Archive for the 'Economics' Category

A New Journal from The Ronald Coase Institute

July 24, 2013

by Mario Rizzo

Readers of this blog may be interested in learning that the awaited-and-hoped-for new journal is actually coming soon. It is a welcome change from the usual in economics today. I hope that Austrians might consider submitting articles of high quality. The following is taken from the website of the Ronald Coase Institute.

A New Journal Coming Soon
Man and the Economy: A Journal of the Coase Society
Editors: Ronald Coase & Ning Wang
Publisher: De Gruyter    Inaugural Issue: April 2014

From the editors:

We are pleased to announce that Man and the Economy will soon be launched. As revealed by its title, Man and the Economy commits to a particular viewpoint of economics: a study of man as he is and a study of the economy as actually exists. This is in sharp contrast to the prevailing view where the economic actor is treated as an atomized utility maximizer and the economy as an artifact of mechanical design, which misrepresents the character of man and the nature of the economy. Man and the Economy restores the economy as an open and evolving social organism of cooperation and competition.

Professor Ronald Coase was editor of the Journal of Law and Economics(JLE) for 18 years. During his editorship, LJE not only became a distinct journal, but also helped to create a new field of study, law and economics. Man and the Economy aims to do to economics what JLE has done to law and economics. Professor Coase serves as founding editor of the new journal. Dr. Ning Wang, who has been working with Professor Coase since 1998, will serve as managing co-editor. They are joined by two associate editors, Sam Peltzman of the University of Chicago and Guang-zhen Sun of the University of Macau, along with a distinguished editorial board made up of economists, anthropologists, political scientists, sociologists, and legal scholars from all over the world.

Man and the Economy starts in 2014 and publishes two issues a year in the first three years. It welcomes empirical (historical, qualitative, statistical, experimental) investigations and theoretical explorations that shed light on how the economy works and how it changes over time. We are committed to making Man and the Economy international and interdisciplinary.

We are keen to publish articles that examine how the emerging market economy works and evolves in Asia, Africa, Latin America, and Eastern Europe as well as contributions by non-economists that focus on the working of the economy. Man and the Economy acceptsOriginal Articles (regular research papers), Research Notes (interesting ideas and findings not fully developed), Voices from the Field(contributions from practitioners in the business and policy community that are of interest to students of the economy), Marketplace for Ideas (interviews with leading scholars and other game-changers in the field), Wisdom of the Past (insights on man and the economy that have been largely forgotten), and Letters from Readers.

We aim to makeMan and the Economy the equivalent of Nature or Science in social sciences, read by and with contribution from the concerned public, policy-makers, business and legal professionals, as well as academics who look up to economics as a study of man as he is and of the economy as it actually exists in the real world.

Remembering Armen Alchian

April 4, 2013

by Jerry O’Driscoll

Earlier this year, we lost one of the greatest economists of this century, UCLAs Armen Alchian, who died at age 98. David Henderson wrote a wonderful appreciation of him for the Wall Street Journal.

Alchian taught at UCLA from the early 1950s until his retirement in the 1990s. Few men have put their stamp on a department as he did. Milton Friedman comes to mind at Chicago. Alchian taught the economic way of thinking, and his approach permeated the course offerings by almost all the other professors. If you took macro from Axel Leijonhufvud, you got a dose of Alchian’s micro. In monetary classes, works like Alchian’s “Why Money” were topics of discussion.  Alchian’s analysis of price searching behavior was background in all the courses.

Liberty Fund published a two-volume collection of his writings. I can obviously touch on only a few issues.

One of Alchian’s greatest contributions was to the theory of market pricing. Read the rest of this entry »

Ignorant Survey from Chicago-Booth?

February 28, 2013

By Mario Rizzo

The Chicago-Booth IMG Forum asks their favorite economists two questions. Let us examine them.

Question A:

Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.

Why was the word “noticeably” added to the question rather than some specific quantitative amount?  In other words, the question could have been phrased: “Would it increase unemployment among low-skilled works by approximately 5 percentage points or less?”  I realize that economists would get nervous about mentioning a specific number. But (1) That would reveal the true difficulties in economics of making quantitative predictions and hence tradeoffs; (2) It would take the subjectivity out of the word “noticeable.”  Noticeable for whom, and by what standard?  Noticeable to the public or to the policy maker or to the economist or to the low skilled workers or to union members?

Question B:

The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy.

There is a lot here. Let us first separate the raising of the minimum wage to $9.00 per hour from the indexing (one could favor the former but not the latter). Read the rest of this entry »

James M. Buchanan: A Preliminary Appreciation

January 9, 2013

by Mario Rizzo

The great economist James M. Buchanan died today at 93. I am still too stunned to write a proper appreciation of his tremendous contributions to economics and, indeed, to moral philosophy.

Buchanan won the Nobel prize in Economics in 1986. But even this does not capture his greatness. There have been many Nobel prizes in Economics since 1969, the year they were initiated. (In my view there have been too many.) Many of these prize winners will be long forgotten and even viewed with puzzlement by future generations, but this prize will stand out. Read the rest of this entry »

“ECONOMICS” NOBEL PRIZE – 2012 Edition

October 16, 2012

by Mario Rizzo

I have very little to say directly about this year’s Nobel Prize in Economics. I do not know whether the seemingly-technical contributions of Alvin E. Roth and Lloyd S. Shapley rise to the level of a Nobel Prize. However, I am mindful that the Nobel Committee has to give the award every year. They also have to show some diversity in the fields they recognize. But their issues are not mine. I have said to friends more than once that the prize in economics ought to be given every other year. I think there have been too many Nobel Prizes and too few really game-changing fundamental contributions.

