Bryan Caplan and David Henderson

Economic Methods

A Category Archive (450 entries)

Meteorological Impossibilities

Economic Methods
Bryan Caplan
The Weather Channel's daily and hourly forecasts often seem logically incompatible.  Consider Oakton, VA's forecast for today.  The current daily prediction says "60% chance of rain."  But several evening hours individually have the same probability of 60%.  Unless I'm missing... MORE

Education Bet Update

Economic Methods
Bryan Caplan
In 2011, my co-blogger David and I bet on the future of higher education.  The terms:I propose that we use the official numbers from the National Center for Education Statistics' Table 212.  2009 is the latest available year of data. ... MORE

The Quantum Leap of Logic

Economic Methods
Bryan Caplan
Quantum mechanics is often used as a club against common sense.  I've heard dozens of variations on Scott's:After all, quantum mechanics doesn't sound plausible either---but it's true.Seriously, though, how does this argument amount to anything more than:Common sense is an... MORE

Common Sense: As True As It Seems

Behavioral Economics and Rationality
Bryan Caplan
Scott once again scoffs in the face of common sense economics:Common sense is almost useless in the field of economics. Never dismiss an economic theory because the assumptions about human behavior don't sound plausible.Notice, though, how Scott tries to persuade... MORE

Bad Faith and Court Decisions

Economic Methods
David Henderson
I wrote my earlier post this morning when I woke up in the middle of the night. I finally got back to sleep and woke up with another thought. Here would be a test of Scott Sumner's claim. You would... MORE

Does Predictability Imply Bad Faith?

Economic Methods
David Henderson
Co-blogger Scott Sumner, on his own blog, has written a stinging critique of intellectuals. You can read it for yourself, but here's the part I want to highlight and respond to: It's an embarrassment that the two sides of the... MORE

Free Intentions

Behavioral Economics and Rationality
Bryan Caplan
I quite enjoyed Alfred Mele's Free: Why Science Hasn't Disproven Free Will (available for pre-order now).  It's a great exercise in the debunking of debunking.  My favorite case: Many psychologists (and laymen) argue that consciousness is epiphenomenal.  In layman's terms,... MORE

Kant just went up a full notch in my eyes.  From The Critique of Pure Reason, via David Gordon, via Wlodek Rabinowicz.The usual touchstone, whether that which someone asserts is merely his persuasion -- or at least his subjective conviction,... MORE

The Economist: Give Tetlock Final Cut

Economic Methods
Bryan Caplan
A year ago, The Economist wrote another stylish but insubstantial editorial.  The topic: the Arab Spring.  The opening:Roughly two-and-a-half years after the revolutions in the Arab world, not a single country is yet plainly on course to become a stable,... MORE

Embarrass Me Now, Please

Economic Methods
Bryan Caplan
I'm now writing the most number-crunching parts of The Case Against Education: one chapter on education's selfish return, another on its social return.  The work is grueling, and haunted by the fear that I've made an early mistake that invalidates... MORE

Huemer's "The Use of Hypothetical Examples"

Economic Methods
Bryan Caplan
Mike Huemer's defense of hypothetical reasoning is so excellent that I feel like I'm cheating EconLog reader when I only quote a few sentences.  So here's his complete discussion, featuring a shout out to David Hume qua economist.  From Huemer's... MORE

When Do Hypotheticals Cover Their Cost?

Cost-benefit Analysis
Bryan Caplan
Suppose I asked, "Where would you buy steaks if you only shopped at stores starting with the letter Q?"  A few people would wrack their brains for an answer.  But most would dismiss the question: "That will never happen, so... MORE

Bauman Climate Bet

Economic Methods
Bryan Caplan
Yoram and I have digitally shaken on our global warming pause bet.  Via Twitter: @bryan_caplan yes, once we clarify concerns of @wonkinakilt You're betting avg(2015-2029)-avg(2000-2014)<=0.05C, yes? If so I accept!-- Yoram Bauman (@standupecon) June 10, 2014... MORE

Bauman Climate Bet Bleg

Economic Methods
Bryan Caplan
The Economist confirms that global warming has paused over the last 15 years:Between 1998 and 2013, the Earth's surface temperature rose at a rate of 0.04°C a decade, far slower than the 0.18°C increase in the 1990s. Meanwhile, emissions of... MORE

The answer to yesterday's data challenge: full-time, year-round workers can be unemployed, but only very briefly.  You don't have to actually work full-time to be a full-time worker.  "Full-time" workers can be unemployed indefinitely as long as they "usually worked... MORE

I've often heard economists talk about "full-time, year-round workers."  Data challenge: Can such workers also be officially "unemployed"?  Answer tomorrow.... MORE

Here are two of my favorite pages from The Cartoon Introduction to Climate Change, available starting today!  I've seen hour-long lectures on experimental versus observational studies that were less pedagogically effective.  Click to enlarge.[Excerpted from The Cartoon Introduction to Climate... MORE

Ad Hominem

Economic Methods
David Henderson
Michael Kinsley gives us Exhibit A Abusive ad hominem usually involves attacking the traits of an opponent as a means to invalidate their [sic] arguments. Equating someone's character with the soundness of their [sic] argument is a logical fallacy. So... MORE

My Moment with Gary Becker

Family Economics
Bryan Caplan
From Selfish Reasons to Have More Kids:In 1992, Gary Becker won the Nobel prize in economics for one big idea: "Economics is everywhere." He saw economics in discrimination; employers hire people they hate if the wage is right. He saw... MORE

Social Desirability Bias: How Psych Can Salvage Econo-Cynicism

Behavioral Economics and Rationality
Bryan Caplan
The strongest evidence against the economic way of thinking is the way that people describe their own behavior.  People rarely announce, "I'm looking out for number one."  Businesses rarely advertise, "Our own profit is our top priority."  Students rarely declare,... MORE

Facts

Economic Methods
David Henderson
One of my pet peeves is people latching on to alleged facts and then running with them even when there is doubt about whether they are true. These "facts" then get repeated so often that many people form an emotional... MORE

I've Won My TARP Bet

Economic Methods
Bryan Caplan
Back in 2008, I noted an obscure TARP provision: SEC. 134. RECOUPMENT.Upon the expiration of the 5-year period beginning upon the date of the enactment of this Act, the Director of the Office of Management and Budget, in consultation with... MORE

Smoking, Social Desirability Bias, and Dark Matter

Behavioral Economics and Rationality
Bryan Caplan
At the IEA blog, Kristian Niemietz points out that expenditure surveys fail to detect most of the tobacco sales visible in national product accounts.  For most goods, the two show broadly the same pattern: with small errors, what people profess... MORE

The Impolitic Wisdom of Simon Kuznets

Cost-benefit Analysis
Bryan Caplan
Highlight from Diane Coyle's GDP: A Brief but Affectionate History:Kuznets, however, saw specifically his task as working out how to measure national economic welfare rather than just output.  He wrote:It would be of great value to have national income estimates... MORE

You Don't Know the Best Way to Deal with Russia

Cost-benefit Analysis
Bryan Caplan
Foreign policy experts love making bold predictions.  The clearer their conclusions, the wiser they sound.  Unfortunately, as Philip Tetlock documents, their predictions about controversial topics are scarcely better than chance.  They're all style, no substance.  The Economist's recent editorial on... MORE

Question for Scott

Economic Methods
Bryan Caplan
Scott writes:Would you feel comfortable telling an accident victim in a wheelchair that "his type of person" is disproportionately composed of drunks? If not, be careful in making generalizations about the unemployed.My question for Scott: Would you feel comfortable telling... MORE

Should your neighbor make healthier choices at restaurants? Market signals are one source of information. Left to their own devices, restaurants rarely provide calorie information at the point of order. Evidently, people do not want to be reminded about the... MORE

The Popularity of Silly Methods

Economic Methods
James Schneider
In Bryan's blog post Predicting the Popularity of Obvious Methods, he suggests that social scientists are more likely to pursue non-obvious methods when the obvious methods don't provide the answer that they like. In the spirit of his post, the... MORE

Ukrainian Prediction Challenge

Economic Philosophy
Bryan Caplan
To repeat myself:The long-run benefits of war are highly uncertain.  Some wars - most obviously the Napoleonic Wars and World War II - at least arguably deserve credit for decades of subsequent peace.  But many other wars - like the... MORE

Wolfers Responds on Happiness

Behavioral Economics and Rationality
Bryan Caplan
Justin Wolfers kindly responded to my recent post.  His thoughts, reprinted with his permission. Interesting, fun, provocative, and well written.  Your math looks to be right to me. Some thoughts: 1. I'm not sure that controlling for confounds necessarily would... MORE

Crude Materialism versus the Wolfers Equation

Behavioral Economics and Rationality
Bryan Caplan
Suppose you're a crude materialist who believes that money is the secret to happiness.  You're estimating an equation of the form: Happiness (in Standard Deviations) = a + b * ln(income) How big should you expect b to be?  Well,... MORE

What Janet Yellen and Rick Santorum Have in Common

Economic Methods
James Schneider
Bryan has discussed the puzzling lack of social conservatives in economics. Economists use an agreed-upon framework that would seem to offer social conservatives a "safe harbor" to express their ideas, as long as they express them within the accepted framework.... MORE

Predicting the Popularity of Obvious Methods

Behavioral Economics and Rationality
Bryan Caplan
Imagine a Question in social science.  The Question can be analyzed using an Obvious Method - a simple, standard approach that social scientists have used for decades.  The Question has a Welcome Answer  - an answer that the typical social... MORE

The Discipline of Dismissal

Behavioral Economics and Rationality
Bryan Caplan
Tyler has some dismissive observations about the practice of dismissal: One of the most common fallacies in the economics blogosphere -- and elsewhere -- is what I call "devalue and dismiss."  That is, a writer will come up with some... MORE

Sitting on an Ocean of Hypotheticals

Behavioral Economics and Rationality
Bryan Caplan
David senses a weakness in my "Sitting on an Ocean of Talent": But I don't think people's opposition to more immigration is that different from how they would react to those who would prevent them from getting at precious resources.... MORE

What's Wrong With IVs? [wonkish]

Economic Methods
Bryan Caplan
Labor economists love using instrumental variables - like your distance to the nearest college - to estimate the education premium.  Heckman, Lochner, and Todd point out a recurring problem with this approach:[M]ost of the candidates for instrumental variables in the... MORE

Farewell to Bart Wilson, For Now

Behavioral Economics and Rationality
Bryan Caplan
Guest blogger Bart Wilson is signing off, for now.  He's been one of my favorite experimental economists for the last decade, and I've been pleased to see him bring his unique perspective to EconLog over the past month.  Out of... MORE

Labor Economists vs. Signaling

Economic Methods
Bryan Caplan
From chapter 4 of my book in progress, The Case Against Education. Normal 0 MicrosoftInternetExplorer4 Signaling has been one of economists' more successful intellectual exports.  After Spence and Arrow developed the signaling model of education in the 1970s, the idea... MORE

Econ as Incredulity

Economic Methods
Bryan Caplan
What is economic theory?  Is it a body of proven truths?  Or a set of hypotheses whose only merit is that they've so far been successfully tested against the facts?  Most economists openly embrace the latter position, but secretly believe... MORE

Ron Paul's Misunderstanding of the CPI

Economic Methods
David Henderson
One of the least discussed, but potentially most significant, provisions in President Obama's budget is the use of the "chained consumer price index" (chained CPI), to measure the effect of inflation on people's standard of living. Chained CPI is an... MORE

The Learning of the Wise

Behavioral Economics and Rationality
Bryan Caplan
Non-economists often advertise their ignorance of economics.  Debate opponent Ron Unz is the latest to cross my path:Now, you know, I'm laboring under a disadvantage in this debate because not only am I not a trained economist, I've never even... MORE

Debate Analysis: Unz, Wadhwa, and Me

Economic Methods
Bryan Caplan
Two of my co-debaters, Vivek Wadhwa and Ron Unz, sent out newsletters analyzing the debate.  Opponent Ron Unz:As a useful means of gauging the impact of the arguments, the organizers take before and after votes of the large New York... MORE

Debate Results

Economic Methods
Bryan Caplan
The Intelligence Squared debate results are in. I performed near the peak of my ability, but my very best was not good enough for the live audience. Not by a long shot: Our side actually lost 4 percentage-points, and... MORE

See Me Today at Intelligence Squared

Economic Methods
Bryan Caplan
Tonight I'm debating for Intelligence Squared in New York City.  The resolution: "Let Anyone Take a Job Anywhere."  Vivek Wadhwa and I are arguing for the affirmative case; Ron Unz and Kathleen Newland are arguing the negative case.  The entire... MORE

I Would Argue

Economic Methods
Bryan Caplan
After reading a draft of Selfish Reasons to Have More Kids, Tyler Cowen bemusedly told me, "You have more enthusiasm for your own arguments than you do for the children themselves."  A slight exaggeration, but I take it as a... MORE

A Challenge for Anti-Keynesians

Behavioral Economics and Rationality
Bryan Caplan
Many of my favorite people are strident anti-Keynesians.  In their eyes, Keynesianism isn't just false; it's incoherent pseudo-science, a blight on our fair economics profession.  Those who think of Keynesianism as pseudo-science generally hold all Keynesians in one dim view. ... MORE

Krugman on Default

Economic Methods
David Henderson
One of the frustrating things about reading Paul Krugman's blog regularly, as I do, is that I so often have to cut through his nastiness to see if he's actually saying something important and, even better, true. Why do I... MORE

A Micro-Mincer regression estimates personal income as a function of personal education and controls:ln Personal Income = a + b*Personal Years of Education + other stuffUnless b is very large, b approximately equals the individual education premium.  b=.09, for example,... MORE

The Error of Utilitarian Behavioral Economics

Behavioral Economics and Rationality
Bart Wilson
If you hang around economists long enough, you're bound to hear the word utility. They don't mean it in the original (at least 500 years old), usefulness sense of the word, as in the utility of electric power to wash... MORE

The Status of Unemployed High-Status Papers

Economic Methods
Bryan Caplan
Every now and then, prominent economists release working papers that never get published.  What should we conclude when an elite article suffers from "long-term unemployment"?1. The signaling story: Even prominent economists can't publish their paper, so it's probably terrible.2. The... MORE

Tyler Long-Term Unemployment Bet

Economic Methods
Bryan Caplan
Tyler just bet me at 10:1 that U.S. unemployment will never fall below 5% during the next twenty years.  If the rate falls below 5% before September 1, 2033, he immediately owes me $10.  Otherwise, I owe him $1 on... MORE

Economics as a Branch of Literature

Behavioral Economics and Rationality
Bart Wilson
Shortly before arriving at Chapman University in 2008 I discovered some essays by Frank Knight. Every graduate student in economics learns about or, at least, has heard references to Frank Knight, one of the original members of the "Chicago school... MORE

Coase on Friedman's Methodology

Books: Reviews and Suggested Readings
David Henderson
My post this morning will be briefer than usual because I'm busy writing a piece for the Wall Street Journal, due this morning, on the late Ronald Coase. But I can't resist quoting from a review of his book of... MORE

Who Is Tyler's Reference Group?

