EconLog Archive
Finance
Andrew Lo, JP Morgan, and PBR Audits
In an interview, Andrew Lo says, There is one very simple question that you can ask — which has a definitive answer — about the small number of individuals who were responsible for managing this group at JP Morgan and putting on the specific trades that lost these large amounts of money. That question is: .. MORE
Behavioral Economics
Firing Aversion Bleg
I’m having trouble finding any pre-existing academic literature on firing aversion. Google Scholar has two hits for “firing aversion” and zero hits for “hirer’s remorse.” Anyone know of any relevant research under another name? P.S. Much oblige to kenneth and steve for their comments. Great guidance. If you want credit in my acknowledgements, please email .. MORE
Economic and Political Philosophy
Somin on Extremer Extremists
Ilya Somin at Volokh Conspiracy methodically answers my questions about extremer extremists. My original suggested response umbrellas: 1. Public relations. Views more extreme than your own are counter-productive because they alienate the moderates you need to convince to get better results. 2. Transition costs. While you agree with the extremer extremists about the ultimate goal, .. MORE
Economics of Education
Summers Joins FIRE
FIRE is pleased to announce the newest addition to its Board of Advisors – Lawrence H. Summers. Professor Summers is President Emeritus of Harvard University. For those of you who don’t know, FIRE is the Foundation for Individual Rights in Education. They try to protect, and often succeed in protecting, rights of students and faculty. .. MORE
Economic Education
The Problem with Wikipedia
When I first heard about Wikipedia, I thought, “this can’t work.” My reason: there was no assurance that letting huge numbers of people fill in entries and update things would lead to correct information. That said, it works much better than I had expected. But in my only two cases where I have paid close .. MORE
Politics and Economics
Steven Chu vs. Bernie Madoff
A commenter on this post wrote, I don’t find it very credible that Steven Chu spends his whole life studying physics (and extremely successful at it) so one day he could reward some political cronies of his boss. Comparing Chu to Madoff, really? Really. I think a reasonable case can be made that Madoff never .. MORE
Politics and Economics
Random Thought
From a graduation speech by Neil Howe, reprinted by John Mauldin. The Millennial Generation is correcting for the excesses of Boomers and Gen Xers who today run America. I need not remind you what those excesses are: leadership gridlock, refusal to compromise, rampant individualism, the tearing down of traditions, scorched-earth culture wars, and a pathological .. MORE
Information Goods, Intellectual Property
A Signaling Theory of Suboptimal Telecommuting
Americans spend a ton of time commuting. According to happiness researchers, commuting is the low point of the typical day. If you look at the jobs that people actually do, though, it’s hard to understand why so many workers continue to commute. Given a computer and high-speed Internet, most desk jobs could now be done .. MORE
Politics and Economics
The Energy Loan Scandal as a Non-story
Mark A. Thiessen writes, as Hoover Institution scholar Peter Schweizer reported in his book, “Throw Them All Out,” fully 71 percent of the Obama Energy Department’s grants and loans went to “individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” Collectively, these Obama cronies raised $457,834 for .. MORE
Economic History
Wikipedia’s Error on the Dismal Science
In addition to Adam Smith’s legacy, Say’s law, Malthus theories of population and Ricardo’s iron law of wages became central doctrines of classical economics. The pessimistic nature of these theories led to Carlyle calling economics the dismal science and it provided a basis of criticism of capitalism by its opponents. This is from the Wikipedia .. MORE
Economic and Political Philosophy
The Extremer Extremists
I’m an extremist. I freely admit it. The status quo is deeply immoral, and would remain so even if there were many moderate changes in the right direction. Many EconLog readers presumably think the same, even if they sharply disagree with my diagnosis of what’s deeply immoral about the status quo. Still, no matter how .. MORE
Statistical theory and methods
Great Moments in Numeracy: LBJ’s Odds of Becoming President
When it became clear to Johnson that he could not reach the top of the ticket, he began to consider the second spot. He had his staff look up how many presidents in the previous hundred years had died in office–five out of eighteen, giving him a better than 20 percent chance of reaching the .. MORE
Central Planning
A Memorial Day Appreciation
Over at “Facts and Other Stubborn Things,” Daniel Kuehn, a frequent commenter on this site, asks that we share thoughts of appreciation for veterans. Here is mine. It’s for Richard Timberlake, a well-known monetary economist and student of Milton Friedman. Dick was a bomber pilot during World War II. Dick wrote an excellent memoir about .. MORE
Regulation and Subsidies
Audits and Principles-Based Regulation
One point that many people miss about principles-based regulation is that it gives regulators an additional enforcement tool, other than addressing actions that are improper. That tool is a process audit. Audits can be very useful. In 1990, Freddie Mac’s “internal audit” unit found severe problems in its Quality Control department (QC). QC was supposed .. MORE
Public Choice Theory
Edward Glaeser on GSE Reform
He sees it (earlier, preliminary, no-cost version here) as a public choice problem. If there is a high probability that political leadership will be induced to pursue policies that maximize the profitability of private entities at the expense of taxpayers, then purely public options create lower social losses. If there is a high probability that .. MORE
Finance
More Comments on Principles-Based Regulation
1. I think that many people are missing an important feature of principles-based regulation, which is the role of audits in producing compliance. I will explain that in the next post on the topic. 2. One principle I want to implement is “Don’t scam customers, especially those who can’t afford it.” I think that many .. MORE
Books: Reviews and Suggested Readings
Jerusalem: Chronicles from the Holy City
Guy Delisle‘s latest graphic novel, Jerusalem: Chronicles from the Holy City, is outstanding – second only to his transcendent Pyongyang: A Journey in North Korea. Like most of Delisle’s books, Jerusalem is a non-fiction travelogue. His wife works for Doctors Without Borders, so Delisle sees one troubled land after another – and draws what he .. MORE
Eurozone crisis
Sentences to Ponder on the Eurozone
1. From Tyler Cowen. It probably is about time to judge the euro zone as a failed idea — and rarely is it wise to double down on failed ideas. 2. From David Zervos via John Mauldin’s newsletter (you may need a free subscription): A bank run is the only way to get to equilibrium .. MORE
Economic Methods
Caplan v. Murphy on Paul: Getting to Bet
Bob Murphy’s confident that Ron Paul will have a lasting political legacy. I’m not. He proposed a bet, I counter-offered, and we haggled. Bob reproduces our haggling with permission. My offer #1: Right now there are roughly zero members of Congress that openly call themselves followers of Perot. Maybe a few, but none that I’ve .. MORE
International Trade
The Economics of Sanctions on Iraq
However, the devastation of Iraq in the service of limiting proliferation did not begin with the war in 2003. For the previous 13 years, that country had suffered under economic sanctions, visited upon it by both Democratic and Republican administrations, that were designed to force the evil, if pathetic, Saddam Hussein from office (and, effectively, .. MORE
Political Economy
Eugenics and Man at Yale
The Yale Alumni Magazine has this: In the early decades of the twentieth century, eugenics “fell squarely in the mainstream of scientific and popular culture,” according to Yale history professor Daniel Kevles, author of the 1985 book In the Name of Eugenics. Theodore Roosevelt popularized the term “race suicide,” for what he saw as the .. MORE