Results for “thaler”
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Most Popular MR Posts of 2017

by  Alex Tabarrok in

The most popular post on MR for 2017 was my post, Switzerland is Prepared for Civilizational Collapse. Who can tell what will go viral? I suppose people are thinking a lot about civilizational collapse in recent times.

Next was Tyler’s post on Richard Thaler’s Nobel Prize.

There’s a lot of interest in Tyler’s religious beliefs as What is the Strongest Argument for the Existence of God? and Why I Don’t Believe in God were both widely read and commented upon.

Next came a bunch of econ posts from both Tyler and myself including:

Not surprisingly politics was also popular, including Tyler’s The Show so Far and Who Should be Shamed? and my post Authoritarians Distract Rather than Debate.

Overall, what strikes me is how normal 2017 seems. Compare with last year’s top posts, which are crazy. I don’t think 2017 was any less crazy than 2016 but–god help us–crazy has become normal.

Pass-through of minimum wages into U.S. retail prices

by  Tyler Cowen in

That is studied by Renkin, Montialoux, and Siegenthaler in a recent paper, which is also a job market paper for Tobias Renkin from the University of Zurich.  Here is the abstract:

We study the impact of increases in local minimum wages on the dynamics of prices in local grocery stores in the US during the 2001-2012 period. We find a signifi cant impact of increasing minimum wages on prices in grocery stores. Our baseline estimate of the minimum wage elasticity of grocery prices is 0.02. This magnitude is consistent with a full pass-through of cost increases into prices. We show that price adjustments occur mostly in the months following the passage of minimum wage legislation rather than at the actual implementation of higher minimum wages. This forward-looking pattern of price adjustments is qualitatively consistent with pricing models that feature nominal rigidities. We fi nd no differential price effect for products consumed by poorer and richer households, and no evidence for demand effects. Our results suggest that consumers rather than firms bear the cost of minimum wage increases. Moreover, poor households are most negatively affected by the price response. Price increases in grocery stores alone offset at least 10% of the nominal income gains of the poorest households.

Of course this also would suggest the sector is relatively competitive.  And if you are wondering, here is the full slate of job candidates from Zurich.

Tuesday assorted links

by  Tyler Cowen

1. Self-driving cars will be better for wheelchairs.

2. “U.S. House of Representatives Financial Services Committee considered many important banking reforms in 2009-2010 including the Dodd-Frank Act. We show that during this period, the foreclosure starts on delinquent mortgages were delayed in the districts of committee members even though there was no difference in delinquency rates between committee and non-committee districts.”  Link here.

3. Reexamining the economics of NFL draft picks.

4. Bershidsky on Merkel and Germany.

5. Is George Orwell overrated?  I claimed this to Cardiff Garcia just yesterday, at least relative to Huxley.

6. What is up with Northern Ireland? (NYT)  A good and important piece.

7. How a made-up article garnered hundreds of citations.

Thursday assorted links

by  Tyler Cowen

1. Behavioral economics should be most important for education.

2. The New York Review of Books discovers the Israeli TV show Srugim.

3. Trust within the diamond trade is eroding.

4. Artisanal vegemite.

5. Toward a public choice theory of the Screen Actors Guild.  Union much?

6. Did standardized languages help drive the Industrial Revolution?

7. Thaler’s “Anomalies” columns from JEP.

Tuesday assorted links

by  Tyler Cowen

1. Who’s complacent?: wine-infused coffee exists.

2. “Across a range of policy settings, people find the general use of behavioural interventions more ethical when illustrated by examples that accord with their politics, but view those same interventions as more unethical when illustrated by examples at odds with their politics.”  Link here.

3. Microfoundations for the endowment effect?

4. After plastic surgery, three Chinese women are stuck at the South Korean airport.

5. Chinese scientists can identify you by your walk.  And China’s AI awakening.

6. David Brooks on Thaler (NYT).

7. Markets in everything, bulk discount edition.

Why “nudge” is more often than not a socially conservative idea

by  Tyler Cowen in

That is the topic of my latest Bloomberg column, on Thaler and Sunstein, here is one excerpt:

There is a common pattern here: Society is unwilling to resort to outright, direct coercion either to keep people married or to keep them from immigrating illegally. We don’t in fact have the resources to do that, nor would we be willing to stomach the required violence. Conservative social policy is thus reborn in the form of a nudge, because that’s what restrictions look like in a violence-averse society.

An especially controversial conservative nudge is all the policy steps and regulatory restrictions and funding cuts that make it harder for women to get abortions. Many Americans must now travel a considerable distance to reach a qualified abortion provider, in some cases hundreds of miles. The cost is discouraging. And the greater inconvenience widens the gap of time between decision and final outcome, perhaps inducing some women to change their minds or simply let the plan go unfulfilled. Yet it is still possible to get an abortion, albeit with greater effort.

And:

I find it striking that nudge theorists usually market the idea using relatively “liberal” examples, such as improving public services. How much we view nudge as freedom-enhancing or as a sinister manipulation may depend on the context in which the nudge is placed. Neither conservatives nor liberals should be so quick to condemn or approve of nudge per se.

