Increasing Marginal Utility

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

Browsing Catharsis – 02.27.15

Replacing ‘statistically significant,” by Phil Birnbaum.

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“In recent years, state and federal courts have been ruling against private regulatory organizations on a number of theories. This Article explores this new private-regulation skepticism and the theories that underpin it. This Article focuses on three main sources of law: the Due Process Clause, non-delegation doctrine, and antitrust law. To illustrate the doctrines, it follows five examples from recent cases and recent news of regulation by Amtrak, the North Carolina Board of Dental Examiners, the Mississippi Board of Pharmacy, the Texas Boll Weevil Eradication Foundation, and landowners in Texas water quality protection zones. The Due Process Clause is a potential limit on the private exercise of regulatory power, especially if the regulators and the regulated parties compete with each other. Federal nondelegation doctrine, by contrast, is unlikely to be much help in these challenges, though some states, like Texas, have vibrant non-delegation doctrines that not only are stricter than the federal one but also strongly distinguish between public and private delegates. Some courts don’t clearly distinguish between non-delegation and due process. I argue that they should, as the two doctrines serve very different purposes. Finally, federal antitrust law is available to guard against the anticompetitive dangers of ‘industry regulating itself.’ Excessive conflicts of interest decrease the chance that a court will find state action immunity from antitrust law, and increase the chance that a court will find a substantive antitrust violation because of structural anticompetitive factors. Additionally, regulators that are sufficiently independent from state government are less likely to be insulated from liability by sovereign immunity. This new regulation skepticism thus provides several useful tools to challenge private regulation.”

Alexander Volokh. 2013. “The New Private-Regulation Skepticism: Due Process, Non-Delegation, and Antitrust Challenges.” Harvard Journal of Law & Public Policy 37, no. 3: 931-1007.

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Browsing Catharsis – 02.26.15

Totally conventional views which I hold,” by Tyler Cowen.

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“Urban ecologists have extended the bounds of this field to incorporate both the effects of human activities on ecological processes (e.g., humans as generators of disturbances), and the ways in which the structures, functions, and processes of urban ecosystems, and human alterations to them, in turn alter people’s behavior. This feedback loop from the perspective of urban ecologists offers a natural connection to economic models for human behavior. At their core, housing markets reveal price signals that communicate to developers the tradeoffs consumers are willing to make for the private characteristics of homes and the attributes of the neighborhoods where they are located. These signals together with local land use rules guide the location of development. The characteristics of this development in turn influence the functioning and evolution of urban ecosystems. This paper describes markets as coordination mechanisms and conveyors of information from a complex adaptive systems perspective. It also discusses the way in which physical and biological processes, infrastructural boundaries, and the institutional equivalent of “barbed wire” all simultaneously act to shape the transmission of ecosystem services over the landscape. These processes alter the spatial distribution of housing prices in ways that are both continuous and discrete.”

Joshua K. Abbott, H. Allen Klaiber, and V. Kerry Smith. 2015. “Economic Behavior, Market Signals, and Urban Ecology.” NBER Working Paper no. 20959.

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Brian Sabean says that California taxes are a hindrance to the Giants signing free agents,” by Craig Calcaterra.

Browsing Catharsis – 02.25.15

Feeding Infants Peanut Products Could Prevent Allergies, Study Suggests,” by Andrew Pollack.

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The Great Analytics Rankings,” by ESPN The Magazine and ESPN.com.

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Some random late February tidbits

Here are three things that require a little more commentary than what appears in my normal link dump.

1. The one podcast I listen to regularly is Effectively Wild, which is for hardcore baseball fans and many people in the industry listen to it. I was catching up on it today. It was announced on the podcast (I don’t see any other announcement about it online) that the two hosts will be acting as the baseball operations department of the Sonoma Stompers, an independent league team and will be writing a book about it. So…. two sabermetric journalists who are known for entertaining absolutely outlandish ideas will be making all the roster decisions for a professional baseball team, while at the same time keeping their identities as journalists. To say that my interest is piqued is an understatement.

2. Liberty Review, a project by the Liberty Fund, has highlighted my article in Economic Affairs published earlier this winter. It was my intention to write this article in hopes of changing the narrative surrounding the decline in Economic Freedom of the World, so I am very happy Liberty Fund chose to highlight it.

3. Katee Sackhoff and James Van Der Beek appeared in an extremely NSFW but well-produced gritty reboot fan film based on Power Rangers. It’s over ten minutes long. Versions of the video are disappearing and reappearing online so I don’t know what its status is. Also, I repeat, NSFW.

Browsing Catharsis – 02.24.15

Rich Data, Poor Data,” by Nate Silver.

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The Fallibility of Science,” by Razib Khan.

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Browsing Catharsis – 02.23.15

Why Fahrenheit is Better than Celsius,” at isomorphismes.

