What this shows is that out of about 80 questions, economists completely agree on just over 30 (about 40%) and agree between 90 and 99% of the time on about three of four questions.   There are very few things that economists don’t generally agree upon, and those appear to be issues where “little” research has been done by anyone.  Where research has been done, economists seem to agree on pretty much everything.

Next, we find out some of the central issues where not only do we do agree, we adamantly disagree with the conventional public view.  For example, we all seem to agree that it’s hard to predict stock prices!  (Who knew?!?).  I think we are disabused of the notion early on when we sit down with our pet scheme and lose our shirts. My “investments” tutorials typically go something like this — “put your money in an index fund.”

We also agree that price instruments are better than fuel economy standards (I’ve been saying that for years), that supply & demand factors drive oil prices, and “buy local” policies don’t save jobs, among other things.  It’s interesting to me that when it comes to net benefits of the stimulus, our views dovetail with the public views (i.e., who knows).  

We previously posted about this important topic right here.

Christian Zimmerman

Assistant Vice President

Federal Reserve Bank of St. Louis

Unemployment insurance programs are often criticized because they encourage various forms of shirking: the unemployed may not try hard enough to look for a new job or may turn down reasonable job offers. Also, the taxes that finance such programs are thought to decrease the labor supply.  This talk will look at an alternative way of insuring against unemployment events through personalized unemployment accounts. We will discuss their advantages but also warn against potential pitfalls. The discussion will be backed up by simulations performed on the labor markets of Oregon, Austria and France.

Tuesday May 14

Steitz Hall 102

4:30 p.m.

How can you get all that done in just seven minutes?  Well, first, the routine consists of twelve intense 30-second exercises (12 exercises x 30 seconds/exercise = six minutes).  Then we have to add a 10-second rest period between each exercise (11 rest periods x 10 seconds / period = 1 minute, 50 seconds).

Let’s see, so the 7-minute workout consists of six minutes of exercise and 1:50 worth of breaks…  Don’t mess with science, I guess. 

Summers is a past president of Harvard and economic-adviser extraordinaire to President Obama.   Hubbard is the dean of the NYU Business School, and star of this ‘stinging’ sendup of Ben Bernanke.

Neither lacks confidence, that’s for sure.

It is worth contemplating for a moment a very simple and commonplace instance of the action of the price system to see what precisely it accomplishes. Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose—and it is very significant that it does not matter—which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all this without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes. The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.

Professor 

Liberal education has a great deal to contribute to society. It’s up to us to figure out how we’re going to be a part of creating our future.

I hope this will result not just in intellectual exchange, although that’s really important, but also action, taking those new ideas to change in the world.

Professor Scott Corry will be featured on a Post-Crescent webcast tomorrow as well! (Link here)

Incoming Randolph College President, Bradley W. Bateman, will be on hand talk about the role of advising at liberal arts colleges.   This is a timely piece given that advising at large universities came under fire earlier this week.  Also, coincidentally enough, President Bateman was my undergraduate advisor once upon a time, though I don’t recall him ever suggesting that I should go to graduate school and become a professor (?).

One of the marquee speakers is Jeff Selingo of the Chronicle of Higher Education and author of the about-to-be-released College (Un)Bound: The Future of Higher Education and What it Means for Students.  That talk is set for 9:35 a.m. Friday.  We are also very excited to have Andy Chan from Wake Forest coming in to talk about links between education and career development.  And, one of the co-founders of Coursera, Daphne Koller from Stanford, will join us via video feed to tell us about the MOOCs.

Wow!

LU has a strong presence as well, with President Beck and Dean Pertl sharing their visions of the future. The tireless Bob Perille (’80), founder and champion of of the Lawrence Scholars programs, will be on hand to talk about (you guessed it) the Lawrence Scholars programs. Rick Davis (’90) from George Mason will invoke the role of the liberal arts in fomenting collaboration and Jennifer Herek (’90) will be on hand to talk about spreading the liberal arts to technical education in Europe.

In addition, Jenny Kehl from UW-Milwaukee will be on hand to talk about how central collaboration and interdisciplinary work will be to tackling some of our toughest environmental issues.

All TEDx events showcase videos from TED events, and as part of that we will be watching the Erik Brynjolfsson video that Professor Finkler discussed in a previous post.

The full schedule is here. 

It should be a good one.  Professor Brandenberger and I were co-organizers, and fortunately John handled some of the more delicate interpersonal matters.  We’re interested in seeing how this goes over.  If you have a few minutes, tune in to the webcast and let us know what you think.  Here is that link.  

This week Lawrence will be hosting a TEDx conference on re-imagining liberal education.  Thanks to Professors Galambos and Gerard, and a few other colleagues from other departments, this live discussion will be video streamed for all of us to watch.

Earlier this month, another TED conference took place.  This one featured economist Robert Gordon (Northwestern) and Eric Brynjolffson (MIT).  Some of you will be familiar with the arguments.  Those who took Capital and Growth last year read Gordon’s paper on the headwinds that will drive economic growth back to the level experienced prior to the first industrial revolution in the 18th century in England.   Gordon believes that our most productive innovations are behind us and innovation will be insufficient to enable us to sustain the 2% per capita real growth of the 20th century.