Do read the whole thing.

Who will win Monday’s Nobel Prize in economic science?

by  Tyler Cowen in

From the WSJ:

Clarivate Analytics, formerly a unit of Thomson Reuters, maintains a list of possible Nobel Prize winners based on research citations. New additions to its list this year were Colin Camerer of the California Institute of Technology and George Loewenstein of Carnegie Mellon University (“for pioneering research in behavioral economics and in neuroeconomics”); Robert Hall of Stanford University (“for his analysis of worker productivity and studies of recessions and unemployment”); and Michael Jensen of Harvard, Stewart Myers of MIT and Raghuram Rajan of the University of Chicago (“for their contributions illuminating the dimensions of decisions in corporate finance”).

Dozens of additional names appear on Clarivate’s list of possible future economics winners, including prominent figures on the American economics scene like Stanford’s John Taylor, a monetary-policy scholar who President Donald Trump is said to be considering for Federal Reserve chairman; Paul Romer of New York University, an expert on economic growth and the chief economist at the World Bank; Martin Feldstein of Harvard, who was chairman of the White House Council of Economic Advisers under President Ronald Reagan and has studied pensions, taxation and other topics in public finance; William Nordhaus of Yale University, who has studied climate change; Dale Jorgenson of Harvard, who has studied productivity; Robert Barro of Harvard, who has researched economic growth; Oliver Blanchard of the Peterson Institute for International Economics, the former top economist at the International Monetary Fund; and Richard Thaler of the University of Chicago, who has studied behavioral economics.

Former Fed chairman Ben Bernanke’s name has been floated in the past, given his academic work on the Great Depression, and his longtime collaborator Mark Gertler of NYU appears on the Clarivate list.  So does Richard Posner, the recently retired federal judge who has written on the intersection of law and economics.

I’ve never once been right, but this year I’ll predict William Nordhaus (“Green Accounting”) and Martin Weitzman (climate change and economics of risk).

Social media are making price gouging too difficult these days

by  Tyler Cowen in

That is the topic of my latest Bloomberg column.  Here is one bit:

Let’s say bottled water was selling at $42.96 a case at the local Best Buy, as shown in this photo. A customer can take out his or her smartphone, snap a photo and post it on social media. The photo may go viral, and many people, including the legal authorities, will be mad at the company.

The reluctance to raise prices is especially strong for nationally branded stores. A local merchant may not care much if people in Iowa are upset at his prices, but major companies will fear damage to their national reputations. The short-term return from selling the water at a higher price is dwarfed by the risk to their business prospects. More and more of the value of business capital is intangible capital, more than 84 percent of the S&P 500 by some estimates. That’s why Best Buy so quickly apologized for its store selling the water at such a high price, blaming the incident on an overzealous local manager.

Consider an alternative: Instead of raising prices to very high levels, let’s say that the local big-box store sells out quickly during an emergency and has empty shelves for water. If those photos circulate, they will be interpreted as signs of general tragedy and want, rather than selfish corporate behavior. It’s too subtle an image to snap the price tag at pre-storm levels, contrast it with the empty shelves, and lecture your Facebook friends about the workings of market-clearing supply and demand and the virtues of flexibly adjusting prices.

Beware the culture of the image!  As I’ve said before, we should levy a micro-tax on photos on Twitter.

Here is Don Boudreaux on price gouging.  Here is David Henderson on price gouging.  I agree with them both.

What I’ve been reading

by  Tyler Cowen in

1. Michael Lewis, The Undoing Project: A Friendship that Changed Our Minds.  A super-fun but oddly uneven biography of Kahneman and Tversky, a meditation on the nature of collaboration, and a history of the early stages of behavioral economics (economics?) and for that matter a history of Israel in some of its early decades.  There are cameos from Rapaport, Thaler, Gigerenzer, and others.  Why did the Israelis take so readily to the idea of an economic psychology, compared to the Anglos?

2. Michel Faber, Undying: A Love Story.  The pages are arranged like poems with stanzas, but it reads more like prose.  It is the moving story of the death of Faber’s wife by cancer, very short and interesting throughout.  So far published only in the UK.

3. Robert R. Reilly, Surprised by Beauty: A Listener’s Guide to the Recovery of Modern Music.  A highly useful and to the point guide to classical music for the periods you probably do not listen to.  It is strongest on the “intermediate” composers, such as Vagn Holmboe, Robert Simpson, and Edmund Rubbra.  It makes a persuasive case for the 17 string quartets of Heitor Villa-Lobos, we’ll see if that was $40 well-spent.

4. Karl Ove Knausgaard and Fredrik Ekelund, Home and Away: Writing the Beautiful Game.  This book is a series of letters, mostly about soccer.  They are more substantive than you might be expecting, but still you have to love both Knausgaard and soccer to enjoy this one, on those I am only one for two.

5. Richard Florida, The New Urban Crisis. Staying ahead of the Curve.  This is about how cities are failing the middle class throughout much of the world.  At the same time, suburbs are seeing a new poverty and urbanization is not always translating into rising living standards around the world.  This book is where the problems of urban economics “are at” right now.