Behavioral Economics and Rationality
Bryan Caplan
As soon as I saw Tyler's latest post on "Why the Theory of Comparative Advantage is Overrated," I asked myself, "Overrated by whom?"  The theory clearly isn't overrated by the 95%+ of American adults who have no idea what the... MORE

Robert Murphy on Math in Economics

Economic Methods
David Henderson
Bryan Caplan (here and here) and I (here) have both posted in Econlog on economics in math. You can read our posts and find links to much of the other discussion. Now Robert Murphy has laid out some of his... MORE

The Tragedy of Economath

Economic Education
David Henderson
Co-blogger Bryan has done an admirable job of critiquing "economath" here and here. What follows from his critique is what I call "the tragedy of economath." Over my 30+ years of teaching mainly Masters students, I come across really good... MORE

The People of Economath

Behavioral Economics and Rationality
Bryan Caplan
Paul Krugman graciously responds to my economath post, but demurs:It turned out -- and still turns out -- that people's economic intuition, if untutored by models, missed a major possibility that is in fact probably the main story.My question for... MORE

Economath Fails the Cost-Benefit Test

Behavioral Economics and Rationality
Bryan Caplan
Paul Krugman responds to Noah Smith's tale of disillusion with mathematical economics:I share much of his cynicism about the profession, but I think he's missing the main way (in my experience) that mathematical models are useful in economics: used properly,... MORE

I am pleased to announce that on October 30, I will be debating before Intelligence Squared.  The resolution: "Let Anyone Take a Job Anywhere."  The teams: Vivek Wadhwa and me for the resolution, Ron Unz and TBD against.The event is... MORE

Japan Bet Bleg

Economic Methods
Bryan Caplan
Scott Sumner has kindly agreed to bleg my request to help craft a bet with Bill Dickens:Bill Dickens wants to bet me that looser Japanese monetary policy won't boost Japanese NGDP.  What victory conditions should a market monetarist consider prudent... 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

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

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

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

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

A Hawk-Dove Ideological Turing Test

Behavioral Economics and Rationality
Bryan Caplan
In Stereotype Accuracy, Clark McCauley describes a fascinating Ideological Turing Test from 1972:Dawes, Singer, and Lemons (1972)... recruited students who were "hawks" and "doves" with regard to the Vietnam War and asked them to write opinion statements that the typical... MORE

The Myth of the Rational Voter: Experimental Edition

Behavioral Economics and Rationality
Bryan Caplan
I've long argued (here, here, and here for starters) that weak incentives are a major cause of political irrationality, but I've failed to convince Gerry Mackie, Jeff Friedman, Tyler Cowen, and many other critics.  So I was delighted to discover... MORE

The Dirty Laundry of Instrumental Variables

Economic Methods
Bryan Caplan
Are instrumental variables (IV) estimates really superior to ordinary least squares (OLS)?  Most high-status empirical economists seem to think so.  Meta-analyses often treat IV as presumptively superior to OLS.  Yet when you ponder IV output, it's often simply bizarre.Rose and... MORE

Another Inflation Bet

Economic Methods
Bryan Caplan
Arthur Breitman and I have hammered out the following inflation bet: If the 12 month change of the CPI-U as reported by the BLS is greater than 5% for any sliding window between today and December 2015 in monthly increments,... MORE

I was pleased to see my old friend Ben Haller challenging me in the comments on my global warming econometrics bleg.  He's in blockquotes, I'm not:The more crap you throw into the regression, the more it will be overfit and... MORE

F.A. Hayek would have been 114 years old today. To celebrate, here's a set of videos in which Hayek is interviewed by, among others, Axel Leijonhufvud (!), Armen Alchian (!!), and James Buchanan (!!!). Or, if you prefer the written... MORE

Keynesian Bets: What's Out There

Behavioral Economics and Rationality
Bryan Caplan
As far as I can tell, none of the comments on my Keynesian bet bleg point out or propose a Keynesian bet.  On Twitter, however, Noah Smith alerted me to the existence of the following Smith-DeLong bet:If, at any time... MORE

Keynesian Bets Bleg

Economic Methods
Bryan Caplan
The strongest evidence for Keynesianism, in my view, is introspection.  During the last five years, however, I've often heard Keynesians claim that their views have been vindicated by events.  To which I'm sorely tempted to respond:It's easy to claim "vindication... MORE

The Pyramid of Macroeconomic Insight and Virtue

Economic Methods
Bryan Caplan
Many of my friends laughed at Paul Krugman when he wrote: Maybe I actually am right, and maybe the other side actually does contain a remarkable number of knaves and fools.Krugman continued:The key to understanding this is that the anti-Keynesian... MORE

Bewerunge and Rosen's working paper on public- versus private-sector compensation begins with a discussion of recent controversy:Putting the inflammatory rhetoric aside, much of the debate boils down to the question of whether public and private sector workers receive about the... MORE

Art's Bet

Economic Methods
Bryan Caplan
First, let me join the rest of EconLog in welcoming guest blogger Art Carden.Second, I'm extremely pleased that Art quickly proposed a home school bet.  Betting is what separates us from the mass of men who live by loose and... MORE

Why Economics and Liberty?

Economic Methods
Art Carden
I'm honored to join the EconLog team as a guest blogger for the next few months. The original bloggers here--Bryan Caplan, David Henderson, and Arnold Kling--have played very important roles in my intellectual development. I've learned much from what they... MORE

Vignettes from the Armen Alchian Memorial

Economic Methods
David Henderson
On Saturday, I attended the memorial service at UCLA for the late Armen Alchian. I arrived about an hour and a half early and so I was there when Jerry O'Driscoll came in, saying that he and Walter Williams were... MORE

The Myopic Empiricism of the Minimum Wage

Economic Methods
Bryan Caplan
Unlike most opponents of the minimum wage, I admit that David Card and Alan Krueger's famous research on the topic is well-done.  How then can I continue to embrace (and teach!) the textbook view that the minimum wage significantly reduces... MORE

TARP Bet Bleg

Economic Methods
Bryan Caplan
As far as I can tell after a quick read, this OMB report says that I'm on track to win my TARP bet in 2013.  But I'd rather outsource this to outside readers.  Anyone?Update: Does anyone dispute that this is... MORE

Bad Social Science: A Consequence of Consequentialism

Cost-benefit Analysis
Bryan Caplan
From my response to Mike Huemer's target essay on this month's Cato Unbound:As a free bonus, Huemer dulls the urge consequentialist libertarians often feel to stretch the truth, to make stronger claims about the benefits of libertarian policies than the... MORE

IGM on High-Skilled Immigration

Economic Methods
Bryan Caplan
The IGM Forum reacts to:The average US citizen would be better off if a larger number of highly educated foreign workers were legally allowed to immigrate to the US each year.The result is very lop-sided agreement:The award for the strangest... MORE

Amazing Dan Klein

Behavioral Economics and Rationality
Bryan Caplan
I'm puzzled by Dan Klein's recent guest post.  I trust his empirics.  Indeed, I prize them.  But what do they show?  As far as I can tell, Dan's empirics show that a sizable minority of economists are small-l libertarians, but... MORE

An Amazing Consensus among Economists: Not

Economic Methods
Bryan Caplan
My friend and colleague Dan Klein has written a guest reply to my recent post on economists' consensus.  Here's Dan: v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} I was surprised to read Bryan's words: "Compared to non-economists, economists enjoy... MORE

Me on Economists' Ideological Divide

Economic Methods
Bryan Caplan
My "What Makes People Think Like Economists?" (Journal of Law and Economics 2001) also analyzes why economists disagree with each other.  Key results (footnotes omitted):Overall, the SAEE evidence suggests that disagreements among economists are surprisingly random. There are 10 questions... MORE

Wolfers on Economists' Ideological Divide

Economic Methods
Bryan Caplan
Justin Wolfers has skeptical comments on Gordon and Dahl's new paper on economists' ideology, featuring this cool graph:Since I remained a little unclear about the origin of the graph, I emailed Wolfers.  He graciously responded, and gave me permission to... MORE

Government Hiring: Raising GDP by Definition

Economic Methods
Garett Jones
GDP, Gross Domestic Product. The number gets a lot of attention, deservedly.  You'd be foolish to use it as your sole economic statistic but you'd be just as foolish to ignore it and go with your gut.  Today I'd like... MORE

Money for Morals

Economic Philosophy
Bryan Caplan
Over at Overcoming Bias, Robert Wiblin offers a tempting reward:Personally, I would like to think I take doing the right thing seriously, so I am willing to offer a monetary prize of £300 for anyone who can change my mind... MORE

Vipul Naik of Open Borders sent me a very insightful email on the non-pecuniary returns to education.  He's kindly given me permission to reprint it.  Vipul speaks:I've been thinking more about your human capital/signaling/ability bias theories of education. It seems... MORE

My Path to Open Borders

Economic Methods
Bryan Caplan
My open borders autobiography is now a guest post at Open Borders.  Since I strove to truthfully and unstrategically describe my intellectual evolution, even my harshest critics may enjoy it.  Highlights:Until I was seventeen, my views on immigration were completely... MORE

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

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

Krugman on Scientific Method

Economic Methods
David Henderson
Some of Paul Krugman's best posts are on scientific method, specifically, how do you judge a theory. One of his posts today is beautiful, or, more correctly, would have been beautiful had he dropped the last line. In that line,... MORE

A Bet I Forgot to Make

Economic Methods
Bryan Caplan
Just one election cycle ago, Tyler embraced a conclusion I found implausible on the basis of a model I found absurd:When it comes to marijuana legalization, I believe that the "anti-" forces will muster as many parental votes as they... MORE

Optimal Open-Mindedness

Behavioral Economics and Rationality
Bryan Caplan
Lately a few people have accused me of being "closed-minded."  As they'd predict, I reject the accusation.  I say my degree of openness is close to optimal.  Consistent with Bayesian reasoning, I am as reluctant to claim vindication by events... MORE

Mish Bet Update

Economic Methods
Bryan Caplan
I'm pleased to report that the noble Mike Shedlock has paid up on our unemployment bet.  You might think this goes without saying, but I'm afraid to say that lesser men have failed to promptly pay up in the past. ... MORE

Rigor, Math, and Numbers

Economic Methods
David Henderson
Quickly researching the work of the two Nobel Prize winners Monday morning has given me more than the usual amount of thinking to blog on. I came across an interesting thought in the classic 1962 Gale/Shapley article that, as you'll... MORE

Utopian Experimental Socialism

Alternative Economics
Bryan Caplan
Larry White's The Clash of Economic Ideas pointed me to a wonderful short essay by Joshua Muravchik.  In it, Muravchik makes the most original observation about socialism I've encountered in years: He ["Utopian socialist" Robert Owen] was no obscure crank.... MORE

I Win My Unemployment Bet With Mike Shedlock

Economic Methods
Bryan Caplan
Back in 2010, Mike Shedlock ("Mish") and I agreed to the following bet:If the official initially reported U.S. monthly unemployment rate falls below 8.0% for any month between now and June, 2015, I win $100.  Otherwise, Mish wins $100. Since,... MORE

Questions for Austrians

Austrian Economics
Bryan Caplan
On my latest conversation post at Cato Unbound, I pose some questions for Steve Horwitz:1. What are some important, substantive economic claims that can be known a priori? 2. What are some important, substantive economic claims that can be logically... MORE

The Tautological Fallacy

Economic Methods
Bryan Caplan
Robin offers the best possible response to my claim that he commits the Metaphorical Fallacy: I'm saying that your mind is literally a signal processing system. Not just metaphorically; literally. That is, while minds have a great many features, a... MORE

The Metaphorical Fallacy

Economic Methods
Bryan Caplan
Consider the following argument:1. Cars are mechanical horses.2. Horses are faster than walking.3. Therefore, cars are faster than walking.Pretty plausible, right?  Unfortunately, this argument is logically as awful as:1. Cars are mechanical horses.2. Horses eat oats.3. Therefore, cars eat oats.Both... MORE

Austrian Myside Bias

Austrian Economics
Bryan Caplan
My Cato Unbound reply to Steve Horwitz on empirical Austrian economics is up.  I concede that Horwitz...makes several sensible points: Some Austrians have no methodological objection to empirical work.Mainstream economists have a dogmatic, narrow view of what counts as "empirical... MORE

Dan Klein on the Econ Profession

Economic Methods
Bryan Caplan
When Dan Klein dissects the economics profession, he manages to be simultaneously thoughtful, blunt, and fair: Normal 0 MicrosoftInternetExplorer4 My view of the matter, in the broadest terms, is that human culture generally, and in particular Anglo-American culture since the... MORE

When my favorite economists change, I usually think they change for the worse.  Dan Klein is a glowing exception.  I've always liked his work.  But in recent years (see e.g. here, here, and here) Dan's metamorphosized from very good to... MORE

Are Austrians Anti-Empirical?

Austrian Economics
Bryan Caplan
Steve Horwitz has the lead Cato Unbound essay this month.  His topic: "The Empirics of Austrian Economics."  My response goes up Friday.  For now, here's Steve:[I]t is not the case, as Josh Barro recently argued, "that Austrian economists reject empirical... MORE

The Temptation of Discrimination

Economic Methods
Bryan Caplan
Why doesn't everyone just follow the rules?  The obvious answer, in many cases, is that breaking the rules has concrete advantages... if you don't get caught.  Why do people jaywalk?  Because it's quicker than schlepping to the crosswalk.  Why do... MORE

Imagine a world where no one ever voluntarily buys good X.  Still, everyone affirms that X is very important, a vital good.  If you hold an election, the population unanimously votes in favor of very generous funding for X.Most economists... MORE

GMU vs. Chicago

Economic Methods
Arnold Kling
Gary Becker and James Heckman argue for more government support for economic research. In the other corner are Don Boudreaux and Tyler Cowen. Indeed, Tyler was in really good form in writing his post. There is not much left of... MORE

Are You Asking or Telling?

Economic Methods
David Henderson
I had a smart aleck friend in high school, Jack McKay, who, when a teacher ordered us to go to the principal, whispered "Are you asking or telling?" I laughed out loud and, if I recall, got in deeper trouble.... MORE

IGM, Economic Consensus, and Partisan Bias

Behavioral Economics and Rationality
Bryan Caplan
Justin Wolfers staunchly defends a view I've long been pushing: economists agree to a shocking extent.  If you follow the economic policy debate in the popular press, you would be excused for missing one of our best-kept secrets: There's remarkable... MORE

A Controversial Issue Resolved With Econometrics

Economic Methods
Bryan Caplan
In answer to David's challenge to name "one controversial issue that had been resolved with econometrics," I nominate the self-interested voter hypothesis - the idea that voters maximize their narrow self-interest.  While many people - scholars included - take this... MORE

Does Econometrics Resolve Issues?

