Wednesday, December 31, 2014

Learning Economics Through Pictures - Minimum Wage and Jack-in-the-Box

On a trip to California last week, this is what I found in a Jack-in-the-Box restaurant.  Putting in a machine like this is a natural response by firms who see minimum wage increases (or threats of minimum wage increases).  The firms will replace low-skilled employees with machinery.  

California increased their minimum wage on July 1, 2014 (to $9.00/hour).  That is terrible news for young and low-skill workers.

My "best of" 2014 ... scholarly articles I published

I have scholarly articles published in 2014. (Yes, it was a good year - although there is a bit of variance in the timing.  I don't think I was less productive in 2013, but things just seemed to get published in 2014.)  Below are the citations and the links to each:

Many countries now require prominent pictorial health warning labels (HWLs) on the front and back of cigarette packages. In the US, pictorial HWLs have been adopted, but tobacco industry litigation has delayed their implementation. This intervention could have value to smokers, if it increases their information and changes their smoking behavior. In this paper we estimate the value of two different health warning labels for cigarette packages relative to the current US labeling policy. Our methodology does not depend on the personal values of policy makers or other individuals, as the value of information estimates we derive are based solely on smokers’ own consumption choices, not any public health or other effects. We introduce an approach to valuing information with a surplus measure that couples willingness-to-pay from non-hypothetical experimental auctions with time-series revealed preference demand estimates. We find that a pictorial HWL has a large value to smokers, and a higher value than a label that only contains text, insofar as changing purchase behavior.


Researchers use practice rounds to familiarize participants with experimental auction mechanisms. We find a positive correlation between practice bids and bids submitted in later rounds. We consider three explanations for this correlation: a behavioral anchoring effect, a tendency for some auction participants to be more free-spending, and misconception of the experimental auction’s demand revealing qualities

3. “Examining the relationship betweenpsychosocial and behavioral proxies for future consumption behavior: self-reportedimpact and bidding behavior in an experimental auction study on cigarettelabeling.”  Health Education Behavior, 29 (2): 183-194.


Experimental and observational research often involves asking consumers to self-report the impact of some proposed option. Because self-reported responses involve no consequence to the respondent for falsely revealing how he or she feels about an issue, self-reports may be subject to social desirability and other influences that bias responses in important ways. In this article, we analyzed data from an experiment on the impact of cigarette packaging and pack warnings, comparing smokers' self-reported impact (four-item scale) and the bids they placed in experimental auctions to estimate differences in demand. The results were consistent across methods; however, the estimated effect size associated with different warning labels was two times greater for the four-item self-reported response scale when compared to the change in demand as indicated by auction bids. Our study provides evidence that self-reported psychosocial responses provide a valid proxy for behavioral change as reflected by experimental auction bidding behavior. More research is needed to better understand the advantages and disadvantages of behavioral economic methods and traditional self-report approaches to evaluating health behavior change interventions.



Epidemiological and toxicological evidence suggests lower risk of smokeless tobacco (ST) products compared to cigarettes. Less is known, however, about consumer perceptions and use of novel forms of ST, including snus and dissolvable tobacco.


In this study, we conducted in-person experimental auctions in Buffalo, NY, Columbia, SC, and Selinsgrove, PA with 571 smokers to test the impact of information and product trials on smokers' preferences. Auctions were conducted between November 2010-November 2011.


We found no evidence of an impact of product trials on demand in our auctions. Anti-ST information increased demand for cigarettes when presented alone, but when presented with pro-ST information it decreased demand for cigarettes. It did not decrease demand for ST products. Anti-smoking information increased demand for ST products, but did not affect cigarette demand.


These findings suggest that credible and effective communications about tobacco harm reduction should reinforce the negative effects of smoking.



To explore how advertising affects demand for cigarettes and potential substitutes, including snus, dissolvable tobacco, and medicinal nicotine.


A Web-based experiment randomized 1062 smokers to see advertisements for alternative nicotine products or soft drinks, then complete a series of purchase tasks, which were used to estimate demand elasticity, peak consumption, and cross-price elasticity (CPE) for tobacco products.


Lower demand elasticity and greater peak consumption were seen for cigarettes compared to all alternative products (p < .05). CPE did not differ across the alternative products (p ≤ .03). Seeing relevant advertisements was not significantly related to demand.


These findings suggest significantly lower demand for alternative nicotine sources among smokers than previously revealed.

Tuesday, December 23, 2014

My "best of" 2014 - opeds

Over the next two weeks, I'll go through some of my professional highlights for the year.  Here are excerpts from the four opeds I published in 2014:

1.  Voter ID laws protect voters
There are two key arguments against the voter ID requirement. The first is that voter fraud doesn’t exist, which would mean the law has no benefits. This argument is laughable. Just ask Melowese Richardson, who was sentenced to five-years in prison for voting for Obama multiple times in Ohio.

2. TV show "Suits" shows danger of restricting people from jobs
While I find the show entertaining, it troubles me because these types of situations happen in real life. There are people who would be good at a job, but restrictions make it illegal for them to work. The show raises a good question: If somebody wanted to pay a non-lawyer for legal advice/representation, why should that be illegal?