The wit and wisdom of Eugene Fama

by  Tyler Cowen in

…in hindsight, every price is wrong.

That’s Eugene Fama, from Fama vs. Thaler.  I enjoyed this part too:

Twenty years ago my criticism of behavioral finance was that it is really just a branch of efficient markets, because all they do is complain about the efficient-markets model. I’m probably the most important behavioral-finance person, because without me and the efficient-markets model, there is no behavioral finance. I still think there is no full-blown testable behavioral asset-pricing model.

I have more sympathies for behavioral finance than that, still the dialogue is worth reading in its entirety.  Judged as a debate, Thaler loses.

Hat tip goes to Allison Schrager.

Gender Differences in Risk-Taking: Evidence from Professional Basketball

by  Tyler Cowen in

That is a new paper by René Böheim, Christoph Freudenthaler, and Mario Lackner, the abstract is to the point:

We analyze gender differences in risk-taking in high-pressure situations. Using novel data from professional athletes (NBA and WNBA), we find that male teams increase their risk-taking towards the end of matches when a successful risky strategy could secure winning the match. Female teams, in contrast, reduce their risk-taking in these situations. The less time left in a match, the larger is the gap. When the costs of an unsuccessful risky strategy are very large (losing the tournament), we find no increase in risk-taking for male teams.

This is consistent with the broader portfolio evidence on risk-taking.  For the pointer I thank the excellent Kevin Lewis.

Best non-fiction books of 2015

by  Tyler Cowen in

These are in the order I read them, more or less, not in terms of preference.  And I would say this year had more good entries than ever before.  Here goes, noting that most of the links go to my earlier reviews of them:

First, here are the economics books:

Mastering ‘Metrics: The Path from Cause to Effect, by Joshua D. Angrist and Jörn Steffen-Pischke, technically late 2014 but it was too late to make that list.

Dani Rodrik, Economics Rules.

Richard H. Thaler, Misbehaving: The Making of Behavioral Economics.  Self-recommending.

Garett Jones, The Hive Mind.  Why national IQ matters.

Scott Sumner, The Midas Paradox.  Boo to the gold standard during the Great Depression.

Greg Ip, Foolproof: Why Safety Can be Dangerous, and How Danger Makes Us Safe.

And the rest, more or less the non-economics books:

Robert Tombs, The English and Their History.

R. Taggart Murphy, Japan and the Shackles of the Past.  The last section is brilliant on current Japanese politics.

Michael Meyer, In Manchuria: A Village Called Wasteland and the Transformation of Rural China.  Adam Minter has a very good and useful review of a good book.

Ian Bostridge, Schubert’s Winter Journey.  Will improve your listening.

The Mahabarata, by Carole Satyamurti.  Rewritten and edited to be easier to digest, intelligible and rewarding.  As “an achievement,” this book does have some claim to be number one.

Avivah Gottlieb Zornberg, Bewilderments: Reflections on the Book of Numbers.  You can never read enough commentary on the Torah.

Daniel Tudor and James Pearson, North Korea Confidential, how things really work there (speculative), rain boots for instance are a fashion item and black markets are rife.

Serhii Plokhy, The Gates of Europe: A History of Ukraine, a good general history of the country.

Guantánamo Diary, by Mohamedou Ould Slahi.  He’s a very smart guy.

Ashlee Vance, Elon Musk: Tesla, Space X, and the Quest for a Fantastic Future.

Sebastian Strangio, Hun Sen’s Cambodia.  Goes deep into a place most people are ignoring.

Michael Booth, The Almost Nearly Perfect People.  The Nordics, that is.

Timothy Snyder, Black Earth.  He succeeded in writing an original book about the Holocaust, which is hard to do.

Emmanuel Todd, Who is Charlie?  Background on France being screwed up.

Niall Ferguson, Henry Kissinger, vol. I.  Background on America being screwed up.

Landmarks, Robert Macfarlane.  How to talk, think, and write about the British countryside.

Andrea Wulf, The Invention of Nature: Alexander von Humboldt’s New World.  The best of the various recent books on Humboldt.

Frank McLynn, Genghis Khan.  Background on a whole bunch of other places being screwed up.

Daniel P. Todes, Ivan Pavlov: A Russian Life in Science. I didn’t have time to read all of this book, but it seemed very good in the fifth or so I was able to read.  By the way, the whole salivating dog at the bell story is a fiction.

Pierre Razoux, The Iran-Iraq War, readable and useful.

Charles Moore, Margaret Thatcher: At her Zenith: In London, Washington, and Moscow, vol.2 of the biography, 1984-1987.  This one I haven’t finished yet.  I ordered my copy advance from UK Amazon, it doesn’t come out in the U.S. until early January.  There is some chance this is the very best book of the year.

I don’t quite see a clear first prize.  If I had to pick, I would opt for a joint prize to the biographies of Musk, Kissinger, Thatcher, and Genghis Khan.  This was the year of the biography.

Sorry if I forgot yours, this list is imperfect in various ways!  And the year isn’t over yet, so I’ll post an update on the very good books I read between now and the end of the year, probably on December 31.