My reactions here are different. Today’s New York Times has an interesting article on the prize. The first point that interests me:

Al [Roth] has spent the last 30 years trying to make economics more like an engineering discipline,” said Parag Pathak, an economics professor at M.I.T. who has worked on school-matching systems with Mr. Roth. “The idea is to try to diagnose why resource allocation systems are not working, and how they can be engineered to produce something better.”

I have no problem with better matching techniques for students applying to medical school or trying to get into certain popular courses and so forth. But I do object to the project of making economics more like engineering. Economics was born of the desire to elaborate and explain the spontaneous ordering of the market. It also tries to explain the conditions under which that ordering process may break down in markets. Markets generally coordinate but sometimes they may not. Let’s find out when, why, and how. It is very, very, important to understand – for both students and practitioners of economics alike – that markets are not like bridges. So I do not want an engineer teaching economics.

The second point has more to do with the impact of constructivist matching schemes on public policy. As a second best, where markets do not operate, they may improve things. However, this takes the spotlight off where it should be: permitting markets where they are forbidden. Or, perhaps, stated more “moderately” encouraging the discussion of a greater role for markets – as in human organs. Even Iran permits a market in kidneys, after all.

Nevertheless, I am amused by all the flurry of activity designed to show how wise and interesting the choice for this year’s economics Nobel is. Sometimes it is not.

Top Young Economists Consider Their Future

July 27, 2012

by Roger Koppl

Ali Wyne of the big think  blog “Power Games”  recently posted an interesting set of comments on the theme “Empirics and Psychology: Eight of the World’s Top Young Economists Discuss Where Their Field Is Going.”  George Mason’s own Peter Leeson  was among the eight “top young economists” sharing their views.

Over at New APPS, the philosopher Eric Schliesser  summarizes the eight comments. “Bottom line: due to low cost computing and a data rich environment the future of economics is data-mining (this was clear from at least four of the comments). This is especially so because the young stars have lost faith in homo economicus (due to behavioral work and the crisis).”

Eric’s summary seems about right to me. There were eight fine minds sharing eight different visions, but two related themes dominated the comments. 1) The old rationality assumption is in trouble and we don’t quite know what to do about it. 2) Economics should be more data-driven now that we have what William Brock has labeled “dirt-cheap computing.” Read the rest of this entry »

Elinor Ostrom, RIP

June 12, 2012

by Mario Rizzo

This will not be a review of her scholarly contributions. I have already made some attempt at that in a post shortly after her richly-deserved Nobel prize in economics. And I also link an announcement of her death here. 

I met Professor Ostrom at a celebration of her work at GMU after she won the prize. I was fortunate enough to be invited to dinner with her and just a few other people afterwards. I was so positively impressed by her, first, as a human being. She was kind, funny and liked a good scotch. (I stuck with the wine.) As a scholar, she was not only brilliant but she was non-dogmatic about methods, willing to learn from others, and had a wonderful combination of humility and self-confidence. She knew how important a good story is to the advancement of science, and not just heuristically.

She and Peter Boettke apparently “clicked” academically. After all, he saw her importance and published a book about her work before the Nobel Committee recognized her (and 99% of all economists ever heard of her!).

At the end of obituaries it is customary to say “she will be missed.” But, really, this time she will be missed by more than her family and friends, but by all of those who learned from her writings or from her in person. We carry on –  impoverished by her death, enriched by her life.

Supply and Demand in Music

January 17, 2012

by Edward Peter Stringham*

Many economists are criticized for being unable to communicate their ideas in am intelligible and non-boring way. How many people, for example, jump to listen about a debate about the Austrian theory of the business cycle? It turns out quite a lot. John Papola and Russ Roberts demonstrated to the world that lots people will actually listen to an economics discussion if presented in an interesting way.  Their videos recently surpassed 4.5. million views. They did an amazing job especially with their good casting decisions for the reporter at the end of the second video.

This year I decided to run a video contest for students to create music videos that help illustrate the laws of supply and demand. Read the rest of this entry »

Chicago and Vienna

October 30, 2011

by Jerry O’Driscoll

In the last two days, two prominent economists have asked me essentially the same question: what is the difference between Chicago and Austrian economics? It is interesting that both asked, particularly since one has a Ph.D from Chicago.

The second economist asked me specifically if Armen Alchian wasn’t really an Austrian. I’ll respond as I did to him. I learned most of my Austrian economics in the UCLA graduate economics program. (At that time, UCLA was known as Chicago West.) I was never an Alchian student, but one read lots of Alchian anyway. And his influence pervaded the department. It was obvious to me that Mises had influenced Alchian. Also Hayek, as is made clear in a video of Alchian interviewing Hayek.

Hayek’s classic essays on prices and information were on various reading lists at UCLA. Read the rest of this entry »

No Way to Escape for the Swiss National Bank

September 15, 2011

by Andreas Hoffmann and Gunther Schnabl

It came as a surprise to many: the Swiss National Bank announced an exchange rate target. Accordingly, the Swiss franc will be held above the level of 1.20 francs per euro. Switzerland gives up a part of its sovereignty, when the ECB makes bad press in buying trash-rated euro area government bonds to support unsustainable national budgets.

But, particularly in an environment of global excess liquidity originating in too-easy monetary policies in major advanced economies, small open economies have incentives to stabilize exchange rates. Read the rest of this entry »

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