Economic Methods
David Henderson
Bryan Caplan's statement, "In social science, the best arguments prove more than the best studies," reminds me of a conversation I was in earlier this week. Economist Jeff Hummel said he couldn't think of even one controversial issue that had... MORE

Barro on Marginal Utility and Wealth Transfers

Economic Education
David Henderson
In an otherwise good article defending Tyler Cowen, Josh Barro states the following: There is declining marginal utility of money: A person who makes $10,000 gets more value out of an extra dollar than a person who makes $100,000 does.... MORE

A Paragraph to Ponder

Economic Methods
Arnold Kling
From Robert Roberts Knowledge comes into us through a variety of channels that can be blocked by our concern for status, and the successful knowledge-seeker will be one who keeps those channels open. The process requires that we be able... MORE

Optimal Openness

Economic Methods
Bryan Caplan
There's something very appealing about Arnold's praise of thinkers who try to open readers' minds instead of closing them:Suppose we look at writing on issues where people tend to hold strong opinions that fit with their ideology. Such writing can... MORE

The Party Line Continuum

Economic Methods
Bryan Caplan
Two veterans of the Council of Economic Advisors object to my claim that political appointees have to toe a party line.Jeff Frankel:Bryan, When I was a Member of President Clinton's Council of Economic Advisers, I never said anything I didn't... MORE

The Curious Ethos of the Academic/Appointee

Economic Methods
Bryan Caplan
High-status academic economists often look down on economists who engage in blogging and punditry.  Their view: If you can't "definitively prove" your claims, you should remain silent.  At the same time, though, high-status academic economists often receive top political appointments. ... MORE

When I first read David's latest post, I mentally reversed the true results.  I thought that every expert on the panel agreed that:A cut in federal income tax rates in the US right now would raise taxable income enough so... MORE

James Manzi on Stargazing

Economic Methods
Arnold Kling
In a podcast with Russ Roberts, Manzi says, Is the number of stars in our galaxy odd or even? Well, there's a real answer to that question. If you have a bunch of people yelling odd and a bunch of... MORE

Two Improper Concepts to Measure

Economic Methods
Arnold Kling
1. The value of household production. Timothy Taylor writes, Get an estimate of hours devoted to home production, and then multiply by the wage that would be paid to domestic labor. No! No, no, no! Suppose I build a deck... MORE

Caplan v. Murphy on Paul: Getting to Bet

Economic Methods
Bryan Caplan
Bob Murphy's confident that Ron Paul will have a lasting political legacy.  I'm not.  He proposed a bet, I counter-offered, and we haggled.  Bob reproduces our haggling with permission.  My offer #1:Right now there are roughly zero members of Congress... MORE

My Review of James Manzi

Books: Reviews and Suggested Readings
Arnold Kling
is out in National Review (dead tree edition a couple weeks ago, on line now). Reihan Salam calls Manzi's work "the most important book of 2012." As you know, I think that honor belongs to Jonathan Haidt's The Righteous Mind,... MORE

Does breast-feeding really give your kids a leg up in life?  It's an important question, and there's a lot of research on it.  But most of the research is, at best, moderately convincing.  The key weakness: If parents falsely believe... MORE

Bet for Brooks: No Education Tsunami Is Coming

Economic Methods
Bryan Caplan
David Brooks joins the list of people who think that higher education is going the way of the daily newspaper:What happened to the newspaper and magazine business is about to happen to higher education: a rescrambling around the Web. I... MORE

The Bettor's Oath

Economic Methods
Bryan Caplan
Another great thing about my new daughter: she got me to start watching Game of Thrones.  The first episode didn't hook me last year, but now I can't stop thinking about the show.  I've even been inspired by the Night's... MORE

Let the Spinning Begin

Economic Methods
Arnold Kling
James Heckman and many co-authors write, a sample of rhesus monkeys...subject to a randomized early rearing protocol to show evidence that the lack of a secure attachment relationship early in life has detrimental consequences on physical and mental health later... MORE

Check Your Base

Economic Methods
David Henderson
In our book, Making Great Decisions in Business and Life, my co-author, Charles Hooper, and I have a chapter titled, "Biases Affect the Best of Us." I thought of one section of that chapter when I read co-blogger Arnold Kling's... MORE

Happy April Fools Day

Economic Methods
Arnold Kling
Unfortunately, this story came out on March 28th, and it is not a joke. During a decade as head of global cancer research at Amgen, C. Glenn Begley identified 53 "landmark" publications -- papers in top journals, from reputable labs... MORE

Michael Mann: I Don't Argue

Economic Methods
David Henderson
What Would Deirdre McCloskey Say? The article's online headline claims I "argue" that fossil-fuel burning is driving climate change. But communicating scientific facts is not arguing. Every national academy of science in the world, including our own, agrees that climate... MORE

A Non-Keynesian Turing Test

Economic Methods
Bryan Caplan
Can a non-Keynesian economist pass for a Keynesian?  Blogger Michael Hartwell tries to pass an ideological Turing Test here:As promised, I have assembled a team of informed Keynesians and left-wing econ fans to answer some general questions about modern economists.... MORE

Conversational Evidence

Economic Methods
Bryan Caplan
I've long argued that economists should take more stock in introspection.  Now Karl Smith argues that economists should take more stock in conversation:[F]or example if you asked someone - why didn't you move to San Francisco or conversely, why did... MORE

James Manzi Watch

Books: Reviews and Suggested Readings
Arnold Kling
In the Journal of Economic Perspectives, Paul Joskow writes, a sensible deployment strategy is to combine a long-run plan for rolling out smart-grid investments with well-designed pilots and experiments. Using randomized trials of smart grid technology and pricing, with a... MORE

Dinner with James Manzi

Books: Reviews and Suggested Readings
Arnold Kling
The publishers of Uncontrolled, his forthcoming book, hosted a dinner attended by about a dozen conservative media luminaries, as well as by yours truly. We received advance review copies prior to the dinner. Uncontrolled will not be available until May... MORE

Paul Krugman on IS-LM

Macroeconomics
Arnold Kling
He writes, The immediate problem was a huge shortfall of demand, as the private sector moved from large financial deficit to large financial surplus. Pointer from Mark Thoma. You have the basic identity that (S-I) + (T-G) = (X-M). That... MORE

The Latest Literature

Finance: stocks, options, etc.
Arnold Kling
The first three articles in the February 2012 issue of the American Economic Review are: "Optimal Interventions in Markets with Adverse Selection." "Overcoming Adverse Selection: How Public Intervention Can Restore Market Functioning" "Collective Moral Hazard, Maturity Mismatch, and Systemic Bailouts"... 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

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

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

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

Arnold and Education: Getting to Bet

Economics of Education
Bryan Caplan
Arnold counter-offers to my proposed education bet.  Arnold's in blockquotes.I'd prefer to stretch out the time frame at least a few years. Maybe let's pick 5 indicators, and winning means at least 3 out of 5.Fair enough, though it does... MORE

Bet for Arnold: Education Is Stably Wasteful

Economics of Education
Bryan Caplan
I've already bet David Henderson that the percent of 18-24 year-olds in traditional 4-year colleges will decline no more than 10% by 2019.  Now Arnold tempts me to double down:I see the potential for a dramatic reduction in the labor... MORE

The Economists We Have

Economic Methods
Arnold Kling
David Colander writes, not only are economists as a group not humble enough, what lay people are presented as economist's policy recommendations are often the policy recommendations of the least humble economist. In summary, my argument is that lack of... MORE

Quiggin on the Caplan-Quiggin Bet

Economic Methods
Bryan Caplan
In 2009, I bet John Quiggin that Europe's unemployment would average at least 1.5 percentage-points higher than the United States over the following decade.  Quiggin's update:Until now, I've been consistently ahead. EU-15 and US unemployment rates were very close during... MORE

Blogs, Journals, and Economists

Economic Methods
Arnold Kling
Paul Krugman writes, doesn't this [the Internet] allow a lot of really bad economics to circulate? Yes, but is it really any worse than it used to be? As I've tried to explain, the notion of journals as gatekeepers was... MORE

Planets, Life, and the Fermi Paradox

Economic Methods
Bryan Caplan
Since junior high, I've believed that the galaxy is full of planets and intelligent life.  But it wasn't until I was in my thirties that I heard of the Fermi Paradox.  You can boil the paradox down to a sentence:... MORE

AEA Panel on Economics Blogging

Economic Methods
Arnold Kling
A Chronicle of Higher Education article: The role of economics blogs started changing noticeably around 2008, said Alex Tabarrok, an associate professor of economics at George Mason University. Before then, blogs were expected to be clever and entertaining, and little... MORE

Arguments in the Economics Blogosphere

Economic Methods
Arnold Kling
Ryan Avent writes, The discussion is not always polite. It is interesting and enlightening, however. And it disciplines participating thinkers in a way that few other mediums manage. I have just started reading David Weinberger's new book, Too Big to... MORE

Why No Mini-Recessions?

Macroeconomics
Arnold Kling
Scott Sumner writes, Now here's one of the most striking facts about US business cycles. When the unemployment rate does rise by more than 0.6%, it keeps going up and up and up. With the exception of the 1959 steel... MORE

Of Models and PSST

Economic Methods
Arnold Kling
Some comments on an earlier post raised a number of issues. 1. Shouldn't the economy just have stayed on its production possibility curve in 1929, rather than go through the Depression? Well, the problem is if it stays on the... MORE

Boettke on the Lamp Post Problem

Economic Methods
Arnold Kling
I recently came across Where Did Economics Go Wrong? Modern Economics as a Flight From Reality, published by Pete Boettke in Critical Review. Looking at its themes, you can see issues that I have dwelt on considerably on this blog.... MORE

From the Chronicle of Higher Education:The discovery that the Dutch researcher Diederik A. Stapel made up the data for dozens of research papers has shaken up the field of social psychology, fueling a discussion not just about outright fraud, but... MORE

Another Education Bet?

Economics of Education
Bryan Caplan
Mark Little proposes an interesting bet in the comments:Bryan, I will not take your bet but will offer you the opposite one--that the proportion will be not less that 10% HIGHER. I believe that your signalling theory is correct, but... MORE

Higher Education Bubble?: Getting to Bet

Economic Methods
Bryan Caplan
David Henderson nobly expresses interest in my proposed bet:I might take that bet. But I don't believe on betting on a change in a number without having a good idea of what the number is now. Please tell me the... MORE

How Kahneman Underestimates Luck

Economic Methods
Bryan Caplan
When I received Kahneman's Thinking: Fast and Slow, I opened to a random page, and found a big error:The idea that large historical events are determined by luck is profoundly shocking, although it is demonstrably true.  It is hard to... MORE

The Legacy of Sargent and Sims

Economic Methods
Arnold Kling
Some thoughts, beyond my reaction of "eh." 1. Since their work became widely circulated, one can argue plausibly that 99 percent of all macroeconomics papers published, dissertations completed, and tenure decisions awarded have been in the mold of Sargent, Sims,... MORE

The Latest Nobel

Economic Methods
Arnold Kling
Tyler Cowen tells you about Sargent and Sims. My reaction is, "eh." Sort of like Bert Blyleven. Star players, but not historically important, unless you're from Minnesota.... MORE

Steve Jobs: Insanely Great

Economic History
David Henderson
I woke up in Turkey at 4:00 a.m. Thursday, went to my computer, and found out that Steve Jobs had died. I titled this post as I did because "insanely great" was the term Jobs loved to use to discuss... MORE

You Should Be Nodding Your Head

Economic Methods
Bryan Caplan
Eliezer Yudkowsky:There are large numbers of embarrassing people who believe in flying saucers, but this cannot possibly be Bayesian evidence against the presence of aliens, unless you believe that aliens would suppress flying-saucer cults, so that we are less likely... MORE

I'm no sports fan, but as a betting man, Moneyball intrigued me.  I thought the ending dragged, but the peaks were high.  My favorite (from the shooting script, so the final scene may be a little different):BILLY:Grady, you don't have... MORE

Why the Confident Don't Bet

Economic Methods
Bryan Caplan
The world is full of confident people.  Despite their confidence, it's usually hard to make them bet on their beliefs - and even harder to make them bet at worse-than-even odds.  In one of my all-time-favorite posts by Robin Hanson,... MORE

On Macroeconometric Models

Economic Methods
Arnold Kling
My latest essay. the Congressional Budget Office can reasonably estimate the effect of economic and policy scenarios on components of the government's budget, including taxes and spending. However, it cannot reasonably estimate the effect of tax and spending changes on... MORE

Making Astrology Look Respectable

Economic Methods
Arnold Kling
On the Internet, it is easy to find the John Kenneth Galbraith quip, "The only function of economic forecasting is to make astrology look respectable." Does anyone have a genuine citation for it? A page number somewhere? Anyway, they're back... MORE

The Rabbit Hole of Behavioral Economics

Behavioral Economics and Rationality
Arnold Kling
Frances Woolley writes, Once you fall down the rabbit hole, you just have to keep on going. If people's choices are not a reliable guide to their well-being, you have to turn to something else. Ask people how happy they... MORE

Are Twin Studies "Pretty Much Useless"?

