EconLog Archive
Incentives
Should lottery directors be licensed?
I’ve often wondered why financial advisors need a license. Perhaps the government believes that this regulations protects the public from making bad financial decisions. But what is a bad financial decision? Is buying a managed stock mutual fund a bad decision for the average person? How about an indexed fund? Perhaps the government is worried .. MORE
Books: Reviews and Suggested Readings
My Weekly Reading for October 20, 2024
No Place To Go by Christian Britschgi, Reason, October 15, 2024 Excerpt: In September, the city council of Kalispell, Montana, took the unusual, and likely unprecedented, step of revoking a permit it had given to a local shelter that had allowed it to offer warm beds to the rural community’s homeless during the winter months. .. MORE
Economics of Crime
Trafficking versus Voluntary Prostitution
A friend on Facebook sent me the following message. I’ve edited it to make fragments of sentences into sentences and to correct spelling mistakes. It relates to my post a few days ago about government officials referring to voluntarily chosen prostitution as “trafficking.” I saw your EconLog post on sex trafficking. I was going .. MORE
Books: Reviews and Suggested Readings
Monetary Shocks: A Natural Experiment
The Economist has a recent article discussing a fascinating natural experiment: History does nevertheless throw up “natural” experiments. In an earlier paper, Mr Brzezinski, Mr Palma and two co-authors exploited one source of variation in the money supply of early modern Spain: disasters at sea. Ships carrying treasure to Spain from the Americas would sometimes .. MORE
Business Economics
Revisiting Jon Murphy on Amazon
Recently, Amazon had one of its big “Prime Day” sales, a two day event where a variety of products would be sold at various discounts. And while looking through some of the offers available, I was reminded of a post from co-blogger Jon Murphy from a year ago. In this post, he examines the FTC’s .. MORE
Incentives
Mortal Ignorance of Methodological Individualism
In an EconoLog post 10 months ago, I commented on a Wall Street Journal report that Yahya Sinwar understood “the Israeli psyche” after spending nearly two decades in jail in that country. He was the Hamas leader thought to have planned the operation that massacred 1200 Israelis and took more than 200 hostages, most of .. MORE
Adam Smith
Acemoglu and Robinson Basically Ignored Adam Smith
In my Wall Street Journal op/ed on the 3 Nobel Prize winners, “A Nobel Prize in Economics for the ‘Inclusive’ Free Market,” published on line on the afternoon of the award and in print the next day, I wrote: The Nobelists’ contribution is to lay out empirical data on the specific economic institutions that helped .. MORE
Economic Growth
Powerful Anecdotes: Korea, Malaysia and Guyana
Daron Acemoglu, Simon Johnson, and James Robinson were recently awarded a Nobel Prize in Economics, partly for work emphasizing the role of good institutions in economic development. They used a variety of creative statistical techniques to get around the thorny problem of how to establish causality. One problem in establishing causality is that a group .. MORE
Economic Education
EconLog Price Theory Problems: Electric Vehicles
[Editor’s note: Welcome to the second of our new series on Price Theory problems with Professor Bryan Cutsinger. You can view the posts from last month’s problem here and here. Share your proposed solutions in the Comments. Professor Cutsinger will be present in the comments for the next two weeks, and we’ll again post his .. MORE
Adam Smith
The Benevolence of Market Exchange – Smith vs Daggett
In his book Living Together, David Schmidtz makes a simple but profound observation about one of the most quoted passages from Adam Smith‘s The Wealth of Nations. Smith says: It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We .. MORE
Labor Market
U.S. Politicians Push for Ukraine to Reduce Freedom Further
A Ukrainian official said Tuesday that American politicians are pressuring Ukraine to lower the minimum age of conscription from 25 to 18 to make more young men available for combat. “If this information has surfaced, I can confirm it: American politicians from both parties are putting pressure on President Zelensky to explain why there .. MORE
Microeconomics
War and the Economic Concept of Substitution
Substitution is an important concept in economics, whether we consider the consumer or the producer, and whether the latter produces bubble gum or, like a state, national defense. If the price of a good (or service) increases relative to the price of other goods, a rational consumer will partly substitute another one that is anyhow .. MORE
History of Economic Thought
Henderson on the Latest Nobel Prize in Economics
As I do every year, I get up at about 3:00 a.m. PDT every Columbus Day (aka Indigenous People’s Day or Canadian Thanksgiving) to see who won the Nobel Prize in economics. I then estimate whether I know enough about his, her, or their work to write a piece in the morning for the Wall .. MORE
Business Economics
Are Sex Workers Necessarily Engaged in Trafficking?
A few years ago, when I was a full-time member of the faculty at the Naval Postgraduate School, faculty and staff were required to go through various trainings. One of them was on how to spot sex trafficking so that we could turn in traffickers to the police. I’m the kind of person who, during .. MORE
Books: Reviews and Suggested Readings
A Societal Nobel Prize in Economics
For communicating ideas, words have their importance. In announcing the award of the 2024 Nobel economics price to Daron Acemoglu, Simon Johnson, and James A. Robinson, the Royal Sweedish Academy of Sciences declared: This year’s laureates in the economic sciences … have demonstrated the importance of societal institutions for a country’s prosperity. The Nobel Foundation .. MORE
Economics and Culture
The Economic Impact of Superstars
Bloomberg has an article discussing the economic impact of superstars like Taylor Swift and Shohei Ohtani: Move over, Taylor Swift. The economic might of baseball star Shohei Ohtani is bringing some big winners, and also some losers to the Japanese corporate world. How should we think about “economic impact”? It’s not an easy question to .. MORE
Public Choice Theory
California Bureaucrat Says the Quiet Part Out Loud
The California Coastal Commission on Thursday rejected the Air Force’s plan to give SpaceX permission to launch up to 50 rockets a year from Vandenberg Air Force Base in Santa Barbara County. “Elon Musk is hopping about the country, spewing and tweeting political falsehoods and attacking FEMA while claiming his desire to help the .. MORE
Central Planning
Is AI Dumber than a Cat? Some Related Points
Why not replace the state (the whole apparatus of government) with an AI robot? It is not difficult to imagine that the bot would be more efficient than governments are, say, in controlling their budgets just to mention one example. It is true that citizens might not be able to control the reigning bot, except .. MORE
Austrian Economics
Hayek’s Nobel at 50
Tomorrow, the Nobel Prize in Economic Science will be announced. Probably no single event is more responsible for the initial success of the efforts by Israel Kirzner and Murray Rothbard to generate a revival of interest in the Austrian School of Economics in the academic practice of economic science and scholarship than F. A. Hayek winning .. MORE
History of Economic Thought
My Weekly Reading for October 13, 2024
Chicago. Milton Friedman from Cambridge to T.W. Schultz. 29 Mar 1954 by Irwin Collier, Economics in the Rearview Mirror, June 7, 2016. Excerpt from Friedman’s letter: Of the people you list as possible visiting professors while Koopmans is away, Solow of M.I.T. is the one who offhand appeals to me the most. I have almost .. MORE
Politics and Economics
Is divided government a good thing?
It depends. But I will argue that the thing it depends on is probably different from the thing that most people believe is important. When I was young, I looked at this issue in partisan terms. Divided government is good (I thought) if the party I oppose holds the presidency, and united government is good .. MORE