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Tag Archives: Economic Methods

I Win My Education Bet with David Henderson

Back in 2011, many futurists expected online education to give traditional four-year colleges a run for their money.  I demurred, arguing that: Education is not primarily about teaching concrete skills.  It’s a stably wasteful way to sort people according to their intelligence, conscientiousness, conformity, etc. So what happens when an innovator claims to have a cheaper, easier substitute for traditional education?  The lazy and the weird gravitate to Cheap Easy U...

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Overcoming Bias Is the Mother of Science

“Science is prediction.”  Not quite true, but still deeply insightful.  Especially when you remember that “Science is prediction” doesn’t mean a prediction that you whisper to yourself.  “Science is prediction” means a public prediction.  You have to shout it from the rooftops, in advance. When Einstein publicly predicted a specific anomaly in the deflection of light during a solar eclipse – and turned out to be exactly right – it was awesome.  Einstein loudly said...

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Ideological Turing Test Makes the House of Lords

Seriously, via my John Locke Institute Summer School colleague Lord Dan Hannan: Over the summer I participated in teaching in a school, appropriately called the John Locke Institute. Rather like what the right reverend Prelate the Bishop of Birmingham was describing in his home city, it tries to teach young people the idea of what the administrators of the course call “generous listening”. It is a lovely phrase. Generous listening means not waiting, patiently or...

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A Nobel Bet

Substacker Nathan Brooks thinks he has a shot at the Nobel prize.  In particular, he says that he can explain some puzzles about the U.S. labor market by appealing to employers’ demand for higher employee effort. I’m not convinced.  I don’t know whether he’s right or wrong.  But even if he were clearly correct, this doesn’t look close to a Nobel-prize-winning insight to me.  And even if it were, Brooks is not an economics professor, so the Nobel committee is highly...

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Angrist’s Critique of Card and Krueger

As in the original Card and Krueger survey, the administrative data show a slight decline in the employment from February to November 1992 in Pennsylvania, and little change in New Jersey over the same time period. However, the data also reveals substantial year to year employment variations in other period. In particular, while employment levels in New Jersey and Pennsylvania were similar at the end of 1991, employment in Pennsylvania fell relative to employment in...

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CPI Bias vs. the Penn Effect

How much richer is the First World than the Third?  If you simply compare nominal GDP per capita, the ratio is staggering.  By this measure, Americans are over twenty times richer than Haitians.  The standard view in macro, however, holds that these ratios are overstated.  Largely due to non-traded goods, the cost of living is higher in rich countries.  To properly compare the First World to the Third, this argument goes, one must do a Purchasing Power Parity...

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A Nobel for Natural Experimenters

Why do natural experiments matter? One of the toughest problems in economic research is figuring out whether a relationship between two variables is causal or coincidental. So, for example, economists find that the lifetime earnings of people who go to school for 12 years are higher than those of people who go to school for 11 years. But what if those who stay in school longer are more motivated or smarter than those who are in for only 11 years? Then the earnings of...

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Paul Samyn’s Failure to Distinguish

On September 21, 2021, Winnipeg Free Press editor Paul Samyn wrote, in an email I received: Carville made those comments in a piece for The Hill in 2014, but that same vexing question resonates today as we look at some of the success Bernier’s anti-vaxx stance as leader of the People’s Party of Canada had at the ballot box Monday night. Bernier didn’t win his seat. His party didn’t elect a single MP. But there was enough in that platform built upon anger over COVID...

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The Continua of Excludability and Rivalry

The classic definition of a “public good” is that it is both “non-excludable” and “non-rival.”  Textbooks normally treat these traits as binary, delivering this 2 x 2 typology: Yet in the real world, both excludability and rivalry lie on a continuum.  Almost nothing is 0% excludable.  If you spend enough effort, you can prevent non-payers from enjoying your product.  At the same time, almost every good requires some effort to exclude non-payers.  Hence, nothing is...

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Climate Shock Bet

Daniel Reeves, co-founder of Beeminder, thinks the book Climate Shock is extraordinarily convincing.  He also apparently has a great deal of respect for my intellectual integrity.  The upshot: Reeves has bet me at 2:1 odds that reading Climate Shock will convince me to support markedly greater government action to mitigate climate change. As we discussed the bet, I warned Reeves that: I feel bad to pretend I’m more open-minded than I really am.  The honest truth is...

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