EconLog Archive
Behavioral Economics
Headline Dismay Minimization
Evaluate this simple cynical theory of what almost every politically aware person really wants: Minimizing the negative emotions they personally experience when they read/see/hear top news stories. In other words, the politically aware strongly care about even objectively minor problems that get a lot of coverage, but barely care about even objectively major problems that .. MORE
Behavioral Economics
An ITT I Cannot Pass
I pride myself on my ability to fairly and accurately explain views with which I disagree. I’ve tried to enshrine this skill in what I call the Ideological Turing Test – the ability of non-believers to mimic believers in a blind trial. But when I read these passages in Noah Smith’s recent column, I realized .. MORE
Economic and Political Philosophy
Huemer’s “Relativism and Tyranny”
The latest installment in my lost works of Michael Huemer series is his 1992 essay, “Relativism and Tyranny.” The paper begins with an infamous quote from 1984, then distinguishes nine theses moral relativists (whether self-conscious or by default) routinely equivocate between. The following are versions of relativism: (1) Moral values generally are established by social .. MORE
Labor Market
Do Steps Toward Freedom Create Net Benefits?
Noah Smith recently wrote a piece titled “Being an Ideologue Means Never Having to Say You’re Wrong.” It starts out well. He writes: “Communism would have worked, if the Soviet Union had only tried it for real.” I must have heard this argument a dozen times from die-hard leftist friends. Marxist economists such as Richard .. MORE
Macroeconomics
Disputes don’t get resolved, they get swept under the rug
This post will be about macro theory, but let’s begin with a related example. You are a libertarian and your best friend is also a libertarian. You tend to see eye to eye on most issues, favoring small government. Then some new issues arise, and your views don’t quite align. Maybe Muslim terrorists, illegal Mexican .. MORE
Economic Education
Rio Reality Check
My family has been enjoying watching the Olympics over the past couple of weeks. The spectacle of sport can be inspirational. (And with a young swimmer in the house, we are ALL about Katie Ledecky and Michael Phelps.) If you missed the recent EconTalk episode with Matthew Futterman, check out the excellent discussion of the .. MORE
Social Security
Social Security Reformer
The Committee for a Responsible Federal Budget has come up with a very clever tool. It’s called “The Reformer: An Interactive Tool to Fix Social Security.” Notice that it’s to fix Social Security, not what I would like to see, which is abolition. But still, it’s very clever and, assuming the underlying model is done .. MORE
Uncategorized
The intellectual as a celebrity
The Financial Times has published a collective interview on “how to detox digitally in the sun“: that is, a set of conversations with famous people on tips to make the most out of your holidays. This is, typically, material for tabloid newspapers but, the FT being the FT, instead of seeking the opinion of movie .. MORE
Economic Methods
The Immigration/Labor Demand Elasticity Puzzle
While labor demand elasticity is pretty clearly negative, virtually all estimates have an absolute value less than 2. Yet estimated effects of immigration on native wages are tiny. Kerr and Kerr’s summary is typical. The documented wage elasticities are small and clustered near zero. Dustmann et al. (2008) likewise found very little evidence for wage .. MORE
International Trade
Lester versus DiMicco on NAFTA
Simon Lester, at Cato at Liberty, has a telling Twitter discussion with Dan DiMicco of Nucor Steel. DiMicco is an adviser to president candidate Donald Trump. According to Time: He [DiMicco] has been an avid supporter of Trump’s trade proposals, recently writing, “The Trump trade policy is both sound and necessary in today’s World where .. MORE
Macroeconomics
Saving is not a problem
I recently came across a WSJ article that is a gold mine of teachable moments for EC101 students: KORSCHENBROICH, Germany–Two years ago, the European Central Bank cut interest rates below zero to encourage people such as Heike Hofmann, who sells fruits and vegetables in this small city, to spend more. Policy makers in Europe and .. MORE
Cost-benefit Analysis
Labor Demand Elasticity: Boredom is Thoughtless
When workers are cheaper, employers want more. But how many more? Does a 1% fall in the price of labor entice .1% higher employment? .5% more? 1% more? In technical terms, what is labor’s elasticity of demand? So much hinges on this seemingly boring question – everything from “How pro-worker is ‘pro-worker’ legislation?” to “Does .. MORE
Books: Reviews and Suggested Readings
#TWET…But What If We’re Wrong?
Why are we so convinced the things we think are true today will still be true for future generations? I mean, everybody knows The Beatles are the greatest rock group of all time, right? (And while pyroseed13 argues in the Comments that once the Baby Boomers are gone, no one will talk about the Beatles, .. MORE
Cost-benefit Analysis
Open Borders Philanthropy Bleg
Question from a reader. Any fruitful ideas? Dear Prof. Caplan, I’ve long been intuitively in favor of open borders, but it is only recently that I have spent a bit of time reading the literature both for and against this case. Perhaps unsurprisingly, I’ve found a couple of your papers particularly persuasive both morally and .. MORE
Labor Market
The new “voodoo”
Here is Arnold Kling: John Cochrane writes, Economics is a work in progress. But it is certainly brand-new, made-up-on-the spot economics, designed to buttress policies decided on for other reasons. He is describing the economic analysis that claims that policies to distort labor markets to try to increase wages will increase aggregate demand, so that .. MORE
International Trade
Working Around FDA Regulation
Premium cigar makers, racing to pump out new brands before stricter rules took effect this week, have flooded the market with hundreds of new smokes, some a bit “green,” with rough labels–one exec put his daughters to work cutting out bands–and odd distribution schemes, to get into the marketplace under the wire. This week’s rules .. MORE
Behavioral Economics
Murder Equivalents
Economists are often accused of believing that everything - health, happiness, life itself - can be measured in money. What we actually believe is even odder. We believe that everything can be measured in anything. --David Friedman, Hidden Order Economists’ have long struggled to get non-economists to put a dollar value on human life. We’ve .. MORE
Central Planning
The Case for Low-Income Housing
Any discussion of trailer parks should start with the fact that most forms of low-income housing have been criminalized in nearly every major US city. Beginning in the 1920s, urban policymakers and planners started banning what they deemed as low-quality housing, including boarding houses, residential hotels, and low-quality apartments. This is from Nolan Gray, “Reclaiming .. MORE
Public Choice Theory
The Ugly Ugly FDA’s Cartel Enforcement
E-cigarettes do not contain tobacco. They contain nicotine, a chemical derived from tobacco and other plants. Plain English was never a deterrent, though, to regulators on an empire-expanding mission. The Food and Drug Administration this week rolled out new regulations on e-cigarettes based on a 2009 law giving the agency power over products that “contain .. MORE
Taxation
The Perverse Death/Estate Tax
Paul Krugman recently posted about Donald Trump’s proposal for eliminating the death tax, aka the estate tax. But Paul really only scratched the surface. The death tax has a number of perverse effects, none of which Paul discusses. You might think that I’ve already biased the issue by using the term “death tax,” a term .. MORE
Macroeconomics
Why the monetary policy pessimism?
I’ve recently noticed a lot of pessimism about what monetary policy can accomplish. For instance, if I discuss a higher inflation target, people will say, “what makes you think the Fed could hit a higher inflation target? After all, they have trouble hitting their current inflation target.” This is incorrect for lots of reasons, and .. MORE