Econ Talk

Tag: Econ Talk

Economics and Sandy

In the aftermath of Hurricane Sandy, it is probably a good time to revisit the basic economics of natural disasters.

(Like Sandy), We’ve been over this ground before.

First, are natural disasters good for the economy?  Also here.

Second, is price gouging a bad thing?  Many, many links at Knowledge Problem — including this one from  And here’s an archived EconTalk where Duke’s Mike Munger takes an hour with Russ Roberts to lay it out for us.

Riesgo Moral

In our continuing series on how incentives shape behavior, we take a look across the sea to España, where a man tragically sawed off his arm to collect on eight insurance policies.  It seems that insurance fraud is on the rise in the depressed economies of Europe

According to data from the ICEA, which carries out research for insurance and pension providers, there were 54,114 fraudulent claims in 2003; in 2011, there were 130,959.

We, of course, have seen this sort of thing before.  And even before that.

But it turns out that it is not only the depressed economies of Europe that are seeing a rise in fraud.  Right here in the U.S. it appears that there is a rather substantial rise in Social Security Disability Insurance claims.  I had first heard about this on an EconTalk episode featuring David Autor.

Craig “Ironman” Eyermann at the Political Calculations blog has the numbers here and further elaboration here.


Microfinance Resources

I know next to nothing about microfinance (there’s more than 20 types of microfinance?!?), though there seems to be plenty of student interest in the topic.  If this applies to you, you might check out this week’s EconTalk podcast features Duke political economist Michael Munger chitchatting with Russ Roberts — about an hour of fun, and a pretty good overview.

For those of you interested in more formal (and cite-able) economics resources, here are a few starting points.   First, if you aren’t sure what it is, check out this review piece on micro-credit at The New Palgrave Dictionary of Economics.

Next, it’s always a good idea to go through the Journal of Economic Perspectives.  Indeed, there are two very solid pieces bookending the past 15 years — “The Microfinance Promise” from the late 1990s, and the more contemporaryMicrofinance Meets the Market.”

And, finally, for a book-length treatment, try The Economics of Microfinance, available over at The Mudd.

Some Interest in Inequality

Although we economists tend to be a “size of the pie” crowd, the subject of the causes and consequences of income and wealth inequality does not completely escape our notice.  Certainly, this has large political and policy implications, especially as inequality and political polarization seem to be proceeding in lockstep.

With that said, I’ve been sitting on these links for a while, waiting to read and digest them so I can say something pithy about them.  But, alas, with Capitalism, Socialism, & Democracy in my lap and Where Good Ideas Come From next in my queue, I don’t see that happening anytime soon.

So, here it goes:

Cowen presents a very provocative thesis, one that we should perhaps discuss over tea?

My favorite political science blog, The Monkey Cage, had an interesting symposium on Larry Bartel’s Unequal Democracy.  Worth a look if this is something that interests you.

Old Ideas from Undead Economists?

A recent EconTalk has John Quiggin, left-of-center author of Zombie Economics, discussing ideas with Russ Roberts, moderator and pro-market guy. Quiggin names his book such because he asserts that there are many economists clinging to ideas that have been thoroughly thrashed and should be discarded, yet they continue to emerge and thrive.  Foreign Policy has a summary of  Quiggin’s five most egregious “undead” ideas:

I'm an idea zombie

The Great Moderation: the idea that the period beginning in 1985 was one of unparalleled macroeconomic stability that could be expected to endure indefinitely.

The Efficient Markets Hypothesis: the idea that the prices generated by financial markets represent the best possible estimate of the value of any investment. (In the version most relevant to public policy, the efficient markets hypothesis states that it is impossible to outperform market valuations on the basis of any public information.)

Dynamic Stochastic General Equilibrium (DSGE): the idea that macroeconomic analysis should not be concerned with observable realities like booms and slumps, but with the theoretical consequences of optimizing behavior by perfectly rational (or almost perfectly rational) consumers, firms, and workers.

The Trickle-Down Hypothesis: the idea that policies that benefit the wealthy will ultimately help everybody.

Privatization: the idea that nearly any function now undertaken by government could be done better by private firms.

Roberts certainly doesn’t agree with Quiggin’s overall assessment, though they do find much to agree on.  This is a great EconTalk for those who think that economists all drink from the same cup.

Econ 300 students might listen to the part about the Efficient Markets Hypothesis and compare it to what Landsburg says in Chapter 9.

And, if you like the dead-undead econ riff, you might check out Todd Buchholz’s now-classic, New Ideas from Dead Economists.

Weekend Audio

Some interesting interviews for those of you out cleaning the garage this weekend.

The first is Raghu Rajan, a favorite of Professor Finkler (I’m guessing from this link), in a Vox interview, “Fault lines: how hidden fractures still threaten the world economy.” From the abstract:

Raghuram Rajan of the University of Chicago talks to Romesh Vaitilingam about his new book Fault Lines, in which he outlines the deep systemic problems in the world economy that threaten further financial crises – high US inequality, patched over by easy credit; excessive stimulus to sustain job creation in times of downturn; and the choices of Germany, Japan, and China to focus on export-led growth rather than domestic consumption. The interview was recorded in London in July 2010.

The second is a favorite of mine, Political Scientist David Brady, over at EconTalk.

David Brady of Stanford University talks with EconTalk host Russ Roberts about the state of the electorate and what current and past political science have to say about the upcoming midterm elections. Drawing on his own survey work and that of others, Brady uses current opinion polls to predict a range of likely outcomes in the House and Senate in November. He then discusses the role of recent health care legislation in the upcoming election as well as Obama’s approval ratings. The conversation concludes with Brady’s assessment of how Congress might deal with the demographic challenge facing entitlement programs.

Brady has a good sense of politics and political history, in addition to being an excellent social scientist. In my policy making institutions course at Carnegie Mellon, I used Brady & Volden’s Revolving Gridlock as an introduction to a simple spatial model and an overview of the past 40 years of American politics (Just don’t tell Professor Hixon).

And, I buried the lead here.  Laurie Santos talks about monkey decision making over at TED.  Who knew monkeys were so irrational? She does some monkey experiments and finds that monkeys consistently make the types of “irrational” errors that humans make.

Laurie Santos looks for the roots of human irrationality by watching the way our primate relatives make decisions. A clever series of experiments in “monkeynomics” shows that some of the silly choices we make, monkeys make too.

I coined the tag “monkeynomics,” not realizing that there actually was monkeynomics.  Click on the tag for more monkey business.