Will the standard policy response to a labour market crisis reduce inequality?
24 Sep 2015 2 Comments
in applied price theory, applied welfare economics, economic history, economics of bureaucracy, economics of education, human capital, labour economics, occupational choice, poverty and inequality, Public Choice Tags: assortative mating, asymmetric marriage premium, College premium, economics of higher education, economics of schooling, economics of universities, graduate premium, marriage and divorce, power couples, university premium
Whenever there is a crisis in the labour market, the standard policy response is send them on a course. That makes you look like you care and by the time they graduate the problem will probably fixed itself. Most problems do. I found this bureaucratic response to labour market crises to repeat itself over and over again while working in the bureaucracy.
Inequality – What can be done?
Stefan Thewissen reviews Tony Atkinson’s book
bit.ly/1h0KDDF http://t.co/KiiGgFQJau—
Max Roser (@MaxCRoser) September 27, 2015
The standard policy response to a normal problem in the labour market is send them on a course. Clever geeks as yourself sitting at your desk as a policy analysis or minister did well at university. You assume others will as well including those who have neither the ability or aptitude to succeed in education. Lowering university tuition fees and easing the terms of student loans simply means that those who do well at university will not have to pay back as much to the government. People who succeed at university already have above average IQs so they already had a good head start in life.
Will more education decrease inequality? A simulation provided an answer. nyti.ms/1xw5m9W http://t.co/paQp19BEWc—
The Upshot (@UpshotNYT) March 31, 2015
The standard solution to growing inequality is to send people on a course. Trouble is that just make smart people wealthier without helping the not so smart and increases the chance of smart men and women marrying off together. This increases the inequality between power couples and the rest.
Drug Price Controls End Up Costing Patients Their Lives
24 Sep 2015 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, economics of regulation, entrepreneurship, health economics, industrial organisation, law and economics, politics - USA, property rights, survivor principle Tags: creative destruction, endogenous growth theory, innovation, intellectual property rights, patents and copyrights, pharmaceutical innovation, price controls
Our research shows that when prices fall, innovation falls even more. Patients would see their lives cut short by delayed or absent drugs.
Source: Drug Price Controls End Up Costing Patients Their Health – NYTimes.com
…cutting prices by 40 to 50 percent in the United States will lead to between 30 and 60 percent fewer R and D projects being undertaken in the early stage of developing a new drug. Relatively modest price changes, such as 5 or 10 percent, are estimated to have relatively little impact on the incentives for product development – perhaps a negative 5 percent.
Source: The Effect of Price Controls on Pharmaceutical Research
The supply-side economics of JFK
23 Sep 2015 Leave a comment
in applied price theory, applied welfare economics, politics - USA, Public Choice Tags: JFK, supply-side economics, taxation and growth, taxation and investment, taxation and the labour supply
Labour costs across the European Union
23 Sep 2015 Leave a comment
in applied welfare economics, currency unions, Euro crisis, international economics, macroeconomics Tags: comparative advantage, EU, Euroland
A single labour market in Europe? Chart shows labour costs in some countries 10 times higher than in others http://t.co/HEzvsSoCPb—
paulkirby (@paul1kirby) September 14, 2015
Do vaccines work?
19 Sep 2015 Leave a comment
in applied welfare economics, health economics Tags: anti-vaccination movement, infectious diseases, The Great Escape, vaccinations, vaccines
Economic impact of global warming: new evidence
18 Sep 2015 1 Comment
in applied welfare economics, development economics, environmental economics, global warming, growth disasters, growth miracles, politics - Australia, politics - New Zealand, politics - USA Tags: climate alarmism, global warming, Richard Tol
A nice summary of the latest research showing that once again the welfare cost of climate change is small except under the most extreme scenarios.
2% of national income is not something to declare a national emergency over unless you are in a very poor country.