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

The Economy as Machine

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

Macroeconometrics: The Science of Hubris

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

Models Vs. Hand-Waving

Economic Methods
Arnold Kling
Nick Rowe writes, the answer to the question "what is the effect of a 1% increase in perceived risk on government bonds?" is exactly the same as the answer to the question "what is the effect of a 1% increase... MORE

Judge the Religious Turing Test

Economic Methods
Bryan Caplan
You can now vote in Leah Libresco's religious Turing Test.  Anyone care to predict the results?  Propose a bet?Update: I just voted.  Overall, amazingly credible answers - I suspect Leah is drawing heavily from ultra-sophisticated Ivy League Christians.  The main... MORE

Religious Turing Test Update

Economic Philosophy
Bryan Caplan
Leah Libresco is moving forward with her proposed religious Turing Test - and she'd appreciate your comments on her draft.  Stay tuned for the result.... MORE

Payday Lending

Economic Methods
Arnold Kling
John Caskey writes In an ideal experiment, one would randomly grant payday loans to a group of applicants and randomly deny the loans as well as close substitutes to a similar group of applicants. One would then track indicators of... MORE

A.B.A.: Always Be Advising

Economic Philosophy
Bryan Caplan
I often annoy other economists by giving advice.  "Economists are supposed to describe behavior, not change it," they insist.  But they couldn't be more wrong.  Economics is inherently advisory.  Anytime an economist notices a discrepancy between (a) the world as... MORE

Thoughts on Education

Economics of Education
Arnold Kling
Tyler Cowen raises a good argument about the signaling model. Education is good for more than getting a good first job offer right off the bat. Presumably, relying on education as a signal causes firms to make mistakes when they... MORE

The Cutting-Room Floor

Economic Methods
Arnold Kling
Tyler Cowen rejoins the debate on the returns-to-schooling literature. What's striking about the work surveyed by Card is how many different methods are used and how consistent their results are. You can knock down any one of them ("are identical... MORE

The "literature" on returns to schooling

Economic Methods
Arnold Kling
Tyler Cowen writes, The view that education is mostly about signaling is inconsistent with the established consensus on the returns to schooling and yet the writers at EconLog do not respond to this literature or, as far as I can... MORE

College Returns and Nonexperimental Data

Economic Methods
Arnold Kling
David Leonhardt writes, Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses.... MORE

How to Make Me Lose an Ideological Turing Test

Economic Philosophy
Bryan Caplan
I bet I would do relatively well on ideological Turing Tests.  But whenever I say the words "I bet," my mind starts to imagine losing scenarios.  If someone wanted to make me fail an ideological Turing Test, what kinds of... MORE

The Ideological Turing Test: Religious Edition

Economic Methods
Bryan Caplan
Leah Anthony Libresco is looking for partners and judges for an ideological Turing Test on Christianity and atheism:I'd like to put my money where my mouth is and play in an ideological Turing Test against a Christian blogger. We could... MORE

Two Tries at the Ideological Turing Test

Economic Philosophy
Bryan Caplan
1. DeLong pretends to be Nozickian.2. I pretend to be conservative. Give me more examples of attempts to pass Ideological Turing Tests in the comments; I'll link to them.... MORE

The Ideological Turing Test

Economic Philosophy
Bryan Caplan
In a Turing Test, a computer tries to pass for human:A human judge engages in a natural language conversation with one human and one machine, each emulating human responses. All participants are separated from one another. If the judge cannot... MORE

Mark Bils on Health Care Prices

Economics of Health Care
Arnold Kling
In this interview, he says, If you had a certain condition and you had $10,000 to get treated at today's health prices, or $10,000 to get treated at 1960s prices with 1960s technology, I don't think it's so obvious that... MORE

PSST and Long-term Unemployment, 2

Growth: Consequences
Arnold Kling
Richard Florida weighs in. The returns to analytical skill rise consistently across the skill distribution; moving from the 25th to the 75th percentile increases earnings by more than $25,000. The same basic pattern holds for social intelligence skills, like teamwork,... MORE

Sen on "Methodological Individualism"

Economic Methods
David Henderson
I'm at a weekend conference in Indianapolis that started last night and goes through tonight. About 14 people, roughly evenly split between philosophers and economists, are working our way through Amartya Sen's The Idea of Justice. One of the things... MORE

Bryan's Challenge

Economic Methods
Arnold Kling
He wrote, Name the most credible measure of idea production that isn't at least moderately positively correlated with population. I think this is a somewhat imprecise formulation. First of all, "moderately positive" is vague. It could be a very low... MORE

Yes Mom

Family Economics
Bryan Caplan
Today I learned that I (partly) inspired a charming parenting experiment.  British journalist Lucy Cavendish:  There are various blogs and websites devoted to the notion that we should give our children free choice, and, in this way, encourage their development... MORE

The Methodology is Flawed

Economic Methods
Arnold Kling
My father always said that there were three iron laws of social science. 1. Sometimes it's this way, and sometimes it's that way. 2. The data are insufficient. 3. The methodology is flawed. On politically sensitive topics, the tendency is... MORE

10-year Budget Projections

Economic Methods
Arnold Kling
Will Wilkinson writes (on Facebook), Tell me what you think about the usefulness/uselessness of 10-year budget/deficit projections. You can think of this as three questions. 1. Are the projections useful? I think they are useful if understood as conditional forecasts.... MORE

Interpreting Data

Economic Methods
Arnold Kling
Two interesting examples. 1. John Taylor attempts to take on Krulong. He writes, For all of 2007, spending was 19.6 percent of GDP. For all of 2021--after the impacts of the recession and the final year of the budget window--the... MORE

Home Prices During the Great Depression

Macroeconomics
Bryan Caplan
Home prices did amazingly well during the Great Depression.  According to Schiller's index, it looks likes inflation-adjusted prices fell from about 74 to 69 between 1929 and 1933 - about a 7% decline.  By 1940, they were up to about... MORE

What I'm Reading

Economic Methods
Arnold Kling
A review copy of Markets on Trial: The Economic Sociology of the US Financial Crisis, edited by Michael Lounsbury and Paul M. Hirsch. One of the essays, by Ezra Zuckerman, says, sociologists' opposition to neoclassical economics generally, and to the... MORE

What Would Robin Hanson Say?

Books: Reviews and Suggested Readings
Arnold Kling
I continue to read The Blind Spot, by William Byers. On p. 137-138, he writes, Until recently, the conventional scientific view was that mind could be reduced to brain, that the physical brain was primary phenomenon and the mind was... MORE

Will I Lose My TARP Bet?

Economic Methods
Bryan Caplan
Back in 2008, I made the following bet:If the Director of the OMB's 2013 report says that a shortfall exists, I win.  Otherwise, I lose.  The stakes: I will make up to five $100 bets at even odds.Now it seems... MORE

Economists' Ideological Blind Spots

Economic Methods
Arnold Kling
Tyler Cowen makes up long lists of the blind spots of left-leaning economists and right-leaning economists. If I were asked this question, I would boil my answers down to one suggestion for each. What I think left-leaning economists should do... MORE

The Decline of Economic Theory

Economic Methods
Bryan Caplan
When I started my Ph.D. in Princeton, pure economic theory was king.  Economists with stellar math skills were high in status and high in demand, even if their knowledge of the real world was... slight.  In the following eighteen years,... MORE

The Future of Egypt: Time to Go On the Record

Cross-country Comparisons
Bryan Caplan
One good way to guard against hidesight bias is to publicly state your odds in advance.  The Iranian Revolution, for example, spurred a wave of cock-eyed optimism around the world.  But before long, theocracy and bloody warfare left Iran in... MORE

Ken Rogoff and Others

Finance: stocks, options, etc.
Arnold Kling
As usual, Mark Thoma has interesting links for today. 1. Ken Rogoff writes, Many countries' tax systems hugely favor debt over equity. The housing boom in the United States might never have reached the proportions that it did if homeowners... MORE

Education vs. Money Management

Economic Methods
Arnold Kling
Consider the following two propositions, one in education (E) and one in finance (F). (E) One way to improve education would be to get rid of the bottom 10 percent of teachers and to try to replicate more widely the... MORE

Agent-Based Modeling: Promises and Pitfalls

Economic Methods
Arnold Kling
Which of the following impediments to economic adjustment do you believe to be the most important? a) the cost of establishing a new enterprise b) the cost of integrating new workers and equipment into an existing enterprise c) the cost... MORE

When I denounce Hayek's heinous writing style, many libertarians retort that Mises was even worse.  Their claim baffles me.  Yes, you can fault Mises' organization; do you really want to begin your treatise on economics with 89 pages of Kantian... MORE

Colander on Complexity

Economic Methods
Arnold Kling
Since I brought up the topic, a commenter pointed me to the Wikipedia article on complexity in economics, and that in turn referred to David Colander. [complexity theory] is highly mathematical, and, as I stated above, accepts the need for... MORE

Forecasting for a Swing

Economic Methods
Arnold Kling
Joe Keohane writes about Nouriel Roubini, For a prophet, he's wrong an awful lot of the time. In October 2008, he predicted that hundreds of hedge funds were on the verge of failure and that the government would have to... MORE

Complication vs. Complexity

Macroeconomics
Arnold Kling
In an interview, Ben Ramalin says, We treat complex things as if they were merely complicated... distinguished between complicated systems, which can be modeled mathematically, and complex systems, for which there is no mathematical model which can say, if X... MORE

Advantage Kant

Economic Philosophy
Bryan Caplan
Tyler (via Ken Feinstein) says I should raise my opinion of Kant.  After reading this paragraph, I can only say: Done!The usual touchstone of whether what someone asserts is mere persuasion or at least a subjective conviction, i.e., firm belief,... MORE

My Proposal for a Code of Ethics for Economists

Economic Methods
Arnold Kling
There has been much discussion of late of a code of ethics for economists, with a focus on disclosing personal interests. I would go in a different direction. My code of ethics would consist of one line: Take into account... MORE

The Perils of Amateur Epidemiology

Economic Methods
Arnold Kling
Robin Hanson cites one paper that says that higher unemployment reduces mortality, perhaps because of healthier eating, while another paper says that higher unemployment reduces the consumption of fruits and vegetables. He writes, Either we can cross "eat healthier" off... MORE

Euro Bet Resolved

Economic Methods
Bryan Caplan
Almost four years ago, I made the following bet with Jeremy Rabkin: If France, Germany, and Italy remain on the Euro as of December 31, 2010, Rabkin owes me $20. Otherwise, I owe him $20.I win.... MORE

Carroll's Bet Proposal

Economic Methods
Bryan Caplan
In response to my remarks about conservative passion, Heritage's Conn Carroll proposes a fairly attractive bet: Here is the bet: Identify the three highest rated conservative talk show hosts (I think its Limbaugh, Hannity, and Beck). Pick three random shows from each... MORE

Semi-Austrians

Austrian Economics
Arnold Kling
On my post on Pete Boettke's podcast, a commenter wrote, The big thing now is combining institutional economics with general equilibrium analysis. This is what Daron Acemoglu has been doing for the last decade now. Which is obviously the way... MORE

Teacher Evaluations and Superstition

Economics of Education
Arnold Kling
Megan McArdle has a long post on the issue of measuring teacher quality. Meanwhile, The New York Times profiles James Heckman, whose careful research suggests that by the time a child reaches school age it is too late to make... MORE

Hating on Econ

Economic Methods
Bryan Caplan
My favorite section in Diane Coyle's The Soulful Science: What Economists Really Do and Why It Matters tries to figure out why economics enrages as often as it bores:Mechanical, mathematical, removed from the "real world," reductionist, autistic - why do... MORE

From the Recommendations for Further Reading column by Timothy Taylor in the Journal of Economic Perspectives fall issue. I eagerly look forward to this regular feature, which was started by the late Bernie Saffran, the beloved Swarthmore economics professor. My... MORE

Statistical Perils: Interpreting Alpha

Economic Methods
Arnold Kling
Let me follow up on this post. I try to drill into my high school students that in classical statistics we make probability statements about our methods, not about the unknown real-world parameters. (I can't believe what I first wrote... MORE

The Perils of Published Studies

Economic Methods
Arnold Kling
Jonah Lehrer writes, The therapeutic power of the drugs appeared to be steadily falling. A recent study showed an effect that was less than half of that documented in the first trials, in the early nineties. The article is interesting,... MORE

What Was Rational Expectations? Bueller?

Economic Methods
Arnold Kling
When I wrote that rational expectations was a theory Y, a commenter asked me to explain rational expectations. I will do so below the fold.... MORE

Theory X and Theory Y

Economic Methods
Arnold Kling
Nick Rowe writes, Then theory Y suddenly appears. Theory Y is new, and has lots of unexplored areas that you have the skills to work on. You don't believe in theory Y, but you could make a useful contribution to... MORE

Macroeconomics with Diffuse Priors

Economic Methods
Arnold Kling
Below, I elaborate on two claims. 1. Macroeconometrics requires the imposition of prior beliefs. 2. If one has diffuse prior beliefs, the correct macroeconomic policies are not easily formulated.... MORE

Macroeconomics, Circa 1970

Macroeconomics
Arnold Kling
According to Prad Krulong, macroeconomists had it and then lost it. They lost it some time after 1970. We had this magic formula, call it M70, and somehow we let it slip from our collective memory. But what was M70?... MORE

Why Not Raise the Stakes?

Economic Methods
Bryan Caplan
In the comments, rapscallion poses an interesting challenge:The bets I've seen placed on this site are so small in value that they don't tell me much other than that none of the bloggers believe in anything with much certainty. A... MORE

Arnold Kling, Noble in Defeat

Economic Methods
Bryan Caplan
Today I cashed my victory check from my election bet with Arnold Kling.  Now it's time to honor him.  Not only did my esteemed co-blogger promptly pay up; he had the courage and honesty to publicly bet in the first... MORE

Park Ranger, Continued

Economic Methods
Arnold Kling
My earlier post drew a number of helpful comments, including one from Karl Smith on his own blog. it is right that take the knowledge of market failure that we have and do what we can to alleviate what suffering... MORE

The Park Ranger and the Museum Curator

Economic Methods
Arnold Kling
Below is a metaphor I am working on. Feel free to comment.... MORE

Pre-Gloat

Politics and Economics
Bryan Caplan
Tomorrow is my first of ten chances to win my bet against one-party democracy with Arnold:Republicans will regain control of at least one branch of the federal government at some point between now and January 20, 2017 (two inaugurations from... MORE

What did Arrow Prove?

Economic Education
Arnold Kling
Among those trying to popularize the Arrow Impossibility Theorem are Steven Landsburg, Tyler Cowen, and Alex Tabarrok. Alex writes, More generally, what Arrow showed is that group choice (aggregation) is not like individual choice... Arrow showed that when a group... MORE

Common Sense and the Marginal Student

Economics of Education
Bryan Caplan
Common sense says that marginal consumer of a product - the person who say "Eh, why not?" before he buys - benefits less from his purchase than the product's average consumer.  This is clearly true for consumption decisions: The typical... MORE

MIT Economists in the New York Times

Economics of Health Care
Arnold Kling
1. Twenty years ago, Peter Diamond wrote, suppose individuals could be grouped independent of their health needs and work status. What if government simply assigned people to groups, ranging in size from 10,000 to 100,000, based solely on where they... MORE

The Scientific Process

Economic Methods
Arnold Kling
David Freedman in The Atlantic writes, We think of the scientific process as being objective, rigorous, and even ruthless in separating out what is true from what we merely wish to be true, but in fact it's easy to manipulate... MORE

How an Irrational Fad Became Entrenched

Economic Methods
Arnold Kling
Scott Sumner asks, How was it that just a few years later it was almost impossible to get anything published without assuming rational expectations, efficient markets, etc. Let me tell you. For a period of about 5 to 10 years,... MORE

Tolerance Will Keep Rising: I'll Bet on It!

