Thursday, December 26, 2013

If economists wrote Christmas cards, and other links

1. If economists wrote Christmas cards - funny!

2. Great Greg Mankiw post about measuring changes in income, and how statistics can be distorted.  

It concludes:
Take this as a cautionary tale.  When people talk about changes in income over time, make sure you know what measure of income they are citing.
3. Jayson Lusk on the hidden cost of food.

The last paragraph is really good ...
This essay arose from my failed attempts to explain externalities to noneconomists and my desire to challenge fellow economists to think more seriously about the real-world implications of policy advice derived from simple textbook models. In popular writing about food and agriculture, there seems to be a lack of appreciation for the types of externalities that reduce welfare and of the difficulty associated with crafting corrective actions that actually increase the size of the pie.
This is something I struggle with when I teach principles of microeconomics.  The nuance of when government intervention would be worthwhile. When we discuss market failures, textbooks all seem to assume that a government that attempts to fix the failure won't have failures themselves.  I.e., they will be completely efficient at fixing the problem.  Anybody with one lick of common sense knows this isn't true, yet even "right-leaning" textbooks seem not to acknowledge this issue.

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