Richard Tol also mentions that there has only been 27 studies of the economic costs of climate change:
Twenty-seven estimates is a thin basis for any conclusion. Researchers disagree on the sign of the net impact; climate change may lead to a welfare gain or loss. At the same time, researchers agree on the order of magnitude. The welfare change caused by climate change is equivalent to the welfare change caused by an income change of a few percent.
- That is, a century of climate change is about as good/bad for welfare as a year of economic growth.
As Tol wrote elsewhere, the reason why there are so few studies of the welfare cost of global warming is governments and bureaucracies do not like the small numbers they yield so they pre-emptively do not fund such research.
Few economists work full-time on the economics of climate change as their research results are too moderate to win repeat business and further research grants. Importantly, there is vicious criticism of what you say. Much better to just work on other topics.
One of the great tactical victories of the climate activists, I resisted the temptation to call them climate alarmists, is they keep going on about the science is settled and whether you are accepting the scientific results.
I have long argued let the science be settled, only the economics matters. The climate change activists do not want to talk about the economics that much except for the estimates by that political hack Lord Stern. Lord Stern has been on the losing side of history ever since he wrote a bad review of PT Bauer’s Dissent on Development where he said:
Dissent on Development is not a valuable contribution to the study of development.
The Stern Review puts the costs of unmitigated climate change at 5–20% of GDP (now and forever). The Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) finds differently.
HT: Lorenzo M Warby
The herd immunity role of #vaccinations explained
16 Sep 2015 Leave a comment
in applied price theory, applied welfare economics, health economics, politics - New Zealand, public economics Tags: Anti-Science left, anti-vaccination movement, best shot public goods, cheap riders, common law, free-riders, good shot public goods, herd immunity, measles, New Zealand Greens, public goods, quackery, tort law, vaccinations, vaccines
Some public goods can be not provided much at all if even a few do not contribute – free ride. These are called weakest shot public goods. The link in the chain is only as strong as the weakest link for some public goods. The fighting against communicable diseases is an example of that.
The classic example given by that brilliant applied price theorist Jack Hirschleifer is a dyke or a levee wall around a town. It is only as good as the laziest person contributing to its maintenance on their part of the levee wall. Vicary (1990, p. 376) lists other examples:
Similar examples would be the protection of a military front, taking a convoy across the ocean going at the speed of the slowest ship, or maintaining an attractive village/landscape (one eyesore spoils the view).
Many instances of teamwork involve weak-link elements, for example moving a pile of bricks by hand along a chain or providing a theatrical or orchestral performance (one bad individual effort spoils the whole effect.)
Another example of weakest shot public goods is community cooperation after disasters. The quality of the public good provided is equal to the contribution of the weakest person who may start a criminal rampage despite the good efforts of everyone else.
People tend to be more cooperative after natural disasters. They realise their contribution is more important than normal to the maintaining of the social fabric which is currently hanging by a thread.
Vaccinations are example of a weakest shot public good. The quality of herd immunity depends fundamentally on just about everybody contributing by getting vaccinated. Not all public goods depend on the some of those contributions made. In some cases just a few people choosing to free ride can greatly undermine the public interest.
The reverse of a weakest shot public good is best shot public goods. Example of this is the development of vaccines themselves. The public good is only as good as the best effort at developing the new vaccine with all the others efforts pointless because the best of the vaccines is chosen.
The most curious people in New Zealand to oppose measures to address the under provision of weakest shot public goods are the New Zealand Greens.
https://twitter.com/KevinHague/status/642505850360213505
The Greens are usually the 1st to stress the importance of communities working together for the common good.
https://twitter.com/KevinHague/status/642530277177192448
Herd immunity protects those who cannot be safely vaccinated including new babies, those for whom the vaccine fails, which occasionally happens, and those with compromised immunity such as adults receiving chemotherapy.
