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Bryan Caplan

Bryan Caplan

Bryan Caplan is Professor of Economics at George Mason University and Senior Scholar at the Mercatus Center. He has published in the New York Times, the Washington Post, the Wall Street Journal, the American Economic Review, the Economic Journal, the Journal of Law and Economics, and Intelligence, and has appeared on 20/20, FoxNews, and C-SPAN. Bryan Caplan blogs on EconLog.

Articles by Bryan Caplan

Ask the Author: Questions for Karelis

4 days ago

Charles Karelis, author of The Persistence of Poverty, is happy to answer your questions.  Please write them in the comments, and he’ll respond in a regular post.
To get things started, here are a few questions from me.
1. Your theory seems to imply that when people temporarily have many personal problems, they will start doing painful things with long-run benefits.  Example: If you’re already (temporarily) miserable, why not go on a diet and start exercising, so when your problems end, you’re thin and fit?  But as far as I know, almost no one does this.  Please comment.
2. Children notoriously engage in much short-sighted behavior – not doing their homework, staying up too late, fighting with siblings, stealing candy, etc.  The standard explanation is that kids

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The Persistence of Poverty: The Spinoffs (Part 8)

5 days ago

If Karelis is wrong, why have I written so much about his work?  Because his arguments are so much better than his conclusion.  Charles Karelis hasn’t explained poverty, but he has still enriched our understanding.  He’s hardly the first person to emphasize the connection between behavior and persistent poverty, but he makes this point more forcefully and eloquently than almost anyone else.  And he’s the first person to highlight the ubiquity of increasing marginal utility in real life.  It’s one thing to say, “Oh, there are some non-convexities,” and another to point out lots of specific convincing examples.  Karelis even has a strong meta-story about how economists have been so blind:
If your theory is correct, why isn’t it conventional wisdom already? After

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Dominance: Material vs. Rhetorical

6 days ago

Do the rich dominate our society?
In one sense, they obviously do.  Rich people run most of the business world, own most of the wealth, and are vastly more likely to be powerful politicians.
In another sense, however, the rich aren’t dominant at all.  If you get in public and loudly say, “Rich people are great.  We owe them everything.  They deserve every penny they’ve got – and more.  People who criticize the rich are just jealous failures,” almost everyone will recoil in horror.
Do males dominate our society?
In one sense, they obviously do.  Males run most of the business world, hold most of the top political offices, hold a supermajority of the most prestigious jobs, and make a lot more money on average.
In another sense, however, males aren’t dominant at all.

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The Persistence of Poverty: It’s Complicated (Part 7)

10 days ago

If Karelis fails to explain the persistence of poverty, what does?  Let’s return to his six competing theories: (1) apathy, (2) fragmentation of the self (which economists might call “hyperbolic preferences”), (3) akrasia (self-control problems), (4) restricted opportunity, (5) unusual preferences, and (6) perverse policies.  How do they really hold up?
(1) apathy.  I don’t see this as a conceptually independent explanation.  Outright apathy is a special case of either (a) hyperbolic preferences or (b) unusual preferences.  (Though in a way, you could call the Karelis model a kind of apathy story, since the poor are able to improve their own situation, but decide the gain is not worth the pain).  The appearance of apathy could also stem from perverse policies.
(2)

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The Persistence of Poverty: The Right, the Wrong, and the Overstated (Part 6)

12 days ago

Now that I’ve sketched The Persistence of Poverty, how does it stand up?
The Right
1. Karelis blames persistent poverty on persistent poverty-inducing behavior: not working, not finishing school, not saving, abusing alcohol, committing non-lucrative crime.  While his evidence is a bit thin, almost everything else I’ve read on poverty confirms that such behavior (plus impulsive sex) is indeed one of poverty’s chief causes.
2. Karelis says that, contrary to standard economic theory, marginal utility is often increasing (and marginal disutility is often decreasing). He produces several convincing examples, mostly involving the alleviation of pain (bee stings, foot blisters), but also consumer products (like scratches on a car).  He could easily have produced numerous

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The Persistence of Poverty: Karelis’ Practice

