EconTalk this week

Cesar Hidalgo of MIT and the author of Why Information Grows talks with EconTalk host Russ Roberts about the growth of knowledge and know-how in the modern economy. Hidalgo emphasizes the importance of networks among innovators and creators and the role of trust in sustaining those networks.

A direct link to the audio is available here.

TEC Lectureship on Europe and the World 2015

Here are two lectures given by Joel Mokyr, the Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History at Northwestern University.

The first is "Culture of Gowth: Origins of the Modern Economy"


The second is "Long-Term Economic Change in China and Europe: The Needham Paradox Revisited"

EconTalk last week

Yuval Harari of Hebrew University and author of Sapiens talks with EconTalk host Russ Roberts about the history of humanity. Topics discussed include the move from hunting and gathering to agriculture, the role of fiction in sustaining imagination, the nature of money, the impact of empires and the synergies between empires and science.

A direct link to the audio is available here.

Catching cheating students

There is a new NBER working paper out on Catching Cheating Students by Steven D. Levitt and Ming-Jen Lin. The abstract reads,

We develop a simple algorithm for detecting exam cheating between students who copy off one another’s exam. When this algorithm is applied to exams in a general science course at a top university, we find strong evidence of cheating by at least 10 percent of the students. Students studying together cannot explain our findings. Matching incorrect answers prove to be a stronger indicator of cheating than matching correct answers. When seating locations are randomly assigned, and monitoring is increased, cheating virtually disappears.

Econ exams at Canterbury, at least, are well monitored with random seat allocation, and have been so for a number of years. I wonder what the amount of cheating is.

EconTalk for three weeks

When Lewis and Clark crossed through Montana, they encountered an extraordinary cornucopia of wildlife. Most of that ecosystem and the animals that once thrived there are gone. But a non-profit wants to bring it all back. Pete Geddes, Managing Director of the American Prairie Reserve talks with EconTalk host Russ Roberts about creating the Serengeti of the Americas--a 3.3 million acre prairie that would allow bison, pronghorn antelope, prairie dogs and their friends to inhabit a Wildlife Reserve in Montana, the size of Connecticut. Geddes discusses the goals of the American Prairie Reserve and how they're using a for-profit company, Wild Sky Beef, to gather support and help from local ranchers for the project.

A direct link to the audio is available here.

Tim O'Reilly of O'Reilly Media talks with EconTalk host Russ Roberts about his career in technology and media and the challenges facing low-wage workers as technology advances. Topics include the early days of the Internet, the efficacy of regulation to protect workers, and the poetry of Elizabeth Bishop.

A direct link to the audio is available here.

Pete Boettke of George Mason University talks with EconTalk host Russ Roberts about the political and economic lessons he has learned as program director of research in the aftermath of Hurricane Katrina. In this wide-ranging conversation, Boettke discusses the role of civil society, the barriers to recovery that have hampered New Orleans and what worked well as people and institutions responded to tragedy and devastation.

A direct link to the audio is available here.

2015 Nobel Prize in economics

The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2015 to

Angus Deaton
Princeton University, NJ, USA

"for his analysis of consumption, poverty, and welfare".
Angus Deaton, UK and US citizen. Born 1945 in Edinburgh, UK. Ph.D. 1974 from University of Cambridge, UK. Professor of Economics and International Affairs, Princeton University, NJ, USA, since 1983.

The work for which Deaton is now being honoured revolves around three central questions:

How do consumers distribute their spending among different goods? Answering this question is not only necessary for explaining and forecasting actual consumption patterns, but also crucial in evaluating how policy reforms, like changes in consumption taxes, affect the welfare of different groups. In his early work around 1980, Deaton developed the Almost Ideal Demand System – a flexible, yet simple, way of estimating how the demand for each good depends on the prices of all goods and on individual incomes. His approach and its later modifications are now standard tools, both in academia and in practical policy evaluation.