3. On the gender wage gap
If you insist that the gender wage gap is a result of discrimination against women, here are a few other claims that must be equally true. By the same logic, young men are discriminated against in favor of young women. Women in their 20s without children out-earn men by as much as $1.08 to every dollar, according to some estimates. It must also be true that white men are discriminated against in favor of Asian-American men, who earn over 5 percent more than white men. To claim either of these as discrimination would be ridiculous, though, right? There are differences in job types, education levels, hours worked, and other factors that lead to these wage differentials. But these factors are just as responsible for the overall difference in wages between men and women.

4. Let's eliminate the minimum wage for teenagers 
The minimum wage is a bad law. A high minimum wage prompts many firms to hire fewer teenagers – or none at all. Companies will only hire a teenager if they think that teenager will increase their profits, and a higher wage means less profit. Often workers are replaced with machinery, and if you’ve seen touch-screens at grocery stores or restaurants, you’re familiar with how easily machinery can replace young workers if lawmakers enforce high minimum wages. This hurts most the group that it purports to help – low-wage workers, by making many unemployable.

Saturday, December 20, 2014

Well-written oped on buying local

Link here


For the most part, however, the economic claims of the "buy local" movement are hooey.
Economic impact studies can have some uses. But in the public policy realm, they have become a racket. They hang ridiculously precise numbers on inherently vague and difficult to measure phenomenon.

Friday, December 19, 2014

CBO examines economic impact of fracking

Link Here


A new report from the Congressional Budget Office details exactly how shale drilling technologies have benefited consumers as well as the economy:
  • Without shale gas, natural gas costs in 2040 would be 70 percent higher than they are projected to be.
  • In 2020, GDP will be 0.7 percent higher than it would have been without shale. By 2040, GDP will be 0.9 percent higher than it would have been without shale.
  • The federal government's tax revenues will be $35 billion higher in 2020 due to shale energy than they otherwise would have been.

Many studies are quite biased.  While CBO reports aren't always accurate - this is probably the least biased source to ever conduct a study on the economic impact of fracking.

Thursday, December 18, 2014

Fracking, economic freedom, and David R. Henderson

Fracking, economic freedom, and David R. Henderson.  Those were my thoughts this morning as I read the story on how NY may ban fracking.

The politicians in NY are making the decision that all NY citizens are not allowed to frack - even those who would wish to.  It is a classic case where economic freedom is violated, although politicians will not phrase it that way.   (They will always claim its for the greater good.)

Speaking of economic freedom - please mark your calendars for January 21st.  David R. Henderson will be speaking at Susquehanna University.  He might not address fracking specifically, but he's been on the front lines fighting for freedom for many years.

Monday, December 15, 2014

The minimum wage is stifling the American dream

Link here

Most troublingly, these low-skilled workers saw “significant declines in economic mobility,” as these workers were 5 percentage points less likely to reach lower middle-class earnings in the medium-term. The authors provide a possible explanation: the minimum wage increases reduced these workers’ “short-run access to opportunities for accumulating experience and developing skills.”

For those who want to climb from a lower income level to a higher income level, nothing is more crucial than job experience. That is the single top thing that a poor person should do if he/she does not wish to remain poor.

While my family wasn't poor, I was from a working-class family of five where the main breadwinner was a US postal carrier. I worked paper routes for about 2 years and then at fast food restaurants for another 2 years, all before I was 16-years old. Those jobs taught me to work hard along with some skills that were valuable to other employers and in life (e.g., how to deal with people). That helped enable me to get higher paying jobs as an older teenager and in college and beyond.

If the minimum wage was higher, those opportunities would not have happened for me. Unfortunately, with the minimum wage as high as it is right now, there are millions of Americans who won't have the opportunities I had. The current (high) minimum wage is stifling the American dream.

Thursday, December 11, 2014

Learning economics through pictures - free market innovation

This chart shows the price of a GB of data.

Source here

I don't have much else to say here - except that this type of incredible innovation that has cut the costs so dramatically only happens with free markets.

This raises a good question: Has the price of any government product dropped over time?

Wednesday, December 10, 2014

Learning Economics Through Pictures - NFL Ticket Prices and Demand

This screenshot was taken of  It shows prices to five different NFL games, all played this past Sunday.

This is a good illustration of how demand for a product affects its price.  These stadiums aren't dramatically different in size - all can hold tens of thousands of customers.  By December, however, some teams are no longer in playoff contention, while others are.  Three teams contending for playoff spots, the Dolphins, Bengals, and Lions, all have minimum ticket prices of about $50 while a fourth, Cleveland, has a minimum price of $31.

The two teams that aren't in playoff contention that are hosting games are the Jaguars and the Redskins.  Their minimum ticket prices are $25 and $6.

With a higher demand and a fixed supply, the price should increase to ensure an equilibrium.  That appears to be happening in the market for sports tickets.

Another note - given that many tickets are purchased months in advance, this equilibrium can only occur when there are legal markets that allow tickets to be resold.

Wednesday, December 3, 2014

David R. Henderson is visiting Susquehanna University!

