Tyler Cowen's Blog, page 589
March 10, 2011
"Common mistakes made by economists"
Ezra's post is worth reproducing (after the intro) in full:
...here's a list of mistakes that I think economists and people who are heavily influenced by economists tend to make when they look at politics. I should preface this by saying I have, at one point or another, been guilty of literally everything on this list:
1. Political power matters. There are many outcomes that are economically efficient in the short term but lead to a dangerous imbalance of political power in the long term — which is, incidentally, not economically efficient at all. This has particular implications for how a lot of economists view unions.
2. Culture matters, as do the real ways that human beings behave. There are policies that fit with theory and evidence but not with communities and people. David Brooks is right about this.
3. If a policy makes sense only in the presence of a secondary compensatory policy — say, a regressive tax where low-income folks get some sort of refund — then you have to ask yourself whether the compensatory policy will pass. If the answer is no, then you need to come up with something that can pass or rethink your support for the policy. The fact that the losers of trade can theoretically be made whole doesn't allow you to just assume they will be made whole.
4. Lots of policy problems can be solved with clever policy solutions. But Washington isn't very good at passing or implementing clever. Simple programs and rules are often better in practice, even if they're worse in theory.
5. Nationalism is a really, really, really powerful force, and you can't make it go away by condescending to it.
6. "Theory implies" does not end arguments. Moreover, economic evidence should be treated with more humility. It's often overturned later, or wrongly understood now. And a lot of the stuff you've told us in the past — particularly the recent past — didn't turn out that well.
7. Listen to political scientists, sociologists, etc. They have perspectives, evidence and training worthy of consideration.
8. Policy arguments are often conscripted for political purposes. You may like Singapore's health-care system, and a politician might find Singapore's health-care system useful to invoke — usually incorrectly — in a speech against the Affordable Care Act, but before assuming the two of you are on the same side, try to figure out whether the congressman has introduced or co-sponsored legislation on this topic that you consider constructive. Nothing sadder than a policy expert who doesn't realize he's being played.
9. No one knows what the word "stochastic" means.
10. Odds are good that you primarily know one sort of person: highly educated, high-achieving, extremely cerebral, etc. Odds are also good that you give too much weight to feedback and ideas from this sort of person, while discounting arguments and complaints from people who don't know the right way to persuade you. Try to keep that in mind.
Any more?
Matt Y. comments.
A small town in northern Spain is reintroducing the peseta as a parallel currency
So this is what it has come to? The details are here.
State-contingent markets in everything
If Allegiant Air gets its way, you might be able to purchase a ticket where the final cost would rise and fall with the price of jet fuel.
For the Las Vegas airline, it's another way, besides higher fares and fees, to guard against rising fuel costs. For travelers, it's a chance to gamble on a cheaper fare.
When booking a flight, passengers could choose between a traditional fixed-price ticket and a discounted, variable-price one. If the price of jet fuel falls by the departure date, customers with a variable ticket would get some cash back. If the price climbs, they would pay more, up to a pre-disclosed cap.
The full article is here and for the pointer I thank Jack Schafer. Usually deals like this are a rip-off, designed to exploit consumers who do not understand the basic principles of insurance, risk, and options.
Costa Rica bleg
Michael A. asks me:
As always, appreciate all your prodigious information output. I am traveling to Costa Rica this summer and was wondering if you might be able to give me any info about Best of Costa Rica -- specifically foods, wines, etc. to hit as well as music and books to check out beforehand, sights to see, the usual Tyler Cowen treatment.
I haven't been to Costa Rica in a long time, but here is what lodged in my memory:
Monkeys and birds, hanging sloth is hard to see, excellent dialect on Caribbean coast, eat palmitos [hearts of palm], like it or not beans and rice for breakfast, cross the country by taxi in a day, if you mispronounce the volcano it rhymes with the last name of David Boaz, Spanish paella in the capital, "Tica," music is mediocre, worst Chinese food anywhere, the least interesting locale in Central America but the best trip for most Americans. Glad I went but won't return.
Theories about Britons
Applying Carroll's theories to Britons, you understand why foreigners think we are repressed. Americans won't touch strangers, the French won't talk to them, but Brits will neither touch nor talk to them.
Here is more.
Is this our future the culture that is Japan markets in everything?
Since he was "discovered" in 1996, Tokuda has emerged as a major player in Japan's emerging adult movie genre known as "elder porn." He says he has appeared in more than 350 films such as "Prohibited Nursing" and "Maniac Training of Lolitas." In these scripts, Tokuda always gets the girl.
The films play upon well-documented Japanese male fantasies. In each, Tokuda plays a gray-haired master of sex who teaches his ways to an assortment of young nurses and secretaries. Whips and sex aides often factor in the plotlines.
Tokuda is 76 years old and he makes an average of one film a week. It is estimated that "elder porn" now accounts for one-fifth of the Japanese adult film sector.
The article is here and for the pointer I thank Daniel Lippman.
Assorted links
1. Page numbers are for wussies.
2. First chapter of Agnar Sandmo's Economics Evolving: A History of Economic Thought.
3. Via Chris F. Masse, life imitates art?
4. The pirate non-tragedy of the commons.
5. How much is the minimum wage at fault?
6. Kevin Drum on "left-wing mistakes".
7. Science fiction gateway drugs?
Eurozone update
It has slipped off the front page, but the underlying problems are not solved:
The cost of borrowing for Portugal, Ireland and Greece has hit euro-era highs, amid concern in the market that European leaders will fail to take concerted action to dispel fears of sovereign defaults in the eurozone.
The long-term market interest rate for Spain has come close to setting a record and Italy's borrowing cost rose above 5 per cent for the first time since November 2008. The moves came as Portugal was forced to pay a sharply higher premium in a debt auction on Wednesday, raising renewed fears that it will be forced to seek an international bail-out.
In Greece there is a national, and growing, anti-austerity movement.
Markets in everything Elfoid homunculus cellphone edition the culture that is Japan
For real, hat tip goes to Bamber.
It takes on the facial characteristics of whomever you are speaking to (with a camera intermediary) and it is "based on a larger robot created by Professor Hiroshi Ishiguro."
When asked how he responds to comments that his Telenoid appears creepy, Ishiguro simply shrugged his shoulders and said that "it is not creepy."
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