Economic Methods
Bryan Caplan
In a thoughtful and provocative post, Tyler tells us:Tolerance of gay individuals and alternative lifestyles is at a historic high.  I would not endorse a crude "regression toward the mean" hypothesis, but we should at least try it on for... MORE

A Book I Wish Someone Else Had Written

Books: Reviews and Suggested Readings
Arnold Kling
The book is Intellectual Capital. Forty Years of the Nobel Prize in Economics, by Thomas Karier, and I was sent a review copy. It appears that the author culled through the economics Nobel web site to obtain material. There are... MORE

Alan Blinder Testifies

Macroeconomics
Arnold Kling
He says, the days of what I call the "Field of Dreams" strategy--build a bigger GDP, and the jobs will come--should be over. It's a sensible strategy in many contexts, but it has two serious drawbacks in the present situation.... MORE

David Friedman on Nuttiness

Economic Methods
David Henderson
David Friedman has an excellent post titled "What Should Count as Nutty?" It follows two of his earlier posts on Christine O'Donnell. A couple of excerpts: In trying to make sense of all this, I fall back on the observation... MORE

In Pursuit of Empirical Macroeconomics

Macroeconomics
Arnold Kling
The following should not be construed as advice to graduate students. Let someone else try it first. 1. Forget the national income and product accounts. Pay no attention to the arbitrary classification of output as C,I,G, and NX. 2. Instead,... MORE

Colander on the Economics Profession

Economic Methods
Arnold Kling
A commenter points to a post from Pete Boettke a couple months ago, where he quotes testimony from David Colander. One would think that competition in ideas would lead to the stronger ideas winning out. Unfortunately, because the macroeconomy is... MORE

Self-Discrediting

Economic Methods
Arnold Kling
This study comes from the Economic Policy Institute. The study analyzes workers with similar human capital. It controls for education, experience, hours of work, organizational size, gender, race, ethnicity and disability and finds that, compared to workers in the private... MORE

My Complete Bet Inventory

Economic Methods
Bryan Caplan
University of Chicago student Brian McDonald has graciously inventoried all my outstanding bets, including a couple I'd forgotten about.  His complete list:Bryan Caplan's bets in order of closing date: 1. "I've bet my $200 to Walter's $1 that Ron Paul... MORE

Lawrence Lindsey Vs. Christy Romer

Macroeconomics
Arnold Kling
She says, by June, before the Recovery Act could have had much of an impact, it was 9½ percent. That is, our projection turned out to be wrong even before the Recovery Act had a chance to get off the... MORE

Thomas Sargent, Master Macroeconomist

Economic Methods
Arnold Kling
In an interview, he says, the more dynamic, uncertain and ambiguous is the economic environment that you seek to model, the more you are going to have to roll up your sleeves, and learn and use some math. Pointer from... MORE

Exchanging Nickels for Dimes?

Finance: stocks, options, etc.
Arnold Kling
James Hamilton writes, Suppose that the Federal Reserve were to sell off all its Treasury securities of less than one-year maturity, and use the proceeds to buy up all the longer term Treasury debt it could. For example, in December... MORE

Russ Roberts and Dan Pink

Business Economics
Arnold Kling
They discuss motivation and incentives. Very enjoyable conversation. If anything, it is a little too fast-paced. One point is that people seek autonomy, mastery, and purpose. I think that is very true in people's avocations, or hobbies. I think, though,... MORE

Inconvenient Positions

Economic Methods
Bryan Caplan
My book on democracy, my almost-complete book on kids, and my future book on education all take inconvenient positions.  Meaning: In each case, there's an ideologically cleaner and more crowd-pleasing rationale for what I think people ought to do.Case 1:... MORE

Macro Doubtbook, Installment 11

Macroeconomics
Arnold Kling
The previous installment was here. The installment below discusses macroeconometrics. It is very brief, because I think that the issue is better discussed in the context of the historical perspective that I envision providing in the main part of the... MORE

Trend vs. Random Walk

Macroeconomics
Arnold Kling
I am starting to re-read Ed Leamer's textbook, Macroeconomic Patterns and Stories. Very early, he presents a graph of real GDP from 1955 to 2005 on a log scale, showing that it grows at a trend rate of 3 percent,... MORE

James Manzi on Experimental Social Science

Economic Methods
Arnold Kling
Strongly recommended. A sample: within this universe of programs that are far more likely to fail than succeed, programs that try to change people are even more likely to fail than those that try to change incentives. A litany of... MORE

Some Further Comments on Blinder-Zandi

Economic Methods
Arnold Kling
Ezra Klein writes, The Kling post goes a bit far. Plenty of respected macroeconomists still use macroeconomic models, which is in itself a refutation of the idea that "the profession has decided that this macroeconometric project was a blind alley."... MORE

What Blinder and Zandi Don't Know

Economic Methods
Arnold Kling
What the Blinder-Zandi paper does is explore the properties of a macroeconometric model. The economics profession abandoned those models thirty years ago, so the tool they are using is like a fossil, frozen in time. Of course, there have been... MORE

Principles of Good Debating

Economic Methods
Bryan Caplan
While ghost-writing for the Conservative Missionary and the Libertarian Missionary, I found myself reflecting on the principles of good debating.  I realize that debating can just be a sophistical exercise.  But it doesn't have to be.  In fact, it has... MORE

How the Blinder-Zandi Study Was Done

Economic Methods
Arnold Kling
Alan Blinder and Mark Zandi used Zandi's econometric model as the basis for a claim that the stimulus and the TARP worked. Thirty-five years ago, I was Blinder's research assistant, doing these sorts of simulations on the Fed-MIT-Penn model for... MORE

Soccer and the Law of Large Numbers

Economic Methods
Arnold Kling
I am not a soccer fan. In my amateur opinion, the rules ought to be changed to foster more scoring. This is not because I want to see more scoring. But having more scoring would reduce the luck factor. It... MORE

Signal and Noise in Economics Writing

Economic Methods
Arnold Kling
Kartik Athreya writes, Why should anyone accept uncritically that Economics, or any field of human endeavor, for that matter, should be easy to process and contribute to? Pointer from Greg Mankiw. Read the whole thing. He is suggesting that bloggers... MORE

In econ grad school, you learn a dozen good ideas and a hundred seemingly irrelevant ones.  Most of those hundred ideas deservedly languish in obscurity; no one uses them to explain the real world, even in conversation.  But once in... MORE

Macro Models and Forecasts

Economic Methods
Arnold Kling
Nick Rowe writes, We can't forecast next year's Y unless Statistics Canada tells us next year's X, and they can't. His point is that some variables are outside of the model, and to make a forecast in real time you... MORE

Krugman Between the Lines

Economic Methods
Bryan Caplan
I'm officially pronouncing Scott Sumner the master of Krugman exegesis.  Two gems (the first level quotes are me quoting Sumner, the second level quotes are me quoting Sumner quoting Krugman):OK, let's have some fun with this golden oldie from 2005:... MORE

Macro: the View from Inside the Ivory Tower

Economic Methods
Arnold Kling
Narayana R. Kocherlakota, President of the Minneapolis Fed, writes, modern macro models are designed to be mathematical formalizations of the entire economy. This ambitious approach is frustrating for many outside the field. Many economists like verbal intuitions as a way... MORE

The Econometrics Controversy

Economic Methods
Arnold Kling
Joshua D. Angrist and Jörn-Steffen Pischke write, Empirical microeconomics has experienced a credibility revolution, with a consequent increase in policy relevance and scientific impact. The quote is from the paper, which is gated, and the link is to the abstract,... MORE

Marginally Less Unreasonable

Economic Methods
Bryan Caplan
Bob Murphy sees a contradiction between my 2008 Bayesian commitment on TARP, my 2009 probability adjustment, and my current views.  In 2008, I said that if the economy tanked, "I still won't be convinced [that TARP is a good idea],... MORE

Outsider Academic Journals

Economic Methods
Arnold Kling
Bruce Charlton no longer edits one. While he was editor, he published Robin Hanson's classic article on what we now call Hansonian medicine. Daniel Klein still edits one, and the latest issue features an article challenging Bryan Caplan's view that... MORE

A Certain Misperception

Economic Methods
Bryan Caplan
On Facebook, I just posed the following question:Bryan Caplan is less certain about most things than others believe him to be.  What's the source of the misperception?My starting hypothesis: People confuse bluntness with certainty.If you question the premise, remember: A... MORE

The Journal I'd Most Want to Edit

Economic Methods
Bryan Caplan
I think Sumner's being tongue-in-check, but here's his genuinely good idea for a new journal:Most economists obviously disagree with me.  The top economists are constantly making predictions that violate the EMH.  OK, then why not set up a new journal, the... MORE

Pricing in Economics Textbooks

Economic Methods
David Henderson
On a list serve that I receive, Warren Gibson, an economics instructor at San Jose State University, recently wrote: Rothbard's Man, Economy, and State discusses bargaining at length but I can't think of another text that does so. Rothbard starts... MORE

How Should Editors Treat Luis Angeles?

Economic Methods
Bryan Caplan
Luis Angeles nobly confessed to a serious coding error in his paper on kids and happiness.  At least to me, that's a (moderately) negative signal of competence and a (strongly) positive signal of honesty.  If you were a journal editor,... MORE

Unassorted Links

Economic Methods
Arnold Kling
Denationalize Housing Finance is a slogan I could get behind. The essay, by David Oedel and Ed Pinto, is timely and important. An update on the sovereign debt crisis in Europe. I know that the Senate and the mainstream media... MORE

How Many Times Must We Bury Behaviorism?

Economic Methods
Bryan Caplan
I noticed continued resistance to survey evidence in the comments.  Frankly, it's hard to believe there's anyone left in social science who doesn't take surveys seriously.  Friedman's original arguments against survey evidence were half-baked, and no one's come up with... MORE

Kahneman on Happiness

Behavioral Economics and Rationality
Arnold Kling
He speaks here. He raises a number of issues with self-reported happiness. An example he gives is someone moving to California because he thinks he will be happier there. If you ask him if he is happier in California, he... MORE

Logic: Denying the Antecedent

Economic Methods
David Henderson
My favorite part of the introductory philosophy course I took at the University of Winnipeg was the segment on logic, especially on logical fallacies. One of the most common logical fallacies is "denying the antecedent." Here's the example used in... MORE

Macroeconometrics and Science

Economic Methods
Arnold Kling
Menzie Chinn writes, the forecasts are generated using old-fashioned models in the spirit of the neoclassical synthesis (demand determined in short run, supply determined in the long run) with (as I understand it) backwards looking expectations rather than model-consistent expectations.... MORE

Should Macroeconometric Models be Outlawed?

Economic Methods
Arnold Kling
Sometimes, people want something so badly that there is money to be made selling them a defective product. Werner Troesken's paper (full version here) on the history of quack medicines offers an example. No matter how many of these medicines... MORE

Models and Hunches

Economic Methods
Arnold Kling
I am possibly going to speak on a panel in a few weeks on the issue of U.S. unemployment. I am thinking of trying to convey two ideas (is that too many? I only have ten minutes). 1. Do not... MORE

Rejoinder on Hayek

Economic Methods
Bryan Caplan
Many people I know objected to my last post on Hayek.  Arnold jokingly called me a troll.  My colleague Russ Roberts urged me to learn greater patience:Five blog posts, huh? I guess that's something like saying Coase only wrote a... MORE

More on the Late Paul Samuelson

Economic Methods
Arnold Kling
A lot of the feeling about him is correlated with how one feels about math. Those feelings range from Robert Lucas (quoted by Tyler Cowen and elsewhere): I internalized its view that if I couldn't formulate a problem in economic... MORE

My WSJ Article on Samuelson

Economic Methods
David Henderson
My article on Paul Samuelson's work is in today's (Tuesday's) Wall Street Journal. They cut it by about 600 words to fit the space. My favorite paragraph that appeared is this one: "Let those who will write the nation's laws... MORE

Distilling Famous Thinkers

Economic Philosophy
Arnold Kling
Dan Klein has thoughts on studying the great minds of the past. This bears on the issue of whether or not one can or should distill Hayek (or any other famous thinker) to five blog posts, as Bryan blithely suggested.... MORE

Thoughts on the Late Paul Samuelson

Economic Education
Arnold Kling
1. He was influential. He influenced students through his textbook, and he influenced the entire economics profession through his dissertation, published as "Foundations of Economic Analysis." Readers of this blog will tend to disapprove of his influence, in that it... MORE

Comment on Tyrone's Latest Post

Economic Methods
Arnold Kling
I got a server error when I tried to leave a comment on Tyler Cowen's blog. Here is the comment: Suppose that the credibility of a scientist is a function of two variables: (1) the evidence he offers; and (2)... MORE

Morning Commentary

Finance: stocks, options, etc.
Arnold Kling
Bill Easterly is not of fan of military nation-building in Afghanistan. He writes, critics of top-down state plans for economic development are also not fans of top-down state plans for military development. If the Left likes the first, and the... MORE

Nobel Conflict?

Economic Methods
Arnold Kling
Russ Roberts interviews Pete Boettke on Nobel Laureate Elinor Ostrom and the Bloomington School. As you listen, note near the end of a slight dig against the 2007 Nobel Prize topic of mechanism design. Ostrom's work would suggest that trial-and-error... MORE

Climate Science and Macroeconomics

Economic Methods
Arnold Kling
Nick Rowe compares and contrasts climate science with macroeconomics. After listing some similarities, he turns to differences. D1. Macroeconomists are trying to explain people; climate scientists aren't. People are harder to explain. In particular, people's behaviour depends on what they... MORE

Underestimating Climategate

Economic Methods
Bryan Caplan
Neither Tyler nor Robin think that Climategate tells us much about climate science.  Robin says that "it's news about academia, not climate":[T]this behavior has long been typical when academics form competing groups, whether the public hears about such groups or... MORE

Styles of Thought in Economics

Economic Methods
Arnold Kling
Seth Roberts interviews Tyler Cowen, who says, I am very interested in the topic of "styles of thought in economics." Robert Solow, my thesis adviser, was a big fan of starting with simple numerical examples. The point is that you... MORE

Sumner Gives Away the Store

Economic Methods
Bryan Caplan
When a person with crummy but popular arguments says that "truth is relative," I understand their motives.  They're denying that anyone else's arguments are any better, and hoping that there's safety in numbers.  But when a person with clever but... MORE

Ask and You May Learn

Economic Methods
Bryan Caplan
An economist I know just emailed me:I anticipate participating in a survey project of a sample of AEA members. Such a survey is an opportunity for throwing in extraneous questions of interest. Can you think of question or two you... MORE

Why Academic Economists Aren't Bayesians

Economic Methods
Bryan Caplan
I don't think I'll find a better answer than Robin's:[T]he main social function of academia is to let students, patrons, readers, etc. affiliate with credentialed-as-impressive minds.  If so, academic beliefs are secondary - the important thing is to clearly show... MORE

Why Aren't Academic Economists Bayesians?

