EconLog Archive
Cost-benefit Analysis
Dixie Cups, CAFE Standards, and Numeracy
The second use is more resource-saving than the third. At my cottage in Canada, I have running water from a pump in the lake but not safe water. So in what we call the “bath hut” I have a bottle of clean water from which I pour a little into a Dixie cup when I .. MORE
Books: Reviews and Suggested Readings
The alternative to rage bait
In my last post, I discussed reasons why rage bait is so depressingly successful. And I see a lot of discourse in favor of libertarianism that seems to lean into the rage bait angle. Sometimes it takes the form of “look at this outrageous and awful thing” done by the government or caused by government .. MORE
Economic and Political Philosophy
“Trade War” as a Contradiction in Terms
If a free country is defined as a place where an individual or private organization is free to engage in voluntary cooperation—including trade—with whoever is willing or able to and on terms accepted by both parties, it follows that “trade war” is a contradiction in terms. Free trade is peaceful trade. Why is this definition .. MORE
Government Growth
Tariffs Foreshadow a VAT?
A year ago, I had this to say: The progressive left will never be able to achieve their dream of a Euro-style welfare state by taxing the rich. If you read the smarter progressives, they all know this. They understand that the US would have to add a large tax on consumption in order to .. MORE
Statistical theory and methods
Discrepancy Does Not Imply Discrimination
In almost any discussion of political and social issues, someone will use the argument that a discrepancy between two groups is per se evidence of discrimination against one group. However, statistical analysis reveals that the latter is not necessarily true. For example, it is true that women make less than men, but women also tend .. MORE
Labor Market
Minimum Wage Misery
I know of a young man who is mentally handicapped. He aspires for a job as a dishwasher in a restaurant, or stocking shelves in a supermarket, or pushing a broom around pretty much anywhere. He is big and strong, and can easily do any of these types of work, but he is slow. He .. MORE
#ReadWithMe
My Weekly Reading for July 13, 2025
I’ve been setting up my cottage in Canada and relaxing, which is why I haven’t posted this week. I’ll pick up the pace this coming week. The Young Rothbard: an Uncomfortable Neoclassical Economist by Joseph T. Salerno, Mises.org, July 3. 2025. Excerpts: Rothbard took courses with all these eminent economists but was especially influenced by .. MORE
Economics and Culture
The Economics of Rage Bait
Clickbait describes a phenomenon where a headline is given a deliberately provocative title to try to get users to engage with some kind of online content. We may bemoan the phenomenon, but it persists because it’s effective. The most effective form of clickbait is known as rage bait. As the name suggests, rage bait is .. MORE
Adam Smith
The Law and Economics: Against Siloing
From June 1 through June 13, I was in Park City, Utah participating in the Law Institute for Economics Professors run by the Law & Economics Center at Scalia Law School. It was a two-week crash course in American law and I will be sharing some insights over future posts (as an aside, if you .. MORE
Economic Methods
Just a Coincidence?
The human brain seems wired to notice patterns. This presumably has some evolutionary advantages, but this attribute can lead us astray in a world that is overloaded with data. I’ll start with a personal anecdote, and then show the implications for data analysis. Back on June 18th, I was traveling through the west side of .. MORE
Economic Methods
Identities and Causation
When I was in high school (approximately 730 years ago, or so it feels these days) I first learned basic trigonometry. A common type of problem in homework and tests involved situations where you had to find the length of one side of a triangle based on other values provided. For example, a problem might .. MORE
Central Planning
British Industrial Policy: This Time Is Different
In the Summer issue of Regulation, I suggest that the growing popularity of industrial policy (also called “industrial strategy”) all over the world is a return to Jean-Baptiste Colbert, the Finance Minister of Louis XIV in the 17th century. Industrial policy is not just an assemblage of political meddling acts—otherwise it would be everywhere in .. MORE
Microeconomics
An Econ 101 Error
On June 17, Treasury Secretary Scott Bessent tweeted: Recent reporting projects that stablecoins could grow into a $3.7 trillion market by the end of the decade. That scenario becomes more likely with passage of the GENIUS Act. A thriving stablecoin ecosystem will drive demand from the private sector for US Treasuries, which back stablecoins. This .. MORE
Economic Growth
My Weekly Reading and Viewing for July 6, 2025
I will be traveling for the next 19 days and so will be posting less frequently. Cincinnati’s Beer-Loving Germans Endured Anti-Immigrant and Anti-Alcohol Resistance by Elizabeth Nolan Brown, Reason, August/September, 2025. Excerpts: Cincinnati’s population ballooned throughout the 19th century, from 2,540 residents in 1810 to 115,435 in 1850, when it ranked as the sixth-largest .. MORE
Government Growth
DOGE Was Always Doomed
I’m sure DOGE will have a long history as the textbook definition of overpromising and underdelivering. There were a lot of reasons to be skeptical of their chances to meet their goals. But I just want to focus on simple realities DOGE didn’t – and couldn’t – alter. In 2024, federal spending was $6.8 trillion. .. MORE
Books: Reviews and Suggested Readings
Bryan Caplan on Antitrust
I’ve started reading Bryan Caplan’s excellent new book entitled Pro-Market and Pro-Business: Essays on Laissez-faire, and have covered the first 12 (short) chapters. I had hoped to find lots of things to post about, but unfortunately I tend to agree with almost all of Bryan’s arguments. There is one chapter on antitrust, however, which I .. MORE
Liberty
Jeff Hummel on the American Revolution
Every few years, I post on an excellent article on the American revolution by economic historian Jeff Hummel. It’s on Econlib. I asked Jeff to write it in 2018 and it has been a perennial hit. Indeed, in a newsletter a few years ago, Liberty Fund stated: Our most popular Article ever is from Jeffrey .. MORE
Law and Economics
Transaction Costs and the Law
Despite Ronald Coase’s many contributions to economics, he is most famous for the co-called Coase Theorem, which is just one small part of his paper The Problem of Social Cost. Simply put, in a world of sufficiently low transaction costs, property rights, institutions, and the law don’t matter. If rights are assigned randomly, the result .. MORE
Economic Education
Cash Transfers: Cutsinger’s Solution
Question: One common argument against public assistance taking the form of direct cash handouts is that the recipients will use the money to buy things that taxpayers find objectionable, e.g., illicit drugs, gambling, etc. To avoid this outcome, the argument goes, public assistance should take the form of in-kind transfers, e.g., food, housing, medical care, .. MORE
Political Economy
The Marriage of Jeff Bezos in Venice
The vocal opposition of some locals to Jeff Bezos’s marriage in Venice, in line with the reaction against tourism, illustrates a few important points in economics and political philosophy. The Financial Times reports (“Jeff Bezos’s Wedding Draws Storm of Protest in Venice,” June 24, 2025): “What is happening here is blatant arrogance,” said Marta Sottoriva, .. MORE
EconTalk
Defying the Data: Standard of Living Edition
In 2007, Eliezer Yudkowsky wrote an interesting article advocating for what he called “defying the data.” The idea was fairly simple – say you have some theory explaining how the world works. A new study is published with data that can’t be accounted for with your theoretical framework. How should you respond? One response is .. MORE