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 Economics Problems, Politics on Apr 13th, 2012
In this week’s episode of “we need a name for this phenomenon” consider the following two circumstances. I was doing an interview the other day when the interviewer asked me for a simple, “back of the envelope” way to understand which foods/products were “better” for the environment. Without getting into the nuances of the question, [...]
Posted in Economics Problems on Apr 8th, 2012
In class I asked students to compare the annual number of deaths around the world from TB (in the 1 to 2 million range, a real tragedy) to what he worst case estimates of deaths due to Global Warming as estimated by the IPCC. At the time of this writing, of the 18 responses I [...]
Posted in Behavior, Economics Problems on Apr 6th, 2012
Behavioral economists really ought to be thanked for making price theory more interesting. They do so by pointing out the many cases where people do not seem to behave in a way that homo-economicus would suggest they should behave. That’s great – because it focuses our minds on what exactly the rational choice paradigm can [...]
Posted in Economic Illiteracy, Economics Problems, Economists on Mar 16th, 2012
So this is what the vigorous and free exchange of ideas has come to? Our dear friend is running around with a blowtorch in a hayfield … As a result, U.S. oil production has risen significantly over the past three years, reversing a decline over decades, while natural gas production has exploded. Given this expansion, [...]
Posted in Economics Problems, Economists, Macroeconomics on Mar 14th, 2012
I am sure my readers would wrinkle their eyebrows upon utterance of the name Brad DeLong. After all, this is a guy who regularly calls all Republicans hacks and does not shy away from throwing his opponents under the ad hominem bus. But that does not mean you ought not read some of the things [...]
Posted in Economics Problems, Economists on Mar 9th, 2012
Mark Thoma points us to a Krugman column that basically says the Republicans are trashing American values by questioning the value of higher education. In fact he explicitly makes the argument that Republicans want people to NOT go to college because that will keep lots of Americans ignorance, and therefore keep mobility low and therefore [...]
Posted in Economic Illiteracy, Economics Problems, Market Failures, You Can't Have it Both Ways on Feb 2nd, 2012
I cannot even begin to tell you how many times I am told, “yeah, supply and demand and prices work and all that, but if we allow them to run wild, the environment will inevitably be destroyed.” These arguments are often levied far more vehemently in the presence of classical liberals than in more mainstream [...]
Posted in Economics Problems on Jan 19th, 2012
Via Greg Mankiw, this video is spot on: Disclaimer: I went to Cornell. No difference. OK, little difference.
Posted in Economic Illiteracy, Economics Problems, You Can't Have it Both Ways on Jan 19th, 2012
About twice a year I end up writing a post screaming at people for not understanding what the term adverse selection means as it pertains to the health insurance market. I can almost understand if the popular press gets it wrong (not really, it is the job of real reporters to understand what they are [...]
Posted in Economics Problems on Jan 16th, 2012
Paul Krugman is NOT a raving Marxist. If you were to follow the back-and-forth in the blogosphere about the importance of the Keynesian paradigm, whether the stimulus was big enough, whether we are in a liquidity trap, whether the FED has any power to reflate the economy right now, whether this is an appropriate time [...]
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