Increasing Marginal Utility

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

Browsing Catharsis – 07.01.15

The 22 Things You Must Do to Truly Be an American,” by Matt Meltzer.

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“This article examines evidence for the private rationality of decisions to choose bottled water using a large, nationally representative sample. Consumers are more likely to believe that bottled water is safer or tastes better if they have had adverse experiences with tap water or live in states with more prevalent violations of EPA water quality standards. Perceptions of superior safety, taste, and convenience of bottled water boost consumption of bottled water. Blacks and Hispanics are more likely to drink bottled water due to their relatively greater exposure to unsafe water and greater risk beliefs. The coherent network of experiences, beliefs, and actions is consistent with rational consumer choice.”

W. Kip Viscusi, Joel Huber and Jason Bell. 2015. “The Private Rationality of Bottled Water Drinking.” Contemporary Economic Policy 33, no. 3: 450-467.

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The above video was done by the creators of Homestar Runner, by the way.

Browsing Catharsis – 06.30.15

Mass Moralizing,” by Robin Hanson.

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“We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid’s welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.”

Amy Finkelstein, Nathaniel Hendren, Erzo F.P. Luttmer. 2015. “The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment.” NBER Working Paper no. 21308.

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Browsing Catharsis – 06.29.15

Big Data Versus Hayek,” by Adam Ozimek.

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“Kenneth Arrow’s pathbreaking ‘impossibility theorem’ was a watershed in the history of welfare economics, voting theory, and collective choice, demonstrating that there is no voting rule that satisfies the four desirable axioms of decisiveness, consensus, nondictatorship, and independence. In this book, Amartya Sen and Eric Maskin explore the implications of Arrow’s theorem. Sen considers its ongoing utility, exploring the theorem’s value and limitations in relation to recent research on social reasoning, while Maskin discusses how to design a voting rule that gets us closer to the ideal — given that achieving the ideal is impossible. The volume also contains a contextual introduction by social choice scholar Prasanta K. Pattanaik and commentaries from Joseph E. Stiglitz and Kenneth Arrow himself, as well as essays by Sen and Maskin outlining the mathematical proof and framework behind their assertions.”

Eric Maskin and Amartya Sen. 2014. The Arrow Impossibility Theorem. New York: Columbia University Press.

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Browsing Catharsis – 06.28.15

Tips for Going Green,” by The Onion.

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“Questions about the origins of human cooperation have long puzzled and divided scientists. Social norms that foster fair-minded behavior, altruism and collective action undergird the foundations of large-scale human societies, but we know little about how these norms develop or spread, or why the intensity and breadth of human cooperation varies among different populations. What is the connection between social norms that encourage fair dealing and economic growth? How are these social norms related to the emergence of centralized institutions? Informed by a pioneering set of cross-cultural data, Experimenting with Social Norms advances our understanding of the evolution of human cooperation and the expansion of complex societies.”

That is the part of the blurb for Experimenting with Social Norms: Fairness and Punishment in Cross-Cultural Perspective by Jean Ensminger and Joseph Henrich.

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Browsing Catharsis – 06.27.15

Texas Supreme Court (somewhat) reinvigorates “substantive due process” protection for economic liberty,” by Eugene Volokh.

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This is probably going to make sense to none of you, but the girl in that comic should be a Heathstone card that is 2/2 for 2 with a battlecry of “Destroy a Beast.” I want a golden animated version of the card, whose artwork would be the second panel of the comic.

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“As human traits and preferences were shaped by natural selection, there is substantial potential for the use of evolutionary biology in economic analysis. In this paper, we review the extent to which evolutionary theory has been incorporated into economic research. We examine work in four areas: the evolution of preferences, the molecular genetic basis of economic traits, the interaction of evolutionary and economic dynamics, and the genetic foundations of economic development. These fields comprise a thriving body of research, but have significant scope of further investigation. In particular, the growing accessibility of low cost molecular data will create more opportunities for research on the relationship between molecular genetic information and economic traits.”

Jason Collins, Boris Baer, and Ernst Juerg Weber. 2015. “The Evolutionary Foundations of Economics.” Working Paper.