Economic Methods
Bryan Caplan
Almost all economic models assume that human beings are Bayesians: They start with some prior beliefs about how the world works, and update those beliefs using Bayes' Theorem as new information arrives.  Behavioral economists often question whether people are in... MORE

Economists Are Irrational; Is Anyone Else?

Economic Methods
Bryan Caplan
George Stigler is notorious for his dogmatic belief that any stable feature of the social world is efficient.  Since people are rational, they quickly spot and bargain around inefficiencies.  I was a little surprised, then, to read these words in... MORE

Studies Show

Economic Methods
Bryan Caplan
Warden: The part of the brain that remembers dance steps is also the anger center. So, juveniles who know how to fox trot are 10% less likely to commit a double homicide.Prisoner: Who conducted this study?Warden: The Institute of Shut... MORE

Changing People's Minds

Behavioral Economics and Rationality
Arnold Kling
What causes people to change their minds? On this blog, I have argued that people do not change their minds on ideological issues. I have argued that econometric regression results typically do not change people's minds. Why is that?... MORE

Robin Hanson Argues from Authority

Economic Methods
Arnold Kling
He writes, Economists should listen more to techies on what techs will be feasible at what costs, but techies should also listen more to economists on the social implications of tech costs. Alas, just as economists prefer to rely on... MORE

One Estimate of Multipliers

Fiscal Policy
Arnold Kling
Alberto Alesina and Silvia Ardagna write, Our results suggest that tax cuts are more expansionary than spending increases in the cases of a fiscal stimulus. Based upon these correlations we would argue that the current stimulus package in the US... MORE

Data and Dogma

Economic Methods
Arnold Kling
(i). Bob Sutton quotes a meta-analysis by Frank Schmidt and John Hunter published in 1998 on the factors found to affect job performance. 1. GMA tests ("General mental ability") 2. Work sample tests 3. Integrity tests: surveys design to assess... MORE

I try to write the kind of books I'd like to read, and I try to read the kind of books I'd like to write. This isn't as narcissistic as it sounds.  I'd like to write like Tolstoy or Alan... MORE

Economic Naivete

Economic Methods
Bryan Caplan
If I had to sum up the mind-set of my Princeton econ education in one cliche, it would be, "There are those who would strain out a gnat, but at the same time swallow a camel."  Sometimes, the profs could... MORE

Curiosity and Humility

Economic Methods
Bryan Caplan
I had a conversation with a colleague today where he discussed research showing that successful people have (a) the confidence to aim for the top, and (b) the humility to harshly critique their own work.  He went on to argue... MORE

Boettke on Masonomics

Austrian Economics
Arnold Kling
Pete Boettke pens An Open Letter to Tyler Cowen (and Arnold Kling). He has some nice things to say about Tyler.... MORE

Tyler Cowen on Masonomics

Economic Methods
Arnold Kling
He spoke at a lunch today. I didn't take notes, so I may have some things wrong.... MORE

Blog on Causes of the Crisis

Macroeconomics
Arnold Kling
I am definitely going to be a subscriber to this new blog. Thanks to Will Wilkinson for the pointer. Several of the initial posts are pushback at Paul Krugman's piece on what economists got wrong. Nobel Laureate Vernon Smith chimes... MORE

"All Theories Are False"

Economic Methods
Bryan Caplan
I can't tell you how many times natural and social scientists have solemnly told me, "All theories are false."  Their "proof" usually amounts to the solitary example of Newtonian physics, proven false by Einsteinian physics.  But if you're patient, they... MORE

Some Pushback to Krugman

Economic Methods
Arnold Kling
From John Cochrane and from Daniel Klein. Cochrane writes, Most of the article is just a calumnious personal attack on an ever-growing enemies list, which now includes "new Keyenesians" such as Olivier Blanchard and Greg Mankiw. Rather than source professional... MORE

Earthquake Science

Economic Methods
Arnold Kling
Mark Thoma writes, even though earthquakes cannot be predicted, at least not yet, it would be wrong to conclude that science has nothing to offer. First, understanding how earthquakes occur can help us design buildings and make other changes to... MORE

Rethinking Macroeconomics, Continued

Macroeconomics
Arnold Kling
Two links to discuss in this post. First, David Altig discusses the "output gap," which I put in scare quotes because it is a concept that I am about to attack. Pointer from the indispensable Mark Thoma, who also provided... MORE

Balan-Caplan Debate: Suggested Topics?

Economic Methods
Bryan Caplan
Not only do I look down on thinkers who won't bet; I also look down on thinkers who won't debate.  The flip side is that I particularly admire thinkers who propose bets and debates.  I'm pleased to report, then, that... MORE

Statistical Significance, Again

Economic Methods
Arnold Kling
Science, Ziliak and McCloskey say, needs to learn both whether and how much. But the putatively common practice of ending the empirical analysis by checking whether a calculated test statistic does or doesn't reject the null hypothesis according to... MORE

Personality and Ideology: A Quick Rejoinder

Economic Methods
Arnold Kling
Bryan writes, Suppose someone had the personality least favorable to economic conservatism: a 0 on Extraversion, 1 on Agreeableness, 0 on Conscientiousness, 0 on Stability, and 1 on Openness. According to the same regression referenced earlier, this person is expected... MORE

How Much Does Personality Affect Ideology?

Economic Methods
Bryan Caplan
Arnold raises an important challenge to my last post:In measuring the importance of personality traits in predicting political ideology, I would ask how much of political ideology can be explained by personality. The answer, if you look at the R2... MORE

Statistical vs. Material Significance

Economic Methods
Arnold Kling
I appreciate Bryan's pointer to an article by Alan Gerber and others on personality and ideology. However, the article illustrates what I consider to be a methodological error. That error is to use statistical significance as a metric. Statistical significance... MORE

In Defense of Low Correlations

Economic Methods
Bryan Caplan
An interesting side discussion from "The Power of Personality" defends the practical importance even small correlations:Walter Mischel (1968) argued that personality traits had limited utility in predicting behavior because their correlational upper limit appeared to be about .30. Subsequently, this... MORE

Personality and Econometrics

Behavioral Economics and Rationality
Arnold Kling
Bryan recently put up two interesting posts, one on personality, the other on econometrics. On personality, he points to some analysis saying that the correlation is higher between certain personality traits and life outcomes than it is between socioeconomic status... MORE

Sociology and Masonomics

Economic Methods
Arnold Kling
Bryan writes, We still think about supply and demand, but we also think about policy, psychology, behavioral genetics, and much more. Some random comments: I wrote about Masonomics as thinking about incentives, signaling, institutions, and evolution. I have heard Nobel... MORE

Russ's Challenge

Economic Methods
Bryan Caplan
From my colleague Russ Roberts:I continue to ask the question: name an empirical study that uses sophisticated statistical techniques that was so well done, it ended a controversy and created a consensus--a consensus where former opponents of one viewpoint had... MORE

I've studied economics for over twenty years.  The more I think about it, though, the more I realize that I don't know what "economics" means anymore.  Textbooks may say that economics is about "incentives" or "trade-offs."  But you can publish... MORE

Some Intellectual History for Matt Yglesias

Macroeconomics
Arnold Kling
He writes, the decision has been made to somewhat arbitrarily impose the view that macro models must be grounded in micro foundations. Readers of this blog know that I would be the last person to defend economic methods in macro... MORE

The Third Iron Law

Economic Methods
Arnold Kling
William Easterly takes on Paul Collier (and implicitly many other users of regression techniques). Oodles of regressions were run...Oodles of control variables were tried...Sample was sliced up to get results... Read the whole thing. My father used to say that... MORE

Ed Leamer

Macroeconomics
Arnold Kling
He is one of the most interesting economic thinkers out there, and Russ Roberts does a nice job interviewing him. The podcast covers the lack of knowledge that we have about macroeconomics, the fact that so many business cycles seem... MORE

Mark and Me on Macro

Macroeconomics
Arnold Kling
on bloggingheads. We both express some humility about what macroeconomics can do. The New York Times decided to extract the section on bank bailouts.... MORE

Notes on Masonomics, 1: Reason without Rationality

Behavioral Economics and Rationality
Arnold Kling
In chapter one of his economics textbook Hidden Order, David Friedman writes, Economics is that way of understanding behavior that starts from the assumption that individuals have objectives and tend to choose the correct way to achieve them. ...For a... MORE

Open Source Forecasting

Economic Methods
Arnold Kling
Google's Hal Varian and Hyunyoung Choi write, We find that Google Trends data can help improve forecasts of the current level of activity for a number of different economic time series, including automobile sales, home sales, retail sales, and travel... MORE

Review Essay on Macroeconometrics

Economic Methods
Arnold Kling
A while back, I mentioned this essay by Jesús Fernández-Villaverde, which at the time was not on line. Now it is there. I think it gives a useful history and perspective on macroeconometrics. Note in particular his discussion of the... MORE

Paragraphs to Ponder

Economic Methods
Arnold Kling
From John Mackey, the CEO of Whole Foods, in an essay in Be the Solution, p. 79: the classical economists became enchanted with the efficiency and the productivity of the industrial enterprises that they studied. Industrial and machine metaphors became... MORE

Meeting on Financial Regulation

Economic Methods
Arnold Kling
Last night I gave my talk at a meeting on financial regulation. The meeting was organized by David Evans. I gather that his goal is to put together a group of practitioners in the field of finance and regulation to... MORE

Taleb and Empiricism

Economic Methods
Arnold Kling
Russ Roberts talks with Nassim Taleb. I was most interested in the latter third of the conversation, where Taleb talks about his radical empiricism. For example, he argues that medicine makes more progress with trial-and-error than with knowledge of biological... MORE

Contest: What to Measure?

Books: Reviews and Suggested Readings
Arnold Kling
Win the Fraser Institute's Money. They want you to enter a contest about what to measure in order to improve public policy. In Be The Solution, Michael Strong cites the Fraser Institute's measures of economic freedom and how well they... MORE

Since You Asked

Economic Methods
Bryan Caplan
In his defense of non-betting, Tyler has said this:How would you feel about an obligation (if only a moral one) for scholars and commentators to publicly reveal the content of their investment portfolios?  Those portfolios are their real bets.  Yet... MORE

Tyler Cowen and Robin Hanson

Economic Methods
Arnold Kling
A bloggingheads dialog. I think it really heats up starting about 30 minutes in. If you want to know what it's like to argue with Tyler or Robin, watching this will show you.... MORE

What Does the Betting Norm Tax?

Economic Methods
Bryan Caplan
Tyler writes:Bryan Caplan believes that scholars should be ashamed if they do not publicly bet their views.  In contrast I fear this requirement would become a tax upon ideas.My knee-jerk reaction is to say, "Yes, a tax upon false ideas." ... MORE

The Mankiw-Krugman Non-Bet

Economic Methods
Bryan Caplan
Here's news I can use: Krugman talked smack about Mankiw, Mankiw politely proposed a bet, and Krugman ignored his offer.  Which reminds me - I'm still waiting for Andy Kessler to accept my bet on the bailout.I have a dream... MORE

Keynes, Probability, and Economics

Economic Methods
Arnold Kling
How one thinks about probability affects how one thinks about economics. Consider the use of the word "probability" in each of the following sentences:... MORE

Sociology on One Foot

Economic Methods
Arnold Kling
Tyler Cowen points to Fabio Rojas, who tries to reduce sociology to four issues. Rachel Kling once offered an even quicker summary of every sociological course: "There's poverty and America sucks."... MORE

Two Mea Culpas

Economic Methods
Bryan Caplan
If there's one thing I've learned from Tetlock, it's that you should openly admit your errors and update your beliefs in response to evidence.  So let me now share two mea culpas with you.1. Last September, I wrote:If the bail-out... MORE

Greg Mankiw Gets Technical

Economic Methods
Arnold Kling
He writes, The purpose of this picture is to show that deeper-than-average recessions are followed by faster-than-average recoveries. (Similar evidence was compiled in the 2005 Economic Report of the President, Chapter 2.) This evidence might be taken as evidence in... MORE

Causes of the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
Mark Jickling of the Congressional Research Service produced a handy chart of causal factors for the financial crisis. I think there are at least twenty, and I personally would probably endorse at least two-thirds of them as playing some role.... MORE

Economics does not equal Macroeconomics

Macroeconomics
Arnold Kling
Clive Crook writes, Mr Krugman gives liberals the economics they want. Mr Barro gives conservatives the same service. They narrow or deny the common ground. Why does this matter? Because the views of readers inclined to one side or the... MORE

Does Gravity Kill?

Economic Methods
Bryan Caplan
A while back, I favorably quoted this line from Larry White: "One can't explain an unusual cluster of errors by citing greed, which is always around, just as one can't explain a cluster of airplane crashes by citing gravity."  Soon... MORE

Macroeconometrics: The Lost History

Economic Methods
Arnold Kling
A first version is here. I was thinking of submitting something like this to the AEA's new Journal Macroeconomics. Suggestions for improvement are welcome.... MORE

When Russ Roberts rewrites some typically hysterical economic reporting, it's a thing of beauty.  But I still prefer his regular blogging. :-)... MORE

Two Critiques of Macroeconometrics

Economic Methods
Arnold Kling
Menzie Chinn writes, A key reason for the academic disenchantment with these types of models included the view that the identification schemes used were untenable (e.g., why is income in the consumption function but not in the investment?). Another source... MORE

Two Podcasts

Economic Methods
Arnold Kling
Yours truly on why the doctor needs a boss. It's about ten minutes. I start out by describing an experience I had with reincarnation. Russ Roberts and Robin Hanson discuss the search for meaning and truth. It is clear that... MORE

Robin's Dangerous Question

Economic Methods
Bryan Caplan
Robin celebrates Inauguration Day with an idealistic yet cynical challenge:[W]hat does Obama have to do for you to consider him a "good" president, or even better than Bush?  It is enough for you that he is (part) black and a... MORE

What Counts as Evidence that the Bailout Worked?