Some of you may recall the discussion we had in one of our reading groups of Brynjolffson and McAfee’s book, Race Against the Machine. In his TED talk, Brynjolffson explains why innovation is far from over and that we have the potential to continue the rate of growth of economic prosperity that we experienced in the 20th century.  Of course, the challenge, as he puts it is: “can we race with the machine?”

View both talks as well as a follow-up debate between these two economists here.

In its typically exhaustive style, The Atlantic takes a few thousand words to come to this conclusion.

This, of course, is what pretty much any off-the-shelf economist has been saying for years, though we didn’t need a series of enormous technologically driven supply shocks to lead us down the path to that conclusion.  Here’s Tim Haab on why Peak Oil doesn’t matter if markets are at all functional.  Here’s a peek at oil futures.

Oh, and by the way, Peak Oil?

Prof. Dan Johnson sans Safari Hat

We’ve received late notice that the Colorado College is hosting its 2nd Annual Research Symposium, and we are invited.

Can’t get out to CC in an expeditious fashion?  Well, come join me in Briggs 223 where I will stream a few of the presentations LIVE.    There are a couple of presentations on innovation, capped off with the big kahuna himself, Dan Johnson, talking about some sort of esoteric bidding system.

All times are CDT.

• 3:40 p.m. Bryce Daniels.  “Drilling for innovation:  examining induced innovation in the oil and gas industry.”

• 4:00 p.m.  Rafael A. Arenas.  “The value of social networks on innovation.”

• 4:20 p.m. Dan Johnson.  “Bidding for Classes: Course Allocation using the Colorado College Auction System”

Montgomery and Powell are professors at Grinnell College, and are well known for lighter work, including “Should Economists Marry Economists?” and their economics murder mystery, Theoretically Dead.*

Baby Markets: Thinking the Unthinkable in International Adoption

Mark Montgomery and Irene Powell

Grinnell College

Adoption laws, national and international, outlaw payments to families for relinquishing their children. This does not stop “baby selling,” but rather moves it into the hands of criminals. History suggests that restricting mutually beneficial exchanges can make worse the problems it is supposed to solve. Is it time to think the unthinkable in international adoption?

The talk examines how current adoption laws create incentives for fraud and other forms of abuse, identifies “moral hazards” abuse created by the legal structure of adoption, and explores how relaxing restrictions on compensating birth mothers would change incentives and behavior of birth parents, adoptive parents and adoption facilitators.

*As far as I know, they are both economics professors, though the Publisher’s blurb says one is a philosophy professor.  I suppose teaching labor economics long enough can turn anyone somewhat philosophical.

Speaking of benefits, the fall Journal of Economic Perspectives has another symposium on contingent valuation.  Twenty years ago, Peter Diamond and Jerry Hausman famously asked, “Is Some Number Better than No Number?”   Although Hausman seems to have found some clarity on the issue, I’d say for the profession the question remains unresolved.

• Catherine L. Kling, Daniel J. Phaneuf and Jinhua Zhao From Exxon to BP: Has Some Number Become Better Than No Number?
• Richard T. Carson Contingent Valuation: A Practical Alternative When Prices Aren’t Available
• Jerry Hausman Contingent Valuation: From Dubious to Hopeless

Next up in the news, we have a consortium  of cities and businesses is looking at a $200 million reservoir project to satisfy all its water needs, but it is contemplating paying rice farmers $100 million not to farm instead.

Is this Coasean bargaining inevitable? I wouldn’t bet the farm on it.

Finally, we have Thomas Kinnaman offering the classic economist’s take down of two benefit-cost analyses of shale gas production (i.e., fracking):

The costs of natural gas extraction include, paradoxically, all of the items listed as “benefits” in the two reports discussed above. Natural gas extraction requires labor, capital equipment, pipelines, and raw materials. These economic resources, in a fully employed economy, could have been allocated to other uses. The price paid to secure these resources from these other industries indicates the value of these resources to these other industries (had their value been higher, the market price would have been higher). Thus, the quantity of each economic resource times its market price – in fact 13 the total expenses by the industry as gathered in the surveys – represent the cost of utilizing scarce economic resources to gas extraction.

This block quote is a battle we economists will probably never win.  When I tell my students “jobs” are a cost not a benefit, they look at me as if I suddenly began speaking Swahili.   The paper is from Ecological Economics, and an ungated version is available here.

This week they tackle the dicey problem of dual-zone vehicle climate controls.

Oh, and coincidentally enough, I was telling my Econ 280 class yesterday that men should ride shotgun because she is safer.

I talk the talk, but do I ride the ride?  

Inflation as a cure for economic ills is not new.  In fact, check out this 1933 video on the how inflation is good for everything and everyone.  Clearly, proponents of Neo-classical macro beg to differ.  Those in Econ 320 will have a chance to sort out the winners and losers.  Indeed there will be losers, as we know that there is no free lunch.  Who will the winners be?

1. lenders or borrowers

2.  savers or consumers

3.  labor or management

4. bond holders or stock holders

5.  renters or buyers

6.  government officials or Wall Street tycoons

Place your bets now or maybe just guard (cover?) your assets.

Whatever else you do watch the video?  It’s a hoot.

We encourage current majors and minors to stop by and feast both on the complementary snacks and the delicious conversations that will undoubtedly spontaneously emerge.  Tell your friends and see you there.