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Quantitative Easing and Exchange Rates

Today I found buried in the appendix of a 2015 working paper by Auerbach and Gorodnichenko some systematic evidence that quantitative easing has an effect on exchange rates, which confirms the market monetarist interpretation of recent macroeconomic history. Here is the relevant figure.

a-g2015

That is an impulse-response function from a vector autoregression. The blue dotted lines are confidence bands, which may be interpreted to denote statistical significance since for a period of time the lower band is greater than zero. This is actually somewhat impressive, since applications of vector autoregression like these often fail to achieve that standard.

Browsing Catharsis – 06.26.15

The recent fiscal policy debates,” by Tyler Cowen.

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Randy T. Simmons and Ryan M. Yonk. 2015. “The empty intersection: why so little public choice in political science?” Public Choice, forthcoming.

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Browsing Catharsis – 06.25.15

The WWE Draft: What If Vince McMahon Could Select Figures From Other Sports and Turn Them Into WWE Superstars?” by the Masked Man.

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“This article is a step towards a rethinking of the emergence of the modern state in Europe. Traditionally, war has been viewed as the central mechanism of state formation. This approach claims that war caused the emergence of the modern state in two significant ways: 1) by consolidating the politically fragmented world of the middle ages through conquest; and 2) through the pressure of competition in a Darwinian international system, which forced the polities of Europe to create the bureaucratic structures fundamental to the authority of the modern state. This article seeks to undermine the first of these mechanisms by showing that the territorial consolidation of Europe was a logical result of dynastic lordship. I seek to show that the consolidation of territory and authority into fewer and fewer hands was a direct consequence of dynastic successional practices and therefore that the emphasis on coercion in European political development has been overplayed.”

Vivek Swaroop Sharma. 2015. “Kinship, Property, and Authority: European Territorial Consolidation Reconsidered.” Politics & Society 43, no. 2: 151-180.

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Browsing Catharsis – 06.24.15

Competitive Innovation,” by David Andolfatto. Paul Romer seems to have lost this battle. But don’t listen to me, I’m the one posting cat videos.

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“We use micro data from the European Social Survey to investigate the impact of ‘culture of leisure’ and taxes on labor force participation and hours worked of second-generation immigrants who reside in 26 European countries. These individuals are born in Europe, and they have been exposed to institutional, legal and labor market structures of their countries, including the tax rates. Fathers of these individuals are first-generation immigrants who migrated from 81 different countries. We construct measures of ‘taste for leisure’ in the country of origin of each immigrant father. We employ average and marginal taxes for each country of residence, and control for a large set of individual characteristics, in addition to attributes of the country of residence and country of ancestry. The results show that for women, both taxes and culture of leisure impact participation and hours worked. For men, taxes influence labor supply both at the intensive and the extensive margins, but culture of leisure has no impact.”

Naci H. Mocan and Luiza Pogorelova. 2015. “Why Work More? The Impact of Taxes, and Culture of Leisure on Labor Supply in Europe.” NBER Working Paper no. 21297.

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Browsing Catharsis – 06.20.15

Do Unemployment Insurance Benefits Encourage Reemployment?” by Jiawen Chen and Pamela Villarreal.

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“Over the past decade, there has been increased interest in improving business regulations, in part because of the increased availability of data that can inform and monitor those improvements. This paper analyzes whether these regulatory changes are linked to economic outcomes. With panel data for 10 years across more than 180 countries, the paper establishes the link between business regulations, firm creation, and growth. It is found that an improvement of 10 points in the overall measure of business regulations is linked to an increase of around 0.5 new businesses per 1,000 adults. Moreover, the results show that although small changes in the overall level of business regulations may have a negligible link to growth, moving from the lowest quartile of improvement in business regulations to the highest quartile is associated with a significant increase in annual per capita growth of around 0.8 percentage points. In addition, the results highlight the importance of sound entry and exit regulations and sound credit market regulations and court enforcement for growth.”

Raian Divanbeigi and Rita Ramalho. 2015. “Business Regulations and Growth.” World Bank Policy Research Working Paper no. 7299.

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