The Economic Way of Thinking

How Do YOU Economize on News?

I have heard co-blogger, Pete, talk about the pleasure and quiet that comes with Sunday mornings (he has also blogged about Sundays here).  Sunday mornings are the one morning of the week where he's able to sip coffee on his back porch and read The New York Times as, some would say, it should be read--article by article with time (and coffee) to reflect.

For most of us (Pete included I'm sure), most of the days of the week are not like quiet Sunday mornings.  The hustle and bustle of a normal day leaves us with little time for careful reading. 

Assorted Links

(1) Here's a more literal interpretation of the fatal conceit.  Here's a link to the Australian study that found doctors had just a 9 percent hand-washing compliance rate, which is further discussed in Super Freakonomics.

(2) Speaking of Super Freakonomics, I finally finished reading it a couple weeks ago.  I'm a big fan; though, I must say that the controversial geoengineering chapter just doesn't fit with the rest of the content.  It's not really freaky (nor is it economics!), and it seems like it's included mainly to help sell copies.

(3) I've been listening to The Monster of Florence CDs in my car recently.  It's clear from the first couple of disks that Italy's history of botched crime scene investigations has a history that pre-dates Foxy Knoxy (slides describing some of the mistakes made in the Knox case here).  According to the book, serious mistakes and contamination of evidence occurred throughout Florence's string of creepy, unsolved serial murders. 

With Italy's legal system in the news (and on my mind), can someone point me to a good empirical paper on the effects of Italy's jury system vis-a-vis the U.S.?  The two judges on the jury structure of Italy's system, in particular, must be resulting in a lot of "professional" strong-arming.  And, surely, good empirical studies have been done on this difference, no? 

(4) Posner and Becker on Obama's jobs summit and increasing employment.

(5) An emergency physician who thinks about tradeoffs. 

The House That Uncle Sam Built

Steve Horwitz and Pete Boettke have a new and highly readable pamphlet on the causes of the housing bubble and our Great Recession, published by the Foundation for Economic Education.  Highly recommended.

Into the Belly of the Beast

 

This morning I will be joining four Mercer University Free Marketeers for a conference at the Atlanta Fed.  The last time I went inside of a Federal Reserve bank, I was their age and went on a tour of the Chicago Fed and the Chicago Board of Trade with NMU's Economics Student Association. 

The best part of my previous trip to the Fed was that we pulled up to the Fed's doors in a limo hearse.  I kid you not.  

Check this post again later this weekend for pictures.  (I doubt there'll be any hearses this time around, but you never know...).

User Fees and Peak-Load Pricing

Over the last couple of months, the topic of user fees has come up on our EWOT blog a few different times (see here and here, for example).  In putting together my MBA Micro exams, I got wondering why user fees and peak-load pricing aren't used a lot more often.  Here are three cases in point: 

(1) Food consumption probably peaks with dinner.  Putting the drunks and others with munchies aside, it must be lowest between midnight and 5 am.  Why don't restaurants use more "smart" pricing during these off-peak hours?  If it can be done in the heavily regulated electricity market, why not in the food market?

(2) An extremely ugly side of people comes out when it comes to overhead bins on full flights.  Those with briefcases are asked to cram their feet for the sake of those who want to take large carry-on bags on board.  This problem has gotten much worse since the introduction of fees for checked bags.  Why aren't airlines being entrepreneurial and also charging for bin space?

(3) Why don't rental car companies pro-rate the first and last days of rentals?  If you go over by even an hour on your final day, you're usually charged for a full day.  Wouldn't a profit-maximizing company have a strong incentive to cut prices substantially on the final day, attract more customers, and still the car around right away?

A good economist should be able to explain the lack of markets for all of the above.  I think I have good answers for each.  Do you?

The Work Of Elinor and Vincent Ostrom

Over at EconTalk, Russ Roberts has a splendid interview with Pete Boettke on the work of Elinor and Vincent Ostrom. 

Christina Romer On The Apparent Recovery

From yesterday's Wall Street Journal.

Do you agree with her that the stimulus package is working, that the cash for clunkers program was a success, that business and government must "come together" to pull us out of the recession?

Does Modern Macro Explain the Recession?

Scott Sumner thinks so in this insightful post; Arnold Kling disagrees.  I'm with Kling on Sumner's argument being "too circular."  Kling also questions whether inflation expectations can be read in the TIPS market and says,

Take right now, for instance.  The TIPS market is saying that inflation is going to be low.  But is that what the people who are buying gold believe?  I don't think so.

Along with concurring with Kling's concerns, I'll add that Sumner's analysis is too ex post for my taste.

Black Boxes

When discussing the Solow model in class yesterday, the term "black box" came up.  One of my students asked me if I was talking about the thing left on planes after they crash.  I was not.  Here's a good Wikipedia entry for black boxes that captures what I was getting at. 

Here's one of my favorite books on black boxes.  I read it as an undergad and still think it's a great book for students with a keen interest in growth theory. 

Is The Fed Independent?

No.  See Don Boudreaux's Open Letter to Ben Bernanke.