The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – F.A. Hayek
Posted in incentives on Jan 22nd, 2010
The Grameen Bank has (rightly I think) been recognized for promoting bottom-up development in poor countries. One thing they do is make small microloans available to entrepreneurs without collateral (thus, traditional lenders would typically not lend to them, either due to lack of collateral, or the risk of their business and the cost of administering [...]
Posted in Health Care, Institutions, You Can't Have it Both Ways on Jan 21st, 2010
Yesterday the New York Times ran a piece describing Professor Bill Baumol’s “cost disease” problem in economics. Very simply, the theory says that some sectors that are labor intensive would be expected to have its costs increase faster than less labor intensive sectors because productivity improvements are harder to come by when lots of human [...]
Posted in Taxation on Jan 20th, 2010
My property tax bill is $6,171 on our $187,000 house, meaning that we pay roughly 3.3% of the value of our home in property taxes every single year. So, the principal and interest payment on my house (5% over 30 years) is somewhere south of $900 per month while the monthly payment for property taxes [...]
Posted in Macroeconomics on Jan 19th, 2010
A lot! The following plots (real) household real estate value between 2000 and 2009. Since the peak, the U.S. has “lost” about $8 trillion in real estate wealth – or about 33% of the value it held at its peak in 2006. However, if you break out the value of real estate into the value [...]
Posted in Paternalism, Regulation on Jan 18th, 2010
Over 20 states have adopted laws requiring youths to wear a helmet when riding a bicycle. We confirm previous research indicating that these laws reduced fatalities and increased helmet use, but we also show that the laws significantly reduced youth bicycling. We find this result in standard two-way fixed effects models of parental reports of [...]
Posted in Regulation on Jan 18th, 2010
This paper quantifies the scale and scope of the commercial real estate mortgage bond market … in an attempt to better understand the role of retail mortgage debt. In particular, this paper quantifies the size of the market, identifies risk factors affecting the coupon yield spread over Treasuries and utilizes a unique data set to [...]
Posted in Health Care on Jan 18th, 2010
Ex ante, it is rare to know when it is coming, but for the aged: The main argument we make is that existing theoretical and empirical analysis of the value of life do not apply, and often under-values, the value of life near its end and terminal care. We argue that several factors drive up [...]
Posted in Macroeconomics on Jan 18th, 2010
It seems to be a lot! Since the the real value of household wealth hit is peak in the U.S. in the 4th quarter of 2006 through the trough in the first quarter of 2009, total U.S. household wealth (including real estate and equities) fell by 23.6% or about $20 trillion. The value of household [...]
Posted in Regulation on Jan 15th, 2010
Recently the blogosphere was awash in pointing out right-wing pundits who did not believe there was a housing bubble. I find that completely uninteresting and uninformative – but if that floats your ideological boat then happy sailing to you. Here is something I find more interesting – the author of the leading Money and Banking [...]
Posted in Welfare State on Jan 14th, 2010
The following is an unpublished review I wrote of Charles Murray’s In Our Hands back in 2006. I’ve been fielding student questions on this topic, so thought it might make sense to put this out there for them to refer to. Social Engineering by Any Other Name … August (2006) marked the ten year anniversary [...]
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