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Behavioral Economics

Organ Transplant Market?

By Arnold Kling | Mar 25, 2003

Irwin M. Stelzer argues that the shortage of organ donors is due to price controls–in particular, the fact that organ donors do not get paid. if we can begin to think about this issue in a clear-headed way, we might consider the advantages of establishing a genuine, ongoing market in organs. If someone in need .. MORE

Economics of Education

Teacher Pay

By Arnold Kling | Mar 24, 2003

Peter Temin argues that teacher pay is too low. He says that in the past, limitied opportunities for women meant that schools were supplied with a pool of high-quality teachers willing to work for low pay. Today, however, talented women have other opportunities that pay better than teaching. He concludes, The implication of this analysis .. MORE

Uncategorized

About EconLog / Econlib

By Arnold Kling | Mar 24, 2003

EconLog, edited by Arnold Kling and Bryan Caplan, is an economics-oriented weblog or “blog” associated with the Library of Economics and Liberty (Econlib). EconLog provides up-to-date commentary and links on recent topical matters in economics, with new articles posted three to six times each week. Reader comments are welcomed. EconLog and Econlib provide helpful resources .. MORE

Social Security

The Budget Debate, VII

By Arnold Kling | Mar 22, 2003

I want to follow up on the attempt by the Center for Budget and Policy Priorities to compare the future bulge in entitlement spending to the Bush tax cut–see this thread. The CBPP was able to shrink the gap between entitlement spending and tax revenues in the middle of the century from something in the .. MORE

Social Security

The Budget Debate, VI

By Arnold Kling | Mar 21, 2003

[Update: Bernard Yomtov convinced me that the CBPP did not make the error I suggested below. Instead, the way that they accomplished the swindle is explained in this post.] As a share of GDP, increases in future Medicare and Social Security benefits are much larger than the tax cuts enacted by the Bush Administration. The .. MORE

Behavioral Economics

Peak Load Pricing and Mental Transaction Costs

By Arnold Kling | Mar 20, 2003

Clay Shirky used (coined?) the term mental transaction costs to describe the problem with using micropayments (small payments to download articles or music). I believe that economists tend to over-rate the value of peak-load pricing systems, because they fail to take into account mental transactions costs. As Andrew Odlyzko has pointed out, consumers prefer flat-rate .. MORE

Public Choice Theory

Comments of the Week, 2003-03-19

By Arnold Kling | Mar 19, 2003

There were several interesting comments under the thread of Public Transit and Public Choice. Bernard Yomtov wrote, Liberals do believe the market fails sometimes. This is hardly a radical position. It is almost universally accepted except among market-worshippers who seem unable to believe that anything that happens in unregulated markets could possibly be bad. So .. MORE

Behavioral Economics

Surveys Vs. Revealed Preference

By Arnold Kling | Mar 18, 2003

Richard Layard uses survey research and some fancy philosophical footwork to argue against conventional wisdom in economics and in favor of a nanny state. Some quotes from the series of three lectures: People in the West have got no happier in the last 50 years. They have become much richer, they work much less, they .. MORE

Economic Education

Protesting Economic Education

By Arnold Kling | Mar 18, 2003

In this essay, I cited Steven Pinker on the value of teaching economics, but I concluded with doubts as to whether “economic idiotarianism” could be eradicated entirely with education. Consider this story about the movement for alternative economics, including a student petition protesting Harvard’s classic “Ec 10” introductory course. The story also mentions a forthcoming .. MORE

Tax Reform

Impact of Dividend Tax Reform

By Arnold Kling | Mar 18, 2003

The users of housing rehabilitation tax credits believe that the Bush Administration proposal to eliminate double taxation of dividends will hurt their industry. Richard Moe writes, By allowing shareholders to receive tax-free dividends only on corporate profits that are fully taxed, the Bush plan could force companies to make a choice: Take the tax credit, .. MORE

Finance: stocks, options, etc.

