In the Armchair Economist, Steven Landsburg argues that the people who read his book are likely to find that it wasn’t as good as they expected. The logic is impeccable – people who over-estimate the value of the Armchair Economist are more likely to buy it and thus discover their over-estimation (sadly, under-estimators never learn of their mistake). Nevertheless, despite the logic, I and many others discovered that Landsburg was wrong. The Armchair Economist and every Landsburg book exceed expectations.
Landsburg is back with More S-ex is Safer S-ex, and another error. This time Landsburg suggests that writing his book was socially destructive. Again, the logic is impeccable – a good book creates a lot less value than its price because to a large extent it displaces the second best book which was almost as good. Authors however are paid based on price and not on social value and thus write too many books. And yet, I must again disagree for Landsburg’s new book is a treasure. There is something to learn on almost every page.
Here’s one idea I learned. In the debate over the economics of global warming the correct discount rate to apply to future generations is a key variable with those arguing that we should do something now, implicitly (and explicitly) arguing for a low discount rate. But if we count future generations highly we ought also to be in favor of reforming social security. Investing social security in the stock market "royally screws" current retirees but increases the savings rate which will be benefit future generations. Thus, a low discount rate ought to weigh in favor of doing something about global warming and investing social security funds in the stock market. Not many people come out consistent on these grounds (I think Brad DeLong is one of the few.) I know, I don’t but Landsburg has got me thinking.