How much of society's income is spent and how much is saved? To explain capital formation and the magnitudes of business cycles, it is necessary to understand the interplay between income and consumption over time. In a few papers around 1990, Deaton showed that the prevailing consumption theory could not explain the actual relationships if the starting point was aggregate income and consumption. Instead, one should sum up how individuals adapt their own consumption to their individual income, which fluctuates in a very different way to aggregate income. This research clearly demonstrated why the analysis of individual data is key to untangling the patterns we see in aggregate data, an approach that has since become widely adopted in modern macroeconomics.

How do we best measure and analyse welfare and poverty? In his more recent research, Deaton highlights how reliable measures of individual household consumption levels can be used to discern mechanisms behind economic development. His research has uncovered important pitfalls when comparing the extent of poverty across time and place. It has also exemplified how the clever use of household data may shed light on such issues as the relationships between income and calorie intake, and the extent of gender discrimination within the family. Deaton's focus on household surveys has helped transform development economics from a theoretical field based on aggregate data to an empirical field based on detailed individual data.

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EconTalk this week

There is only one country in the world where a person can sell a kidney to another citizen who buys it. That country is Iran. Tina Rosenberg of The New York Times talks with EconTalk host Russ Roberts about the Iranian kidney market--how it works, its strengths and weaknesses, and whether its lessons apply to the United States or elsewhere.

There is a direct link to the audio available here.

Questions on trade

Tyler Cowen – for his upcoming conversation at the Mercatus Center with Dani Rodrik – asked on his blog for suggestions of questions that he might put to Professor Rodrik. Don Boudreaux suggested that Tyler ask Professor Rodrik the following question:

Rodrik was quoted in a 2007 New York Times report as saying that, while he follows the methods of modern economics, he rejects the “faith” [his word] – that says, among other things, that free trade is always good. And, of course, Rodrik is known for his ‘heterodox’ refusal to join in mainstream economists’ embrace of free trade.

So, ask Rodrik if economists who embrace free trade within a country are guilty of faith-based policy recommendations in the same way that he thinks economists who embrace free trade between countries are guilty of faith-based policy recommendations? If he answers no, ask him to summarize the relevant differences that separate intranational from international trade, and press him explain why these differences are real or strong enough to shift the burden of persuasion away from those who oppose a general policy of free trade and onto supporters of free trade.

Rodrik's answer to this question is given here. While Boudreaux's response to this answer is here.

A discussion well worth following.

EconTalk last week

Ever wonder what goes on behind the scenes at a Broadway show? This week's EconTalk lifts the curtain on the magical world of Broadway: Mitch Weiss, co-author of The Business of Broadway, talks with EconTalk host Russ Roberts about his book and what it's like to manage the production of a blockbuster musical in New York City. Topics discussed include the eight-performance-per-week grind, the how and why of creating a Broadway set, the challenges of wardrobes (domestic and international) and the pluses and minuses of unions which are a central part of the Broadway workplace.

A direct link to the audio is available here.

Conversation on free banking theory between Larry White and Juan Ramón Rallo

Lawrence H. White is economics professor at George Mason University and Juan Ramón Rallo is also economist and director of Instituto Juan de Mariana.

EconTalk for two weeks

How much care do you take when you make a donation to a charity? What careers make the biggest difference when it comes to helping others? William MacAskill of Oxford University and the author of Doing Good Better talks with EconTalk host Russ Roberts about the book and the idea of effective altruism. MacAskill urges donors to spend their money more effectively and argues that the impact on human well-being can be immense. MacAskill wants donors to rely on scientific assessments of effectiveness. Roberts pushes back on the reliability of such assessments. Other topics include sweatshops, choosing a career to have the biggest impact on others, and the interaction between private philanthropy and political action.

A direct link to the audio is available here.

Are human beings naturally cooperative or selfish? Can people thrive without government law? Paul Robinson of the University of Pennsylvania and author of Pirates, Prisoners and Lepers talks with EconTalk host Russ Roberts the ideas in his book. Robinson argues that without government sanctions or legislation, there is an evolutionary drive to cooperate even in life-and-death situations. In such situations private punishment and norms play a crucial role in sustaining cooperative solutions. The last part of the conversation deals with the criminal justice system and how attitudes toward the system affect society-wide cooperation and crime.

