Sat, 22 December 2018
Today on the podcast, Ash Navabi returns to discuss his recent work on housing and rent control. Ash published an opinion piece entitled "Why low-income earners should actually welcome Ontario's reversal on rent control." In that article, Ash pushes back on the kneejerk reaction to the Ontario government's reversal of its rent control policy on new units: There's no question that there are problems with affordability and livability in certain areas of Ontario, but implementing rigid rent control measures is not the way to fix them. We discuss the policy change that prompted the article, and the backlash the article itself generated, as well as many things related to housing policy. |
Fri, 14 December 2018
Today's guest is Jonathan Meer of Texas A&M. We discuss his work on the minimum wage. The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. For both theoretical and econometric reasons, we argue that the effect of the minimum wage should be more apparent in new employment growth than in employment levels. In addition, we conduct a simulation showing that the common practice of including state-specific time trends will attenuate the measured effects of the minimum wage on employment if the true effect is in fact on the rate of job growth. Using three separate state panels of administrative employment data, we find that the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments. These effects are most pronounced for younger workers and in industries with a higher proportion of low-wage workers.
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Fri, 7 December 2018
Today's guest is Bryan Cutsinger of George Mason University, discussing his paper, "Seigniorage in the Civil War South." During the U.S. Civil War, the Confederate Congress adopted three currency reforms that were intended to reduce the quantity of Treasury notes in circulation by inducing the money-holding public to exchange their notes for long-term bonds. In this paper, we examine the political factors that influenced the adoption of the reforms and their effect on the flow of seigniorage - revenue that the government derived by using the newly-printed Treasury notes to purchase the goods and services it required. We argue that the bifurcation of the Confederate Congress into two groups – those legislators that represented the Confederacy's interior and those from areas no longer under Confederate control – contributed to the adoption of the reforms. Our findings indicate that representing an area outside of the rebel government's control increased the likelihood that a legislator would support efforts to reform the currency by over 90 percent. In addition, our results indicate that the rate of monetary expansion in the South was below that which would have maximized the revenue from seigniorage. We find that the reforms reduced the flow of seigniorage by approximately 57 percent, depriving the Confederate government of much-needed revenue.
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Fri, 9 November 2018
Today's guest is Bob Murphy of Texas Tech University. We discuss his work on climate change and the social cost of carbon. Bob started working on issues related to climate change when he started working with the Institute for Energy Research. We discuss the implications of the Integrated Assessment Models (IAMs) used to evaluate the impact of climate change, the pivotal role played by discount rates in evaluating any kind of climate policy, the pitfalls of carbon taxation, and the opportunities presented by geo-engineering technologies. Here are some links to articles we mentioned in the episode: William Nordhaus versus the United Nations on Climate Change Economics The Case Against a U.S. Carbon Tax The Benefits of Procrastination: The Economics of Geo-engineering
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Sun, 30 September 2018
Today I discuss one of my own papers: "Instructions" by Freeman, Kimbrough, Petersen, and Tong. This research project on experimental instructions has been ongoing for years, but it was recently conditionally accepted for publication. I tell the story of how the research came together and detail some of the results. A survey of instruction delivery and reinforcement methods in recent laboratory experiments reveals a wide and inconsistently-reported variety of practices and limited research evaluating their effectiveness. Thus we experimentally compare how methods of delivering and reinforcing experiment instructions impact subjects' understanding and retention. We report a one-shot individual decision task in which mistakes can be unambiguously identified in behavior and find that mistakes are prevalent in our base-line treatment which uses plain, but relatively standard experimental instructions. We find combinations of reinforcement methods that can eliminate half of subjects' mistakes, and we find that we can induce a similar reduction in mistakes via enhancements to the content of instructions. Residual mistakes suggests this may be an important source of noise in experimental studies.
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Fri, 21 September 2018
Today's guest is Viktor Vanberg of the Walter Eucken Institute. We discuss a recent working paper of his entitled Individual Choice and Social Welfare: Theoretical Foundations of Political Economy. What we call an economy, i.e. the nexus of economic activities and relations within some defined regional limits – e.g. a local, a national or the world economy –, has always been subject to measures taken, or constraints imposed by political authorities. How economies work is inevitably, and to a significant extent, contingent on the political environment within which they operate. We discuss welfare economics, what it means for economics to be an applied science, and the work of the late James Buchanan.