Employees as Owners

By Arnold Kling | Mar 17, 2003

Charles Duhigg, a student at Harvard’s Business School, reviews some disadvantages of employee stock ownership. A 2000 study by economists at the University of South Alabama found that when the amount of stock held in an ESOP increases, ”management will likely behave in a risk-reducing manner and decrease its commitment to innovation.” More specifically, they’ll .. MORE

Social Security

The Deficit Argument, V

By Arnold Kling | Mar 16, 2003

David Warsh gives one of the more sober overviews of the debate over tax cuts, the deficit, and Social Security. There are two basic issues in US tax policy — the question of the size of government and the health insurance/pension problem. …During the 1990s, the federal share of GDP climbed steadily from its thirty-year .. MORE

Public Choice Theory

Public Transit and Public Choice

By Arnold Kling | Mar 13, 2003

Here is Public Choice theory boiled down to three sentences, by‘Jane Galt’. The liberal mantra is that the market fails. The free market mantra is that government fails worse. And I think the weight of empirical evidence is on our side. For example consider urban rail transit subsidies. Rachel DiCarlo concludes, when it comes to .. MORE

Trade Barriers

Comment of the Week, 2003-03-13

By Arnold Kling | Mar 13, 2003

The topic of the World Population Outlook leads to the issue of immigration. David Thomson made this point. We need to educate these people so that they can become productive citizens. Will this encourage more Mexicans and others to break our national laws and sneak across our borders? If so, that’s the price we must .. MORE

Information Goods, Intellectual Property

Anti-anti-economics

By Arnold Kling | Mar 13, 2003

In Suits and Geeks, I discuss some information-age economic issues. As Carl Shapiro and Hal Varian wrote, “Technology changes. Economic laws do not.” My essay concludes, My goal is to see ignorance reduced on both sides of the Suit-Geek divide. Suits who are ignorant of the Internet ultimately do a disservice to the businesses whose .. MORE

Behavioral Economics

Economic vs. Non-economic Savings Incentives

By Arnold Kling | Mar 13, 2003

Hal Varian compares the potency of two types of incentives to save. One incentive is a tax break for savings. The other is a non-economic incentive, in which it becomes easier for an employee to sign up (or harder not to sign up) for a savings plan. For the latter, he cites research from James .. MORE

Growth: Consequences

Growth and Anti-Americanism

By Arnold Kling | Mar 12, 2003

Marian L. Tupy writes, If I am correct, then at least some of the roots of contemporary anti-Americanism rest on a deep misunderstanding concerning the functioning of international economics. Contrary to common misconception, the reasons for global economic inequality rest on a local level. They include the lack of rule of law, lack of respect .. MORE

Macroeconomics

Israel’s Public Sector

By Arnold Kling | Mar 12, 2003

Israel is an example of a country where there is a need to confront government spending. The cooperation of the public sector is essential to the success of an economic plan to cut spending, said Treasury wage director Yuval Rachlevsky on Tuesday. …”The only way of getting the economy out of the quagmire is by .. MORE

Economic Growth

World Population Outlook

By Arnold Kling | Mar 11, 2003

Ben Wattenberg analyzes the world population outlook. In the United Nations’ most recent population report, the fertility rate is assumed to be 1.85, not 2.1. This will lead, later in this century, to global population decline. He points to a number of economic effects of this drop in fertility, including challenges with funding retirement benefits .. MORE

Supply-side Economics

Supply-side Dissatisfaction, II

By Arnold Kling | Mar 10, 2003

N. Gregory Mankiw, incoming chairman of the President’s Council of Economic Advisers, continues to take flak from supply-siders. In this essay, I discuss the latest attack, from The Wall Street Journal’s Susan Lee (subscription required). Her objection to Mankiw is current. She complains that “his best-selling textbook argues that deficits or government debt pushes up .. MORE

Trade Barriers

Trade War?

By Arnold Kling | Mar 7, 2003

The WindsofChange blog asks, will the foreign-policy rift over Iraq spark a trade war between the U.S. and other countries? Indeed, a long term French campaign to introduce retaliatory and anti-USA tarrifs in the EU strikes me as not only likely, but probable. As an economist, I would say that of all the ways to .. MORE