Category: Economics

Here are his economics posts.  Here is his very intelligent blog, which is a mix of economics and business school analysis.

Land prices in Biloxi are up.  The reason?  Mississippi is a poor state and so historically even homes with water views were modest.  When the coast boomed, due to gambling and tourism, the land became a lot more valuable in alternative uses like hotels, casinos, and vacation homes for the rich.  But it’s costly and takes a long time for developers to buy up small lots and bundle them into bigger packages.  The hurricane, however, acted like nature’s form of eminent domain.  With the small houses destroyed there are many sellers, bundling is becoming easier, and everyone expects that zoning will be changed to favor the developers.

Absurdly, CNN paints the speculators as almost as bad as the hurricane itself:

But what Katrina spared, the real estate rush now imperils.  The arrival of speculators threatens what’s left of bungalow
neighborhoods that are among the Gulf’s oldest communities, close-knit
places of modest means where casino workers, fishermen and their
families could still afford to live near the water.

But while there is a certain sadness in seeing an old way of life decline no one is being forced to sell and those who do sell must be very pleased that there are eager buyers.

Thanks to Edward Johnson for the pointer.

"Private governments,” such as homeowners associations and condominium cooperatives, provide all manner of collective consumption goods, from road maintenance, trash collection, and snow removal to transportation, policing, and medical care. These organizations were practically unheard of in 1960, but today some 54.6 million people in the United States live in various neighborhood associations.

That’s from my latest paper, What are Private Governments Worth? written with Amanda Agan.  Despite the explosion of private governments, very little research has been done on measuring their value.  Thus, Agan and I compare the value of homes within HOAs (home owner associations) with the value of homes outside of HOAs.  After controlling for a wide variety of housing characteristics including age, size, style and so forth we find that homes within HOAs sell for a whopping 5.4 percent or $14,000 more than similar homes outside of HOAs.  Put differently a 3 bedroom home within an HOA is worth about as much as a 4 bedroom home outside of an HOA.  This result is robust and continues to hold even when we look at similar homes inside and outside of HOAs but within the same subdivision.

For more on HOAs see The Voluntary City (which I edited) and especially Robert Nelson’s excellent new book from the Urban Institute, Private Neighborhoods And the Transformation of Local Government. 

My macro class should read this blog post.  Here is another good paper on the topic.  If you want my view of the equity premium paradox, we have to ask whether Bryan Caplan is stupid.  Choice is context-dependent, and we should not be too worried if no single utility function can account for all of our investment decisions.

Arnold Kling criticizes National Review magazine, but don’t bother working through the argument.  It will only make your head hurt.  Perhaps you have read Brad DeLong on NR as well.  Arnold suggests that:

NRO clean out its stable of economics writers and instead choose from some of the other bloggers around. James Hamilton or Andrew Samwick or Russ Roberts or Don Boudreaux or Tyler Cowen or Alex Tabarrok.

I have not been reading NR, so I will not offer an independent assesssment.  But consider the basic economics.  Most popular political magazines live and die by direct mail.  The "burn rate" of non-renewals is very high, and either advertisers or donors will care about subscription numbers.  So new subscribers must be found frequently (NB: the real culprit is lack of loyalty of previous subscribers).  Given their natural constituencies, that makes it hard for a right-wing magazine to come out against George Bush.  The tendency is toward boosterism and taking sides.  That is one reason why I — a "small l" libertarian who preferred the economic policies of the Clinton years — am unlikely to receive some particular writing assignments.

On average "out of power" magazines (Reason, American Prospect) should be better than "in power" magazines.  But if NR, or NRO, wants a piece on how the Bush years have eaten into our economic, political, and institutional capital, I would be happy to oblige.

Want to get off the phone?  Buy these sound effects.  There are many good options, such as "Deposit 25 Cents" or "I Can’t Hear You (Helicopter Noise)".  But I don’t think "This fly is bothering me" will do the trick.  There is also a new section for responding to telemarketers, how about "I am Listening"?