13 days ago

Now that he’s explained the nature of persistent poverty, Karelis is ready to end it forever.  His solution is simplicity itself: Give the poor everything they need. Once their needs are met, they’ll start acting like regular middle-class folks in order to satisfy their wants.  Or in his terminology, once you give the poor enough to pay for all their relievers, they will prudently strive to acquire their pleasers.  Thus, even though many of Karelis’ statements will likely appall left-wing readers, his policy conclusions are ultra left-wing.  Contrary to virtually everyone on Earth, for example, Karelis affirms that unconditional welfare benefits increase work effort:
In particular, I look back at the debate surrounding the 1996 U.S. welfare reform, concluding that

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The Persistence of Poverty: Karelis’ Theory

17 days ago

Karelis says that persistent poverty-including behavior is the main cause of persistent poverty, that none of the other major theories can explain what’s going on, and that he can.  How?
He starts by attacking what initially seems like one of the most banal assumptions in all of economics: diminishing marginal utility.  If you could either have $500 for sure, or $1000 with 50% probability, you’d want the sure thing, right?  Economics aside, isn’t this just common sense?  Not according to Karelis.  The real story, he says, is that some goods (“pleasers”) have diminishing marginal utility, but other goods “(relievers”) have increasing marginal utility.  For pleasers, you prefer a sure thing over a gamble with the same expected value; for relievers, however, you

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Reverse Birth Control: A Thought Experiment

18 days ago

Some prominent sociologists argue that teen pregnancy, when it occurs, is functional.  Teen pregnancy is a foolish life choice for middle-class teens, because they’re sacrificing bright futures.  Lower-class teens, in contrast, don’t have bright futures to sacrifice, so why wait to become a parent?  I’m skeptical of the underlying counter-factuals, but never mind that.  Frank Furstenberg’s “Teenage Childbearing and Cultural Rationality” (Family Relations, 1992) rebuts the functionalists with a thought experiment that is as powerful as it is concise:
[I]f they had to take a pill for a month in order to become pregnant, relatively few teenagers, especially those of school age, would become parents. And, if they had to obtain permission from their parents to take that

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The Persistence of Poverty: Karelis vs. Six Standard Stories

19 days ago

After you read Karelis on the behavioral causes of poverty, you’ll probably assume he’s some sort of social conservative.  If you have the patience to hear him out, however, you’ll discover that he’s one of a kind; no earlier thinker ever thought what Karelis thinks.
Skeptical?  After discussing how the poor make themselves poor, Karelis’ next task is to examine the leading left- and right-wing explanations for persistent poverty.  He breaks them into three “dysfuction” theories and three non-dysfunction theories – six in all: (1) apathy, (2) fragmentation of the self (economists might instead say “hyperbolic preferences”), (3) akrasia (non-philosophers would say, “weakness of will”), (4) restricted opportunity, (5) unusual preferences, and (6) perverse policies.

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The Persistence of Poverty: Karelis’ Puzzle

20 days ago

I first heard about Charles Karelis’ The Persistence of Poverty when it was published in 2007.  I didn’t just fail to read it; after hearing summaries of its thesis, I considered it too absurd to read.  Now that I’m writing a book on poverty, however, I felt duty-bound to go through the whole book.  When I did, I wasn’t just pleasantly surprised.  I was astounded.  The Persistence of Poverty is an awesome book.  So logical.  So concise.  So direct.  So insightful.  So beautifully written.  While I still don’t buy his big picture of poverty, I have been enriched by the experience.
In honor of this wonderful intellectual product, I’m publishing a seven-part series.  This first post will walk readers through Karelis’ thesis; followups will add critiques and

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Sweetness and Light: A Tale of Sugar Regulation

24 days ago

Tales of Weird Regulation, from Chad Syerson’s “What Determines Productivity?” (Journal of Economic Literature, 2011):
Benjamin Bridgman, Shi Qi, and Schmitz (2009) show how regulations in place for decades in the U.S. sugar market destroyed incentives to raise productivity. The U.S. Sugar Act, passed in 1934 as part of the Depression-era restructuring of agricultural law, funded a subsidy to sugar beet farmers with a tax on downstream sugar refining. Refiners were compensated for this tax by quota protection from imports and government- imposed limits on domestic competition (antitrust law was often thrown to the wind in the construction of New Deal programs). This transfer scheme led to the standard quantity distortions, but it also distorted incentives for

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The Persistence of Poverty Book Club

25 days ago

Starting on Monday, I will be writing a long series of posts on Charles Karelis‘ utterly original book, The Persistence of Poverty.  I’d compare him to a left-wing Robin Hanson – gnawingly thought-provoking even when he’s mired in error.  (Don’t miss Robin on Karelis, by the way).
The Persistence of Poverty is so well-written and concise you can finish in two hours.  And used copies cost less than $2.00 on Amazon.  So give it a try, and see you Monday!
P.S. Charles says he will be happy to answer your questions.  At the end of the series, I’ll put up a special thread for queries to the author.