A fascinating economic impact study

Link to story about the economic impact of cover-up businesses

The chair is dedicated to conducting research on the economic and social impact of Tasatur (providing cover for expatriates to illegally run their own business activities) on the Saudi society and ways to combat the phenomenon.
According to Prof. Diyab, “the phenomenon of cover-up businesses has created unhealthy competition in the local market.” He said that the Saudi government has attempted to combat this problem but has been unsuccessful so far with the practice having increased lately. He noted that the government is aware of the negative economic, social, legal and political impact the illegal businesses are having on the society.

I don't know what's meant by "unhealthy competition", but it sounds like these "cover-up" businesses are providing services that people like, and that established businesses don't like them.  I couldn't find an actual academic study on this issue, but am curious what an study attempting to quantify this impact would look like.

Tuesday, December 2, 2014

Incentives to admit climate change?


As you study economics, you realize incentives are everywhere.  Unfortunately, the incentives aren't always positive.  For those who receive funding to study climate change - the incentives are skewed to encourage findings that say there is climate change.  If it is suddenly discovered that climate change will not be damaging, that would destroy the careers of thousands of researchers.

Because of these bad incentives, any rational person should harbor at least some doubts about the possible impact or likelihood of climate change.  As an economist, I find this especially true since projections of climate change are often based on theoretical models.  Those in economics, more than in almost any field, should understand that just because there is consensus on an issue, doesn't mean the model is correct. (Mortgage crisis, anyone?)

Saturday, November 29, 2014

Fracking and Oil Prices

1. Oil Prices have been dropping - with fracking getting the credit


In just a matter of months, the price of a barrel of oil has dropped from more than $100 to about $70, and gas is now cheaper than it has been in years. But a recent report conducted for the American Petroleum Institute claimed oil would cost twice as much as it does now if it weren't for America's fracking boom, which wrings oil and natural gas out of shale miles underground.
But the next question could be whether the fracking industry can survive the low prices it brought.
“The shale boom is on a par with the dot-com boom," Russian oil baron Leonid Fedun of OAO Lukoil told Bloomberg. "The strong players will remain, the weak ones will vanish.”

2. A great story on Vox about OPEC's strategy

This marks a big shift in global oil politics. Essentially, OPEC is now engaged in a price war with oil producers in the United States. The cartel will let prices keep falling in the hopes that many of the newest drilling projects in the US will prove unprofitable and shut down.

If these were companies within the US instead of countries in OPEC, they would be violating two laws.  It is illegal to have a cartel to conspire to raise prices.  (Which OPEC is not doing at this exact moment but it is their usual strategy.)  It is also illegal to attempt to force a company out-of-business with lower prices and then raise prices once the competition is gone.

Excerpt 2:
The catch is that no one quite knows how low prices need to go to curb the US shale boom. According to the International Energy Agency, about 4 percent of US shale projects need a price higher than $80 per barrel to stay afloat. But many projects in North Dakota's Bakken formation are profitable so long as prices are above $42 per barrel. We're about to find out how this all shakes out — and which numbers are correct.

Wednesday, November 26, 2014

Discouraging shopping on Thanksgiving

A group of lawmakers in Connecticut want to discourage shopping on Thanksgiving Day.  Link to story here.

In recent years, retailers in Connecticut and across the country have lengthened "Black Friday" bargain shopping by opening on Thanksgiving, usually in the evening.
But some Democrats in the General Assembly fear the consumer holiday is starting to overshadow the traditional one, and hope to pass a law next year that would create disincentives for stores to stay open the last Thursday in November.
"Thanksgiving is the one holiday a year that all Americans share," said state Rep. Matthew Lesser, D-Middletown, who introduced a bill this year that would have required retailers to pay workers triple overtime for Thanksgiving Day hours. "When you're forced to come into work and leave your family on that one day of the year, it really strikes at basic family values."

To preface, I am not going to shop on Thanksgiving.  But just because my family celebrates Thanksgiving with friends and doesn't wish to shop, it doesn't mean every family has to celebrate the way we do.  I also don't mind when the public discourages stores from opening on Thanksgiving. There is a great way to do this - by not shopping at a store that is open on Thanksgiving.  Public pressure is OK.  But when lawmakers interfere with the free-market, that is problematic.

The lawmakers might say that these restrictions on freedoms are for workers, but that is a weak argument.  There are thousands of employers in the US, and if workers wish to not work on Thanksgiving, they could work at a firm that won't need them on Thanksgiving.  A counter-argument from the naive would say that those jobs (that don't require Thanksgiving work) might pay less.  RIGHT!  If you are in a sector of the economy that could use workers on Thanksgiving - jobs that don't require work on Thanksgiving are likely more-appealing and pay less, while jobs that require work on Thanksgiving are less-appealing and pay more.  These differences are called compensating wage differentials.  But by restricting the opportunities, you punish the workers who wish to make more money by not giving them an opportunity to work.

This push by Connecticut lawmakers appears like a penalty on businesses.  Because of the competitiveness of the retail market, however, those penalties would be pushed onto consumers.  This would manifest itself in  one of two ways: fewer deals for consumers or stores closing when consumers wish they'd be open. Lawmakers should not choose when consumers should shop by penalizing firms who are open on a particular day.

If lawmakers tried to impose this on a Christian holiday, like Christmas or Easter, I can only imagine the uproar from the very people who are pushing for these ill-conceived regulations.

