Results for “thaler”
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Tuesday assorted links

1. How did American beer get so bland?

2. Insightful comments about Beatles songs.  The more obscure the song, the better the comment.

3. There is no great stagnation.

4. The Indian fear of gold?  And “On April 1, the Securities and Exchange Commission approved a request by a private stock exchange partnered with Overstock to deal in “digital securities.”

5. Dick Thaler is launching a blog.

6. Iceland to lift capital controls, worth watching.

7. Yaramiso (speculative).

*Misbehaving: The Making of Behavioral Economics*

That is the new and forthcoming book from Richard H. Thaler, due out in May.  It is excellent and fascinating, and yes even if you have read all of the other popular books on behavioral economics you should read this one too.

The title is good but I find the subtitle even more alluring.  For me the very best parts of the book are about Thaler’s career as an economist.  Indeed much of the book traces the development of behavioral economics through a biographical lens.  Here is one excerpt:

…my thesis advisor, Sherwin Rosen, gave the following as an assessment of my career as a graduate student: “We did not expect much of him.”

And:

I spent a fair amount of time staring at the List and adding new items, but I did not know what to do with it.  “Dumb stuff people do” is not a satisfactory title for an academic paper.

Other figures of note make cameo appearances in the book, including Cass Sunstein and John Lott.

Who are the most influential economists?

Everyone is up in arms over the list supplied by The Economist.  I won’t go through those debates.  Let me just note that for all the talk of wonk this, data that, and Generalized Method of Moments this that and the other, every now and then the best algorithm is simply Asking Tyler Cowen.  So here are, in no particular order, the most influential economists circa 2014:

1. Thomas Piketty

2. Paul Krugman

3. Joseph Stiglitz

4. Jeffrey Sachs

5. Amartya Sen

Basta.  Of course Yellen and Draghi are extremely influential as central bankers, but in the way Paul Volcker was, so that is a different list, albeit a more important one.

I would add several comments:

a. Piketty does very very well for marginal impact in 2014, but probably would/will do less well over broader time spans, even if you think his work will hold up.

b. Krugman is a clear winner for the United States.

c. Stiglitz, Sachs, and Sen have most of their influence outside of the United States.

d. Larry Summers is influential among economists and the intelligentsia and is one possible choice for number six, with Dani Rodrik as another, or maybe drum up the leading Islamic theorist on sukuk.  But Summers is not so influential with casual observers, which in some ways puts him as the opposite of Stiglitz (in his current incarnation).

e. There is no right-wing or center-right economist on the list.  See the EJW symposium on why there is no Milton Friedman today.  Krugman is probably the most politically conservative figure among the top five.

f. Behavioral economics as a whole is quite influential, but with no single dominant figure of influence.  In actuality Cass Sunstein (not formally an economist) and Richard Thaler might globally be #1 in the behavioral area, followed by Daniel Kahneman.

Interview with Eugene Fama

By Jeff Sommer, it is interesting throughout.  Here is one good part:

Shiller and Thaler helped to found the field of behavioral finance to help explain a lot of these anomalies. Where’s the difference between the two views, as you see it?

If I were to characterize what differentiates me from Shiller or Thaler, it’s basically we agree on the facts — there is variation in expected returns, which leads to some predictability in returns. Where we disagree is whether it’s rational or irrational. And there’s nothing in the available evidence that allows one to really settle that in a convincing way. The stuff that both Shiller and I have done has been very illuminating in terms of the behavior of returns. The interpretation of that is open for reasonable disagreement.

I think all points of view should get a full airing, and that’s why I’m thrilled to get the prize with Shiller.

Coming from the other side, here is Shiller on Fama.

“What’s the question about your field that you dread being asked?”

That is the new Edge symposium, with many excellent luminaries, including Jens Ludwig, Richard Thaler, and Raj Chetty from economics, with Sendhil Mullainathan playing host and interlocutor.  Chetty serves up these answers:

Here are three questions that come to mind that I dread answering as an economist working on policy issues:

1. If you were in charge, what policies would you enact today to raise growth rates and incomes for the average family in America?

