EconLog Archive
Behavioral Economics
Various Articles
Posting here will be infrequent until later in October. Meanwhile, here are some links that may be of interest. Is the insecurity of Microsoft software an externality that should be regulated or taxed? An example of professional licensing as rent-seeking (in more ways than one). Robert Hall draws out the implications of extrapolating ever-increasing health .. MORE
Economics of Education
Libertarian Redistribution
In an essay called Bleeding-Heart Libertarianism, I sketch a system for using a consumption tax with a negative-income-tax feature to replace government-provided health care, education, and income security. Does the bleeding-heart libertarian approach seem harsh? Actually, the Welfare State is worse. The Welfare State targets much more of its largesse to people who are less .. MORE
Macroeconomics
Meltzer on the Labor Market
In an earlier post, I asked, What is the likelihood that some of the weak job growth and strong productivity growth of the past two years is in part a statistical mirage? Allan Meltzer says that the likelihood is high. What many companies have done is outsource some services previously performed in house. For example, .. MORE
Finance: stocks, options, etc.
Stock Options
In response to my earlier post on executive compensation, Jonathan Wilde wrote, First, to answer Arnold’s question – since all economic values are subjective, there is no question of there being a ‘correct’ valuation. All voluntary economic exchanges depend on the two parties valuing the exchanged goods in reverse order. I have yet to hear .. MORE
Energy, Environment, Resources
California Reality
As a dean at Berkeley, Hal Varian has a personal interest in California. In his column today, he offers some plain-spoken economics lessons. Most California voters think the electricity crisis contributed to the state budget deficit. If only things were that simple. In reality, not a cent of the deficit was caused by electricity prices: .. MORE
Energy, Environment, Resources
Comment of the Week, 2003-09-24
On the subject of the environment and technology, D-squared writes, Future generations cannot make contracts with us, so their preferences about the rate of extraction don’t figure in the market price. Suppose that the desire for ivory threatens to make elephants extinct. Economists think that part of the problem is that nobody owns the elephants. .. MORE
Human Capital
Executive Compensation
Two interesting articles in the latest Journal of Economic Perspectives. Lucien A. Bebchuk and Jesse M. Fried focus on the agency problem. Managers have an interest in compensation schemes that camouflage the extent of their rent extraction or that put less pressure on them to reduce slack. As a result, managerial influence might lead to .. MORE
Price Controls
The Case for Price Gouging
C.C. Kraemer argues that laws against price gouging are a bad idea. rather than harming the victims, the profit motive actually helps them because the result is an increase in supplies. That assures that everyone who needs the plywood will get it, an unlikely occurrence if prices are not allowed to rise. When the stores .. MORE
Energy, Environment, Resources
Environment-friendly Farming?
Jonathan Rauch says that agriculture tends to abuse the environment. The trade-offs are fundamental. Organic farming, for example, uses no artificial fertilizer, but it does use a lot of manure, which can pollute water and contaminate food. Traditional farmers may use less herbicide, but they also do more ploughing, with all the ensuing environmental complications. .. MORE
Productivity
Productivity and Unemployment
In The Labor Market Puzzle, I sketched a one-sector model in which marginal productivity was falling as average productivity was rising. This would account for a drop in employment along with higher average productivity. Paul Kasriel has a more extended description of this model. It includes basic diagrams. What do you suppose has been happening .. MORE
Human Capital
Minimum Wage and CEO Pay
Marc Brazeau asks (see Steve Antler’s site), Two common arguments against raising the minimum wage are possible inflationary effects and job loss. Why aren’t these issues raised in relation to executive compensation? I think that the conventional wisdom is that inflation is determined primarily by monetary policy. I do not think that contemporary economists would .. MORE
Macroeconomics
The Two Labor Market Surveys
The U.S. Department of Labor uses two different surveys of the labor market. As Alan Reynolds put it, When government officials asked people if they had a job last month, 137.6 million said “yes.” But when employers were asked, they said they had only 129.8 million on nonfarm payrolls. However, Alan Krueger says that there .. MORE
Economics of Education
Comment of the Week, 2003-09-17
On the topic of college tuition, Andrew Martin writes, I disagree with the idea that tuition is high because the government helps pay for it. UNC, for an instate student is much lower than that $20 grand for the precise reason that the state funds it. However, with the budget crunch and massive expansion plans .. MORE
Economics of Education
Friedman Interview
John Hawkins’ interview of Milton Friedman touches on many subjects. Friedman is not terribly worried about Social Security. we’re a very strong country, lots of able people, lots of active entrepreneurs, and so the Social Security system will be a burden, but it won’t destroy the country. I think it will be changed of course. .. MORE
Economics of Education
College Tuition
Why is college tuition so high? In an essay, I argue that colleges today offer more lifestyle consumption benefits. college represents a different bundle of services than it did thirty years ago, and part of where the increase in tuition goes is to pay for this rise in aesthetics. I also question whether colleges have .. MORE
Fiscal Policy
The Budget Debate
The Congressional Budget Office provides an analysis of the long-term Budget outlook. The projections also assume for analytical purposes that aggregate federal revenues will level out at 19 percent of GDP in 2020, reflecting the higher end of the range over which they have fluctuated during the post-World War II period (18 percent was the .. MORE
Information Goods, Intellectual Property
Intellectual Property
N. Stephan Kinsella argues against the concept of intellectual property. On the utilitarian argument for intellectual property, he says, It is debatable whether copyrights and patents really are necessary to encourage the production of creative works and inventions, or that the incremental gains in innovation outweigh the immense costs of an IP system. On the .. MORE
Economic Growth
Economics of Reconstruction
Given the situation in Iraq, an economic analysis of the problem of developing political institutions would seem timely. Tyler Cowen and Christopher J. Coyne have drafted a paper on the topic. They write, Our core thesis is the following: reconstructions go well when they succeed at turning potential games of conflict into games of coordination. .. MORE
Economics of Education
Comment of the Week, 2003-09-11
On school vouchers, John Thacker wrote, Vouchers, depending on implementation, should decrease the strength of the link between housing and good schooling, since schooling would be less determined by where one lived. One would then expect the price of housing located in good school districts to fall relative to housing in less good school districts. .. MORE
International Trade
Cancun Trade Talks
I’ve always thought of these world trade meetings as being no more significant than the anti-globalization protests that they spawn, but I’ll defer to others, who think that they matter. Peter Gallagher owns the issue in the blogosphere (at least from a photojournalism perspective). TechCentralStation has a forum on the topic. Ronald Bailey is doing .. MORE
Macroeconomics
Grading the President in Macro
What grade should President Bush earn in macroeconomics? Brad DeLong writes, As a short-run employment- and demand-generating program, an objective grade would be a D if not an F. It was about cutting the taxes of the rich, improving incentives to save and rationalizing the taxation of capital income, and boosting the values of people’s .. MORE