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Socialism Sucks, and Everyone Ought to Know It

26 days ago

Today my friends Bob Lawson and Ben Powell have released their new Socialism Sucks: Two Economists Drink Their Way Through the Unfree World.  Intellectually, EconLog readers will know the score, but Socialism Sucks embeds good economics and economic history within an irreverent travelogue.  Modern socialist rhetoric is so ahistorical and otherworldly that it’s great to hear reports about what North Korea, Venezuela, and Cuba are actually like.  Along the way, Lawson and Powell thoughtfully explore the whole “That’s not real socialism” slogan. Quick version: Contrary to First World socialists, it’s the hell-states that are real socialism, and the success stories of Scandinavia that are fake socialism.
I actually had the privilege of workshopping the draft of this

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The Bayesian Prisoners’ Dilemma

27 days ago

Suppose someone sends you a new article claiming X.  Intuitively, we think, “This will either make you more likely to believe X, or have no effect.”  Once you understand Bayesian reasoning, however, this makes no sense.  When someone sends you an article claiming X, you should ask yourself, “Is this evidence stronger or weaker than I would have expected?” If the answer is “stronger, ” then you should become more likely to believe X.  However, if the answer is “weaker,” then you should become less likely to believe X.
Thus, suppose you initially consider X absurd.  When someone sends you some evidence in favor of X, you should update in favor of X if the evidence is less awful than expected.  You should update against X, in contrast, only if the evidence is even

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Fernandez-Villaverde, Spain, and Gravity

July 25, 2019

In a follow-up to yesterday’s post, I asked Jesus Fernandez-Villaverde two follow-up questions.
My first question: “Suppose Spain had been in South America.  Would the same policies still have worked nearly as well?”
Jesus replied: “Yes if a free trade agreement with US and Canada had existed.”
I then inquired: “So the gravity model just isn’t that important here?  Opening your economy when you’re surrounded by rich neighbors seems a lot more fruitful than opening your economy when you’re surrounded by other poor neighbors…”
Jesus’ extensive and thoughtful response, reproduced with his permission, lies below.
My answer relies on how I interpret gravity equations, so let me start with that.
Of course, it makes sense for Spain, let’s say, to trade with Portugal more

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Fernandez-Villaverde on Spain’s Economic Success

July 24, 2019

Last week I asked:
Why is Spain so much richer now than almost any country in Spanish America?  Before you answer with great confidence, ponder this: According to Angus Maddison’s data on per-capita GDP in 1950, Spain was poorer than Argentina, Chile, Mexico, Peru, Uruguay, and Venezuela, and roughly equal to Colombia, Bolivia, Costa Rica, Cuba, Ecuador, Guatemala, and Panama.  This is 11 years after the end of the Spanish Civil War, and Spain of course stayed out of World War II.
Via email, Penn’s Jesus Fernandez-Villaverde replied.  The following is kindly reprinted with his permission.
By luck, the question is posted close to the 60th anniversary of the day that gives you a rather compelling answer (and one that is well accepted by most Spanish economic

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Winship Psychoanalyzes Economic Pessimism

July 23, 2019

I’ve spent years telling Tyler Cowen that conventional price indices are upwardly biased, so his stagnationist views are wrong.  And he’s spent years replying that my views are sadly out-of-date.  In this piece, the highly up-to-date Scott Winship unequivocally reaffirms the classic view that indices are indeed upwardly biased.  Indeed, the old Boskin Report was probably too cautious:
The chart shows that from 1969 to 2012, the PCE and my extended C-CPI-U series indicate that prices rose by a factor of 5, while the CPI-U-RS gives the ratio as 5.5 and the CPI-U as 6.3. These distinctions are important. If nominal income—income prior to taking the rising cost of living into account—rose by a factor of 7.2 over this period (as my own estimates suggest), using the