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Sat, 1 September 2018
Today's guest is Peter Boettke of George Mason University and we're discussing his recent book in the Great Thinkers in Economics series: F. A. Hayek: Economics, Political Economy and Social Philosophy. This book explores the life and work of Austrian-British economist, political economist, and social philosopher, Friedrich Hayek. Set within a context of the recent financial crisis, alongside the renewed interest in Hayek and the Hayek-Keynes debate, the book introduces the main themes of Hayek’s thought. These include the division of knowledge, the importance of rules, the problems with planning and economic management, and the role of constitutional constraints in enabling the emergence of unplanned order in the market by limiting the perverse incentives and distortions in information often associated with political discretion. Key to understanding Hayek's development as a thinker is his emphasis on the knowledge problem that economic decision makers face and how alternative institutional arrangements either hinder or assist them in overcoming that epistemic dilemma. Hayek saw order emerging from individual action and responsibility under the appropriate institutional order that itself emerges from actors discovering new and better ways to coordinate their behavior. This book will be of interest to all those keen to gain a deeper understanding of this great 20th century thinker in economics. Note for those interested in buying the book: IF you are at a university and your university library has the Springer subscription (which most do), you can order a print-on-demand version---MyCopy---for $25, so that makes it somewhat more reasonable than the library prices. You can also get a discount flyer here. |
Mon, 20 August 2018
Corey A. DeAngelis of the Cato Institute joins the podcast to discuss his review of the school choice research. Is public schooling a public good, a merit good, or a demerit good? Public schooling fails both conditions specified in the standard economic definition of a public good. In order to place public schooling into one of the remaining two categories, I first assess all of the theoretical positive and negative externalities resulting from public schooling as opposed to publicly financed universal school vouchers. Then, in an original contribution to the literature, I quantify the magnitude and sign of the net externality of government schooling in the United States using the preponderance of the most rigorous scientific evidence. We discuss this paper in addition to a recent blog post Corey wrote entitled "We Shouldn’t Need to Use Science to Grant Educational Freedom." Corey argues that we should have a strong presumption in favour of letting families choose where their kids go to school. In the academic debate on school choice, people adopt an implicit balance of evidence standard for supporting or opposing school choice. But it makes more sense to place the burden of evidence on those who seek to limit others' choices.
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Mon, 13 August 2018
My guest today, Mario Macis of Johns Hopkins University, has done a number of interesting studies related to blood and organ donation, particularly the compensation of blood and organ donors. For instance, Mario and his coauthor, Nicola Lacetera, observed the effect of an incentive system that offered symbolic rewards to blood donors in a particular Italian town. They found that when prizes for frequent donation were publicly announced, people donated more blood, indicating that social image concerns are a factor in blood donation. Through a large-scale natural field experiment with the American Red Cross, Mario and his coauthors showed that offering donors economic incentives to donate blood increases donation without increasing the fraction of ineligible donors. Mario's more recent research deals with people's attitudes towards compensated kidney donation. Using a choice experiment, Mario and his coauthors study the determinants of Americans' views on these repugnant transactions: Regulation and public policies are often the result of competition and compromise between different views and interests. In several cases, strongly held moral beliefs voiced by societal groups lead lawmakers to prohibit certain transactions or to prevent them from occurring through markets. However, there is limited evidence about the specific nature of the general population’s opposition to using prices in such contentious transactions. We conducted a choice experiment on a representative sample of Americans to examine preferences for legalizing payments to kidney donors. We found strong polarization, with many participants in favor or against payments regardless of potential supply gains. However, about 20% of respondents would switch to supporting payments for large enough supply gains. Preferences for compensation have strong moral foundations. Respondents especially reject direct payments by patients, which they find would violate principles of fairness. We corroborate the interpretation of our findings with the analysis of a costly decision to donate money to a foundation that supports donor compensation. Finally, we discuss some proposed legislation that would allow limited experiments in compensating kidney donors.
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Fri, 3 August 2018
Here on Economics Detective Radio, we've had many discussions about the early modern period, and the circumstances that gave rise to the modern levels of sustained economic growth that were heretofore unheard of in human history. One important question is, what was it about England and the Low Countries in the early modern period that made them the first to transition to modern-style economies? A related, and equally important question is why other times and places throughout history failed to produce an industrial revolution. My guest today, George Tridimas, has done interesting work exploring the question of why the Greek golden age of 500-300 BCE didn't produce sustained economic growth. He gives a number of explanations, ranging from cultural and political factors to Greece's acute lack of the energy sources necessary to produce enough heat to smelt steel.
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