EconLog Archive
Behavioral Economics
A Case for Paternalism?
Because it appears in the latest American Economic Review, I got around to reading carefully Daniel Kahneman’s Nobel lecture, Maps of Bounded Rationality. He contrasts an intuitive way of processing information with a calculating, rational method. The central characteristic of agents is not that they reason poorly but they often act intuitively. And the behavior .. MORE
Tax Reform
Tax Simplification
Bruce Bartlett writes that we have met the enemy and he is us. If people really want simplicity, it can be done. But my experience is that when push comes to shove, people would rather have complexity and keep whatever tax provisions benefit them. In the end, the demand for true simplicity always ends up .. MORE
Economic Growth
Phelps on Dynamism
Edmund S. Phelps writes, My thesis is that the degree of dynamism in a nation’s economy hinges on its development of some key economic institutions – company law and corporate governance, the population’s preparation for business life, the development of financial instruments such as the stock market and so forth. Such general institutions as the .. MORE
Finance: stocks, options, etc.
The 1990’s Bubble Economy
William Nordhaus reviews two books on the economy of the 1990’s. One of the books, by Janet Yellen and Alan Blinder, apparently finds little evidence that economic policy was a major factor in the rapid economic growth of that era. Instead, Their basic finding is that a series of unexpected and favorable developments were responsible .. MORE
Economic Growth
Long-term Growth Forecasts
What will economic growth look like in the 21st century? Mark Bahner solicited answers to this question from many economists and pundits, but only a few replied. Bahner’s predictions are relatively optimistic. He foresees worldwide average GDP per capita rising from $6500 in 2000 to $100,000 in 2070. In my opinion, any prediction of world .. MORE
Books: Reviews and Suggested Readings
Sowell on Math and Economics
A while back, we discussed whether math is necessary for economic education. Thomas Sowell gives his view. Introductory economics is too often taught as if the students in it were all potential economists who had to be introduced to the standard graphs, equations and jargon that they will need in higher level courses or in .. MORE
Economic Growth
Foreign Aid and Growth
In a generally skeptical post on the topic of using foreign aid to stimulate economic growth, Tyler Cowen asks, If you know of any good studies on what predicts future (not current) growth, in the Granger-causal sense, please let me know. In my predecessor blog, I pointed to a paper by Richard Roll and John .. MORE
Economic and Political Philosophy
Economics and Moral Intuition
Here’s one for all those with a philosophical bent, from Robin Hanson via Tyler Cowen. How does economics, which talks about the positive effects of self-interest, square with moral intuition? we economists…seem to be constantly giving people excuses and social support for violating what most people see as moral boundaries. And we seem to have .. MORE
Economic Education
Economic Education
Tyler Cowen recommends James Buchanan’s “The Soul of Classical Liberalism,” an essay published three years ago. As Cowen points out, Buchanan is wrestling with tough philosophical issues. Here, I just want to focus on a few sentences that bear on the issue of teaching economics. First, he despairs of training everyone to understand economic science. .. MORE
International Trade
Case for Globalization
One of our comment threads discussed this essay by Kyle Markley that makes the economic case for globalization. All significant economic change creates a disaffected group of people, people whose economic situation is threatened by economic change. Such people bear the cost of adjusting themselves to the new realities of doing business. These people see .. MORE
Economics of Health Care
Taxes and Health Insurance
The Joint Economic Committee’s health economist Tom Miller published a reminder of how our health insurance was system has been (mis-)shaped by tax considerations. Proponents of the tax exclusion for employer-provided health insurance contend that it provides the financial incentives that hold our employer-based, private health insurance system together and sustain a market-based alternative to .. MORE
Uncategorized
Prescribing Capitalism
Marginal Revolution found RangelMD, a doctor who was willing to criticize the economics of single-payer government funded health care. In order to expand Medicare to cover every citizen and pay for all medical treatment and all medications that Americans have become accustomed to would require increasing the federal budget by over a third to over .. MORE
Social Security
Long Run Stock Returns
Because the stock market figures into most Social Security privatization plans, the Social Security Administration commissioned economists to estimate long-run returns from stocks. This analysis is three years old, but since I’ve brought up the issue on several occasions it seems worth a mention. Keep in mind that when the economists were writing the market .. MORE
Economic Methods
Math and Economics
Brad DeLong points to an interesting post by Daniel Davies on the use of math in economics. Davies writes, If the history of economic thought teaches us anything, it teaches us that people who don’t use the mathematics always, sooner or later, end up saying something badly wrong about economics. Paul Krugman has an essay .. MORE
Price Controls
Predicting Drug Price Controls
Jonathan Oberlander and Jim Jaffe think that drug price controls are on the horizon. They say that this is what happened to payments to physicians and hospitals under Medicare. The government has habitually responded to budget stresses by changing the reimbursement mechanism and lowering payments. Whatever one thinks of government efficiency, this practice has worked .. MORE
Microeconomics
Coase and Dean
Everett Ehrlich invokes Nobel Laureate Ronald Coase as Ehrlich interprets the success of Howard Dean in terms of reduced transactions costs in setting up a political organization. the Internet has changed all that in one crucial respect that wouldn’t surprise Coase one bit. To an economist, the “trick” of the Internet is that it drives .. MORE
Regulation and Subsidies
Water Privatization, Continued
Lynne Kiesling has two interesting posts on water privatization. In her first comment, she writes, Suppose you are not persuaded by my argument that water utilities should be private companies and not municipal utilities. OK, but you could still contract out the management and operation of the water treatment and water delivery facilities to a .. MORE
International Trade
Smooting the Weasels
Reason‘s Matt Welch comments on the story that the Bush Administration is going to refuse to allow bids for Iraqi reconstruction work from companies that are located in countries that did not support the coalition. 1) It [costs] the Iraqi people and the American taxpayer, by making them pay above-market prices for reconstruction. 2) Assuming .. MORE
Regulation and Subsidies
Water as a Private Good
If you ask people to list goods that should never be privatized, water is often one of the first that comes to mind. But Richard Tren writes, Those that campaign against private water ownership and supply on the grounds that somehow water is “different” should think again. It is precisely because water has been treated .. MORE
Growth: Consequences
A Nation of Entrepreneurs?
Jeff Cornwall points to a survey on entrepreneurship. Cornwall writes, The survey sampled 1,000 Americans over the age of 18. Here are some of their findings: * 56% of Americans dream of starting their own business (E.M. Couple this with 40% of college students who responded in another study that owning their own business is .. MORE
Economics of Education
State Universities vs. Vouchers
The fifty states use a variety of methods to subsidize higher education, but the most popular seems to be a subsidy for in-state students to attend specific public institutions. Bridget Terry Long compares this approach with a voucher program. up to 24 percent of first-year students would no longer choose a public, four-year school if .. MORE