EconLog Archive
Behavioral Economics
Affective Forecasting Errors
Psychologist Daniel Gilbert finds that people tend to erroneously forecast how events will affect their happiness. He argues that people choose to act on the wrong information when they predict, for example, whether they will enjoy a particular vacation spot. if you actually give people one of these two pieces of information, they more accurately .. MORE
Energy, Environment, Resources
Oil Econ, Once More
I really like Edward Lotterman’s latest. No one studies elasticities of demand for oil more than OPEC. Its leaders know that in the very short term — i.e., a few weeks or months — a 10 percent price hike may cut their sales only 1 percent or less. But in the long term, price hikes .. MORE
Energy, Environment, Resources
Oil Econ Follow-up
Earlier, I posted on the Strategic Petroleum Reserve. Nick Schulz has some more on the gas price issue. Ketchup at a retail grocery store is $0.16 an ounce meaning it rings in at an impressive $20.48 a gallon, almost ten times what gas costs. Gas is also cheaper than orange juice ($6.64 a gallon), Snapple .. MORE
Uncategorized
Health Care Follow-Up
In an earlier post, I said that health care funding should focus on outcomes, rather than procedures. David Cutler has thoughts along the same lines. Why don’t we pay a little bit more to make sure that people don’t have colon cancer rather than pay so that they have colonoscopies… I want to put the .. MORE
Institutional Economics
Leviathan
Our parent site, Econlib, now has a sister site, The Online Library of Liberty, a library of classic works. You can browse Books and Essays. Among the writers whose work is presented and discussed is Thomas Hobbes, who offered a contractual theory of a state as a way of protecting ourselves from the “war of .. MORE
Energy, Environment, Resources
Strategic Petroleum Reserve
With oil prices high, should the Strategic Petroleum Reserve be reduced? Steve Antler criticizes John Kerry for making such a suggestion. In contrast, Fred Singer has called the Strategic Petroleum Reserve, a wasteful effort by government to protect against an imaginary embargo. No such thing: Being fungible, SPR oil would merely lower slightly the price .. MORE
Economic Growth
Costs of Entrepreneurship
Andrew David Chamberlain points to a World Bank study written by Andrei Shleifer, among others, of barriers to entrepreneurship. Countries with heavier regulation of entry have higher corruption and larger unofficial economies, but not better quality of public or private goods. Countries with more democratic and limited governments have lighter regulation of entry. The evidence .. MORE
Regulation and Subsidies
Bundling
The issue of bundling has been in the news recently. For example, the Europeans want to punish Microsoft for bundling a media player with its operating system. Professor Bainbridge supports the regulators in this case. Prohibiting Microsoft from bundling, say, media players and search engines into the Windows operating system is critical to preserving competition .. MORE
Economics of Education
Teacher Pay and Quality
Virginia Postrel describes recent research in the issue of teacher pay and teacher quality. One paper is by Sean P. Corcoran and others. Postrel summarizes the results as: the chances of getting a really smart teacher have gone down substantially. In 1964, more than one out of five young female teachers came from the top .. MORE
Economics of Health Care
Consumer-driven Health Care
Last night, I went to hear a talk by Regina E. Herzlinger, author of Consumer-driven Health Care. Her philosophy of health care is the opposite of the conventional wisdom that I derided in America is Crazy. The talk was given at a dinner event sponsored by the local alumni of the Harvard Business School, where .. MORE
Fiscal Policy
Against Budget Surpluses
Wayne Angell argues that the Clinton Administration paid down the Federal debt too quickly. The recent peak in federal debt as a percentage of GDP averaging 49% from 1993 to 1996, compared with the all-time peak in 1946 of 109%, was rapidly reduced by an annual pay-down of the debt of 1.4%, 1.9% and 8% .. MORE
International Trade
Where Can America Compete?
Netscape founder Marc Andreessen has some suggestions, including: * Innovation and entrepreneurialism — anything new we tend to be really good at * Software design * Advanced chip design (CPUs, 3D accelerators, etc.) * Networking systems design … * Law * Education * Agriculture (!!! — we are an exporter) * Advanced manufacturing (technologically sophisticated .. MORE
Macroeconomics
Employment Forecasting, continued
A while back, Paul Krugman published a graph that appeared to show that the employment forecasts of the Bush Administration were implausible. Drawing the same graph, but using an earlier start date, James K. Galbraith refutes that analysis. As Galbraith points out, what the Bush economists are guilty of is forecasting a normal recovery in .. MORE
Labor Market
Grocery Workers Strike?
The grocery workers in the Washington DC area are thinking about going on strike. The president of the union representing 18,000 Washington area Giant Food and Safeway Inc. employees believes “there is a serious possibility” that upcoming contract negotiations will break down, possibly resulting in a strike against one or both supermarket chains. Meanwhile, Virginia .. MORE
Energy, Environment, Resources
Water Usage
Lynne Kiesling writes, our water use has not gone up in 20 years. If we paid prices for water that reflected the true cost of its use, and if farmers could transfer their property rights over water to non-agricultural users, think how much less water we could be using than we did 20 years ago. .. MORE
Economics of Health Care
The Health Care Market
Do high health care costs in the United States prove that free-market health care does not work? Steve Verdon responds. The Medicare program subsidizes health care consumption for some of the largest consumers of health care dollars. When you subsidize something people consume more of it. While the various individuals might see their out-of-pocket expense .. MORE
International Trade
The Free Trade Case
Brink Lindsey offers “one-stop shopping” for a list of common complaints about trade and outsourcing and their refutations. One excerpt: Again and again, serious and influential voices have raised the cry that the sky is falling. It never does. The root of their error is always the same: confusing a temporary, cyclical downturn with a .. MORE
Finance: stocks, options, etc.
House Prices
Brad DeLong says that in the housing market, one person’s capital gain is another person’s capital loss. Yes, many people who have refinanced have now boosted their own consumption spending because they feel (and are) richer. But why haven’t those who will buy your house in thirty years and their parents cut back on spending .. MORE
Labor Market
The Two Employment Surveys
The divergence between the payroll survey and the household survey of employment has been a big issue over the past year. The Bureau of Labor Statistics recently offered its analysis. The whole article is worth reading. Here are a few excerpts. As part of its annual review of intercensal population estimates, the U.S. Census Bureau .. MORE
International Macroeconomics
Economists, Bridge, and National Savings
Brad DeLong and I were sitting East-West, with Warren Mosler and Thomas E. Nugent sitting North-South. Somehow, we got to two ad hominems, doubled and redoubled. Let’s review the bidding. Mosler and Nugent opened with Understanding that government deficits add to savings and that U.S. consumers fund the desires of foreigners to save is a .. MORE
Fiscal Policy
The Budget Menu
In the essay I referred to in my previous post, I also write A President who has only added to future entitlement obligations ought to be judged as having acted to increase taxes. To call this Administration a tax cutter is like taking a spoiled kid who does not touch dinner but takes a double .. MORE