demand-side effects, drawing a comparison to... MORE

School Networking: Friends versus Connections

Economics of Education
Bryan Caplan
Thanks to everyone who participated in my exploratory survey on school networking.  Anyone who wants to play with the data can download it here.  At least in this admittedly self-selected sample, the two big patterns are:1. People make lots of... MORE

I'm an Outside Agitator

Behavioral Economics and Rationality
David Henderson
Frequent Econlog commenter Greg G wrote recently: But there is something very strange about this debate [about the minimum wage]. All the agonizing about the suffering that the minimum wage causes to poor people seems to come from relatively wealthy... MORE

A Prediction about Brookings

Income Distribution
David Henderson
Greg Mankiw announced on his blog today that he will be speaking at a Brookings Institution event tomorrow. The topic: "40 years later- The relevance of Okun's 'Equality and Efficiency: The Big Tradeoff.'" Here's my prediction: Most, and probably all,... MORE

Patrick Sullivan left me the following comment: [Read] what Alan Greenspan did in October 1987. He was on an airplane to Dallas on 'Black Monday' when the stock market began to plummet. On arrival he made a few phone calls,... MORE

Noah Smith recently made this claim: Maybe people are perfectly smart and rational enough to understand the David Ricardo idea, and also smart enough to understand something else that economists have known for 200 years -- international trade doesn't necessarily... MORE

Iranians' Ways around Oppressive Government

International Trade
David Henderson
Last night, I went to an event at the Peace Resource Center in Seaside, California to see talks by some Americans who had recently visited Iran. There's lots to report, and I may do a further post, but one thing... MORE

Would you vote for Tyrion Lannister?

Book Club
Alberto Mingardi
On the Liberty and Law blog, Mike Rappaport has an interesting post on the politics of Game of Thrones. I got caught up in Game of Thrones by the HBO TV series, which is marvellously engaging. Then I started to... MORE

Timothy Taylor on Net Debtor Nations

International Trade
David Henderson
Conversable Economist Timothy Taylor has an excellent post on the net international investment position of the United States. Tim has been hitting two-baggers, three-baggers, and home runs for a long time now. If you want to see a well-informed economist... MORE

More evidence for a Great Stagnation

Macroeconomics
Scott Sumner
The government recently estimated that real GDP rose at a 0.2% rate in the first quarter of 2015. Most forecasters overestimated the growth rate, while the Atlanta Fed was pretty close, with a 0.1% forecast. The media pointed to temporary... MORE

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