2. Why do American students perform poorly relative to students in other countries and how can we fix education in the U.S.?

3. When are house prices going to recover to pre-recession levels?

Handicapping the 2012 Nobel

This article mentions Alvin Roth, Bob Shiller, Richard Thaler, Robert Barro, Lars Hansen, Anthony Atkinson, Angus Deaton, Jean Tirole, Stephen Ross, and William Nordhaus.

I’ll predict a triple prize to Shiller, Thaler, and Eugene Fama.  Fama clearly deserves it, can’t win it solo (too strongly EMH in an age of financial crisis), but can be bundled with two people from behavioral finance and irrational exuberance theories.

Barro will get it, but not in an election year.  Hansen and Ross are good picks but I don’t see them getting it before Fama does.  Paul Romer deserves mention but this is probably not his year because of politics in Honduras.

William Baumol cannot be ruled out.  A neat idea — but unlikely — is Martin Feldstein and Joseph Newhouse for their pioneering work in health care economics, plus for Feldstein there is public finance too.

Tirole and Nordhaus are deserving perennials, with various bundlings (e.g., Oliver Hart, or for Nordhaus other names in environmental).  I hope the Krueger-Tullock idea is not dead but I would bet against it, same with Armen Alchian and Albert Hirschman.  Dale Jorgensen has a shot.

I believe Duflo and Banerjee (and possibly Michael Kremer too, maybe even Robert Townsend) will get it sooner than people are expecting, though not this year as they just presented in Stockholm.  Next year I think.

Not once in the past have I been right about this.

Addendum: Here is the talk from Northwestern.

Assorted links

1. Valentine homage to Romer, and a continuous time approach (is it?), and PubMed research papers related to Valentine’s Day.   Here are data on spending.  Here is a Chris Coyne video on the economics of Valentine’s Day; it is a non-Hansonian, non-Keynesian, Treasury view of the day, he is not impressed by a one-time increase in monetary velocity.

3. What science looks like.

4. Peter Conti-Brown on elective shareholder liability.

5. Flying-Bridge Motorhome.

5. Richard Thaler defends fun.

Do all serious economists favor a carbon tax?

Richard Thaler, Justin Wolfers, and Alex all consider that question on Twitter.  I say no.  While I personally favor such a policy, here are my reservations:

1. Other countries won’t follow suit and then we are doing something with almost zero effectiveness.

2. It may push dirty industries to less well regulated countries and make the overall problem somewhat worse.

3. There is Jim Manzi’s point that Europe has stiff carbon taxes, and is a large market, but they have not seen a major burst of innovation, just a lot of conservation and some substitution, no game changers.  Denmark remains far more dependent on fossil fuels than most people realize and for all their efforts they’ve done no better than stop the growth of carbon emissions; see Robert Bryce’s Power Hungry, which is in any case a useful contrarian book for considering this topic.

4. Especially for large segments of the transportation sector, there simply aren’t plausible substitutes for carbon on the horizon.

5. A tax on energy is a sectoral tax on the relatively productive sector of the economy — making stuff — and it will shift more talent into finance and other less productive sectors.

6. Oil in particular will become so expensive in any case that a politically plausible tax won’t add much value (careful readers will note that this argument is in tension with some of those listed above).

7. A carbon tax won’t work its magic until significant parts of the energy and alternative energy sector are deregulated.  No more NIMBY!  But in the meantime perhaps we can’t proceed with the tax and expect to get anywhere.  Had we had today’s level of regulation and litigation from the get-go, we never could have built today’s energy infrastructure, which I find a deeply troubling point.

8. A somewhat non-economic argument is to point out the regressive nature of a carbon tax.

9. Jim Hamilton’s work suggests that oil price shocks have nastier economic consequences than many people realize.

9b. A more prosperous economy may, for political and budgetary reasons, lead to more subsidies for alternative energy, and those subsidies may do more good than would the tax.  Maybe we won’t adopt green energy until it’s really quite cheap, in which case let’s just focus on the subsidies.

