Markets in Everything

Readers of Greg Mankiw's blog or Marginal Revolution have likely come across posts discussing how markets find themselves providing goods or services in pretty much every sector imaginable.

From the WSJ, here's just another product that will be hitting the streets of NYC very soon.

"When the Scientist Is Also a Philosopher"

Gregory Mankiw had an interesting article published in the New York Times today that presents an idea that I first came across in my intro to macroeconomics course. My professor started off our first lecture by half-jokingly-half-seriously stating that "once you start thinking about economics, it's hard to think about anything else."

In his piece, Mankiw is essentially animating that notion. Economics is not just studying supply-demand equilibrium or forecasting markets; it's really about studying incentives and policies coming from such a wide range of perspectives that would each purportedly increase net social welfare/utility.

One reason why economics is so intellectually satisfying is that the scientist is also a philosopher. In considering policy proposals, research, or theory, it would behoove us all to remember that reality.

Happy Open Borders Day!

Happy Open Borders Day!

In an earlier blogpost, I mentioned a study that found reducing migratory barriers could lead to a 50-150% growth in world GDP. Last fall, I was fortunate enough to spend a semester abroad in London, which I had read about over and over again as a global city that bore fruits from that internationalism. And as time has passed, I have consistently found myself more and more persuaded by what one friend called the "peaceful fundamental right to move," although the current administration may not be as convinced as I am.

Catherine Rampell on the gender gap in college majors

Over at the Washington Post, Catherine Rampell published an article discussing how women who earned B's in an introductory economics course were less likely to pursue a degree in economics.

Via the Washington Post & Claudia Goldin/Harvard University

Rampell then references Claudia Goldin, an economics professor at Harvard, who found that "Women who received a B in Econ 101, for example, were about half as likely as women who received A’s to stick with the discipline. The same discouragement gradient didn’t exist for men."

How could this be? Goldin suggests the following, as quoted from the article:

“Maybe women just don’t want to get things wrong,” Goldin hypothesized. “They don’t want to walk around being a B-minus student in something. They want to find something they can be an A student in. They want something where the professor will pat them on the back and say ‘You’re doing so well!’ ”
“Guys,” she added, “don’t seem to give two damns.” 

Most of us probably won't be very satisfied with this answer. 

Rampell then transitions into rhetorically asking why - on the other hand - are men who earn B's not dissuaded from pursuing an economics degree. I'm not sure how many of us will buy the argument that "Male students could be more overconfident — effectively, college bros shrug off gentleman’s C’s" either. 

If Rampell releases a follow up to her first article, I'm hoping she mentions another NYT blogpost that discusses a recent study about stereotypes on gender and their impact on careers (and thus, we'd presume, career choice). Unfortunately, the full study is not available without cost, but the blogpost incorporates results from the data which presumably are significant. 

I'd be more convinced by articulate numbers than conjectures on specific gender tendencies, and I'm sure the women who Catherine Rampell is trying to convince to "embrace the B's" would be too.

Jeffrey Miron's new take on the drug war

From Cato @ Liberty (The Cato Institute's blog):

If you lie down on a water bed, the amount of water does not change; it just moves elsewhere. A similar phenomenon occurs with drug prohibition; targeting one drug reduces its use, but that displaced demand shows up somewhere else. 

This is an incredibly powerful metaphor for the current scenario with America's war on drugs. The rest of his piece can be read here.

Some midterms week relief

For those suffering from the onslaught that is midterms week...

If you've been consistently studying throughout the semester, maybe you don't need to stay up until 3 A.M. cramming every night. Yeah. Let's go with that.

Don Boudreaux on increasing the minimum wage

From CafeHayek:

Pres. Obama insists that raising the hourly U.S. national minimum wage by 39.3 percent – from its current $7.25 to $10.10 by July 2016 – will have (as described by two members of Mr. Obama’s Council of Economic Advisors, Jason Furman and Betsey Stevenson) “little or no negative effect on employment.”

So here’s a challenge that I (and others) have posed before but believe to be sufficiently penetrating to pose again. This challenge, of course, is posed to supporters of this hike in the minimum wage:
...name some other goods or services for which a government-mandated price hike of 25 percent will not cause fewer units of those goods and services to be purchased. 

Beer? Broccoli? Bulldozers?...Or does low-skilled labor just happen to be the one good or service in the entire world for which a government-mandated 25-percent rise in the price that its buyers must pay for it will not diminish buyers’ willingness to buy it?


This is a great example of a piece written in theoretical terms that can make us think empirically about public policy debates.