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Cost-benefit Analysis

Sports Stadiums

By Arnold Kling | Apr 10, 2003

The Atlantic Monthly points to this survey of the economic impact of pro sports stadiums. The verdict from many economic studies is that the marginal contribution of a sports team to a local economy is small, and perhaps negative. When a stadium is financed with public money, the benefits do not accrue to the public. .. MORE

Income Distribution

Measuring Tax Progressivity

By Arnold Kling | Apr 10, 2003

The May issue of The Atlantic Monthly pointed to this study of tax progressivity at the state level. The authors write, Our primary finding is that most state and local tax systems take a much greater share of income from middle- and low-income families than from the wealthy. That is, most state tax systems are .. MORE

Trade Barriers

Agricultural Trade Barriers

By Arnold Kling | Apr 10, 2003

Paul J. Gessig makes the case for dismantling U.S. agricultural subsidies. According to Organization for Economic Coordination and Development (OECD) data and calculations from Dan Griswold of the Cato Institute, completely eliminating the current web of subsidies and tariffs would provide the economic equivalent of an immediate $18 billion per-year tax cut for American consumers. .. MORE

Macroeconomics

Reconstructing Iraq

By Arnold Kling | Apr 9, 2003

The future of Iraq’s economy is suddenly a topical issue. I wrote, The new government in Iraq should encourage the growth of a private sector, by keeping taxes and regulation on businesses to a minimum. However, for the next several years, the government itself may have to be a large part of the economy. It .. MORE

Information Goods, Intellectual Property

Comment of the Week, 04-09-03

By Arnold Kling | Apr 9, 2003

The signal-to-noise ratio in our comments continues to be very high. See the Economics of Hydrogen thread and the imperfect markets thread, for example. But I give the comment of the week award this week to Robert Musil. A brief excerpt: Disney’s continuing “creation” of Mickey Mouse would likely end if Mickey image became common .. MORE

Information Goods, Intellectual Property

Lessig on Copyright

By Arnold Kling | Apr 8, 2003

In 1998, Congress extended copyright terms on both new and existing works. Lawrence Lessig tried unsuccessfully to have this extension overturned by the Supreme Court. In this interview, Lessig explains the weakness of the economic argument for the copyright extension. First, even for new works, a longer copyright term confers very little incentive at the .. MORE

Austrian Economics

Defending Imperfect Markets

By Arnold Kling | Apr 8, 2003

Sean Gabb explains how Austrian economics differs from Anglo-American economics. the standard economics textbooks provide an utterly unrealistic defense of the market. They begin with the claim that markets are efficient, and then define efficiency as it does not and cannot exist. A perfectly efficient market, they agree, is one in which there are many .. MORE

Economic Growth

Internet Bubble and Growth

By Arnold Kling | Apr 7, 2003

Brad DeLong argues that the failure of many Internet-based enterprises does not imply a social loss. profits are not the same thing as social value…Profit is primarily a signal about the size of a set of enterprises: If too small, then customers are desperate for your products, prices are high, and profits abundant; if too .. MORE

Behavioral Economics

Surveys Vs. Revealed Preference, II

By Arnold Kling | Apr 4, 2003

In a previous post, I mentioned Richard Layard’s critique of economics, based on survey research. Now, I have written an extended response to Layard. An excerpt: [Layard] is saying that you cannot trust people’s behavior as an indicator of their preferences, because their tastes may be socially constructed. However, if tastes are socially constructed, then .. MORE

Efficient Markets Hypothesis

Comment of the Week, 2003-04-02

By Arnold Kling | Apr 2, 2003

On the issue of index investing, Yasser Mawji wrote Surely there’s a problem of aggregation that’s inherent to index fund investing. If most investors are blindly purchasing index funds without any regard for valuation, then those stocks which constitute the index will become overvalued. Back in 1999-2000, a stock would rocket 20% or more on .. MORE

Supply-side Economics

The Budget Debate, VIII

By Arnold Kling | Apr 2, 2003

Be careful what you wish for. Some supply-siders have asked for “dynamic scoring” of tax cuts, to take into account supply-side effects. The Congressional Budget Office has done this analysis. CBO’s analysis suggests the proposals, on net, would probably increase labor supply but decrease investment and the stock of capital. Largely because of those two .. MORE

Energy, Environment, Resources

Economics of Hydrogen

By Arnold Kling | Mar 28, 2003

Lynne Kiesling has written a five-part article on hydrogen fuel cells. She looks at technical issues as well as economic issues, and each part in the series offers insightful analysis. The last installment questions the wisdom of the Bush Administration’s proposed subsidy for hydrogen fuel development. She writes, Governments (and corporate bureaucracies, for that matter) .. MORE

Economic Education

Economics and its Enemies

By Arnold Kling | Mar 28, 2003

William Coleman, author of Economics and its Enemies, gave a lecture on the history of anti-economics. He sees two main sources of hostility to economics. First, The paradoxical truth is that nothing is more unpopular than the pursuit of the public interest. For every member of the public is a vested interest who wants preference .. MORE

Efficient Markets Hypothesis

Can you Beat the Market?

By Arnold Kling | Mar 27, 2003

Financial columnist James Glassman touts a study by Joshua D. Coval, David A. Hirshleifer, and Tyler G. Shumway that shows that some investors were able to beat the market consistently. This conflicts with the efficient markets hypothesis. The authors write, A rolling-forward strategy of going long firms purchased by previously successful investors and shorting firms .. MORE

Fiscal Policy

War Economics

By Arnold Kling | Mar 27, 2003

We are starting to see articles on the economics of the Iraq war. Some are described in this article by Virginia Postrel and others are described in this post by ‘Jane Galt.‘ Postrel correctly points out that old-fashioned Keynesian theory would peg the national cost of the war as being less than the Budget impact .. MORE

Economics of Education

Comments of the Week, 2003-03-26

By Arnold Kling | Mar 26, 2003

The teacher pay issue drew the most interesting comments. Someone who left only a first name wrote a voucher system would make the educationally well-off better off, would make the poorly-off worse off, would Balkanize society, and would create an educational under-class. To which Patrick Sullivan replied, All of the above problems exist in the .. MORE

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