Tuesday, November 25, 2014

Fracking works better than sanctions against Russia

Link here

Low oil prices and financial sanctions from the U.S. and its allies are set to cost Russia between $130 and $140 billion a year, or seven percent of the country’s economy, according to Finance Minister Anton Siluanov.
“We’re losing around $40 billion a year because of geopolitical sanctions, and about $90 billion to $100 billion from oil prices falling by 30 percent,” Siluanov told reporters, according to Reuters. “The main issue that affects the budget and economy and financial system, this is the price of oil and the fall in monetary flows from the sale of energy resources.”

Friday, November 21, 2014

Two stories on bias in economic impact studies

1. Great article on how Lebron James is NOT creating a $500 million annual economic impact for Cleveland.  

The biggest problem with the $500 million figure is that it falls prey to one of the most serious fallacies in economic impact analysis: the failure to account for the substitution effect. Any money spent by local residents at Cavs games is money not spent elsewhere in the local economy. The extra 150,000 fans who will be going to watch LeBron next year are 150,000 people who at least on game nights aren't going out to nightclubs, restaurants, and theaters. The higher ticket prices mean less disposable income for fans to spend on Indians or Browns games, or movie tickets, or bowling, or free-style skydiving, or whatever it is Clevelanders were doing while LeBron was in South Beach. Similarly, every kid in Cleveland will be getting a LeBron jersey for Christmas or Hanukkah this winter, but this doesn't mean they will be getting more presents; it just means they're getting different presents. 

My argument, just like my research has shown most notably in the renewable energy industry, is these types of estimates are typically much higher than careful analysis or reality can confirm,” Swenson said.
While Swenson might be right that the dollar estimate is too high, the pipeline will create an enormous economic.  The debate here focuses on how large the impact will be.  That is far different from the article about LeBron James returning to Cleveland.  He will have almost no economic impact on the city of Cleveland.  The big reason the pipeline will have an impact but extra sales of Cleveland Cavaliers tickets won't have an impact is that the pipeline construction doesn't suffer from same "substitution effect" issues.

3. Bonus story!  A new EI study on the pipeline was just released.  Link here.

Wednesday, November 12, 2014

Teaching Economics through Pictures - Food Trucks and Price Discrimination

Thanks to Austin Boyle (he's at @austinboyleecon) for posting this on twitter ...

This is a picture of a menu from a food truck.  The key thing to note is how the prices aren't printed on the menu?

The most reasonable explanation for why they're not posted is that firms price discriminate.  When the food trucks go to different locations, some consumers may have higher incomes overall while others have lower incomes.  This will translate into larger or smaller willingness to pay for food products.  By not printing the prices on the menu, food trucks can price discriminate.  What might cost $8 in one part of town will cost $9 or $7 in others.  The firm will change prices in order to maximize profits.

This is a classic example of price discrimination.  The cost to the firm is the same, but different prices are charged to different people based on their willingness to pay.

Sunday, November 9, 2014

Economic Impact of Eagle Ford Shale

A new report is out.

I haven't had the chance to thoroughly review this yet, but here is a paragraph from the executive summary:
Estimates of overall economic impact for the 21-county area in 2013 top $87 billion, up from $61 billion in 2012. For 2023, the 21-county impact is estimated to exceed $137 billion, far higher than the $89 billion forecast for 2022 that we reported in the March 2013 economic impact study. The rationale for the upward revisions (as mentioned above) is due to the way the Eagle Ford continues to exceed expectations in terms of production. In addition, new manufacturing projects associated with the natural gas renaissance in the U.S., as well as new processing, refining and port facilities are factors driving increases in the economic impact statistics.

Saturday, November 8, 2014

Learning economics through pictures - markets vs. voting

There are some who use economic methods to examine issues in political science - this area of work is called Public Choice Theory.

One commonly discussed issue is "the majority rule problem".

An example of this is when a small majority of voters (say 52%) has a slight preference for a particular law while a large minority of voters (48%) has a strong preference against.  In this case, the overall well-being of society will be lower when the law is passed, but we would expect the law to indeed be passed because 52% want the law.

The majority rule problem occurs because each person, regardless of how strongly he/she feels about an issue, only gets one vote.  One vote cannot measure intensity of preferences, it can only measure the direction of preferences.

This is different from markets, where intensity of preferences is measured.  For example, most people would rather have a Mercedes than a Kia, all else equal.  But the price isn't equal.  Those who most want a Mercedes can purchase one - by paying more.  The intensity of their preferences is measured based on willingness to pay.

Wednesday, October 29, 2014

Deception in experiments

Link here

A joint letter from the presidents of Stanford University and Dartmouth College will be sent to nearly 100,000 Montana voters to apologize for an experiment by three political-science professors at the two institutions. The letter comes after voters and state officials objected to a mailer, sent by the professors, that featured the state’s official seal and offered information about the political leanings of candidates for the state’s Supreme Court as part of an attempt to see whether such information would alter how Montanans voted.
The article is interesting and the issues aren't confined to political science.  I have a paper that will be published soon examining how economists view and define deception in economic experiments.  Once the article is posted online I will link to it here.

Sunday, October 26, 2014

$125K teachers salaries: More evidence that a school voucher program could work?

