Increasing Marginal Utility

A blog so good it violates the law of diminishing marginal utility.

Browsing Catharsis – 04.23.14


“However, Hayek and Friedman lost this terminological battle a long time ago, and I’m not sure we should want the term ‘liberal’ back today even if we could have it. After all, the word now has such negative associations that even many liberals (in the modern sense of the word) no longer use it and have instead taken to calling themselves ‘progressives.’”

-Ilya Somin, “What Should We Libertarians Call Ourselves? How About Libertarian!Here he is applying this to the recent debate. If the Rothbardians want to claim the word “libertarian” for themselves, I’m fine with calling myself a neoliberal.


Via Geeks Are Sexy.


“I would argue the EMH is truer that the S&D model. And by EMH I am actually only talking about the assumption that asset price deviations from trend are essentially unforecastable. Specific versions such as the CAPM may be flawed in other ways. However I believe the random walk model is truer than S&D, and also quite useful.”

-Scott Sumner, “Why the EMH is truer than supply and demand.” I don’t quite agree, but although Sumner is applying the “thick” version of supple & demand that implies perfect competition, far more of “economic intuition” depends on perfect competition than people realize.

Political Labels

There’s been some back-and-forth about libertarians reclaiming the word “liberal” from progressives. I don’t really care for fighting over terminology. The only motivation I see for engaging in that battle is to have the words we use cohere with our aesthetic sense of history, and I attach very little value to that.

In the ideal world, I probably want to call myself a liberal. If I were to impose my own labels on the world based on my own aesthetic tastes, it would look something like this. See here for more description of this particular cartesian plane.



Reality isn’t quite as neat as I presented it, but symmetry is beautiful, and beauty is truth. Also, it looks like a pokeball.

Browsing Catharsis – 04.20.14


“The commercial real estate sector is responsible for a large share of a city’s overall carbon footprint. An ongoing trend in this sector has been the entry of big-box stores such as Wal-Mart. Using a unique monthly panel data set for every Wal-Mart store in California from 2006 through 2011, we document three main findings about the environmental performance of big-box retailers. First, Wal-Mart’s stores exhibit very little store-to-store variation in electricity consumption relative to a control group of similar size and vintage retail stores. Second, Wal-Mart’s store’s electricity consumption is lower in higher priced utilities and is independent of the store’s ownership versus leased status. Third, unlike other commercial businesses, Wal-Mart’s newer buildings consume less electricity. Together, these results highlight the key roles that corporate size and centralization of management play in determining a key indicator of a firm’s overall environmental performance.”

-Matthew E. Kahn, Nils Kok, “Big-Box Retailers and Urban Carbon Emissions: The Case of Wal-Mart.”


“Why are they lying to you? Some are doing it for profit, trying to sell their alternative remedies by making you afraid of science-based medicine. I’m sure that many others within the anti-vaccine movement have genuinely good intentions, and do honestly believe that vaccines are harmful. But as a certain astrophysicist recently said ‘The good thing about science is that it’s true whether or not you believe in it. In the case of vaccine truthers, this is not a good thing. Good intentions will not prevent microbes from infecting and harming people, and the message that vaccines are dangerous is having dire consequences. There are outbreaks of vaccine-preventable illnesses now throughout the United States because of unvaccinated children.”

-Jennifer Raff, “Dear Parents, You Are Being Lied To.”


“If, however, you judge a team’s moves by the man who made them, you’ll resist drawing conclusions for now. On one side, we have the informed judgments of an entire industry; on the other, the track record of a single person. The safe answer is to trust in the wisdom of crowds. The right answer might be to trust in the wisdom of Dave Dombrowski.”

-Rany Jazayerli, “Trust in Dave Dombrowski: Questioning the Doug Fister trade? Doubting the Miguel Cabrera extension? Where Detroit Tigers GM Dave Dombrowski is concerned, faith should replace conventional wisdom.”

Browsing Catharsis – 04.19.14


“It’s not that mammograms do nothing. Women who were randomized into the mammography group were much more likely to be diagnosed and treated for breast cancer — this was true for all the studies. And it starkly illustrates the over-diagnosis issue. In the control group, some small tumors were not detected or treated, but they were detected in the mammogram group, hence the higher diagnosis rates in the latter group. And yet women in the control group were no more likely to die of breast cancer. This suggests those tumors that were missed were often not fatal. Taking these results together, some doctors and policymakers have argued for a significant decrease in the use of mammograms — the argument being that the risks of over-diagnosis are too large.”

