EconLog Archive
Cost-benefit Analysis
What Bad Students Know that Good Economists Don’t
The college premium skyrocketed over the last three decades. B.A.s now out-earn high school grads by 70-80%.* College graduation, in contrast, barely rose. In econospeak, the supply of college graduates looks bizarrely price-inelastic. Over the last two months, I’ve read virtually everything ever written on this puzzle. All of the compelling stories converge on a .. MORE
Books: Reviews and Suggested Readings
Everest and the Quest for Status
I’m currently polishing up my behavioral health economics book The Seven Deadly Sins. The first five chapters discuss the core health concerns of diet, exercise, drinking, smoking, and sex. The last two “sins” are using heroin and climbing Everest. I included these chapters for the sake of entertainment; I doubt many of my readers will .. MORE
Behavioral Economics
Evolutionary Psychology on Crusonia
Suppose two 20-year-olds wash up on a the desert island of Crusonia. One is male, the other female. They are both from the same country, but are otherwise randomly selected. Both are convinced they have no hope of escaping the island. Two questions: 1. What fraction of castaways pair bond over the next ten years? .. MORE
Labor Market
Krugman and Blinder: Welcome to the Supply Side
Obamacare defenders and Princeton University economists Paul Krugman and Alan Blinder have granted that the Congressional Budget Office is making a reasonable claim in saying that by 2024, Obamacare, if not repealed or delayed, will reduce the number of hours worked in the economy by the equivalent of about 2.5 million full-time jobs. That doesn’t .. MORE
Economic Methods
What Janet Yellen and Rick Santorum Have in Common
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. A related issue is whether or not economics is in some sense poorer for its .. MORE
Behavioral Economics
The Futility of Quarreling When There Is No Surplus to Divide
Imagine two people have the following relationship options: Option A: DateOption B: Be FriendsOption C: Stop Seeing Each Other Person #1’s preference ordering is: {A, C, B}. In English, #1 most prefers to date, and least prefers to just be friends. Person #2’s preference ordering is: {B, C, A}. In English, #2 most prefers to .. MORE
Income Distribution
Why Income Mobility is Larger in the Middle
Whenever we talk about income mobility, we should never forget that we’re talking about mobility in each direction. One can move down the income scale as well as up. Indeed, if we measure income mobility of households by movement from one quintile to another, it necessarily must be the case (given a fixed number of .. MORE
Behavioral Economics
What the Swiss Vote Really Shows
The Swiss just passed a referendum to restrict immigration from the EU. Tyler thinks this shows that open borders is a hopeless cause. When immigration gets too high, public opinion naturally turns against immigration. Normal 0 MicrosoftInternetExplorer4 In my view immigration has gone well for Switzerland, both economically and culturally, and I am sorry to .. MORE
Labor Market
Why do booms feel good?
The answer to this question might seem obvious, but it isn’t. Yes, booms feature lots of jobs and income, but most standard macro models suggest that booms feature “excesses,” with too much employment and perhaps over-investment too. In the sticky wage/price model, recessions are bad because workers are working less than they’d prefer to work, .. MORE
Behavioral Economics
A Question of Organizational Literacy
What fraction of Americans can correctly explain the difference between a business and a corporation? Please show your work.
Business Economics
American Hustle: Unreal and Real
WARNING: MULTIPLE SPOILERS AHEAD I saw the movie, American Hustle, on Friday night and liked it a lot. I liked the pace and I especially liked the integration with 1970s music, one of my favorite decades for pop music. I did, though, find one of the key economic ideas in the movie highly implausible. Irving .. MORE
Political Economy
Bias and Bigness Bleg
Question for anyone who thinks that the existing regulation regime is well-designed to protect the interests of big business: Why do so many regulations exempt firms with small numbers of employees (typically 50 or less) – and so few regulations exempt firms with large numbers of employees? Please show your work.
Eurozone crisis
How not to privatize
The other day my colleague Massimiliano Trovato and I had an op-ed in The Wall Street Journal Europe, on the forthcoming “privatization” of Poste Italiane, the Italian postal service. I’ve always thought that the old Milton Friedman mantra on tax cuts (“I am favor of cutting taxes under any circumstances and for any excuse, for .. MORE
Monetary Policy
OK, now I’m really confused (the snake and the peg)
Here’s an imaginary dialogue: Student: So the central bank sets the level of interest rates, right? Professor: Not really. It would be more accurate to say that interest rates mostly reflect the condition of the economy. Higher inflation and/or higher real growth causes higher nominal interest rates. I.e. NGDP growth is the main determinant of .. MORE
Labor Market
Why India’s Ban Against Child Labor Increased Child Labor
Some take it as a matter of faith that increasing taxes will dull people’s desire to work. However, higher taxes can sometimes cause people to work more. When higher taxes reduce the after-tax wage, people are poorer for any given number of hours worked. When they become poorer, many people are more anxious to earn .. MORE
Family Economics
How Rival Marriage Is
Last month, I observed: If you share your home with a spouse, you don’t have as much space for yourself as a solitary occupant of the same property. But both of you probably enjoy the benefits of more than half a house. If a couple owns one car, similarly, both have more than half a .. MORE
Upcoming Events
Me at Webber Tonight
I’m sorry for not posting this earlier. I just learned that this is open to the public. I’m speaking at Webber International University in Babson Park, Florida tonight. 6:15 for food and drink. 7:00 for the talk. Here’s the link.
Economics of Health Care
Bleg on Health Care Questions
On March 19, I will be speaking at Oberlin College in Ohio. It will be a debate with Ted Marmor of Yale University. Well, not quite a debate. The format is that the organizers, Professor Marmor, and I will agree in advance on 5 to 7 questions. We will each get a few minutes to .. MORE
Economic Education
AMA Highlights
Last night’s Ask Me Anything was a treat. Main surprise: I was expecting more weird and personal questions. A few highlights: [-]eliaspowers Hi Bryan, There has been a lot of talk online recently on the merits of a Basic Income Guaranty or Negative Income Tax. I have two questions: Would you endorse something like a .. MORE
Economics of Health Care
Deception-Based Medicine
Emily Oster stirred a lot of controversy when she suggested that pregnant women could enjoy a drink of alcohol if they so chose. Why did she arrive at a view that clashed with much of the American medical establishment? She named two reasons. The first is that she did a better job of sifting through .. MORE
Economics and Culture
Two cheers for the tasteless
Does Tamara Ecclestone prompt “a rethink of capitalism“? So writes the Philosopher’s Mail, a website that aims to “prove genuinely popular and populist news outlet which at the same time is alive to traditional philosophical virtues”. Nowadays, rich people easily raise to the status of global celebrities just because they are, well, rich. The news .. MORE