Link to Vox article describing a unique approach taken by a school

The $125,000 number was eye-catching, but it was just the start of the school's approach to teaching. Teachers were also eligible for a bonus of between 7 to 12 percent of their salary. The teachers, who are not unionized, went through a rigorous selection process that included a daylong "audition" based on their teaching skills. The typical teacher already had six years of classroom experience before they were hired.

Many teachers I know oppose the idea of vouchers.  They shouldn't.  Well, the good ones shouldn't.  If schools are free to compete (especially if you get rid of unions), you wouldn't necessarily expect lower overall teacher salaries.  You would expect better teachers to be compensated well, and poorer teachers to be compensated poorly (or fired).

Tuesday, October 14, 2014

My newest publication: the value of graphic warning labels to smokers

The title of my newest paper, published at the Journal of Economic Behavior and Organization, is titled  "The Economic Value to Smokers of Graphic Warning Labels on Cigarettes: Evidence from Combining Market and Experimental Auction Data".

Many countries now require prominent pictorial health warning labels (HWLs) on the front and back of cigarette packages. In the US, pictorial HWLs have been adopted, but tobacco industry litigation has delayed their implementation. This intervention could have value to smokers, if it increases their information and changes their smoking behavior. In this paper we estimate the value of two different health warning labels for cigarette packages relative to the current US labeling policy. Our methodology does not depend on the personal values of policy makers or other individuals, as the value of information estimates we derive are based solely on smokers’ own consumption choices, not any public health or other effects. We introduce an approach to valuing information with a surplus measure that couples willingness-to-pay from non-hypothetical experimental auctions with time-series revealed preference demand estimates. We find that a pictorial HWL has a large value to smokers, and a higher value than a label that only contains text, insofar as changing purchase behavior.

This was a collaborative work with three superstar scholars.  Stephan Marette's has exceptionally strong analytical skills and uses those skills to help society gain insight into real-world problems.  Jim Thrasher is one of the top experts on cigarette labeling in the world.   Last but not least, Jayson Lusk wrote the book on experimental auctions (literally) and is one of the most-prominent agricultural economists under 50.  It was a fun team to work with.

Saturday, October 11, 2014

Two Fracking Links

1. There are reports that NY Governor Cuomo interfered with an economic impact report on fracking.  That is a danger of economic impact studies, unfortunately.

Several area residents interested in hydrofracking had mixed reactions Wednesday about a recent news report that found that a federal study commissioned by Gov. Andrew Cuomo’s administration was edited or delayed before it was published.

2. A registry may be created to track fracking-related health complaints

In 2011 the Marcellus Shale Advisory Commission recommended a registry to collect health data from people living nearing fracking operations. Three years later that registry has yet to be created, and a state Senate panel says such a database is an important step toward tracking and responding to public health complaints related to gas drilling.
State Sen. John Yudichak (D-Luzerne) says individual health studies are fine, but the state needs to develop data that covers all parts of the commonwealth.
I agree with an organization doing this in theory, but the anti-fracking community could so easily abuse this system for their benefit.  If you're an anti-fracking advocate, it would pay to quietly get groups of people to report health complaints that are consistent with the alleged issues fracking could cause.  

Then, when bans or tax policy issues come up, you'd be able to rely on data for your decisions.  It's faulty data, but the public likely wouldn't know.  

Economists don't like hypothetical surveys because of potential bias.  The same bias could easily come into play here which could lead to bad policy decisions.

Saturday, October 4, 2014

Learning economics through pictures - price discrimination and cruising

Price discrimination is the practice of charging different buyers different prices for the same product, even when there are no cost differences.  (Note, the word "discrimination" has a negative connotation but price discrimination can actually improve the well-being of society.  Further, military and senior discounts are forms of price discrimination.)

Here is a picture of cruise pricing on  All prices are for the same cruise, just different dates.  

This is a classic example of price discrimination.  The cost to the cruise company is the same on for each trip.  The cruise company has to pay the same amount for fuel, materials, and labor.  However, the demand to cruise from December 29-January 2 is considerably higher.  The 4 day stretch around New Years Eve is a popular time to celebrate, many people are off from work and almost all kids are off from school.  Because of this difference in demand, the same four day cruise costs 350% more during peak times than during the off-peak time.

The cruise industry also engages in other forms of price discrimination.  I'll post about those soon.

Wednesday, October 1, 2014

New documentary on fracking

Link here

“There’s been so much myth and misinformation about fracking that has clouded the mainstream media, and the industry has been so late in joining the conversation,” noted producer Chris Faulkner, CEO of Breitling Energy Corporation. “I just couldn’t stand seeing only part of the story – the worst-case scenario part – being told over and over again.”

Friday, September 26, 2014

Learning economics through pictures - law school enrollment and the law of supply

For many years, there has been chatter that the returns to a law degree aren't what they used to be.  (E.g., see this).  Other stories have talked about how tough it is to find a job after graduation.  All of this would indicate that the returns on a law degree are lower than they once were or that the price one earns from being a lawyer has dropped.

Today I saw this chart:

The law of supply states that when the price drops, fewer suppliers will enter a market.  This chart shows that the market for lawyers is consistent with the law of supply.

Link to source article here

Thursday, September 25, 2014

Jayson Lusk speaking at Susquehanna University on October 22nd

I am pleased to announce three great speakers are coming to Susquehanna University during the 2014-2015 academic year. All three are part of a 2014-2015 speaker series on liberty and economic freedom.

