Month: October 2005

When do creators do their best work?

Randall Jarrell similarly observed that "[Wallace] Stevens did what no other American poet has ever done, what few poets have ever done: wrote some of his best and newest and strangest poems during the last year or two of a very long life."

In contrast:

[Jean-Luc] Godard has directed scores of movies in a career that continues today in its fifth decade, but there is a strong critical consensus that his most important single work is his first full-length movie, Breathless, which he made in 1960 at the age of 30.

Those two passages are from David W. Galenson’s forthcoming Old Masters and Young Geniuses: The Two Life Cycles of Artistic Creativity.  Here is a related working paper.  Here are many other interesting papers.

My question: Which economists have done extremely important work after the age of 50?  Have done their best work after 50?  After 40?  Comments are open, I welcome your suggestions but it is not easy…


Lots of evidence that the housing market is slowing; prices are not rising as quickly as in the past, inventory is building and perhaps most tellingly insiders are selling shares of home building firms at record pace.

Some analysts say that the share sales by home builders are reminiscent
of the heavy dumping of stock by technology company executives just
before the technology bubble burst in 2000. For that reason, the
staggering level of insider sales has analysts and investors wondering
if home builders see something menacing on the horizon, like a cooling
of the real estate market.

A Bush plan for avian flu

President Bush said today that he was working to prepare the United States for a possibly deadly outbreak of avian flu. He said he had weighed whether to quarantine parts of the country and also whether to employ the military for the difficult task of enforcing such a quarantine.

"It’s one thing to shut down your airplanes, it’s another thing to prevent people from coming in to get exposed to the avian flu," he said. Doing so, Mr. Bush said, might even involve using "a military that’s able to plan and move."

The president had already raised, in the wake of Hurricanes Katrina and Rita, the delicate question of giving the military a larger role in responding to domestic disasters. His comment today appeared to presage a concerted push to change laws that limit military activities in domestic affairs.

Mr. Bush said he knew that some governors, all of them commanders of their states’ National Guards, resented being told by Washington how to use their Guard forces.

"But Congress needs to take a look at circumstances that may need to vest the capacity of the president to move beyond that debate," Mr. Bush said. One such circumstance, he suggested, would be an avian flu outbreak. He said a president needed every available tool "to be able to deal with something this significant."

Here is the full story.  Here is the text of his remarks, with commentary from Glenn Reynolds.

I am hoping to write a longer piece on what we should do, but frankly Bush’s idea had not crossed my mind.  For a start, quarantines don’t usually work, especially in a large, diverse, and mobile country.  The Army would if anything spread the flu.  A list of better ideas would include well-functioning public health care systems at the micro-level, early warning protocols, and good decentralized, robust plans for communication and possibly vaccine or drug distribution.  Might the postal service be more important than the Army here?  How about the police department, and the training of people in the local emergency room?

Stockpiling Tamiflu is worthwhile in expected value terms, but many strains of avian flu are developing resistance; we should not put all our eggs in this basket.  We also should stockpile high-quality masks and antibiotics for secondary infections (often more dangerous than the flu itself), and more importantly have a good plan for distribution and dealing with extraordinary excess demand and possibly panic.  Let’s not ignore obvious questions like: "if the emergency room is jammed with contagious flu patients, where will other (non-flu) emergencies go?" 

A good plan should also make us less vulnerable to terrorist attacks, storms, and other large-scale disasters.  Robustness and some degree of redundancy are key.  You can’t centrally plan every facet of disaster response in advance; you need good institutions which are capable of improvising on the fly.  In the meantime, let’s have betting markets in whether a pandemic is headed our way; that would provide useful information.

Addendum: It is Bird Flu Awareness Week in the blogosphere, Silviu has the appropriate links.

How Columbia built up its economics department

Here is the story. One excerpt:

“Especially in a place like New York, there is a big temptation to go for assembling people who will be on Charlie Rose, get written up in The New Yorker,” says David Card, who’s credited with helping rejuvenate Berkeley’s economics department. “But that has nothing to do with younger people doing research”–the true measure of a top program.

Here is their home page and list of new arriving faculty.  Thanks to Craig Newmark for the pointer.

