Richard Thaler’s Nobel Prize

by Mario Rizzo Richard Thaler has won the Nobel Prize for initiating the behavioral moment in economics. My view of the Nobel Prize in economics is much like Time magazine’s view of its “Person of the Year.” It is awarded to the economist who "for better or for worse... has done the most to influence” … Continue reading Richard Thaler’s Nobel Prize

A Crisis in Economics?

by Mario Rizzo Periodically, people warn about the “crisis in economics.” I have heard about several of these over my professional career. Somehow the mainstream or orthodox economists never seem to notice these crises or take them seriously. They continue doing what they were doing. Today the crisis, if there is one, is due to … Continue reading A Crisis in Economics?

Military Service and the New Paternalism

by Mario RizzoIn the last few years there has been a small expansion in the number of universities that are reinstating ROTC (Reserve Officer Training Corps) after the cancellation of such programs due to protests against the war in Vietnam. I express no opinion here about whether universities should have ROTC programs. My points here … Continue reading Military Service and the New Paternalism

Top Young Economists Consider Their Future

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 … Continue reading Top Young Economists Consider Their Future

“Rationality” isn’t always Rational

by Mario Rizzo Over the past two years I have been reading more than I ever dreamed about rationality in economics, especially in the standard neoclassical theory of choice. I have done this because I want to get at the root of the controversies concerning whether people’s behavior is, in particular contexts, rational or not.  Claims about … Continue reading “Rationality” isn’t always Rational

Behavioral Economics and Rationality

by Mario Rizzo One of the very good things about the blogosphere is that academics have been uploading their syllabuses for various courses. For the past couple of years, I have been teaching a graduate course taking a detailed and critical look at modern behavioral economics, including its normative and policy aspects. More and more, I am thinking … Continue reading Behavioral Economics and Rationality

The Attack on Dignity and Moral Autonomy: The Case of Cigarettes

by Mario Rizzo The latest in the paternalistic actions of the federal government are a kind of reductio ad absurdum.  At least this is how it might have seemed ten or fifteen years ago if someone would have said that cigarette-pack health warnings would become graphic pictures designed to horrify the public into not smoking.  … Continue reading The Attack on Dignity and Moral Autonomy: The Case of Cigarettes

Policy Makers and Irrational Exuberance

by Chidem Kurdas Robert Shiller says the speculative bubble in real estate was driven by “a contagion of optimism” that pushed up prices and expectations in a feed-back loop. This epidemic apparently engulfed regulators as well.  “Government policy makers breathed in the same optimism, which no doubt encouraged them to be lax on regulatory restraint,” … Continue reading Policy Makers and Irrational Exuberance

The Blinders of Behavioral Economics

by Mario Rizzo  At the turn of the new-year the Financial Times published two small articles about why people often do not adhere to their new year’s resolutions. One article was by a philosopher (Julian Baggini) and the other by a psychiatrist (Antonia Macaro). Interestingly, they each seem to focus on whether people really want … Continue reading The Blinders of Behavioral Economics

Behavioral Economics: Rocking the Boat

by Mario Rizzo   It seems as if it has become increasingly common for bloggers who are also academics to post the syllabi of courses that may elicit some general interest. In that spirit I post my syllabus for a graduate course in behavioral economics here.  Behavioral Economics 2011 Course  Despite some rhetoric to the contrary, academics are a very … Continue reading Behavioral Economics: Rocking the Boat

When Nudging Isn’t Enough

by Glen Whitman In a New York Times op-ed, George Loewenstein and Peter Ubel argue that policymakers are relying too heavily on behavioral economics, when traditional -- that is, rational choice -- economics would often serve them better. On cursory reading, you might think this op-ed repudiates the facile use of behavioral economics to guide … Continue reading When Nudging Isn’t Enough

New Paternalism, Regulation and Cass Sunstein

by Mario Rizzo The New York Times magazine has an interesting, if somewhat uncritical, article on Cass Sunstein, the Obama regulation czar. The "best" part is the section about me: Some scholars dislike the strong, if subtle, governmental hand that is embedded in this last proposal. It seems more forceful than a nudge. “Once you get … Continue reading New Paternalism, Regulation and Cass Sunstein

All Decisionmaking is Doomed to Failure: Questions for the Bias Industry

by Mario Rizzo   Behavioral economists have an embarrassment of biases. They have discovered many cognitive and behavioral biases which plague human decisionmaking. By one count there are nearly a hundred of them.   A cognitive bias is a systematic departure from rational decisionmaking. For example, a person may react differently if he is told that a … Continue reading All Decisionmaking is Doomed to Failure: Questions for the Bias Industry

New Paternalism on the Slippery Slopes, Part 8: Hyperbolic Discounting in Public Policy

by Glen Whitman As discussed in a previous post in this series, the new paternalists often use the concept of hyperbolic discounting (roughly, excessive impatience) to show that people make systematic errors that could, in principle, be corrected by government intervention. But what if policymakers, too, are prone to hyperbolic discounting? That is the question … Continue reading New Paternalism on the Slippery Slopes, Part 8: Hyperbolic Discounting in Public Policy

Why Kant Was Smarter Than Behavioral Economists

by Mario Rizzo   Behavioral economists who like to indulge in normative pronouncements have decided that quasi-hyperbolic discounting violates rationality. In other words, suppose a person decides today that he will give up the hamburgers he loves beginning in 2010 (because of the high fat content). But then when 2010 arrives he reverses his decision and … Continue reading Why Kant Was Smarter Than Behavioral Economists

Behavioral Economics As Self-Help

by Mario Rizzo   For quite a number of years I have been saying that I have no objection to behavioral economics per se, aside from the legal paternalism wing. After all, why shouldn’t people use science to make their lives better?   So now MIT economist Dan Ariely has adapted some of the findings of behavioral … Continue reading Behavioral Economics As Self-Help

The New Interventionist Economics

by Roger Koppl Two recent posts on this blog (here and here) raise the issue of animal spirits and where macro is headed.  I’ve recently completed a draft manuscript saying we are headed for “BRACE” economics.  I say the “New Interventionist Economics” will be characterized by five features: Bubbles Radical Uncertainty Animal Spirits Complexity Dynamics … Continue reading The New Interventionist Economics

New Paternalism on the Slippery Slopes, Part 4: Context Dependence

by Glen Whitman New paternalists have also relied on the notion of context dependence to justify their policies. But as with hyperbolic discounting, they unjustifiably assume the existence of an inconsistency of preferences gives the policymaker license to choose among the inconsistent preferences. That assumption is the paper’s next target (pp. 703-704): For a variety … Continue reading New Paternalism on the Slippery Slopes, Part 4: Context Dependence