Deliriously hot @guardian sim shows why anti-measles jabs help protect your whole community gu.com/p/45f7e/stw http://t.co/H31ZKbXkqg—
Info=Beautiful (@infobeautiful) February 05, 2015
We are all in this together. It is time for the New Zealand Greens to stop pandering to those are only think of themselves and what a free ride on others including the very sick and new babies.
Source: NOVA | What is Herd Immunity?
Herd immunity requires vaccination rates of about 94%. The near universal vaccination rates required for herd immunity are to smaller margin to pander to an awkward squad who do not want to vaccinate despite the harm they do to others.
Harm to others is grounds and has always been grounds for public policy and public health interventions. Instead, the Greens are anti-science, anti-public health.
Measles is the most contagious disease known to man. Seven children died in New Zealand in the last measles outbreak in 1991. The dead are already too many from the anti-vaccination quacks and cranks.
The most dangerous monopoly: When caution kills
13 Sep 2015 Leave a comment
in applied price theory, applied welfare economics, economics of bureaucracy, economics of regulation Tags: adverse selection, Competition as a discovery, drug lags, moral hazard, The meaning of competition
Hayek explains the inexplicable value of capitalism and traditions
13 Sep 2015 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, constitutional political economy, F.A. Hayek, liberalism Tags: capitalism and freedom, market selection, spontaneous order, The meaning of competition
Applied welfare economics was never value free, but applied price theory is @TimothyTTaylor
11 Sep 2015 Leave a comment
in applied welfare economics, comparative institutional analysis, constitutional political economy, history of economic thought, liberalism, Murray Rothbard Tags: David Colander, Henry Hazlitt, Joan Robinson, methodology of economics
The first words uttered in my first lecture in applied welfare economics by Bob Rutherford were ‘this course starts with an explicit political position – that of liberalism’. I never forgot that.
Source: CONVERSABLE ECONOMIST: Crossing the Ravine from Economic Theory to Policy Advice.
This leads us to Robert and Zeckhauser’s taxonomy of disagreement:
Positive disagreements can be over questions of:
1. Scope: what elements of the world one is trying to understand?
2. Model: what mechanisms explain the behaviour of the world?
3. Estimate: what estimates of the model’s parameters are thought to obtain in particular contexts?
Values disagreements can be over questions of:
1. Standing: who counts?
2. Criteria: what counts?
3. Weights: how much different individuals and criteria count?
Any positive analysis tends to include elements of scope, model, and estimation, though often these elements intertwine; they frequently feature in debates in an implicit or undifferentiated manner. Likewise, normative analysis will also include elements of standing, criteria, and weights, whether or not these distinctions are recognised.
The origin of political disagreement is a broad church indeed in a liberal democracy. Those you disagree with are not evil, they just disagree with you. As Karl Popper observed:
There are many difficulties impeding the rapid spread of reasonableness. One of the main difficulties is that it always takes two to make a discussion reasonable. Each of the parties must be ready to learn from the other.
Tariffs and the class war
10 Sep 2015 1 Comment
in applied welfare economics, income redistribution, international economics, Public Choice, rentseeking Tags: rentseeking, tariffs
Since 1975 average UK earnings for full-time employees have more than doubled after accounting for inflation
10 Sep 2015 Leave a comment
in applied welfare economics, economic history, labour economics, labour supply, poverty and inequality Tags: British economy, The Great Enrichment
Is sociology really irrelevant in policy debates?
03 Sep 2015 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, constitutional political economy, economics of bureaucracy, economics of media and culture, income redistribution, labour economics, occupational choice, Public Choice, rentseeking Tags: compensating differentials, evidence-based policy, media bias, offsetting behaviour, public intellectuals, sociology, The fatal conceit, The pretence to knowledge, unintended consequences
Is sociology really irrelevant in policy debates? @familyunequal does a better job with the #s blog.contexts.org/2015/01/25/soc… http://t.co/c4E25DTCmm—
(@SocImages) February 04, 2015
Utopia, you are standing in it! 
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