The Unbroken Window

George Akerlof’s canonical example of the market for lemons (information asymmetries leading to unraveling in free markets with subsequent welfare losses) seems to be a perfect illustration of the problem of asymmetric information. Ironically, just as what has happened in the canonical descriptions of public goods problems (lighthouses and honey bees), market power (oil cartels), [...]

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From Al Gore:
But what a burden would be lifted! We would no longer have to worry that our grandchildren would one day look back on us as a criminal generation that had selfishly and blithely ignored clear warnings that their fate was in our hands. We could instead celebrate the naysayers who had doggedly persisted [...]

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It is well known that Paul Krugman has morphed from Nobel Prize winning columnist into something else. Nonetheless, it is still fun to analyze what he is saying when he pretends to be wearing his economist hat. Take for example the issue of whether or not we should be worrying about having a debt to [...]

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I am wondering if the following might considered a market failure in the traditional sense. I don’t think so because I do not see uncompensated benefits and costs here, so maybe a better question would be to ask why this equilibrium persists. Here it is: have you ever noticed the janitors where you work or [...]

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We have had a sighting of an man employment eating beast right here in North America! And this one doesn’t seem to have the tail of poisonous spines or multiple rows of teeth.
And what is this vicious creature? A reduction in the minimum wage. Paul Krugman castigates the Focks news crowd for thinking that lowering [...]

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Greg Mankiw’s freshmen seminar was probably terrific. But one outcome that has me mildly concerned is:
I also asked the students how their views had changed over the course of the semester. Those who started out liberal said they came to appreciate market mechanisms more. Those who started out conservative said they came to appreciate the [...]

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Academics seem to find it a respectable doctrine to aim to keep politics out of the classroom. I do not necessarily think that is a good idea, after all we do have political science departments. The spirit of the argument however is to keep your personal politics out of the classroom.
I like that idea only [...]

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This abstract says it all:
Why are the 2000s so different from the 1970s? A structural interpretation of changes in the macroeconomic effects of oil prices …
In the 1970s, large increases in the price of oil were associated with sharp decreases in output and large increases in inflation.  In the 2000s, and at least until the [...]

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If requiring workers to be paid $7.25 per hour is a good idea, I would like to see a ban on volunteer work. How can proponents of the minimum wage argue with a straight face that it is OK to work for “free?” I bet any answer they give me will undermine the case they [...]

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I wonder why I remain startled when I have conversations like the following:
Student: Professor Rizzo, can you show me an example of how the “economic way of thinking” is different, and will help me be a better citizen
Professor: Sure. Take the Endgangered Species Act. This was an act of Congress intended to do what?
Student: Protect [...]

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