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The Discouraged Suitor

July 22, 2019

Labor economists occasionally have a crisis of faith.  After years of scrutinizing the unemployment rate, they suddenly remember… discouraged workers.  Who are they?  They’re people who want a job, but aren’t officially unemployed because they aren’t actively searching for work.
This is a serious problem – and a serious flaw with official unemployment rates.  True, we should not forget the Prideful Worker Effect – the workers who say they want a job, but refuse to do any job for which they’re genuinely qualified.  But if you take introspection half as seriously as I do, you can hardly deny that lots of people find job search extremely demoralizing.  When your whole ego and sense of self are on the line,  one needs Stoic determination to keep looking in the face of

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The Case Against Education: Now in Paperback

July 19, 2019

The Case Against Education is now in paperback, with a new Afterword by yours truly.  Highlights from the Afterword:
My earlier work (Caplan 2007) maintains that when economists and the public disagree, the economists are usually right.  The Case Against Education, however, focuses on a rare topic where economists and the public are on the same page.  The sad result, in my view, is that economists end up rationalizing popular errors rather than correcting them.  Not all economists, of course; Michael Spence won a Nobel Prize for developing the signaling model on which my book relies.  Yet by and large, labor and education economists thoughtlessly equate schooling with “human capital formation.”
Though this allegation may seem harsh, I stand by it.  Almost all of

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“España Es Como Una Madre”

July 18, 2019

Our most memorable Uber driver in Madrid was a young Pakistani man.  We gave him twenty minutes; he gave us his odyssey.  Too bad I failed to recorded the conversation, because this would have been a great interview to broadcast on Spanish radio.
Our driver’s story: Back in Pakistan, he lived in hunger, so he left home to seek his fortune.  In popular parlance, he became part of the “European migrant crisis.”  He traveled solo, journeying from Pakistan to Iran to Turkey.  Then he zigzagged around the EU, passing through Greece, Romania, Germany, Italy, and France.  Our driver gave few details, but each of these countries treated him badly.  He had to hide from the authorities, and could not legally work.
After three months, however, he reached Spain – and his life

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Reflections from Spain

July 17, 2019

I just got back from a five-week visit to Spain.  The first four weeks, I was teaching labor economics at Universidad Francisco Marroquín while my sons took Spanish-language classes on Islamism, Self-Government, and the Philosophy of Hayek.  Then we rented a van and saw Cordoba, Seville, Gibraltar, Fuengirola, Granada, and Cuenca.  During my stay, I also spoke to the Instituto von Mises in Barcelona, Effective Altruism Madrid, the Rafael del Pino Foundation, and the Juan de Mariana Institute.  I had ample time to share ideas with UFM Madrid Director Gonzalo Melián, UFM professor Eduardo Fernández, Juan Pina and Roxana Niculu of the Fundación para el Avance de la Libertad, and my Facebook friend Scott McLain.  Using my sons as interpreters, I also conversed with

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Against Tu Quoque

July 16, 2019

War crimes trials often weigh on the consciences of the conscientious.  Aren’t such proceedings mere “victor’s justice”?  The hypocrisy is usually palpable; after all, how often does either side in a violent conflict walk away with clean hands?  Unsurprisingly, then, one of defendants’ favorite legal strategies is to tell their prosecutors, “Well, you guys did the same.”  It’s called the tu quoque defense:
An argument from fairness, the tu quoque argument has an enduring appeal to the human conscience. Simply put, tu quoque is the Latin rendition of “you too”, with the argument built-in, though often unstated: “Since you have committed the same crime, why are you prosecuting me?” Cast in more affirmative terms, the argument is that if one side in a conflict has

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The Broader Effects of Trade and Tech

July 10, 2019

Quite a few people consciously favor “free markets, but not free migration.”  When questioned, many explain that unlike free markets in goods, free markets in labor have “broad social effects.”  At this point, I have to suppress my urge to exclaim, “Are you out of your minds?”  They’re right, of course, that free migration has broad social effects.  They’re crazy, however, to imagine that free markets in goods lack these effects.  Indeed, at least within the observed range, ordinary market forces have changed society far more than immigration.
Start with international trade.  If the U.S. were a closed economy, manufacturing would still have shrunk, but it would remain a major source of employment.  The Rust Belt would be doing far better – and less eager for a