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“Libertarian constitutional thought is a distinctly minority position among scholars and jurists, one that at first glance has little connection with either modern Supreme Court jurisprudence or the liberalism that remains dominant in the legal academy. However, libertarian ideas have more in common with mainstream constitutional thought than at first meets the eye. They have also had greater influence on it. This article explores the connections between mainstream and libertarian constitutional thought in recent decades. On a number of important issues, modern Supreme Court doctrine and liberal constitutional thought has been significantly influenced by pre-New Deal libertarian ideas, even if the influence is often unconscious or unacknowledged. This is particularly true on issues of equal protection doctrine and modern ‘substantive’ due process as it pertains to ‘noneconomic’ rights. Here, both the Supreme Court and much of the mainstream academic left have repudiated early twentieth century Progressivism, which advocated across-the-board judicial deference to legislatures. They have also rejected efforts to eliminate common law and free market ‘baselines’ for constitutional rights. The gap between libertarian and mainstream constitutional thought is much greater on issues of federalism and property rights. Here too, however, recent decades have seen significant convergence. Over the last thirty years, the Supreme Court has begun to take federalism and property rights more seriously, and the idea that they should get strong judicial protection has attained greater intellectual respectability. Moreover, much of libertarian constitutional thought merely seeks to apply to federalism, property rights, and economic liberties, the same principles that mainstream jurists and legal scholars have applied in other areas, most notably ‘noneconomic’ constitutional rights and separation of powers.”

David Bernstein and Ilya Somin. 2014. “The Mainstreaming of Libertarian Constitutionalism.” Law and Contemporary Problems 77, no. 4: 43-70.

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Inside the projections process: How best to use fantasy baseball projections to build your draft strategy,” By Tristan H. Cockcroft.

Boyes on my paper on economic freedom and economic inequality

William Boyes has blogged about my paper on the effect of economic inequality on economic freedom. In what follows, he is in block quotes.

So, the apparent argument would be to have the government implement policies to eliminate inequality since that would increase economic freedom.

Yes and no. In the main text I do not make any argument about what the government should do. In the conclusion, I merely suggest, “One implication is that those who wish to promote economic freedom as measured by EFW should most enthusiastically promote liberalizations which also promise to reduce inequality. Reforms that do both could include educational reform, the elimination of corporate welfare, or intellectual property reform.” In other words, pursue policies that will increase economic freedom, but will most clearly also reduce inequality at the same time.

But this argument is flawed. Does government intervention increase inequality? Yes. Does inequality decrease economic freedom; according to Murphy it does. But, government intervention reduces economic freedom. So is Murphy measuring a simultaneity here rather than a causal relation? Again, yes.

My identification strategy addressed this. On the RHS I have the gini coefficient in year t as a control and I employ fixed effects.* On the LHS, I have the gini coefficient in year t+10. I’m curious as to what type of simultaneity Boyes had in mind that is missed here.

*Yes, so that means some specifications have Nickell Bias, but Nickell Bias sorta isn’t a thing.

Free, unfettered markets create some amount of inequality, but just the amount that enhances growth and increases freedom. Trying to reduce that inequality through interventionist policies reduces economic freedom, but leads to further inequality.

I don’t once advocate government intervention once in the paper.

Inequality is reduced when people are mobile both from one income bracket to another but also from one job to another, from one location to another, from one activity to another, etc. Government regulation and taxation have reduced mobility and thus enhanced inequality. Government monetary policies, especially the QEs, have increased inequality.

There is literature both ways on whether economic freedom reduces or increases inequality. I give the cites to both in the paper. While I would prefer to live in a world where freedom strictly always reduces inequality, there are plausible mechanisms where it doesn’t, e.g. subsidies to human capital formation. And I hope that acknowledging the possibility that subsidies to human capital reduce inequality doesn’t paint me as a socialist.

In any case, I do not take any position on the effect of economic freedom on inequality in the paper.

Browsing Catharsis – 02.22.15

What matters more–the productivity slowdown or the inequality increase?” by Greg Mankiw. If more was made of the former, the argument that the complaints about the latter aren’t mostly just veiled envy would be more convincing. Oh, and transparent acts of moral coherence trying to combine the two don’t count.

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Marco Del Giudice. 2012. “The Twentieth Century Reversal of Pink-Blue Gender Coding: A Scientific Urban Legend?” Archives of Sexual Behavior 41, no. 6: 1321-1323.

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Snow Removal,” by Randall Munroe. This is about attaching microwave emitters or flamethrowers on the front of your car to melt snow as you drive.

Browsing Catharsis – 02.21.15

Why restaurants are putting bacon back on everything again,” by Drew Harwell.

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“Mounting evidence suggests that economic dynamism and entrepreneurial activity are declining in the United States. Over the past thirty years, the annual number of new business startups and the pace of job reallocation have declined significantly. A variety of causes for these trends have been suggested, including an increasing ability of firms to respond to idiosyncratic shocks, technology induced changes in the costs of hiring and training, and increasing regulation. This research combines data from the Statistics of U.S. Businesses, which contains measures of the decline in economic dynamism, with RegData, a novel dataset leveraging the textual content of the Code of Federal Regulations. RegData contains annual industry level measures of the stringency of regulation. By combining these data, we are able to estimate the extent to which changes in the level of federal regulation can explain decreasing entrepreneurial activity and dynamism. We find that Federal regulation has had little to no effect on declining dynamism.”

Nathan Goldschlag and Alex Tabarrok. 2014. “Is Regulation to Blame for the Decline in American Entrepreneurship?Summarized here.

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Browsing Catharsis – 02.20.15

Your Brain Is Primed To Reach False Conclusions,” by Christie Aschwanden.

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Little Caesars To Introduce Pizza Wrapped In 3.5 Feet Of Bacon.”

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