Economic Methods
Bryan Caplan
Back in September, I asked, "How would we know if the bail-out worked?"  "Wait and see" doesn't cut it, because:If the bail-out happens, how will we know if it prevented disaster? If unemployment stays under 8%, proponents will say that... MORE

Short-term Success, Long-term Fizzle

Economic Methods
Arnold Kling
Gordon Dahl and Lance Lochner write (I can't find an ungated 2008 version of the paper, and the 2005 version seems to differ), Our baseline estimates imply that a $1,000 increase in income raises combined math and reading test... MORE

Another Elite Blog

Economic Methods
Arnold Kling
It comes from Eric Drexler, the nanotech visionary. Pointer from Robin Hanson who I'm sure understands much more of what Drexler says than I do. My guess is that at the margin, scientific communication would benefit from more blogging and... MORE

Great White Parenthetical

Economic Methods
Bryan Caplan
From Larry White's target essay on Cato Unbound:(One can't explain an unusual cluster of errors by citing greed, which is always around, just as one can't explain a cluster of airplane crashes by citing gravity. Anyway, the greedy aim at... MORE

Easterly on Collier and Correlation

Growth: Causal Factors
Arnold Kling
Reviewing Paul Collier's The Bottom Billion, William Easterly writes, Collier comes perilously close to another statistical fallacy known as selection bias. He chose the countries that belong to his Bottom Billion on the basis of their poverty today, and then... MORE

Peer Review as a Reputation System

Economic Methods
Arnold Kling
Many people reacted to my take-down of peer review, and at least one commenter asked, "Can you come up with something better?" Easily. The generic problem is something called "reputation systems."... MORE

Trusting Scholarship

Economic Methods
Arnold Kling
Felix Salmon writes, one of the problems with such research is the way that it's presented to the public, through newspaper and magazine articles, or TED lectures, or the online dissemination of pre-pubication versions of papers. The stuff which gets... MORE

The Underground Economist

Economic Methods
Bryan Caplan
No, not The Undercover Economist.  The Underground Economist.  That's the theme of a new symposium that Dan Klein, intellectual entrepreneur extraordinaire, is soliciting for Econ Journal Watch:Fyodor Dostoevsky's novella Notes from Underground (1864) is a classic of introspection and confession.... MORE

Economists with Pseudo-Knowledge

Finance: stocks, options, etc.
Arnold Kling
I am shocked at the behavior of my fellow economists during this crisis. They are claiming to know much more than they do about causes and solutions. Rather than trying to understand and explain what is going on, they are... MORE

We're still likely to see a bail-out in the near future. So here's a question: If the bail-out happens, how will we know if it prevented disaster? If unemployment stays under 8%, proponents will say that the bail-out prevented a... MORE

I Don't Want to Be a Paul Ehrlich

Economic Methods
Bryan Caplan
I've figured out a way to operationalize a bail-out bet. Method: In five years, the government itself is supposed to publicly announce whether the bail-out lost money. I propose to use the government's self-assessment in five years to adjudicate the... MORE

Getting to Bet

Economic Methods
Bryan Caplan
In the comments, Patri Friedman points out that Barry Ritholtz has already offered a $1M bet that the bail-out loses money. Alas, though I agree with (and even chuckle with) Ritzholtz's conclusion, this is not yet a serious bet. Problems:... MORE

Nailing Down a Kessler Bet

Economic Methods
Bryan Caplan
Several readers suggest that I bet Andy Kessler about the U.S. government turning a profit on its bail-out. Here's Kessler's claim:My calculations, which assume 50% impairment on subprime loans, suggest it is possible, all in, for this portfolio to generate... MORE

Will the Paulson Plan Turn a Profit? Let's Bet

Economic Methods
Bryan Caplan
Bush says that the Paulson Plan might turn a profit:The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal. And when that... MORE

How I Lost My Macro Religion

Macroeconomics
Arnold Kling
At lunch, Nick Schulz asked me what Robert Hall is known for. I said that Hall changed my view of macroeconomics. Even today, Hall's work influences how I think about global warming. So pull up a chair, grab a cup... MORE

In Defense of the Obvious

Economic Methods
Bryan Caplan
Writing instructors often attack the use of the words "obvious," "of course," and the like. "If it's 'obvious,'" they mock, "then don't say it!" But giving up these words is easier said than done. I can't imagine giving an econ... MORE

Immaculate Estimation

Economic Methods
Arnold Kling
In a very short, satirical paper, James Heckman writes, Provided conditional density (1) is assumed, we do not need to observe a variable in order to compute its conditional expectation with respect to another variable whose density can be estimated.... MORE

The Anti-Hansonian Heuristic

Economic Methods
Bryan Caplan
I often disagree with people who know more about a given topic than I do. For example, the typical economist who works in Industrial Organization is familiar with a lot more current antitrust research than I am. Robin Hanson notwithstanding,... MORE

Scott Page Makes Diversity Respectable

Economic Methods
Bryan Caplan
Confession: When Scott Page's book The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies came out, I assumed it would be a flabby, politically correct snooze-fest. Since I don't like flabby, politically correct snooze-fests, I... MORE

Letting Students Drop a Question: A Big Mistake

Economic Methods
Bryan Caplan
On many exams, professors give students e.g. 4 questions, then say "Answer any three." The point, I suppose, is to: 1. Avoid penalizing students for random blind spots. 2. Create safety valve for badly-written questions. In practice, though, it seems... MORE

Goldberger Explains Why My Referee Was Wrong

Economic Methods
Bryan Caplan
When the typical professor reads a referee's rejection letter, his standard explanation is that "The referee was an idiot." Most of the time this is unfair - at least half the time, it's the author who's the idiot, and the... MORE

Selection Bias and Parental Regret

Economic Methods
Bryan Caplan
In 1975, Ann Landers asked her readers a hypothetical question: If you had you had your life to live over again, would you still have children? Over 10,000 replied. 70% said no. I've seen several random "child-free" activists cite Landers'... MORE

An Econometrics Lesson

Economic Methods
Arnold Kling
I received an email from a reader who was very excited to find that over the past 70 years the correlation between excess health care inflation (the price of health care relative to the overall CPI) and the proportion of... MORE

How to Tell the Truth With Statistics

Economic Methods
Bryan Caplan
From Robert Gordon's "Everyday Life As An Intelligence Test":Even defense attorney Alan Dershowitz was guilty of faulty probability reasoning when he correctly pointed out that fewer than 1 in 1000 wives who are abused by their spouses, as Mrs. Simpson... MORE

Persuading Tyler Cowen

Economic Methods
Bryan Caplan
Tyler's said this before, but it still flabbergasts me:It's funny how Bryan thinks he can cite my actions as evidence against the correct belief. That's absurd; for instance I also don't act as if determinism is true, but citing that... MORE

Bet Bleg

Economic Methods
Bryan Caplan
Who knows enough about the data to say how many of the 15 rematch bets Ehrlich would have won?... MORE

Is Ehrlich the Least Hansonian Thinker Ever?

Economic Methods
Bryan Caplan
Tyler says that John Rawls is the "least Hansonian thinker" ever. But perhaps Paul Ehrlich is a better candidate. Here's what he (and his wife) have to say about betting:Steve and Paul indulged in this betting foolishness in the first... MORE

Do I Step on Libertarian Toes?

Economic Methods
Bryan Caplan
Once again, Robin's doing what he does best: get meta. I've argued that Sylvia Hewlett hurt her book sales by stepping on her friends' toes without reaching out to potential allies. But if that's what I think, says Robin, isn't... MORE

Here are my two Laws of Fundamentalism: 1. In any textual dispute between fundamentalists and moderates of the same creed, the fundamentalists are almost always correct. 2. In any substantive dispute between fundamentalists and moderates of the same creed, the... MORE

The Power of Mistaken Identity

Economic Methods
Bryan Caplan
In most twin studies, the twins themselves (or their parents) report "twin type" - i.e., whether the twins are identical (monozygotic/MZ) or fraternal (dizygotic/DZ). This is reasonably accurate, but falls far short of DNA testing. Most behavioral genetic studies rely... MORE

Sentences that Should Embarrass Any Grad Student

Economic Methods
Bryan Caplan
The true author of each of these sentences is a noted Nobel prize-winner. Still, if a grad student wrote any of them, he should be embarrassed. I italicize the words that make each sentence blush-worthy, and follow each with a... MORE

Wisdom of Crowds Blog Experiment

Economic Methods
Bryan Caplan
Dan Phiffer, a blogger I met at SXSW, has set up a little "wisdom of crowds" experiment on his blog. Check it out, and see if you can make the crowd a little wiser. :-)... MORE

What Rothbard Missed: Error or Demagoguery?

Economic Methods
Bryan Caplan
Murray Rothbard seems to misunderstand some elementary lessons about monetary economics. He was a brilliant polymath, so it's hard to believe that this was simple ignorance. Perhaps he got locked into these errors early in his career, and never broke... MORE

Economics and Sociology

Economic Methods
Arnold Kling
Reviewing the last chapter of Tim Harford's The Logic of Life, Fabio Rojas writes, the market system itself, as indicated by Tim’s concluding chapter, depends on population, innovation, and liberal economic institutions. These, in turn, depend on psychology, group culture,... MORE

How Nurture Works

Economic Methods
Bryan Caplan
In a critique of Brink Lindsey, Arnold writes: "I think that my co-blogger would go ballistic over this 'nurture assumption' methodology." I wouldn't quite go ballistic, because there is solid evidence that growing up in a high-IQ home raises the... MORE

Useful Research

Economic Methods
Arnold Kling
Tyler Cowen discusses what he sees as some of the most interesting findings of the past year in economics. The common thread in these various discoveries is a careful use of data and an interest in real-world problems and puzzles.... MORE

Twilight of My Liberal Idol

Economic Methods
Bryan Caplan
I've been singing Krugman's praises for years. Anyone who could write The Accidental Theorist has a lot of credit in my bank. But his latest column on the failure of betting markets is so beneath him, it hurts to read:[P]rediction... MORE

Questions for Arnold

Economic Methods
Bryan Caplan
1. Arnold writes:I have no strong priors about the distribution of possible global temperatures going forward.How about strong posteriors conditional upon the existence of a scientific consensus? If consensus doesn't impress you, then you should be willing to bet at... MORE

Standards of Proof

Economic Methods
Arnold Kling
Bryan writes, isn't Arnold's standard of scientific evidence strangely strict? Few results in economics rest on an "experiment or a naturally-occurring event where the results are extremely unlikely to occur unless X is true." I thought I was simply stating... MORE

Like other global warming skeptics, Arnold objects to reliance on scientific consensus:To me, scientific evidence is not "a whole bunch of scientists think X." To me, scientific evidence is "Here is an experiment or a naturally-occurring event where the results... MORE

Online Seminar

Growth: Causal Factors
Arnold Kling
As part of an online seminar, Adam Przeworski writes, When in 1993 Limongi and I reviewed studies of the effect of political regimes on economic growth, we found that the results perfectly fitted the ideological climate of the period when... MORE

Rojas Bleg

Economic Methods
Bryan Caplan
Fabio Rojas is looking for:[Z]ip code level data from 2004/2005 that has:demography: gender, age, race, SES, occupation. Other stuff (like family structure or housing) would be a plus. political behavior: party ID + 2004 presidential vote would be more than... MORE

Me Versus the Economic Consensus

Economic Methods
Bryan Caplan
Tyler Cowen has a challenge for me:Dan's key point is that you, in fact, differ radically from the professional consensus (as Arnold writes as well) and that the argument is self-undercutting if you simultaneously erect expert consensus as a relevant... MORE

Econometric Confirmation Bias

Economic Methods
Arnold Kling
Russ Roberts writes, Edward Leamer’s indictment of modern econometrics, “Let’s take the ‘con’ out of econometrics” is the best known critique of our habits as empirical economists but it has not been taken to heart by the profession. There are... MORE

Clark gives Greif Grief

Institutional Economics
Arnold Kling
Gregory Clark goes medieval on Avner Greif. In chapter 2, Greif lays out a formal definition of an institution. This is, “An institution is a system of rules, beliefs, norms and organizations that together generate a regularity of (social) behavior”... MORE

Mankiw's Pithiest... Post... Ever.

Economic Methods
Bryan Caplan
I like to see myself as an equal-opportunity offender, but I can't measure up to Mankiw's latest:Consider a person who A. takes an important truth developed by others, B. exaggerates it for dramatic effect, C. as a result, draws public... MORE

Surowiecki's Levy and Peart's Mistake

Economic Methods
Bryan Caplan
In my book, I reference Surowiecki's "guess-the-weight-of-an-ox" anecdote. My colleague David Levy and his co-author Sandra Peart show that isn't quite right. Contrary to Surowiecki, Galton reported the median guess, not the mean - which was reported by Pearson years... MORE

Scott Adams on the Economic Way of Thinking

Economic Methods
Bryan Caplan
Scott Adams, of Dilbert fame, thinks like an economist - and wants his readers to do the same: I studied economics in college. One thing I’ve noticed is that other people who have studied economics tend to think a similar... MORE

The Messiness of Economic Analysis

Economic Methods
Arnold Kling
In summing up his reaction to Gregory Clark's book, Tyler Cowen writes, Greg wants an explanation with a Malthusian or a Ricardian rigor and logic. I believe our explanations will be more like those of history than of economics. That... MORE

Would a Truth-Seeker Ask?

Economic Methods
Bryan Caplan
Robin lays down a challenge:Consider the people you most admire that you know personally, such as your parents, spouse, or work mentor. Now imagine the worse [sic] sort of things someone might plausibly accuse those people of. Are you confident... MORE

Tyler on Trusting Experts

Economic Methods
Arnold Kling
Tyler Cowen writes, I tend to trust sources who use their intelligence to point out flaws in their own positions. But is this more than an aesthetic preference on my part? In my view, this is much more than an... MORE

Leveraging Agreement

Economic Methods
Bryan Caplan
Don't miss David Henderson's amiable podcast on disagreement in economics. His tale of disillusion with Krugman alone is worth the price of admission. This podcast reminds me of an idea I've had for a while: Creating a meta-petition of policies... MORE

Reliability of Survey Data

Economic Methods
Arnold Kling
Tom Slee writes, what I get from the Netflix prize is that there are probably significant limits to recommender systems. Even the smartest don't do a whole lot better than the simple approaches, and a lot of work is required... MORE

Who to Trust?

Economic Methods
Bryan Caplan
Arnold writes:With one exception, I think there is nothing that the public can look for in terms of a signal about economists. The best thing is to force economists to explain their arguments clearly in layman's terms, and then to... MORE

With Rebuttal from Dan Klein?

