In my retirement, I am catching up on bios of famous economists, typically those who have died and/or those who won the Nobel Prize, for The Concise Encyclopedia of Economics.
My latest is of public choice economist Gordon Tullock.
Earlier this month, I posted some highlights from the bio.
Apr 1 2018
David Glasner has an excellent post on the relationship between inflation and unemployment. At one point he links to Paul Krugman, who makes the following comment: Even if you think that inflation is fundamentally a monetary phenomenon (which you shouldn't, as I'll explain in a minute), wage- and price-setters don't ...
Apr 1 2018
Here is my audio recording of my 10-minute talk I gave at California State University Monterey Bay on Monday. CSUMB.m4a
Mar 30 2018
In my retirement, I am catching up on bios of famous economists, typically those who have died and/or those who won the Nobel Prize, for The Concise Encyclopedia of Economics. My latest is of public choice economist Gordon Tullock. Earlier this month, I posted some highlights from the bio.
READER COMMENTS
AlexR
Mar 31 2018 at 9:08am
Nice bio. Tullock surely deserved to share in Buchanan’s Nobel.
The idea of a “transitional gains trap†is weird, though. Why would the new owner of a cornfield fight harder to keep an ethanol mandate than the original owner? Investments to get the mandate enacted in the first place are sunk costs, and the landowner’s decision on how much to continue investing to keep the mandate shouldn’t depend on these sunk costs, or on whether the current (or a previous) owner is one who sunk them. The capitalization of the benefits of regulation into the price of land doesn’t introduce any asymmetry in incentives between the buyer and seller of the land. On the contrary, it’s this market capitalization that ensures symmetry.
David R Henderson
Mar 31 2018 at 9:55am
@AlexR,
Nice bio. Tullock surely deserved to share in Buchanan’s Nobel.
Thanks.
The idea of a “transitional gains trap†is weird, though. Why would the new owner of a cornfield fight harder to keep an ethanol mandate than the original owner? Investments to get the mandate enacted in the first place are sunk costs, and the landowner’s decision on how much to continue investing to keep the mandate shouldn’t depend on these sunk costs, or on whether the current (or a previous) owner is one who sunk them. The capitalization of the benefits of regulation into the price of land doesn’t introduce any asymmetry in incentives between the buyer and seller of the land. On the contrary, it’s this market capitalization that ensures symmetry.
Very well put. You and I think of the world the same way. But I think Tullock is right that most people don’t. I think there are two reasons. The first is guilt. Some of the people who got the benefit originally feel some guilt and the people who want to take it away feel very little guilt about taking it away: they feel some guilt about taking it away from someone who paid for it fair and square. The second is the concept of “playing with house money.” It’s not a concept I agree with. If I were at the gambling table and just won $1,000, that’s my $1,000: it’s no longer the house’s $1,000. But again, that’s not how most people think.
AlexR
Mar 31 2018 at 11:13am
You raise a reasonable point, David, but you might not be aware of the upheaval that’s been rocking academic psychology in recent years. The majority of accepted truths in human psychology are based on experimental results that are not replicable, based on recent attempts to replicate them. It’s apparently a big scandal (although fraud likely isn’t involved, just the all-too-human susceptibility to self deception). Someone who knows more about the subject than I do tells me that many or most of the insights in Kahneman’s book Thinking Fast and Slow are likewise based on experimental results that can’t be replicated. There is a paper by Charles Plott and Kathryn Zeiler that finds the “endowment effect†is an artifact of complicated experimental protocols confusing subjects. People appear to be much more rational than we give them credit for.
Which I think raises another puzzle: Why are we so (irrationally?) eager to attribute irrationality to others? I think your idea of guilt makes sense here. As economists, we feel guilty about the simplicity and power of our models, and have been trained to express skepticism about that simplicity – skepticism that signals our virtues of open-mindedness and sophistication. But it’s all too easy for a free-floating skepticism to harden into a dogmatic acceptance that posited complexities like irrationality are real and significant.
David R Henderson
Mar 31 2018 at 11:32am
@AlexR,
Again, well put.
I am aware of those failures to replicate. Also, I just finished editing the Econlib Feature Article for April. It covers some of this. Watch for it on Monday.
Re why I’m eager to attribute irrationality to others, it’s because I see so much of it.
Jon Murphy
Mar 31 2018 at 10:34pm
An excellent biography of one of my favorite economists (and a major influence on my own thinking)
David R Henderson
Apr 1 2018 at 12:51am
Thanks, Jon.
Fred Anderson
Apr 1 2018 at 10:53am
AlexR notes that (apparently):
“The majority of accepted truths in human psychology are based on experimental results that are not replicable . . . .”
Somewhere I recall a quip – whose source I can’t now find – that said (paraphrased);
Most of what we know in psychology is based on experiments with rats and college sophomores; neither of which may be fully human.
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