The first of the three speeches is titled “The Food Police and the Future of Food” and will be given by Jayson Lusk on Wednesday, October 22nd in Faylor Hall.

Jayson Lusk is Regents Professor and Willard Sparks Endowed Chair in the Department of Agricultural Economics at Oklahoma State University. He has been listed as one of the most prolific and cited food and agricultural economists of the past decade in a variety of outlets, has won numerous research awards, published editorials in outlets such as the New York Times, Wall Street Journal,,,, and the Huffington Post, and has made TV appearances on Fox and Friends, the John Stossel Show and more. His most recent book, The Food Police: A Well-Fed Manifesto about the Politics of Your Plate, was published by Crown Forum in 2013.

Tuesday, September 23, 2014

PA school cancels musical 'Spamalot', showing that we need vouchers for schools

A month after sending the check, Mr. Smith sent an email to Ms. Burch expressing concern about scenes in the show, then followed up in another email saying he was “not comfortable with ‘Spamalot’ and its homosexual themes.” He said school shows were supposed to be “community events” in South Williamsport, a small town in north-central Pennsylvania that is best known as the host of the annual Little League World Series. Mr. Smith said he didn’t want “families to be afraid of bringing small kids because of the content,” nor students forced “to choose between their own personal beliefs and whether or not to take part in a production.” 
But in email to Mr. Smith and in subsequent interviews with the news media, Ms. Burch continued to defend “Spamalot,” a musical comedy based on the movie “Monty Python and the Holy Grail” that includes a comical subplot about Sir Lancelot as a closeted gay man who ends up coming out and marrying another man. The show ran for four years on Broadway and won the Tony Award for best musical in 2005, and has been performed at high schools for several years.
The problem here is that kids (and families) of various beliefs are all forced to attend the same school district.  (OK, they're not forced.  They could pay taxes into that school district and attend somewhere else by paying twice for education.  Perhaps I should we could say families are "forced to pay for the product".)  When Spamalot was on Broadway, I don't recall any controversy.  Those who didn't want to attend the show didn't attend.  Those who wanted to attend did.  Nobody who felt offended by the content of Spamalot was forced to pay their money into the show.

Our students, however, are forced to go to the school in their district or pay extra to go elsewhere.  This is why we have this problem, and controversies over whether prayer should be allowed in school, standardized testing, and more. If instead there were a voucher system, where students get a voucher from the government to attend any school, these problems wouldn't exist.  Those who want to attend a school that shows musicals like Spamalot can attend.  Those who wish to attend a show  can choose not to attend.

Once again we are presented with evidence that non-market "solutions", like our public school system, creates problems.

Link to my most recent radio interview

Link here

This was a discussion of the Scotland independence vote.  I come on at the 31 minute mark.  I don't speak too much here, mostly they were (wisely) interested in what my Scottish colleague Daryl Rodgers had to say on the vote.  They did ask about some of the economic considerations, however, where I chimed in.

Thursday, September 18, 2014

Great climate change article ...

I'm a bit late with this, but here is a great article by Edward Lazear in the Wall Street Journal.  (Thanks to David Kendall for bringing this to my attention)

The Obama administration is instituting a variety of far-reaching policies to reduce carbon emissions and mitigate climate change. Are any of these capable of making a difference? Simple arithmetic suggests not. Given this reality, we would be wise to consider strategies that complement and may be more effective than mitigation—namely, adaptation.

Thursday, September 11, 2014

Learning economics through pictures - beer vending machines

Thanks to SU econ major Courtney Conrad for bringing this to my attention!

This is a beer vending machine found in the stadium of the Minnesota Twins.  The benefits of this for the stadium is that you need fewer worker.  The downside, of course, is that the machines cost money.  

With higher minimum wages and threatened future minimum wage increases across the country, however, these types of machines will become more widespread.

Monday, September 8, 2014

Assorted Links

1. An economist on the airline seat-reclining controversy

2.Outstanding Forbes article on the black-white learning gap.

The root cause, of course, is something that neither the President nor the well-intentioned apologists for black academic failure (who cite everything from boredom to Common Core to institutional racism as causal agents), nor union-bashers, nor even school choice advocates care to admit: the lack of respect for, role modeling of, and high expectations for rigorous academic study in many black homes and communities. 

We're #35!

Rankings of research output by economics departments at liberal arts universities

It's only experimental, but it is still pretty exciting for our small department.  Many of these departments have far more faculty members than Susquehanna, whereas Susquehanna University's economics department has four faculty members.  

Saturday, September 6, 2014

I'm quoted in an article discussing the PA governor's race

Link here

Pennsylvania had added 54,000 jobs over the year.
Matthew Rousu, an economics professor at Susquehanna University, notes that politicians generally get too much credit when the economy is good and too much blame when it’s bad.
But Corbett has likely helped the state economy — particularly in rural Pennsylvania — by encouraging natural gas drilling.

Wednesday, September 3, 2014

My newest oped in Forbes - Voter ID laws protect voters' rights

Link here
There are two key arguments against the voter ID requirement. The first is that voter fraud doesn’t exist, which would mean the law has no benefits. This argument is laughable. Just ask Melowese Richardson, who was sentenced to five-years in prison for voting for Obama multiple times in Ohio. 