A direct link to the audio is available here.

School vouchers: a survey of the economics literature

For those interested in the area there is a new NBER working paper out on School Vouchers: A Survey of the Economics Literature by Dennis Epple, Richard E. Romano and Miguel Urquiola.

Abstract:

We review the theoretical, computational, and empirical research on school vouchers, with a focus on the latter. In this substantial body of work, many studies find insignificant effects of vouchers on educational outcomes; however, multiple positive findings support continued exploration. Specifically, the empirical research on small scale programs does not suggest that awarding students a voucher is a systematically reliable way to improve educational outcomes. Nevertheless, in some settings, or for some subgroups or outcomes, vouchers can have a substantial positive effect on those who use them. Studies of large scale voucher programs find student sorting as a result of their implementation, although of varying magnitude. Evidence on both small scale and large scale programs suggests that competition induced by vouchers leads public schools to improve. Moreover, research is making progress on understanding how vouchers may be designed to limit adverse effects from sorting while preserving positive effects related to competition. Finally, our sense is that work originating in a single case (e.g., a given country) or in a single research approach (e.g., experimental designs) will not provide a full understanding of voucher effects; fairly wide ranging empirical and theoretical work will be necessary to make progress.

EconTalk this week

Thousands of bears in New Jersey. Humpback whales near New York City. Acres devoted to farming stable or declining even as food production soars. Jesse Ausubel of the Rockefeller University talks with EconTalk host Russ Roberts about the return of nature. Ausubel shows how technology has reduced many of the dimensions of the human footprint even as population rises and why this trend is likely to continue into the future. The conversation concludes with Ausubel's cautious optimism about the impact of climate change.

A direct link to the audio is available here.

Chris Trotter misunderstands economics

Over at the Offsetting Behaviour blog Eric Crampton notes that Chris Trotter has been writing In praise of Bryce Wilkinson. And justly so.

But at one point Trotter writes,

Economics II was staffed by young economists who had studied at universities in the United States where the monetarist theories of Milton Friedman, and the ideas of neo-classical economics generally, were already well-entrenched.

"[T]he ideas of neo-classical economics generally, were already well-entrenched". Is this in anyway surprising? This comment seems to show a rather large misunderstanding of the development of economics.

I mean neo-classical economics developed in the 1870s with the work of Carl Menger, William Stanley Jevons and Léon Walras. So by the 1970s and 1980s it had been around for 100 years. It had been the standard in economics textbooks since, at least, Alfred Marshall's Principles of Economics in 1890s. So I am confused as to why Trotter thinks its worth noting that Treasury economists were trained in it. Every economics student, then as now, is trained in it. Its the standard, there is nothing unusual or noteworthy about it.

What would be worthy of note is if they were using non neo-classical ideas. And it is, because they were. Many of the ideas introduced by treasury economists of this time where ideas which moved thinking outside of the purely neo-classical box. They were thinking Coaseian thoughts by applying ideas from the law and economics literature and the new institutional economics to the New Zealand policy scene. They also utilised ideas from contract theory, in the main principal-agent theory, and the transaction cost economies of Oliver Williamson,

This kind of thinking is non neo-classical thinking. It moves away from the ideas of perfect markets, perfect information, zero transaction costs and institution free worlds. So one of the most important things we should be grateful to Wilkinson et al for is the introduction of non neo-classical thinking into New Zealand policy making. It is a great and lasting contribution, a contribution for which they can be justly praised.

Hal Varian interviews Alvin Roth

Hal Varian interviews Alvin Roth about Roth's new book "Who Gets What — and Why," at Google.

EconTalk this week

Rachel Laudan, visiting scholar at the University of Texas and author of Cuisine and Empire, talks with EconTalk host Russ Roberts about the history of food. Topics covered include the importance of grain, the spread of various styles of cooking, why French cooking has elite status, and the reach of McDonald's. The conversation concludes with a discussion of the appeal of local food and other recent food passions.