Underappreciated economists, a continuing series: Daniel Chen

Here is an incredibly interesting reading list, on the political economy of belief, courtesy of the young Daniel Chen.  Even better, here is one of his recent papers, check out the abstract:

Religious intensity as social insurance may explain why fiscal and social conservatives and fiscal and social liberals come hand-in-hand. We find evidence that religious groups with greater within-group charitable giving are more against the welfare state and more socially conservative. Libertarians (fiscal conservatives–social liberals) are more abundant than the religious left (fiscal liberals–social conservatives). The alliance reverses for members of a state church: social conservatives become fiscal liberals. Increases in church-state separation precede increases in the relationship between fiscal and social conservatism. The framework provides a novel explanation for religious history: as credit markets develop, elites gain access to alternative social insurance and legislate increasing church-state separation to create a constituency for lower taxes. This holds if religious voters exceed non-religious voters, otherwise, elites prefer less church-state separation in order to curb the secular left. This generates multiple equilibria where some countries sustain high church-state separation, high religiosity, and low welfare state, and vice versa. We use this framework to explain the changing nature of religious movements, from Social Gospel to the religious right, and why church-state separation arose in the US but not in many European countries.

Maybe this is not fully sound, but it is one of the most interesting papers I have read in years.  I have high hopes for the guy.

The FDA Tragedy

Writing in the WSJ (Oct. 3), whose editors ought to know better, Cynthia Crossen says:

Only 70 years ago, American companies could legally sell poison in a
medicine bottle.

Obviously, no drug maker would knowingly kill its customers — the
free market would punish that kind of bad business. But a company
that inadvertently sold a drug resulting in multiple deaths faced no
legal penalties.

In 1937, however, the consequences of Americans’ unfettered right to
buy and sell medicine became disastrously clear. An antibacterial
syrup called Elixir Sulfanilamide killed at least 75 people, some of
them young children who had been suffering from nothing more serious
than a sore throat.

What a load of rot.  Here is a letter I sent to the WSJ:

Where did
Crossen get the bizarre idea that poisoining was not illegal 70 years ago?  It’s true that there was no federal law
against drug fraud but there was no federal law against rape either –
this did not mean that only 70 years ago rape was legal.  In fact, 
Massengil, the company that sold Elixir Sulfanilamide, was successfully
sued and punished under the common law of tort.

Dramatic, easy to see, tragedies like those caused by Elixir
Sulfanilamide and Thalidomide encouraged the naive to demand an
expansion of the FDA’s powers.  The less easily seen tragedy has been drug delay, fewer new drugs, and higher prices.  Careful observers
– see for some evidence – estimate that the costs of the latter tragedy
far exceed the former.  The FDA has put the nail in the coffin of more
than just the "pain and beauty boys."

Tax Bryan Caplan

Bryan Caplan argues that IQ research has strong policy implications.  His conclusion:

The more IQ matters, the more likely it becomes that existing government policies are a waste of money – and that you would get a bigger payoff by doing less – or maybe nothing at all.

Surely this deserves some discussion of the Flynn Effect, that near-universal albeit mysterious process whereby average IQs rise each generation.  Should we re-gear government policy to subsidize whatever factors deserve the credit for this phenomenon? 

But I have a simpler worry about Bryan’s libertarian conclusion.  When Bryan says "IQ matters a great deal" I hear "inelastic factors of production."  IQ won’t change much in the short run, and perhaps IQ — rather than effort or environment — accounts for more of good (and bad) outcomes than we used to think.  But we all know that inelastic factors of production can be taxed and subsidized without much deadweight loss.  More generally, the belief that value comes from inelastic factors will not favor markets or liberty.  The historical correlation between IQ research and anti-egalitarian social engineering is not a complete accident. 

Yes IQ matters for policy, but I see no particular reason why libertarians should welcome this conclusion.  Libertarian philosophy does better under the traditional story of the self-made man.  Thomas More, I believe, understood a similar point, albeit in the language of his time.

Addendum: Here is Jane Galt on same topic.

Thomas More discovered the Pareto compensation principle

The following is not bad for the early sixteenth century:

…another [advisor] advises him to prohibit many practices with heavy fines, especially those that are contrary to the public interest, noting that later he can make a monetary arrangement with those whose interests are hurt by the laws and that thus he can win the gratitude of the people and make a double profit, first from fining those whom greed has led on into his trap and then by selling dispensations to others…

If you want to publish a history of thought piece, you will find unexplored law and economics in Thomas More.  Then you can move on to Montesquieu, circa 1748.  It didn’t start with Beccaria and Bentham.