Economic Methods
Bryan Caplan
Alex's ridicule of the New York Times piece on economists who "oppose the hegemony of free-market economics" is spot-on. Basic fact-checking would have exposed the silliness of this story, which was decisively refuted by Dan Klein and Charlotta Stern a... MORE

I Heart Econ

Economic Methods
Bryan Caplan
Guest blogging at Free Exchange, I answer the charge that Econ is a cult, and end with a hymn of praise:[T]here's nowhere where the grass is greener than in the economics profession. It's far from perfect, but economics is an... MORE

Where Numbers Come From

Economic Methods
Bryan Caplan
Brad DeLong explains the birth of an early pro-NAFTA number:Here's where I state that the "200,000 net jobs projected from NAFTA" number was mine: we took an estimate of overall economic efficiency gains from tariff reductions and an employment elasticity... MORE

Evolution and genetics aside, my understanding of natural science is very weak. Fortunately, examining the bets experts are willing to make is a great substitute for understanding what they are talking about. So when Robin Hanson reports that global warming... MORE

More on the Height of Bravery

Economic Methods
Arnold Kling
A commenter on my post on the slowdown in America's height gains refers to Michael R. Eades, who points out that the original research was pretty much self-refuting. It should be real easy to determine whether the above sociological jibberish... MORE

Hanson Convinces Me that Astrology Is a Science

Economic Methods
Bryan Caplan
The well-educated like to mock astrology; I've done it myself. But today over lunch, Robin Hanson convinced me that it's unfair to do so. There's nothing wrong with studying the predictive power of astrological signs. The only problem is concluding... MORE

Paul Ormerod

Economic Methods
Arnold Kling
More than one reader has asked me about Paul Ormerod. Is he an example of an economist who has been unjustly overlooked by the mainstream?... MORE

Intellectual Arrogance

Economic Methods
Arnold Kling
Brad DeLong writes, My view is that the neoclassical economics toolkit can be very, very useful--no, stronger than that, is very useful and necessary--for everybody from the center on left. ...By contrast, the neoclassical toolkit can be absolute poison for... MORE

On heterodox Economics and Innovation

Economic Methods
Arnold Kling
There is a lively discussion at TPM Cafe over whether heterodox economics gets no love from the neoclassical crowd. Here is an excerpt from a summary. Chris Hayes kicks things off by boiling down his feature Nation piece into two... MORE

Dogs Not Barking

Economic Methods
Arnold Kling
In the latest Econ Journal Watch, at least two articles are about what is not found in economic literature. John Dawson argues that The Economic Freedom of the World index is under-utilized in studies of economic growth. Charles Blankart and... MORE

Few economists bother to explain in writing why other people's articles are a waste of time. Even fewer economists bother to explain in writing why entire journals are a waste of time. As far as I'm aware, in fact, there... MORE

Scholastics and Pietists

Economic Methods
Arnold Kling
Daniel J. D'Amico and Daniel B. Klein write, scholastics are more concerned with speaking to each other, distilling results, and passing them down through intermediaries to the laity. Pietistic figures are more interested in speaking directly to the everyman. They... MORE

Inteview with Nassim Taleb

Economic Methods
Arnold Kling
Russ Roberts interviews Nassim Taleb. It's one of the most fascinating interviews in Roberts' series. One implication of Taleb's thinking is that we are overconfident in our ability to manage risk. Burt Malkiel, who is arguing from a more traditional... MORE

Robert Solow on Model-Building

Economic Methods
Arnold Kling
William J. Polley points to Solow's essay, which first appeared in 1997. A few excerpts and my comments.... MORE

Biases in Evaluation Scales

Economic Methods
Arnold Kling
Elaborating on a point I raised , I am going to make the following conjecture: In an evaluation scale (e.g, rate this professor on a scale of 1 to 5), the mean evaluation is biased toward the middle. Is this... MORE

Papers that look interesting

Economic Methods
Arnold Kling
Glaeser and Sacerdote, suggesting that when rich people are around other rich people, they vote Democratic, but when they are around less-rich people, they vote Republican. Not having read the paper, I'm guessing on the basis of the abstract that... MORE

Mankiw Defends his Tall Tale

Economic Methods
Arnold Kling
In an email that he gave me permission to quote, Greg writes, Your instrumental variable analogy is good, but your assertion that it is a weak instrument is not. The calculations in the paper establish how good an instrument height... MORE

Taxation and Instrumental Variables

Economic Methods
Arnold Kling
Greg Mankiw links to a new paper that he co-authored with Matthew Weinzierl that says, Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This paper shows that the standard... MORE

Defending Freakonomics

Economic Methods
Arnold Kling
Alex Tabarrok defends Steven Levitt from an attack by Noam Schieber. I think Scheiber is off in a few ways. First, he conflates methods and questions. It's true that clean identification is often found with quirky experiments but a quirky... MORE

Shimer on Acemoglu

Political Economy
Arnold Kling
Robert Shimer tries to summarize the research of Clark Medalist Daron Acemoglu. One example. Daron and James [Robinson] explore the transition from autocracy to democracy. What makes the political elites allow the poor to vote? Daron and James argue that... MORE

Subjective Relative Measurement

Economic Methods
Arnold Kling
John Quiggin writes, Suppose you wanted to establish whether children’s height increased with age, but you couldn’t measure height directly. One way to respond to this problem would be to interview groups of children in different classes at school, and... MORE

An Economist or a Public Intellectual?

Economic Methods
Arnold Kling
Now that we know that an economist is someone who is honest and a public intellectual is someone who is not, suppose we were to read the following. We have data on the real income—that is, income adjusted for inflation—of... MORE

Economists: The World's Got a Problem With Us

Economic Methods
Bryan Caplan
The smartest man I know is being savaged on the comments section of the Washington Monthly. Don't miss it!... MORE

Hail the Victorious Dead

Economic Methods
Bryan Caplan
Milton Friedman's sad passing reminds me of King Theoden's last words in The Return of the King: You have to let me go. I go to my fathers, in whose mighty company I shall not now feel ashamed. ...and makes... MORE

Milton Friedman

Economic Methods
Arnold Kling
Hearing of the death of Milton Friedman, I turned to this biography. What struck me was that Friedman won the Clark Medal, given to the economist under 40 with the most achievements, in 1951. At that time, he had published... MORE

My Favorite Example of a Biased Statistic

Economic Methods
Arnold Kling
In a column pointing to research findings on a variety of topics, William Saletan includes The richer the country, the lower the ratio of male-to-female promiscuity. In no country is the ratio of male-to-female promiscuity measured in an unbiased manner.... MORE

Who's On Your Shoulder?

Economic Methods
Bryan Caplan
Ezra Klein engages in some interesting introspection: Nowadays, I know that folks from that end will be looking to cut apart my ideas, I have to protect my points against their insights which, in turn, means I absorb their insights.... MORE

Tyler: A Plague on Both Your Houses

Economic Methods
Bryan Caplan
Tyler on refereeing: A properly critical and useful "accept" report is harder to write. Don't look for excuses to quickly reject a potentially good paper. Tyler on being refereed: If you get careless, sloppy, or downright outrageous referee reports, it... MORE

An Outside Perspective on GMU

Economic Methods
Bryan Caplan
"[N]obody could ever figure out our own political leanings by reading our papers." That's how Andrew Gelman sees his research. In contrast, when Gelman visited GMU, "One thing that struck me about the people I met there was that their... MORE

The Math Bubble

Economic Methods
Arnold Kling
Bryan wonders, Ten years ago, ultra-mathematical theorists were the kings of the economics profession. Now they seem to be nigh irrelevant. Clever and relatively open-minded empiricists rule the roost. Cementing the trend, few of the students coming out of top... MORE

Freeze - Statistics Police!

Economic Methods
Bryan Caplan
Heard of the study that finds that beautiful women have more girls and intelligent men have more boys? Andrew Gelman finds that at least the first finding is suspect on multiple levels. You get a statistically significant effect if you... MORE

Lifespan and Heritability

Economic Methods
Arnold Kling
This gets my vote for most important research finding of the year (my emphasis): “How tall your parents are compared to the average height explains 80 to 90 percent of how tall you are compared to the average person,” Dr.... MORE

Lazy Thinking

Economic Methods
Arnold Kling
Abhijit Vinayak Banerjee writes, Randomized trials like these—that is, trials in which the intervention is assigned randomly—are the simplest and best way of assessing the impact of a program. They mimic the procedures used in trials of new drugs, which... MORE

Trust Cues

Economic Methods
Arnold Kling
My latest essay summarizes some ideas I've been blogging about lately. An empirical argument attempts to convince you using logic and observation. A trust cue threatens you with loss of membership in a valuable group unless you take a given... MORE

Popular Opinion

Economic Methods
Arnold Kling
Bryan writes, If virtually everyone just argues for whatever position he was born into, a truth-seeker should hold the gladiators for popular views to higher standards. I have a slightly different way to arrive at this position. Consider the following... MORE

Intellectual Gladiators

Economic Methods
Bryan Caplan
I'm no sports fan, but it's pretty clear that countries with more people win more Olympic medals. The obvious explanation is that people typically play for the country they were born into, and the ten best basketball players in China... MORE

Skepticism About Junk

Economic Methods
Bryan Caplan
No snarl intended, Arnold. I'm a big fan of Cox and Alm, too. But just pointing to basic numbers only gets you so far. Cox and Alm can show that living standards are rising, but if you want to figure... MORE

Economics non-junk Science

Economic Methods
Arnold Kling
Bryan snarls, Arnold, please tell us: What's not junk? As I believe Yogi Berra said (if not, it sounds like something he would say), "You can observe a lot just by watching." I think economists should put more effort into... MORE

Not Junk? A Question for Arnold

Economic Methods
Bryan Caplan
Arnold writes: The junk-science aspect is to look at correlations and say that they prove what intuition and common sense might wish to be true. I just do not believe that it is possible to use correlation to untangle the... MORE

Economic Junk Science

Economic Methods
Arnold Kling
I am reading the latest issue of the American Economic Review, which is a selection of papers from this year's annual convention of the American Economic Association. A lot of it is what I consider to be "junk science." So... MORE

Macroeconomics and Confirmatory Bias

Economic Methods
Arnold Kling
Greg Mankiw has written an outstanding new essay that reviews the history of thought in macroeconomics. I don't know where he is planning to give this paper, but I wish I could be a discussant. Here is a brief excerpt.... MORE

Behavioral Science vs. Happiness Research

Economic Methods
Arnold Kling
Bryan writes, If happiness research can't make behavioral predictions, then behavioral research can't make happiness predictions. Which is as it should be. Books that are based on research designed to predict behavior belong in the Social Science section. Books that... MORE

Measurement Without Measurement

Economic Methods
Arnold Kling
Bryan writes But Arnold's prediction and the happiness literature are actually compatible. I am not going to be trapped into talking about happiness research as if it makes behavioral predictions. Happiness research cannot make behavioral predictions at all. It consists... MORE

Wild Hypotheses

Economic Methods
Arnold Kling
Pete Boettke wants to see Economics with Attitude. I have often asked job candidates what the wildest hypothesis related to their research in economics and political economy that they want to pursue would be. Here are some of my ideas... MORE

Multicollinearity and Micronumerosity

Economic Methods
Bryan Caplan
R.J. Rummel's critique of a Cato study set off a big bloggers' debate about the value of think tanks. The following passage in Rummel's critique got my attention: This correlation is meaningful for the kind of regression analysis Gartzke did,... MORE

Economics and Autism

Economic Methods
Arnold Kling
Simon Baron-Cohen said, A systemizer is somebody whose style of thinking is predominantly in terms of understanding things according to rules or laws. You can think of lots of different kinds of systems: mathematical systems (algebra, computer programs), or mechanical... MORE

Another Take on What's Wrong With Economics

Economic Methods
Bryan Caplan
Not only do I disagree with Arnold's views on the self-interest and rationality assumptions; it also looks like Arnold disagrees with Arnold! In the past, Arnold has expressed a lot of sympathy for my view that systematically mistaken economic beliefs... MORE

What's Wrong with Conventional Economics?

Alternative Economics
Arnold Kling
Michael Blowhard summarizes two books attacking mainstream economics. For most of the "Changing Face" crowd, the field needs some correction, but nothing fundamental. One mathematical-modeling whiz says straight-out that there's nothing wrong with mathematical modeling that better mathematical modeling can't... MORE

Measuring Health Care Effectiveness

Economics of Health Care
Arnold Kling
Co-blogger Bryan and I have been arguing over two issues, one substantive and one methodological Substantive issue: I say that health care probably is effective. He says that there is no evidence that it is effective on average. Incidentally, Paul... MORE

Stat Fight, Con't

Economic Methods
Arnold Kling
Bryan says, a fair number of papers have a lot of data points. So rejecting the null hypothesis of no effect is pretty easy. Moreover, it is fairly common in both literatures to discuss the magnitude of the effect, not... MORE

Deadly Chicago Econometrics

Economic Methods
Arnold Kling
Bryan's post on the statistical findings about parenting and health care reminds me of what we at MIT used to call "Chicago econometrics." A fundamental fallacy in classical statistics is to say, "Therefore, we accept the null hypothesis." The classical... MORE

Don't Believe Behaviorism's Dead? I Say!

Economic Methods
Bryan Caplan
One of the many paradoxes of behaviorism is that the only way you can tell that Arnold Kling and I disagree about it is from our words. Observe our behavior for a hundred years; you'll never figure out where we... MORE

Behaviorism in Economics: A Funeral

Economic Methods
Bryan Caplan
One reaction to my recent piece in Econ Journal Watch is "economics isn't about what people say or believe; it's about what people DO." The easy response is: Not anymore, it isn't! Survey research has exploded in economics. So has... MORE

Bleg: looking for SAS help

Economic Methods
Arnold Kling
I recently came across the Medical Expenditure Panel Survey, which seems like a fascinating data set. I would like to do some basic cross-tabs of some of the data. However, I am not a SAS jockey. Moreover, some of the... MORE

Math and Economics

Economic Education
Arnold Kling
In a wide-ranging essay, I question the dominance of math in advanced economics. The raising of the mathematical bar in graduate schools over the past several decades has driven many intelligent men and women (perhaps women especially) to pursue other... MORE

Unprovable Speculations

Economic Methods
Arnold Kling
John Brockman asked dozens of scientists and other intellectuals to state a proposition you believe is true, even though you cannot prove it. Not many of the answers deal with economics, and those that do strike me as hostile without... MORE

Paul Samuelson

Austrian Economics
Arnold Kling
Since the name of Paul Samuelson came up recently, I thought I would toss out a few random impressions of him. I only had Samuelson for one course, which I believe was in the Spring of 1977. It was part... MORE

All's Fair in Politics

Public Choice Theory
Michael Munger
by Michael Munger Guest Blogger Economist Ray Fair's very simple model on presidential elections has some interesting things to say about the upcoming election. Given the macro-economic and macro-political factors that have mattered in the past, George W. Bush should... MORE

Statistical Jargon

Economic Methods
Arnold Kling
I try to use the 2000 election in Florida and the question of Iraq's weapons of mass destruction to illustrate statistical concepts. In statistics, a parameter (not to be confused, as it is often is by laymen, with perimeter), is... MORE

Sowell on Math and Economics

Economic Methods
Arnold Kling
A while back, we discussed whether math is necessary for economic education. Thomas Sowell gives his view. Introductory economics is too often taught as if the students in it were all potential economists who had to be introduced to the... MORE

Math and Economics

Economic Methods
Arnold Kling
Brad DeLong points to an interesting post by Daniel Davies on the use of math in economics. Davies writes, If the history of economic thought teaches us anything, it teaches us that people who don't use the mathematics always, sooner... MORE

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