A direct link to the audio is available here.

EconTalk this week

Summer Brennan, author of The Oyster War, talks with EconTalk host Russ Roberts about her book and the fight between the Drakes Bay Oyster Company and the federal government over farming oysters in the Point Reyes National Seashore. Along the way they discuss the economics of oyster farming, the nature of wilderness, and the challenge of land use in national parks and seashores.

A direct link to the audio is available here.

The "anti-commons" in intellectual policy

A common argument made with respect to intellectual property is that many countries innovation system provide excessively strong or numerous intellectual property rights that drown innovation in a “thicket” or “anti-commons” of overlapping legal rights. The majority view holds that anti-commons effects are a common occurrence that raises significant policy concerns about excessive intellectual property rights. A counter view to this line of argument is that market players have incentives and capacities to correct for anti-commons type effects through contract and other mechanisms.

In a paper, The Anti-Commons Revisited, forthcoming in the Harvard Journal of Law and Technology, Jonathan Barnett aggregates and critically reviews the diverse body of evidence on this issue. He independently replicates some of the most controversial results, surveying over a century’s worth of pooling arrangements, and providing additional evidence on potential anti-commons effects in certain markets. Two surprising and unusually consistent conclusions emerge. First, there is little concrete evidence that intensive levels of intellectual property acquisition and enforcement restrain innovation or output. Second, unless constrained by antitrust limitations, markets consistently exhibit capacities to devise transactional solutions that preempt or mitigate intellectual thickets. These conclusions erode confidence in the majority view, which in turn casts doubt on normative recommendations in favour of weakening intellectual property rights to preclude anti-commons effects.

The abstract reads:

Intellectual property scholars and policymakers often assert that technology and creative markets suffer from “anti-commons” (“AC”) effects that restrain innovation within a web of conflicting intellectual property claims. A minority view asserts that market players have incentives and capacities to correct for AC effects through transactional solutions. To assess the relative merits of each side of this debate, I review a large and diverse body of empirical evidence relating to AC effects in contemporary and historical markets. I independently replicate the most controversial empirical findings, supplement additional research on selected markets, and provide a survey of all documented IP-pooling arrangements in U.S. markets since 1900. The weight of the evidence strongly favors the minority view. Evidence for AC effects is scarce while evidence that markets correct for AC effects is abundant. AC effects are typically preempted or mitigated through cooperative arrangements among small numbers of IP holders or transactional solutions devised by entrepreneurial intermediaries for large numbers of IP holders. This pattern recurs over a diverse array of markets and periods, including automobiles, petroleum refining, aircraft, and radio communications in the early to mid-20th century, and information and communications technology markets from the late 20th century through the present. Contrary to standard assumptions, there is little evidence that these markets experienced reduced or delayed innovation or output despite intensive levels of patent issuance and litigation.

EconTalk this week

Seafood is highly perishable and supply is often uncertain. Roger Berkowitz, CEO of Legal Sea Foods talks with EconTalk host Russ Roberts about the challenges of running 34 seafood restaurants up and down the east coast. Berkowitz draws on his 22 year tenure as CEO and discusses how his business works day-to-day and the question of sustainability.

A direct link to thee audio is available here.

You REALLY know your economy is in trouble when .......

you start to run out of beer!!

From Vice News comes the news that Venezuela Faces Looming Beer Shortage in Dispute with Nation’s Biggest Brewer.

Venezuela's largest food distributor on Thursday denounced the government occupation of a Caracas warehouse amid accusations that the company is hoarding goods.

Soldiers took over the warehouse complex used by Empresas Polar late Wednesday just as Venezuela's federation of brewers announced that Polar's beer manufacturing subsidiary is shutting two of its six plants because of a lack of imported barley — a crucial ingredient in beer.

and

Earlier this month, the head of Venezuela liquor store federation warned that the nation was about to run out of beer because brewers had reached "zero hour" amid widespread shortages in raw materials. Days later, he was detained for reasons that remain unclear.

An economy without beer is an economy in need of reform, big time!