EconLog Archive
Economics of Health Care
The FDA’s Power Grab
But if the FDA gets its way, nitroglycerin will not be obtainable for pennies. The situation was stable until Pfizer went through the time and expense required to test its particular version of nitroglycerin, Nitrostat, which the FDA approved in 2000. Once the FDA did that, other versions became officially “unapproved.” In 2010, the FDA .. MORE
EconTalk
#TWET: Terry Moe on the Constitution
Could allocating more power to the American President result in a more efficient government? Could it result in a smaller government? I admit, I would have had a pretty strong (negative) reaction to those two questions if you’d posed them to me a week ago. But, as usual, this week’s EconTalk episode has me thinking… .. MORE
Economics of Health Care
Scott Alexander IS an Economist
So many other bloggers called attention to Scott Alexander’s outstanding post about why the price of EpiPen is so high that I didn’t feel the need to. But now he has written another post about drug prices and the harm done by drug price regulation and has hit it out of the park again. An .. MORE
Behavioral Economics
Solve for This Equilibrium
Tyler Cowen’s fond of admonishing us to “solve for the equilibrium.” His maxim came to mind while reading his Bloomberg column last month: How’s this for a simple rule: Open borders for the residents of any democratic country with more generous transfer payments than Uncle Sam’s. What would happen? Many economists and perhaps laymen would .. MORE
Taxation
Response to Professor Stephen Gordon
Last month, I posted about Professor Stephen Gordon’s confusion between a tax and a price. Professor Gordon responded, and I responded to him. Here’s an excerpt from my response: Both Foster and I noted that there is an important distinction between a tax and a price. Professor Gordon is right that a tax on carbon .. MORE
Macroeconomics
My paper at the monetary rules conference
Today I will be presenting a paper at a Mercatus/Cato conference on monetary policy rules. Here I’d like to summarize my key themes: 1. The past 10 years have destroyed the pre-2008 consensus on monetary policy. Everything is up in the air. Tools, targets, and even the extent to which monetary policy can hit its .. MORE
Behavioral Economics
Betting Justice
My favorite Oliver Wendell Holmes quote, by far: Chauncey Wright, a nearly forgotten philosopher of real merit, taught me when young that I must not say necessary about the universe, that we don’t know whether anything is necessary or not. I believe that we can bet on the behavior of the universe in its contact with us. .. MORE
Media Watch
Matt Welch on the Washington Post’s Deficient Apology
Using “not entirely” in this case is like saying Rocky was “not entirely” about loan collections. On a blog called EconLog, I generally stick to economics. But occasionally I make an exception to deal with other issues. One is media bias, because I think the issue is so important. Recently Matthew Sheffield wrote an op/ed .. MORE
Labor Market
How would we know if wages were sticky?
I’ve done a lot of posts on wage stickiness, but misconceptions keep popping up. The sticky wage theory of the business cycle is based on the notion that only a fraction of wages get adjusted each period. This leads to some odd results. The bigger the fall in the equilibrium wage rate, the bigger the .. MORE
Behavioral Economics
Helicopter Parenting and Moral Causation
Condemnation is fun, but numbers are boring. What are we supposed to do, then, when condemnation requires numbers? Suppose you want to condemn a parent for putting his child in grave danger, but your knowledge of actual risks is hazy at best. The simplest approach is to do what Kahneman calls “answering an easier question.” .. MORE
Labor Market
Honor Laborers
Most Americans think of Labor Day as part of a long weekend and the unofficial end of summer. It was originally meant, though, to recognize the contributions of labor unions. I recommend a third alternative: use Labor Day to honor laborers. To honor laborers, you would have to respect their right to make choices for .. MORE
Macroeconomics
The interest rate fallacy
There is a common fallacy that lower interest rates are expansionary. Where does this fallacy come from? I can think of two true facts, each of which contributes to this fallacy. 1. The true fact that if I am thinking about building a new house, a lower interest rate might make me more inclined to .. MORE
Macroeconomics
Reply to Kocherlakota
I recently did a post over at MoneyIllusion, arguing against the elimination of currency. I suggested that this would have a disproportionate impact on the poor, who often lack access to banking facilities. It would also reduce privacy; the government would have access to all your shopping habits. Suppose a Colorado Congressman buys some pot .. MORE
Monetary Policy
No, Ben Bernanke, He Wasn’t
Hamilton was without doubt the best and most foresighted economic policymaker in U.S. history. So writes former Fed chairman Ben Bernanke. Monetary economist and fellow UCLA grad Lawrence H. White disagrees. Larry writes: Now that the controversy has cooled we can take a more informed perspective. There is no denying Hamilton’s importance and influence, or .. MORE
International Macroeconomics
Brexit uncertainty and Brexit itself
Is it too early to evaluate the impact of Brexit? I’d say so, given that Brexit will not occur until at least 2019. How about the impact of Brexit uncertainty, which just a few weeks ago many (most?) pundits were suggesting would push the UK into recession? It may be a bit too early, but .. MORE
Books: Reviews and Suggested Readings
P.J. O’Rourke on Math
Warning: I normally post on one thing at a time. This is more stream of consciousness than I’m used to doing. My favorite P.J. O’Rourke book is Eat the Rich: A Treatise on Economics, written in 1998. In my review of the book, I wrote: O’Rourke addresses the most important question in economics: “Why do .. MORE
Education
What would a principled defense of political correctness look like?
Vox has a new article on political correctness: Academic freedom is the sine qua non of higher education. Students ought to be challenged, even made uncomfortable, in order to learn in deep and meaningful ways. And, of course, collegiate education is where students must encounter perspectives different from their own. No one who genuinely believes .. MORE
Competition
Apple’s principled defense
Private businesses very seldom mount a principled defence of their behaviour. This is why libertarians like to stress that they are pro-market and not pro-business. Business people, being self-interested like anybody else, will attempt to make the most of the circumstances and the majority of them won’t hesitate in accepting legal privilege; indeed many lobby .. MORE
Cost-benefit Analysis
The Math Myth
Math professor David Edwards sent me this short essay on mathematical education. Printed with his permission. The Math Myth Themath myth is the myth that the future of the American economy is dependent upon the masses having higher mathematics skills. This myth goes back to at least Sputnik, when the Russians were going to surpass .. MORE
Behavioral Economics
John Kerry, Anti-Terrorist
Remember this: No country is immune from terrorism. It’s easy to terrorize. Government and law enforcement have to be correct 24 hours a day, 7 days a week, 365 days a year. But if you decide one day you’re going to be a terrorist and you’re willing to kill yourself, you can go out and .. MORE
Books: Reviews and Suggested Readings
#TWET: Why the Law is so Perverse
Having recently been diagnosed with kidney disease, you find yourself in need of a transplant. Fortunately (?), several years ago you joined a kidney club, agreeing to donate one of your own sometime in the future should you be a match. Now the tables have turned, and the club donor chosen by lot to donate .. MORE