10. The actual application of such a tax will involve lots of rent-seeking, privileges, exemptions, inefficiencies, and regulatory arbitrage.

It seems to me entirely possible that a serious economist would find those arguments hold the balance of power.  In my view those points stack up against a) the problem seems to be worse than we thought at first, b) the philosophic “we are truly obliged to do something,” and c) “some taxes need to go up anyway” arguments.

I am in any case not an optimist on the issue and I consider my pessimism a more fundamental description of my views on the issue than any policy recommendation.  If you study tech, you will see a bright present and also a bright future.  If you study K-12 education, you will see a mixed to dismal present and a possibly bright future.  If you study energy economics and the environment, you will see an OK present and a dismal future, no matter what policies we choose.

Economics Nobel odds at iPredict

iPredict is running contracts on who will win this year's Nobel Prize in Economics. As I write Oliver Hart heads the field with a 25% chance, Robert Schiller, Richard Thaler, Martin Weitzman come next, all with an 18% chance of winning.

Also listed are William Nordhaus, Jean Tirole, Angus Deaton, Richard Posner, Gene Grossman, Ernst Fehr, Gordon Tullock, Avinash Dixit, Sam Peltzman, Eugene Fama and Robert Barro.

It does seem to be a market based on real money payments, though I am not sure how much liquidity is there.  The direct link to the contracts is here and right now Thaler is leading.  The link cited above is here and for the pointer I thank Eric Crampton.

Who will win the Nobel Prize in economics this year?

I see a few prime candidates:

1. Richard Thaler joint with Robert Schiller.  

2. Martin Weitzman and William Nordhaus, for their work on environmental economics.

3. Three prominent econometricians of your choice, bundled.

4. Jean Tirole, possibly bundled with Oliver Hart and other game theorists/principle agent theorists.  But last year the prize was in a similar field so the chances here have gone down for the time being.

5. Doug Diamond, bundled with another theorist or two of financial intermediation, such as John Geanakopolos.  Bernanke probably has to wait, although that may militate against the entire idea of such a prize right now.

6. Dale Jorgenson plus ???? (Baumol?) for a productivity prize.

I see #1 or #2 as most likely, with Al Roth and Ernst Fehr also in the running.  Sadly, it seems it is too late for the deserving Tullock.

In general I think Robert Barro has a good chance but I don't see him being picked so close to a financial crisis; the pick would be seen as an endorsement of Barro's negative attitude toward fiscal stimulus and I don't expect that from the Swedes.  The financial crisis is a problem for Fama especially, though he is arguably the most deserving of the non-recipients.  Paul Romer is another likely winner, although they may wait until rates of growth pick up in the Western world.  He is still young.  The Thomson-Reuters picks seem too young and for Alesina the political timing probably is not right for the same reasons as Barro.

Here is a blog post on the betting odds for the literature prize; NgŠ©gÄ© wa Thiong'o is rising on the list.  Not long ago the absolute favorite was Tomas Tranströmer, who perhaps should start his own line of toys or have his name put on a school of engineering.

Concerning BP: very good sentences

And if we aren’t careful, we will encourage companies that have enough money for collection to leave the drilling to those that don’t.

That's from Richard Thaler and the entire column is worth reading.  Here is his wise conclusion:

We are left in a difficult place. Neither the private nor the public sector seems up to handling these kinds of problems. And we can’t simply wait for the next disaster, because, as people might say if they had to use G-rated language, stuff happens.

Assorted links

1. Links to rumors of Larry Summers leaving the Obama administration.

2. Bill Simmons endorses sabermetrics.

3. Doctors with ownership of surgery center operate more often.

4. Albert Hirschmann is 95 years old today.

5. Markets in everything, end grade inflation: outsource grading to Bangalore.

6. Strip mall vacancy rate hits 10.8% — good for ethnic food?

7. Dick Thaler replies to libertarian critiques from Glen Whitman and the gentlemanly Mario Rizzo.