EconLog Archive
Books: Reviews and Suggested Readings
Second Thoughts About Stats vs. Personal Experience
I can’t believe I took so long to discover Thomas Gilovich‘s excellent How We Know What Isn’t So. I’ve read almost all of the semi-popular books in cognitive psychology, and this turns out to be one of the best. All too often, cognitive psychologists exhibit the very biases they denounce – overconfidence to take just .. MORE
Income Distribution
How Everyone Can Get Richer as Per-Capita Income Falls
When people argue about whether immigrants are pulling down our standard of living, they rarely notice a simple but deep arithmetical fact: Everyone in a country can get richer as per-capita income falls. Proof by example: Suppose the residents of Country A earn $50,000 per year each without immigration, and $60,000 per year with immigration. .. MORE
Economic and Political Philosophy
Let Them Get Roommates
A fun fact about the U.S. versus Europe is that poorest 25% of Americans have more living space than the average European. But some Americans have been left behind. Our most deprived citizens often sleep three to a room, eat prison-grade food, and share bathroom facilities with dozens of unhygenic strangers. They are known as… .. MORE
Economics of Education
Beyond Reform?
The book Beyond the Classroom, by Laurence Steinberg, suggests that school performance depends on factors that are outside the control of the school. He focuses on the issue of student engagement. When highly engaged students are in class, they are there emotionally as well as physically. They concentrate on the task at hand, they strive .. MORE
Social Security
Measuring Shortfalls in Entitlement Programs
How big? So-o-o-o-o big. Ask the Concord Coalition. If added to the rates needed for Social Security, the implied payroll tax rate necessary to cover the future costs of both Social Security and Medicare would be 32 percent in 2040 and 44 percent in 2075. Read the whole thing. Thanks to Bruce Bartlett for the .. MORE
Economics of Education
Does the Academy need a Reformation?
In this essay, I write The Catholic Church in 1500 was a debased, corrupt monopoly. It collected onerous taxes, which people paid because they believed that there was no alternative if they wanted a decent afterlife. However, inwardly people seethed at the amount that the clergy extracted and the debauched uses to which the funds .. MORE
Cross-country Comparisons
A Chat With Falun Gong
Yesterday I had an interesting chat with an earnest young man who belongs to the Falun Gong movement. As best as I can tell, Falun Gong is the most serious of the opponents of Communist rule in China. Whenever I meet people from China who passionately want change now, it rarely takes more than a .. MORE
Economics of Health Care
Health Care Waste, Continued
Interesting comments from Roy Poses at Health Care Renewal. He, er, poses an interesting question. Outside of medicine, the price of technologies drop as they age. Admittedly, there have been many incremental improvements in CT scans, but there have been no revolutionary changes. In particular, the “C” in “CT” stands for computer. CT scans use .. MORE
Books: Reviews and Suggested Readings
Speaking of Bubbles
The bubble in economics blogs continues to inflate. One of the newer entrants is Freakonomics, from Steve Levitt and Stephen J. Dubner. I am becoming more and more dependent on William Parke’s Economics Roundtable. At some point, the number of hours of interesting material to read there is going to increase the number of waking .. MORE
Finance: stocks, options, etc.
Bubble Talk
Steven Pearlstein writes, nearly every asset market you can think of is showing signs of bubblelike behavior. The reason is pretty clear: The global economy is awash in free cash. The article makes a number of interesting allegations, not all of which I agree with. For example Pearlstein says that one would expect a lot .. MORE
Information Goods, Intellectual Property
Hanson Link Fix
My initial link for Hanson’s working paper was incorrect. It’s now been fixed. If you couldn’t find it before, here it is. My apologies.
Information Goods, Intellectual Property
Terrorism Betting Markets: Inquiring Minds Know
A new working paper by Robin Hanson observes: “When a controversy erupts in the media, and widely differing views are expressed, it is natural to wonder which opinion is the one more favored by those who are most informed about the topic.” At least it’s natural for me. If you followed the controversy on the .. MORE
Economics of Health Care
Health Care Waste
How much of our health care spending is wasted? In this essay, I argue that the waste is less than many people believe. I do not believe that health-care reformers should be taken seriously when they suggest that spending on health care in the United States could be brought down to the levels in other .. MORE
Game Theory
Tariffs, Quotas, Games, and Drugs
Gary Becker makes the case against the drug war. After totaling all spending, a study by Kevin Murphy, Steve Cicala, and myself estimates that the war on drugs is costing the US one way or another well over $100 billion per year. …Our study suggests that legalization of drugs combined with an excise tax on .. MORE
Labor Market
What is a Modern Recession?
Robert Hall writes Unemployment rises not because of a bulge of layoffs but because workers entering job search—from previous jobs, from school, and from home activities—experience unusual difficulty in finding jobs. Among other things, this means that stories on layoffs, which are treated as very important in the press, are in fact not very significant .. MORE
Labor Market
Hitler’s Argument for Conquest
What was Hitler’s argument for attacking other countries? You might think he didn’t have one, but he did. His argument is frankly Malthusian: Our population is growing, and we will run out of food unless we get more land. (My colleague David Levy tells me that Malthus wasn’t a Malthusian, but that’s a topic for .. MORE
Social Security
The Three Percent Solution
The Washington Post had a story about a new paper by Robert Shiller, which can be found here. He says that the recommended “life cycle account,” which mixes stocks and bonds in proportions that change as one gets closer to retirement, is unlikely to yield a return in excess of 3 percent. Since the proposals .. MORE
Politics and Economics
Postmodernism: Private Vice, Public Virtue?
I stumbled across an atypically insightful essay by Noam Chomsky, “What Is Wrong With Science and Rationality?,” in the colorfully-named collection Market Killing. You can read a nearly complete version of the essay here. Chomsky pushes two theses in this essay. First, postmodernism makes no sense: [T]o take part in a discussion, one must understand .. MORE
Fiscal Policy
Inevitable Tax Increases
In the latest WSJ blogger celebrity death match, Max Sawicki says Social Security and Medicare spending will increase faster than GDP, requiring increases in taxes, and there is not a damn thing anyone can do about it Tyler Cowen responds, I don’t think that I can spend Max’s money better than he can. I think .. MORE
Politics and Economics
Social Security and Intransitivity
Bryan’s post on the doubtful empirical usefulness of social intransitivity is probably right. Nonetheless, suppose that on Social Security there are three political viewpoints–Democratic, Republican, and nonpartisan–and three policy options–status quo, private accounts, and fiscal medicine. By fiscal medicine, I mean tax increases and/or reductions in future promised benefits. Presumably, Democrats’ favorite option is the .. MORE
Politics and Economics
Riker and the Mathematician’s Fallacy
The last chapter of William Riker’s classic work, Liberalism Against Populism, contains some of the strangest statements I have read in quite a while. Background: Riker is deeply impressed by the literature on social intransitivity. As Arrow and others showed, sometimes a majority will vote for A rather than B, B rather than C, and .. MORE