Here is the link, and thanks to Joseph Weisenthal for the pointer.

What could be a better name than AdamSmithLives?  The writer is Sandra Peart, professor of economics at Baldwin-Wallace College and sometimes visitor at George Mason.  My colleague David Levy will be guilted into contributing as well.  Here is a post on exaggerated reporting about New Orleans, and its parallels in the history of economic thought.  Here is the mission statement.  Welcome to the blogosphere!

1. Nobel prize in environmental economics to Weitzman, Nordhaus

2. Nobel prize in trade theory to Bhagwatti and Dixit

3. Nobel prize in President Bush praising to Krugman and David Brooks

4. Nobel prize in behavioral stuff to Richard Thaler

5. Nobel prize in contracts to Hart, Holmstrom, and Oliver Williamson

6. Nobel prize in development economics to Dasgupta and Deaton

7. Nobel prize in finance to Fama

8. Nobel Price in mechanism design to Milgrom, Myerson and Maskin

9. Nobel prize in family economics to Mincer and Pollak

10. Prize in Political Economy to Alesina, Persson and Tabellini

11. Prize in Modern Macro to Barro and Sargent

These demand curves are the exception rather than the rule, but nonetheless they appear to exist:

One sex worker…explained why she no longer offered her favorite clients free sex or cheaper rates: "They pretend to be flattered, but they never come back!…There was one client I had who was so sexy, a tai-chi practitioner, and really fun to ****.  Since good sex is a rare thing, I told him I’d see him for $20 (my normal rate is $250).  Another guy, he was so sexy, I told him "**** for free."  Both of them freaked out and never returned…They don’t believe they can have no-strings-attached sex, which is why they pay.  They’d rather pay than get it for free."

That is from The Purchase of Intimacy, by Viviana Zelizer.  I take the main point of this book to be yes you can love your prostitute and perhaps you can like your maid as well.  A commercial transaction is compatible with holding deeper feelings for the other party.

Here is a Richard Epstein review of the book.  I liked the book, but it is sad that the current debate needs such a tract.  Here is my previous post on Giffen goods.

I won’t call Bryan Caplan stupid:

By way of analogy, consider these two scenarios:

1. You lose $1000 in some unforeseen way.

2. You lose $1000 in a way your spouse specifically warned you might happen.

The man needs some voodoo flags.  In the meantime, here is a testimony to Bryan’s wisdom.  And scroll down Econolog to read the whole discussion.

There are more economist interviews up at Radioeconomics, in convenient podcast format.  New offerings include Becker, Posner, Boudreaux, John Palmer, Craig Newmark, James Hamilton, and others.

Portuguese is my favorite language to hear sung.  I cannot read it, but here is a new Brazilian economics blog, degustibusblog.net.  At the very least I know the authors like me.  If you insist on something Brazilian in English, do not forget Eduardo Giannetti’s much underrated The Lies We Live By: The Art of Self-Deception.  Heading back to Portuguese, here is a classical liberal site, thanks to Tom Palmer for the pointer.

It is called Bumvertising. 

Bumvertising™, or the use of sign holding vagrants to advertise, is a development of PokerFaceBook.com’s
most recent advertising campaign. Homeless men are able to provide a
valuable and tangible service to a company, while receiving an
additional revenue stream in combination with their normal donations
from begging.

Here is a photo gallery of ads.  Here is the company’s "economic analysis" of the practice.  Here is some nasty language directed against the founders.  And it seems you pay the bums with barter:

Through his own effort and the assistance of his marketing team, Mr.
Rogovy developed signs and accumulated the resources that most bums
would find attractive. Money, sandwiches, chips, apples, water, and
other beverages have all been dispensed in order to compensate the
homeless in the Seattle Bumvertising™ campaign.

I have no direct information on how real this practice is, or if it violates minimum wage laws, but the web site appears legitimate.  Thanks to Curt Gardner for the pointer.  Comments are open if you know more.

"Is it Gouging if Politicians Charge $1000 for Meal?"

That is Michael Giberson, here is the post.