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Nobel economist Richard Thaler misfires on ‘anti-price-gouging’ laws – Publications – AEI

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AEI Nobel economist Richard Thaler misfires on ‘anti-price-gouging’ laws Writing in today’s Wall Street Journal, David Henderson summarizes some of the accomplishments of Richard Thaler, the 2017 Nobel laureate in economics (“This Year’s Nobel Economist Makes Sense of Irrationality“), here’s part of David’s summary and critique of Mr. Thaler’s changing views on anti-price-gouging laws (bold added): In 2012, Mr. Thaler opposed a proposed law against price-gouging in Connecticut. Big companies, he said, worry about their reputations, so they already refrain from price-gouging and stock up in advance of emergencies. On the other hand, one-time entrepreneurs, who may not be as worried about their reputations, are happy to supply items at high prices during a crisis. But in a radio

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AEI
Nobel economist Richard Thaler misfires on ‘anti-price-gouging’ laws

Writing in today’s Wall Street Journal, David Henderson summarizes some of the accomplishments of Richard Thaler, the 2017 Nobel laureate in economics (“This Year’s Nobel Economist Makes Sense of Irrationality“), here’s part of David’s summary and critique of Mr. Thaler’s changing views on anti-price-gouging laws (bold added):

In 2012, Mr. Thaler opposed a proposed law against price-gouging in Connecticut. Big companies, he said, worry about their reputations, so they already refrain from price-gouging and stock up in advance of emergencies. On the other hand, one-time entrepreneurs, who may not be as worried about their reputations, are happy to supply items at high prices during a crisis. But in a radio interview last month, Mr. Thaler had changed his tune. “A time of crisis is a time for us all to pitch in; it’s not a time for us to grab,” he said. True, but the ability to charge high prices encourages more of us to “pitch in.

MP: I’d also point out that laws preventing prices from rising following a crisis encourage many more of us to “grab” scarce goods like water and gasoline and scarce resources like hotel rooms for ourselves if those scarce items are allocated on a first-come, first-served basis at artificially low prices and we get there first. That “grabbing” will increase overall post-crisis suffering and retard the recovery process.

Nobel economist Richard Thaler misfires on ‘anti-price-gouging’ laws
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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