-Emily Oster, “Are Mammograms Worth It?


“In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these polities.”

-Daron Acemoglu, Francisco A. Gallego, and James A. Robinson, “Institutions, Human Capital and Development.”


Browsing Catharsis – 04.11.14


Now, not all Marxists talk that way. But some do, and many more could. The point here is that both the libertarian and Marxist can agree that it’s wrong to initiate aggression, but they dispute who has a claim to what and so what counts as aggression. Neither one of them can resolve the dispute by pointing to the wrongness of aggression. Rather, they need an independent argument determining who owns what. You don’t reason your way from non-aggression to libertarian theories of property rights. Rather, you derive the libertarian non-aggression principle from a libertarian theory of property rights.”

-Jason Brennan, “On Begging Questions.”


GOP politicians can’t have it both ways anymore. An economic system that simply doles out favors to established stakeholders becomes less dynamic and makes job growth less likely (most jobs are created by new businesses). Politically, the longer we’re in a “new normal” of lousy growth, the more the focus of politics turns to wealth redistribution. That’s bad for the country and just awful politics for Republicans. In that environment, being the party of less — less entitlement spending, less redistribution — is a losing proposition.”

-Jonah Goldberg, “What principles rule the GOP?


Browsing Catharsis – 04.10.14

Papa Nutt, the Ben Bernanke of the operation, is offering discounts to Gathering vendors who accept the virtual moola; the hope is to establish it during the annual festival (‘No one wants to be the one vendor at Gathering of the Juggalos who doesn’t accept JuggaloCoin!’), move it to the ICP online store, and eventually so embed it in the culture that Juggalos can use it to purchase couches from each other on Craigslist (not kidding, that’s the example given).”

-Evan McMurry, “Juggalos Are Starting Their Own Cryptocurrency and You’re Not Invited.” Pretty sure this empirically falsifies the tenability of private currency.



“That’s why your range of projections has to be narrower than the expected standings.  How much narrower? Over the past few seasons, the SD of team wins has been around 11.  Actually, it fluctuates a fair bit (which is expected, due to luck and changing competitive balance).  In 2002, it was over 14.5 wins; in 2007, it was as low as 9.3.  But 11 is pretty typical. Since a team’s observed performance is the sum of talent and luck, and because talent and luck are independent, SD(observed)^2 = SD(talent)^2 + SD(luck)^2. Since SD(observed) equals 11, and SD(luck) = 6.4, we can figure that, after rounding, SD(talent) = 9 So: if a season prediction has an SD that’s significantly larger than 9, that’s a sign that someone is trying to predict which teams will be lucky.  And that’s impossible.”

-Phil Birnbaum, “Predictions should be narrower than real life.”


Under the Affordable Care Act, between six and eleven million workers would increase their disposable income by cutting their weekly work hours. About half of them would primarily do so by making themselves eligible for the ACA’s federal assistance with health insurance premiums and out-of-pocket health costs, despite the fact that subsidized workers are not able to pay health premiums with pre-tax dollars. The remainder would do so primarily by relieving their employers from penalties, or the threat of penalties, pursuant to the ACA’s employer mandate. Women, especially those who are not married, are more likely than men to have their short-term financial reward to full-time work eliminated by the ACA. Additional workers, beyond the six to eleven million, could increase their disposable income by using reduced hours to climb one of the ‘cliffs’ that are part of the ACA’s mapping from household income to federal assistance.”

-Casey Mulligan, “The ACA: Some Unpleasant Welfare Arithmetic.”

How much do we cheer overthrowing the NCAA?