Utopia has been one of the most misunderstood books in the history of ideas.  More did not intend his utopia as a normative proposal.  Instead it is his vision of how society would work if no one responded to approbational incentives of honor and shame.  There would be fewer vanities and absurdities of many kinds, but extreme punishments would be needed to prevent people from breaking the law.  No one would keep the law for the sake of honor.  In reality, utopia is impossible, as pride and property are indispensable and society rests upon the foibles of men.  The book is an early classic of social science, and a precursor of Smith’s TMS, but read it from back to front.

New food bleg

This coming weekend I will be in Memphis, Tennessee, looking for barbecue.  I know or know of the famous places, can you suggest a dump instead?  Don’t even bother if they have their own web site.  How about a place with an open barbecue pit?  I also will be driving down Rt.61 to Clarksdale, Mississippi, how about something there or along the way?  Comments are open.

The Unreported Mexican Immigration Story

Michael at asks a good question:

If illegal immigration from Mexico is inevitable, as some make it out to be, then why was there so little illegal immigration from Mexico prior to the mid-1960s?

The composition of Mexican immigration has changed dramatically.  Go to El Paso, where many Mexican-Americans have been around for a few generations, and you will see mostly mestizos.  Over time, more of the immigrants come from deeply rural Mexico.  Often they cannot read or write, their knowledge of Spanish (never mind English) is rudimentary, and they have no idea of decent medical care.  They will get a witch doctor to boil corn for a divination.  For them, coming to the United States is a major and new encounter with Mexican culture, never mind Yankee culture. 

This is one reason why current Mexican immigration is bringing more social problems than before; it is not just the numbers.  Nor is there much solidarity amongst immigrants, many of whom hold cultural grudges based on disputes from back home.  One acquaintance of mine returned to his home village about two years ago, complaining of "all those Mexicans" in Los Angeles.

Contrary to economic intuition, it is often the poorest migrants who leave last.  If I think about the Mexican village where I hang out and buy art, only in the last twenty years has anyone had enough money to catch a bus to the border, much less pay the "coyote" fees to cross.  Mexican immigration also works as a chain.  One person crosses the border, finds a job, and sends money back so that brothers and friends can cross as well.  For all these reasons the flood is, for better or worse, now much harder to stop.  As Mexico gets richer, more people are coming.

Intertemporal substitution is especially important for these new migrants.  If it were easier to come and go, many Mexicans would spend a big fraction of the year in their home villages.  The burden on the U.S. would become less in some ways, more in others.  In the U.S., jobs would be more temporary, more Mexicans would live near the border (for easy regular transport), Mexicans would work harder in their time here (and consume their leisure back home in the village), and most importantly, more Mexican males would keep ties to their wives and families.  The net effect might well be positive.

If you would like to read more about this, I recommend my own Markets and Cultural Voices: Liberty vs. Power in the Lives of the Mexican Amate Painters.

My next question: Do you think that migration from Bhutan is high or low?  Do you have the intuitions of an economist or sociologist?  Answer here.  Hint: it won’t stay low forever.

More specific foreign words for “rent-seeking”

Do you, like me, cringe at the word "rent-seeking" to express the concept of investing resources to gain transfers of wealth from others?  (Forget about Alfred Marshall, isn’t "rent" what you pay for your apartment?  And do you really have a consistent definition which delineates "rent-seeking" from "profit-seeking," yet without begging the question?)  Here are some more specific concepts, expressed in terms of a single word, taken from a longer list of strange words.  How about these?

GRILAGEM Brazilian Portuguese

The practice of putting a live cricket into a box of newly faked documents, until the insect’s excrement makes the paper look convincingly old.

DHURNA Anglo-Indian

Extorting payment from someone by sitting at their front door and staying there without food, threatening violence, until you get paid.

SOKAIYA Japanese

A man with a few shares in several companies who extorts money by threatening to come to the shareholders’ meetings and cause trouble.

If you ever wish to teach rent-seeking to your class, just tell them about sokaiya.