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Historically Hollow: The Cries of Populism

July 4, 2019

History textbooks are full of populist complaints about business: the evils of Standard Oil, the horrors of New York tenements, the human body parts in Chicago meatpacking plants.  To be honest, I haven’t taken these complaints seriously since high school.  In the absence of abundant evidence to the contrary, I say the backstory behind these populist complaints is just neurotic activists searching for dark linings in the silver clouds of business progress.  When business offers new energy, new housing, new food, the wise are grateful to see the world improve, not outraged to see a world that falls short of perfection.
Still, I periodically wonder if my nonchalance is unjustified.  Populists rub me the wrong way, but how do I know they didn’t have a point?  After

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Jencks on Incentives and Single Motherhood

July 2, 2019

A striking passage from Christopher Jencks’ foreword to Edin and Lein’s Making Ends Meet:
Some conservatives oppose all efforts to help single mothers balance their budgets, even when the mother works.  They argue that making life easier for single mothers will just make them more numerous.  For those who see single mothers as a major cause of the nation’s social problems, cutting their numbers is even more important than reducing material hardship.
Although liberals scoff publicly at these arguments, few really doubt that changing the economic consequences of single motherhood can affect its frequency. Imagine a society in which unmarried women knew that if they had a baby out of wedlock their family would turn them out, the father would never contribute to the

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Monetize Your Anger

June 27, 2019

Critics of the economics profession often accuse us of “knowing the price of everything and the value of nothing.”  But economists also often antagonize a far larger group – ordinary people who barely realize our profession even exists.  How?  By asking about Willingness To Pay (WTP).  How much extra would you have to earn to add 20 minutes to your daily commute?  How large of a fare discount would be required to get you and your husband to sit separately on an airplane?  Part of the complaint is that questions about WTP are dehumanizing.  The main complaint, though, is that monetizing emotions creates conflict.  Social ties are so important that it’s best not to price human feelings.
Perhaps.  But I can’t help but notice a wide range of cases where thinking in

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£s for Brexit

June 25, 2019

With my perfect betting record hanging in the balance, I follow Brexit news to the point of obsession.  Out of the many hundreds of stories I’ve read, though, I have yet to hear anyone point to the simplest path to Brexit: Let Britain buy its way out! In Theresa May’s failed deal, the UK was supposed to pay the EU about £38 billion for the “divorce.”  Yet there is nothing magical about this price tag.  It could just as easily be £40 billion, or £140 billion.  Why, then, can’t the UK just tell the EU, “The backstop is a deal-breaker.  How much money will it take to make this issue go away”?
If this were any normal business deal, this straightforward path would be on the tip of every Brexiteer’s tongue.  It’s the logic of any familiar real estate transaction:
“We

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Murray on the Prevalence of “Poverty”

June 20, 2019

Charles Murray‘s Losing Ground contains a most surprising claim:
[P]overty did not simply climb upward on our national list of problems; it abruptly reappeared from nowhere.  In the prologue to this book, 1950 was described as a year in which poverty was not part of the discourse about domestic policy – indeed, as a year in which the very word “poverty” was seldom used.  The silence was not peculiar to 1950.  From the outset of the Second World War until 1962, little in the popular press, in political rhetoric, or in the published work of American scholars focused on poverty in America.
When Murray wrote these words, there was really no way to verify this climb.  When I read this passage, I was fairly incredulous.  Now, however, Google’s Ngram can check this quote

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Martial Negligence in Game of Thrones and Beyond

June 18, 2019

I’ve previously argued that George R.R. Martin’s Song of Ice and Fire is implicitly a great pacifist work.   While rewatching season 2 with my younger son, I re-discovered a scene worthy of a pacifist ovation.  While Talisa, the crucial pacifist character, appears only in the show, the following exchange sheds great light on the role of martial negligence in Martin’s fictional universe.  For context, Robb Stark is the King in the North, Talisa is a battlefield medic, and they’re surrounded by the bodies of maimed and dead soldiers.
Talisa: That boy lost his foot on your orders.
Robb: They killed my father.
Talisa: That boy did?
Robb: The family he fights for.
Talisa: Do you think he’s friends with King Joffrey? He’s a fisherman’s son that grew up near Lannisport.

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