The successful attacks on the NCAA combine two traditional enemies of proponents of free markets – unions and antitrust law. However,

  1. The “nuanced” free market view regarding unions is that it should be up to the market to determine their role and scope, as long as teamsters aren’t throwing bricks at people or something. It isn’t at all obvious today that the legal advantages unions hold aren’t canceled out by right-to-work legislation. Private sector unions, as they exist today in America, may be a good or a bad thing for the economy.
  2. The theoretical arguments against antitrust are very poor and typically get tangled up with discussing the illiberal reasons why antitrust was first adopted in the US, which has nothing to do with whether it should be practiced today. The best arguments are that effective antitrust law is practically difficult for a variety of reasons, e.g. how rarely the “bad” versions of oligopoly or monopoly really apply in real life, or how public opinion (and thus government) is firstly set against practices that look bad but are actually welfare-enhancing. In other words, it’s not the stupidest idea in the world to point out strange, particular cases where it may be helpful for the government to take a baseball bat to the head of a monopoly; merely on average it’s not worth it.
  3. Monopsony has long been a theory in search of an application. The Herculean assumptions needed to apply it to the market for unskilled labor would make Hercules blush. But if it applies to anything in the world in the private sector, it applies to professional sports, and perhaps even moreso to the NCAA. Is anyone willing to argue that the NCAA is operating in a contestable market?

So I look forward to lawsuits brought forth by labor activists on behalf of student athletes in coming years. On average, it’s not good to have institutional arrangements that still allow such lawsuits to take place. It’s kinda like the ban on CFCs, which looks like it was a good thing, even though command-and-control environmental regulation is on the whole terrible. Sometimes the government really does trip over itself and do something beneficial. It’s just not very instructive.

Browsing Catharsis – 04.09.14

“As it turns out there is a sizable literature in economics that examines these very issues and derives optimal policy. The conclusions of this literature are important because (1) they take the meritocratic view seriously, and (2) they arrive at policy conclusions that are often at odds with those proposed by advocates of meritocracy.”

-Josh Hendrickson, “What is Fair?


“Elvis’ beard is terrible, by the way. Horrendous. He cuts half of his chin off, too I was just up there getting on him about it. Yeah it’s terrible. He looks like Abe Lincoln. … He has to cut that thing off. It’s so bad, it’s almost embarrassing.. .. I can’t even look at him it’s so bad.”

-Mike Napoli, via Marc Normandin, “Mike Napoli tells Elvis Andrus to shave ‘horrendous’ and ‘embarrassing’ beard.”



Browsing Catharsis – 04.08.14

See more of… that… at Kotaku.


“3)      Confusing shifts in demand and supply curves: No, lower oil prices is not helping the US economy if it is caused by a drop in global AD
“9)      Central banks are printing money like hell – we will get hyperinflation (confusing demand and supply for money)”

-Lars Christensen, “10 fallacies of the Great Recession.”



Browsing Catharsis – 04.07.14

“We show that, without strong auxiliary assumptions, it is impossible to rank groups by average happiness using survey data with a few potential responses. The categories represent intervals along some continuous distribution. The implied CDFs of these distributions will (almost) always cross when estimated using large samples. Therefore some monotonic transformation of the utility function will reverse the ranking. We provide several examples and a formal proof. Whether Moving-to-Opportunity increases happiness, men have become happier relative to women, and an Easterlin paradox exists depends on whether happiness is distributed normally or log-normally. We discuss restrictions that may permit such comparisons.”

-Timothy N. Bond, Kevin Lang, “The Sad Truth About Happiness Scales.” That is… problematic.



“Under a second view, the process of being unemployed has made these individuals less productive.  Under a third view (‘ZMP’), these individuals were not very productive to begin with, and the liquidity crisis of the crash led to this information being revealed and then communicated more broadly to labor markets.  I see a combination of the second and third forces as now being in play.”

-Tyler Cowen, “Why are so many people still out of work?: the roots of structural unemployment.” So…. Cowen may have been right all along. This is becoming more and more persuasive, though this in conjunction with no inflation is still a puzzle.


“This is clearly part of the appeal of a show like ‘Mad Men,’ in which ‘red America’ is the past rather than provinces, and where part of the thrill of watching (especially in the early seasons; less so now) is a kind of anti-P.C. escapism, into a world where men are Real Men, cars don’t have seatbelts, and everything seems so much sexier than in our more egalitarian and hygienic world. This thrill coexists with a smug present-ist judgment, of course, but that’s part of the show’s power as well: By slumming and judging all at once, liberal viewers get to have their enlightened post-1960s Whole Foods carry-out and dine on Oysters Rockefeller too.”

-Ross Douthat, “TV Fandom in Red, Bad and Blue.”


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