The Unbroken Window

The answer is probably the same reason why I am fond of FA Hayek. In preparation for an undergraduate seminar I am running on Hayek, I came across a thought that is as powerful as the one I have at the top of the website. Here it is, if not in exact form:
“the main merit [...]

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Sam Peltzman wrote of this 40 years ago. Liberal economist Larry Summers wrote about it 20 years ago. The paradox is quite simple. Suppose the government provides universal free services, such as education, of modest or even good quality. Many people would rationally find it optimal to consume the “free” product than to pay higher [...]

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As an impressionable boy I thought that climate alarmists, environmental doomsdayers, anti-poverty crusaders, consumer safety crusaders and the like were working hard to make the world a better place. As a middle-aged adult, I have come to hold a slightly different view of these crusaders – that they really don’t give a damn about the [...]

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Is there any better quote to capture how some people feel about the way the world works. WTC responders are in line to scoop up $657 million in damages to be paid by NYC and the companies that worked to clean up the WTC site.

Is it really plausible that anyone was unaware of the health [...]

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Per capita GDP in the United States is roughly $47,000.
Per capita personal income is about $39,880.

Let’s think about the kind of tax system we have in the U.S.
What kind of effective marginal tax rates do you think a family faces that has per capita income below half of per capita GDP in the country or [...]

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When I teach intermediate microeconomics I talk a little about the history of conscription in the United States and then help the students understand how to model out the true economic costs of raising a military via a draft versus raising a military of volunteer soldiers.
Some of my students, in particular those with family in [...]

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I am usually a fan of randomized experiments. But not this one:
This paper analyzes a randomized tax enforcement experiment in Denmark.  In the base year, a stratified and representative sample of over 40,000 individual income tax filers was selected for the experiment.  Half of the tax filers were randomly selected to be thoroughly audited, while [...]

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I am opposed to coercive redistribution on both moral and practical grounds. However, suppose a bleeding-heart were to convince me that it is “just” to stick a gun in my face and force me to part with my earnings, and further, that they were to decide how to be charitable on my behalf and that [...]

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The economic reasoning behind why rules like the minimum wage or living wage laws are not so helpful is irrefutably solid. But no amount of sound economic thinking seems to work for my students, and that certainly also applies to popular notions of the way the world works. In times like those, perhaps it is [...]

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Moral and Social Constraints to Strategic Default on Mortgages by Luigi Guiso, Paola Sapienza, Luigi Zingales – #15145 (AP CF)
Abstract:
We use survey data to study American households’ propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). [...]

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