This is the second oped I had published today ... 

Learning economics through pictures - the benefits of a college degree

Link here

My oped on the TV show 'Suits' and restrictions on working

This is my latest oped, published at The Federalist

While I find the show entertaining, it troubles me because these types of situations happen in real life. There are people who would be good at a job, but restrictions make it illegal for them to work. The show raises a good question: If somebody wanted to pay a non-lawyer for legal advice/representation, why should that be illegal?

Monday, September 1, 2014

Labor Day reading: Great oped on protecting workers ...

Link here

Barack Obama’s vow to create a “rising, thriving” middle class has instead produced stagnant incomes, a weak consumer economy and a surge in government dependency – all while his overbearing executive branch actively works against the best interests of American laborers. And no agency has been more instrumental in this assault on American productivity than the National Labor Relations Board (NLRB) – which was recently at the heart of a major constitutional crisis.

Thursday, August 28, 2014

A police officer answers questions on Ferguson ...

Link here

The whole article is great.  Here's an excerpt:
Shooting events are over far faster than most people think. According to a scientifically-validated study on reaction times, the time from a threat event to recognition of the threat (the decision making process) is 31/100 second. The mechanical action of pulling the trigger is as fast as 6/100 of a second. 
For those who aren't anti-police but are curious about some issues claimed in the Ferguson case, this is great.

Tuesday, August 26, 2014

Disparate treatment vs. impact

It is so crucial to understand the difference between these two facts.  This includes academia.  Many professors who get upset about supposed discrimination, don't understand this difference.

Pacific Legal Foundation has a nice write-up here.

It starts:
There are two types of discrimination recognized by our various civil rights laws: disparate treatment and disparate impact. The former is conscious, intentional discrimination.  The latter is unintentional, and is demonstrated through statistical disparities.  Here on the Liberty Blog we have often posted on various absurd applications of disparate impact theory.  We have also notedhow the Obama Administration is trying to inject disparate impact into nearly every facet of American life.  Disparate impact is a pernicious doctrine that forces racial balancing, hurts business, and violates the Equal Protection Clause.

Saturday, August 23, 2014

Tax inversions - Mankiw's take

Click here for Mankiw's piece on tax inversions.  My favorite excerpt:
The great 20th-century jurist Learned Hand— who, by the way, has one of the best names in legal history — expressed the principle this way: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.”

Negative economic impact of hurricanes

Full paper here

Excerpt from WSJ:
What they found is that the popular idea that disasters stimulate growth and economic losses are made up quickly isn’t true. Storms cause a long-running reduction in per capita real gross domestic product.
The researchers found if during the course of a year each location in a country experienced maximum cyclone wind speeds of 9.4 meters per second (m/s) above average (about an extra 21 miles per hour), this would result in national income being 3.6% lower in 20 years than it would have been without the storm.

Friday, August 22, 2014

Great meme

12 things you need to know about government unions

Link here

5. In recent developments, mothers took on a governor and politically-connected union.
In early fall 2009, Pam Harris, a resident of suburban Chicago and mother of a young adult son with severe developmental disabilities, received a form letter from agents of Illinois Gov. Pat Quinn informing her that, as a care provider for her son in Illinois’ Disabilities Program, she now could cast a mail-ballot vote regarding which of two unions would be installed as her monopoly-bargaining agent in her dealings with the state.

Thursday, August 21, 2014

Proof that it's not just Democrats that want to restrict freedom ...

Republicans try to "restore" ban on online gambling

It starts:
Republicans generally oppose federal encroachment on policy matters traditionally left to the states. SO why is Rep. Ted Poe (R-Tex) alone among his GOP House colleagues in opposing a federal online gambling ban that would preempt state laws, reward special interests, and curtail an otherwise lawful pastime enjoyed by many Americans?

Wednesday, August 20, 2014

Article - Boom in Marcellus Shale Continues ...

Link here

Just how has Marcellus continued to grow at such a blistering pace? To start, the industry’s learning curve has been impressive. Marcellus natural gas production continues to grow despite a drop in rig count since 2012. Historically, natural gas volumes have responded to shifts in rig counts. Analysts have argued that it would be difficult for the industry to maintain production with a slowdown of drilling activity. (Fracking) has turned this logic flat on its face.

Best music video - that covers an economics topic?

I'll be showing this to start my first principles of microeconomics course on Tuesday ...

Sunday, August 17, 2014

The economics of the ice-bucket challenge

Link here

This why Caitlin Dewey, a blogger for the Washington Post who claims that we should praise the challenge for raising so much money, gets it all wrong. The ice bucket challenge has done one good thing, which is raise $3 million for the ALS Association. But it’s also done a really bad thing: take money and attention away from other charities and other causes. That means that, if we want to know whether the ice bucket challenge has been on balance a good thing for the world, we’ve got to assess how effective the ALS Associations is compared with other charities. If 50% of that $3 million would have been donated anyway, and if the ALS association is less than half as effective at turning donations into positive impact on people’s wellbeing than other charities are on average, then the fundraiser would actively be doing harm.

