The Economic Way of Thinking

Nobel Prediction Time

My co-author, Bob Subrick, offers up his Nobel Prize in Economics predictions over at his excellent blog, Stationary Bandit.  He suggests that Gordon Tullock may still have a shot this year at winning a shared prize with Anne Krueger and Jagdish Bhagwati.  Alex Tabarrok reports that Eugene Fama is the favorite on sports betting site, Ladbrokes. 

With Obama winning the Peace Prize yesterday, I'm more optimistic than ever about Tullock having a shot at the Economics Prize.  Even though I hold out hope for Tullock, I expect Robert Barro to win this year's prize.  Like Fama, Barro's name has been in the running for years.  Awarding him the prize this year would, to some extent, offset awarding the prize to the very political Krugman last year. 

Fama just seems a little too risky given the financial crisis and the concomitant attack on efficient markets; short Shiller at 7:1 if you can!  Who do you all think will win? 

Obama Wins Nobel Peace Prize

Here.  Your thoughts?

Books On My Desk This Friday Morning

* Ludwig Lachmann, Capital, Expectations, and the Market Process

* Roger Koppl and Gary Mongiovi (eds.), Subjectivism and Economic Analysis: Essays in Memory of Ludwig M. Lachmann

* Don Lavoie (ed.), Expectations and the Meaning of Institutions: Essays in Economics by Ludwig Lachmann

* A.J. Polan, Lenin & the End of Politics

Library Economics

I'm on the road a lot.  To pass the time I sometimes listen to books on CD.  Here's a question related to books on CD for our readers that I think economic theory can probably answer: Why, when I check out books on CD from the library do I only get them for one week? 

I can understand the need for quickly turning over movies, but I doubt the same kind of need for quick returns is present in the books on CD market.  I also doubt that it's an issue of expense because many books are far more expensive than books on CD.  Given that listening to 20 disks on House of Cards will take me a lot longer than reading the book, why is the library insisting that I bring the set of disks back once per week to renew?

Ayn Rand's School for Tots

In my favorite Simpson's episode, Maggie is sent away to the "Ayn Rand School for Tots."  While at the school, posters hang above childrens' beds that read "A is A."  Children are read "The Fountainhead Diet" by Ms. Sinclair, a woman who looks a lot like Ayn Rand.  And, when children ask for the bottle, they are reminded that they are behaving like leeches.  More on the episode can be found here.

Over at the Austro-Athenian Empire blog, Roderick Long discusses an episode from Ayn Rand's own childhood that may have been formative in her future work.

(HT: Eric Crampton)

Say Hello To Marx, Again

I've critically studied Marxism for almost a quarter of a century.  Thanks to the crisis, it has returned with a vengeance in the work of Hardt and Negri.  Perhaps it's time for another article.

Miscellany

* The climate change controversy:  Ian Plimer looks quite foolish in this review.

* Signaling problems:  Will Wilkinson on cap-and-trade.

* Bills and coins.

The Illusion Of Mutually Beneficial Exchange

Take a look at Michael Shermer's con game.

Deciphering Bono: Actions Sometimes Speak Louder Than Words

Anemone and I had a blast last night rocking out to U2 in the Georgia Dome.  Their play list offered a nice combination of new tunes and classics like "Beautiful Day" and "With or Without You," and their light show was spectacular.  The 71,000+ seat stadium was packed, which is a feat only a few bands could pull off. 

Seeing U2 perform is something we've wanted to do for years because we both love listening to Bono when he has a microphone in hand and Edge behind him.  However, I tend to push the "Mute" button on my remote whenever U2's front-man is on Oprah or without Edge.  While I'm sure Bono's heart is in the right place, good intentions, ill-informed economic reasoning, and tremendous international appeal make for a dangerous combination when it comes to some of his activist efforts.  In other words, unless he's singing, I try to tune out his words as much as possible.

His actions, on the other hand, are sometimes worth paying attention to because they demonstrate that even the great humanitarian, Bono, responds to economic incentives (additional stories here and here).  The Rolling Stones also appear unable to get no satisfaction, and, as a result, they have followed Bono's move to The Netherlands. 

A Real Clunker

Okay, the cash for clunkers program boosted sales -- during the time of the program.  And, predictably, sales have fallen after the program ended.  It didn't allow for a sustained expansion in the industry.  The economic way of thinking predicts that would happen.

Here's a nice article from the October 4th Wall Street Journal.  It adds a wonderful twist to all of this:  you cannot create more wealth with a policy that intentionally destroys wealth.

It's Not The Marathon; It's The Runner

This morning's Wall Street Journal has an article titled "The Fleeting Benefits of Marathons."  Contra Art de Vany, the article acknowledges the growing body of research that has found significant cardio benefits from long-distance running and reduced risks of cancer and other disorders. 

The article then talks about how marathoners are not enjoying long-lasting health benefits after running a marathon, and it makes marathoning sound akin to a "crash diet" where people experience fleeting weight loss and health benefits.

I have no doubt about the "crash diet" result.  What I do take issue with is the idea that running one marathon--by itself--promises permanent weight loss, health improvements, and the fountain of youth.  Like any type of exercise, the key is that the exercise be sustained.  Why would anyone expect something different from the marathon? 

To truly capture the health benefits of long-distance running, a better approach than looking at people after one marathon would be to separate marathoners into two groups.  Group 1 would include those who run a marathon to check off a box on the "bucket list" and say, "Never again."  Group 2 would include those who have run multiple marathons.  I suspect significant health differences between the two groups. 

A Night of Enlightenment

Jim Otteson's talk here at Mercer last week was titled "The Scottish Enlightenment on the Promise and Peril of Commercial Society."  Jim gave us a wonderful overview of the Enlightenment (with particular emphasis on Adam Smith).  According to Otteson, the promise of commercial society was material abundance and greater freedom of choice; Smith, the great empiricist, speculated about the causes of economic abundance, and, with hindsight, his conjectures appear to have been on the mark. 

Jim then went on to discuss the perils of commercial society.  He started by explaining a concern Adam Ferguson had about the "voluptuousness" that comes with abundance.  Otteson then linked the concerns the Enlightenment writers had about voluptuousness up to the present by discussing happiness research and the progress paradox.

While I got to spend plenty of time with Jim while he was in town, there were still a number of questions I never got to ask him while he was in town.  Several of them can be found below the fold:

A Sentence to Ponder

"The large expansion in debt in World War II looks like a small blip compared to what's coming if we do not change policy."  That's what John Taylor said recently on his new blog, Economics One. 

Here's the relevant graph accompanying the comment:

 

Scary

This sure is a lot different than my elementary school music classes, where in addition to having my hair pulled by the teacher (seriously!), we sang "Home, Home on the Range," "We Are the World," and "The Greatest Love of All."

HT: My student, the other Ben Powell.