EconLog Archive
Economic Education
How Don Boudreaux Got Hooked on Economics
In a previous post, I praised Don Boudreaux of Cafe Hayek for spreading economic wisdom to people in letters to the editor. This is the story Don told me about how he got hooked on economics. I tell this story whenever I teach the economics of price ceilings, for reasons you’ll see shortly. In the .. MORE
Economic and Political Philosophy
How Far Does the Five-Organ Hypothetical Get Us?
Simple moral theories are almost always easy to refute with simple hypotheticals. Yet in the real world, right and wrong rarely seem ambiguous to me. The reason isn’t that I think that consequences don’t count. I take consequences seriously. My moral judgments are clear-cut largely thanks to what I’ll call the Five-Organ Hypothetical, also known .. MORE
Books: Reviews and Suggested Readings
Paul Johnson’s Peroration
Since we have been discussing his Modern Times, I thought I would excerpt his conclusion, below. by the year 1900 politics was already replacing religion as the chief form of zealotry…At the democratic end of the spectrum, the political zealot offered New Deals, Great Societies and welfare states; at the totalitarian end, cultural revolutions; always .. MORE
Economic Methods
James Manzi on Experimental Social Science
Strongly recommended. A sample: within this universe of programs that are far more likely to fail than succeed, programs that try to change people are even more likely to fail than those that try to change incentives. A litany of program ideas designed to push welfare recipients into the workforce failed when tested in those .. MORE
Economics and Culture
Murphy on Discrimination
This month’s Feature Article on Econlib, by economist Robert Murphy, is the nicest succinct article I’ve seen on how free markets make people pay a price for the kind of discrimination that most people abhor. He points out also that much of the discussion of discrimination in the South seemed fuzzy about whether it was .. MORE
Behavioral Economics
Not Robin Hanson or Tyler Cowen
But Jonathan Haidt sounds like them. The answer, according to Mercier and Sperber, is that reasoning was not designed to pursue the truth. Reasoning was designed by evolution to help us win arguments. That’s why they call it The Argumentative Theory of Reasoning. So, as they put it, and it’s here on your handout, “The .. MORE
Behavioral Economics
The Macro Doubtbook, Installment 10
The previous installment was here. The installment below covers behavioral economics. Recall that the ultimate approach in the Doubtbook will be to stitch together the history of macroeconomic thought with the history of macroeconomic episodes. The opening chapter looks at all of the different sub-fields of economics that macroeconomists turn to for their theories. We .. MORE
Books: Reviews and Suggested Readings
Moral Relativism and Modern Times
Seeing Bryan’s previous recommendations, I am reading Paul Johnson’s Modern Times for the first time. It is a bracing book, filled with opinions that differ from those of Progressive historians. On a number of minor points, I find Johnson less than persuasive. His veneration of Charles de Gaulle, for example. Modern Times succeeds in making .. MORE
Economic Education
In Praise of Don Boudreaux
Economics in One Letter Almost every morning when I wake up, one thing I can count on in my e-mail inbox is a letter written by Don Boudreaux earlier that morning in which he takes on this or that economic fallacy. I know I could get virtually all the letters by going to the blog .. MORE
Books: Reviews and Suggested Readings
Books Pertaining to Information
Tyler Cowen recommends five. I thought about what books I might recommend, and I realize that I have stopped reading books on information technology. Unless you count Cowen’s Age of the Infovore, I may not have read any in this century. I agree that Clay Shirky and David Weinberger are interesting, but I pick up .. MORE
Economic and Political Philosophy
How Bad Was Moral Relativism?
I just finished re-reading Paul Johnson’s Modern Times. According to Johnson, moral relativism was the root of all evil in the twentieth century. I’m tempted to agree, but ultimately I doubt that meta-ethics played more than a supporting role in the statist horrors that Johnson catalogs. Consider: If you’re pushing mass murder, what’s the best way to sell it? Sales .. MORE
Finance: stocks, options, etc.
Banks, Private Benefits, and Social Benefits
Samuel Hanson, Anil K. Kashyap, and Jeremy C. Stein write, If significant increases in capital ratios have only small consequences for the rates that banks charge their customers, why do banks generally feel compelled to operate in such a highly-leveraged fashion, in spite of the obvious risks this poses? And why do they deploy armies .. MORE
Economic Methods
Some Further Comments on Blinder-Zandi
Ezra Klein writes, The Kling post goes a bit far. Plenty of respected macroeconomists still use macroeconomic models, which is in itself a refutation of the idea that “the profession has decided that this macroeconometric project was a blind alley.” Alan Blinder, for instance, is part of the profession, and so is the president of .. MORE
Monetary Policy
What if the Fed Bought Euros?
Scott Sumner writes, The US can’t really use the exchange rate as a policy tool, it is too controversial. And so, we have to turn to less controversial tools, like pouring more wood on what the CBO says is a fiscal fire. That is not what Sumner says, of course. He says that the Fed .. MORE
Labor Market
Unemployed Houses: A Recalculation Story
Alex Tabarrok writes, The U.S. housing vacancy rate–an unemployment rate for home–is at its highest level since at least 1965 (see figure). Why? Is it sticky prices? Lack of aggregate demand? Structural? For labor, the recalculation story says that employment is a by-product of patterns of specialization and trade. Old patterns are constantly becoming unsustainable, .. MORE
Macroeconomics
“They’ll Just Save It.”
How many times have you heard the following argument in the last two years? Tax cuts/helicopter drops of cash/whatever won’t stimulate demand. People are too nervous to spend. Whatever you give them, they’ll just save it. The problem with this claim, like the analogous argument about reserves, is that it never considers the savers’ motives. .. MORE
Economic Methods
What Blinder and Zandi Don’t Know
What the Blinder-Zandi paper does is explore the properties of a macroeconometric model. The economics profession abandoned those models thirty years ago, so the tool they are using is like a fossil, frozen in time. Of course, there have been many tweaks over the years, but my guess is that if I had access to .. MORE
Economic Methods
Principles of Good Debating
While ghost-writing for the Conservative Missionary and the Libertarian Missionary, I found myself reflecting on the principles of good debating. I realize that debating can just be a sophistical exercise. But it doesn’t have to be. In fact, it has obvious truth-seeking advantages over the straightforward lecture format. For starters, debaters usually have a knowledgeable opponent .. MORE
Economic Methods
How the Blinder-Zandi Study Was Done
Alan Blinder and Mark Zandi used Zandi’s econometric model as the basis for a claim that the stimulus and the TARP worked. Thirty-five years ago, I was Blinder’s research assistant, doing these sorts of simulations on the Fed-MIT-Penn model for the Congressional Budget Office. I think they are still done the same way. See lecture .. MORE
Growth: Consequences
My Vacation Plans
I’m going on vacation Thursday morning here. I’ll be there until August 15. Sometime tomorrow and for a four-hour layover in Denver on Thursday, I’ll pre-program some posts on things I’ve been thinking about. I’ll also go on line from time to time while I’m there, although that’s not easy. What that means is that .. MORE
Political Economy
Resolution Authority for Governments
Paul Romer is always interesting, and especially in this podcast with Paul Kedrosky. In the last quarter of the interview, the discussion turns to badly-performing cities, and Romer speculates that we need a workout procedure that would allow a city government to move into completely different hands. As with troubled banks, one could argue that .. MORE