Saturday, August 16, 2014

Learning Economics Through Pictures - Law of Demand and Second Amendment

Economic impact of divorce

Blog post is headlined as "The Economic Impact of Divorce".

When I saw the title, I got excited, as I thought it would actually be an examination of the economic impact of divorce (which, to my knowledge, nobody has researched).  I was disappointed, as it wasn't really an economic impact study, but basically a pitch to use the firm's divorce lawyers.

Several years ago at my church, I was in a small group for couples.  One day the leaders had an exercise they asked all of the couples to go through.  One was to examine how expensive it would be to get divorced. There are financial impacts on the couple, of course, but I'm not certain there are broader economy-wide impacts.  (At least not immediately, here's research on children.)

Here are a couple articles on the costs of divorce to the couple:

Link 1

Link 2

Friday, August 15, 2014

Learning economics through pictures - US medical spending

Picture 1 source here

The conventional story is that the US was horrendously inefficient, much more so than other countries.  While that may be true, these graphs make it appear that it's more likely that we spend far more on elderly care than other countries.  For those under age 60, we don't seem much more inefficient than other countries.  These graphs make it appear that it is not inefficiency, but choices on how much to spend on elder-care, that make our per-capita health care expenses more than other countries.  (Note - these graphs are from pre-Obamacare data.)

Monday, August 11, 2014

Liberty and Economic Freedom Series at Susquehanna University

I am pleased to announce three great speakers are coming to Susquehanna University during the 2014-2015 academic year.  All three are part of our speaker series on liberty and economic freedom.

The three speakers complement each other nicely.  One speaker will discuss national issues, one will discuss issues specific to the state of Pennsylvania, and one will discuss issues related to food and agriculture.

Our three speakers are:

Jayson Lusk :             Wednesday, October 22nd
David R. Henderson:  Wednesday, January 21st
Nate Benefield:           Monday, April 13th

Here's some information on our speakers:

Jayson Lusk. Regents Professor and Willard Sparks Endowed Chair in the Department of Agricultural Economics at Oklahoma State University.  
Jayson will be talking about issues related to food, the "food police", and freedom.  Here's (an abridged version of) his autobiography:

I currently serve as Regents Professor and Willard Sparks Endowed Chair in the Department of Agricultural Economics at Oklahoma State University and also serve as the Samuel Roberts Noble Distinguished Fellow at the Oklahoma Council of Public Affairs. After earning a B.S. in Food Technology from Texas Tech University in 1997, I received a Ph.D. in Agricultural Economics from Kansas State University in 2000.
I’ve been listed as one of the most prolific and cited food and agricultural economists of the past decade in a variety of outlets including here, here, here, and here, won numerous research awards, given lectures at over 30 universities in the US and abroad, published editorials in outlets such as the New York Times, Wall Street Journal,,,, and the Huffington Post, and have made TV appearances on Fox and Friends, the John Stossel Show, and Wall Street Journal Live, among others.

In 2007, I co-authored a book on a consumer research method with Jason Shogren published by Cambridge University Press and co-authored an undergraduate textbook on agricultural marketing and price analysis with Bailey Norwood published by Prentice-Hall. In 2011, I released a book co-authored with Norwood on the economics of farm animal welfare published by Oxford University Press and also co-edited the Oxford Handbook on the Economics of Food Consumption and Policy. My most recent book, The Food Police: A Well-Fed Manifesto about the Politics of Your Plate, was published by Crown Forum in 2013.

David R. Henderson.   Research fellow at Stanford University’s Hoover Institution, and an associate professor of economics at the Graduate School of Business and Public Policy, Naval Postgraduate School, in Monterey, California.

David will be discussing issues related to the national economy, including the benefits of capitalism and economic freedom.  Here's an abridged version of his autobiography:

I’m the editor of The Concise Encyclopedia of Economics (Liberty Fund, 2008). It is now on the web at: It has been translated into Russian and Arabic. My book, The Joy of Freedom: An Economist’s Odyssey, was published by Financial Times Prentice Hall in the fall of 2001, and has been translated into Chinese. I also wrote, with my former student, Charles L. Hooper, Making Great Decisions in Business and Life (Chicago Park Press, 2006). It has been translated into Japanese and Korean.
I’ve written about 200 articles for such popular publications as the Wall Street Journal, New York Times, Barron's, Fortune, Los Angeles Times, Chicago Tribune, Public Interest, National Review, Red Herring, and Reason. I’ve testified before the House Ways and Means Committee, the Senate Armed Services Committee, and the Senate Committee on Labor and Human Resources. I’ve also appeared on C-SPAN, CNN, the Jim Lehrer Newshour, the O’Reilly Factor, and the John Stossel show, and I’ve done radio interviews with NPR, the BBC, KQED-FM and many regional radio stations.

Nathan Benefield.  Vice President of Policy Analysis for the Commonwealth Foundation.

Nate has researched and written on public policy issues including taxes, government spending, education reform, transportation funding, health care policy, and economic development. Nate's work has been featured in the Philadelphia InquirerPittsburgh Post-GazettePittsburgh Tribune-ReviewPatriot News, and Allentown Morning Call amongst others.  Nate frequently provides testimony to the Pennsylvania House and Senate and often lends his policy expertise to WHP 580 and KDKA radio.