My 2015 in Broadway shows

2015 was a great year in many ways.  As far as musicals go, this year I launched Broadway Economics, which is designed to help teach economics through showtunes.

I also saw more shows in NYC this year than in any previous year (seven).  Here are the shows in order I saw them:

1. On the Twentieth Century

Very entertaining show - saw Kristen Chenoweth and Andy Karl in performances that earned them both Tony nominations.  It also has the song Five Zeroes, which will be going on Broadway Economics soon.


2. Honeymoon in Vegas

Great show that unfortunately couldn't gain traction in NYC.  Fortunately, the low demand meant we got 6th row seats for almost nothing by going through the "rush" tickets line.  My kids got to meet Nancy Opel after the show.  Also - The Airport Song is a great song illustrating price discrimination that is featured on Broadway Economics.

3. Something Rotten

Fantastic and hilarious show!  Also has a couple songs featured on Broadway Economics (Welcome to the Renaissance and A Musical).

4. Fun Home

The show that won the Best Musical Tony in 2015 was quite good.  Again, it features a song that is on Broadway Economics.

5. The King and I

What I found fascinating about this show, other than its outstanding quality, was that it was at the Lincoln Center.  That theater's operational model seems quite different from many, as they rely on many donations.  (And they get A LOT of big donations.)  It shows with the casting - as The King and I had a large cast, which isn't cheap.

6. Spring Awakening

This was an all-deaf cast, which made for an interesting musical.  I have a song how has hearing aids, so I really wanted to see this show.  I'm not a big fan of the music or the story, for that matter.  (Full of cliches about how mistreated kids ar

e ...) But the acting was pretty amazing.  Seeing the acting in sign language, with a perfectly silent theater, was powerful and well worth the trip.


7. Dames at Sea

What else did I see this year?

1. Ham for Ham

My wife and I saw this performance of Ham for Ham.  (And our family is going to Hamilton in February!)

2. Once, the Musical (on tour)

3. Matilda, the Musical (on tour)

4. You're a Good Man,Charlie Brown (local production)

My favorite show of the year!  I might be biased, however, as my three kids all had roles.

5. The 25th Annual Putnam County Spelling Bee (local production)

Should Deception in Experiments be Allowed? - My New Paper at the AJAE

Link here

This was collaborative research with my coauthors and friends Greg Colson, Jay Corrigan, Carola Grebitus, and Maria Loureiro.

Abstract

Deceptive experimental practices are banned in some professions but are standard in others. Recently, the journals of the Agricultural and Applied Economics Association introduced guidelines that allow researchers to publish articles that use some forms of deception. However, in their present form, these guidelines leave room for interpretation. This situation is not ideal for researchers, and a clearer definition of which deceptive practices should be banned could be beneficial. Our aim is to help provide greater clarity and potential guidance for journal policies regarding deception by using the results of surveys of both researcher and student subjects. Evaluating ten potentially deceptive experimental techniques, we find consistent support for banning certain practices while allowing others.

The best books I read in 2015

Here is the list of books I read this year.  Note - these are books I read in 2015, but some came out prior to this year.

The books I recommend, either because I learned from them or because they were entertaining (or both) - in no particular order:

1. The Century Trilogy by Ken Follett.  These three (very large) books are historical fiction.  I found the stories fascinating.  On top of that, I learned a bit about what life might have been like at various points and places in the 20th century.  On top of that, there are many good economic lessons one can learn from these books.

2. By the People by Charles Murray.  Outstanding book.  A bit depressing, as it is quite convincing in how the American dream - in terms of how it was initially considered - is dead.  But it also shows a game plan for winning it back.

3. Misbehaving by Richard Thaler.  He's a bit arrogant and overstates his case in many places, but it serves as nice overview of behavioral economics.

4. The Business of Broadway by Mitch Weiss.  Great book for Broadway fans who like learning about the business side of things.

5. Money: Master the Game by Tony Robbins.  He is good and offers great advice.  I'm going to have my kids read this.

Last, but not least:

6. The Survivor (Mitch Rapp novel) by Vince Flynn and Kyle Mills.  One of my favorite book series ever has continued after the tragic early death of Vince Flynn.  I was skeptical before it came out, but found this as enjoyable as the previous books.



Some other books:

1. The new Krugman book.  I'm not a Krugman fan.  This was no worse than his other books, and definitely better than his NY Times columns.
2. The new Stiglitz book.  This was worse than his other books, but largely because it was just a collection of his columns. If you want a drinking game, take a shot every time he says George W. Bush gave "tax cuts for the rich" (with no supporting evidence to defend his claim).
3. Chicagonomics.  This book was OK, but I was hoping for more.  I did enjoy his interview transcripts at the end of the book most.  Admittedly, I didn't finish this.  Just couldn't keep my attention well enough.  (Although I skipped to the end for the interviews.)
4. Cockpit Confidential.  It wasn't bad, but I stalled part-way through and didn't finish.
5. Real Dissent.  Same as #4.

Economic Lessons for Children from the Hunger Games

My newest paper has been published at Econlib.org, the Library of Economics and Liberty.  It is titled Economic Lessons for Children from the Hunger Games.  I'm quite excited to have a paper there, as I read it daily and really respect the writers on that website.  Further, Susquehanna University was fortunate enough to have David Henderson visit our campus last January.

As far as the article, here is the link.

An excerpt:

While I've found these books and movies entertaining, the value of this enterprise isn't limited to entertainment. The Hunger Games might contain the best depiction of communism and its cousin—socialism—ever provided in a best-selling novel. Given the national popularity of self-avowed socialist Bernie Sanders and others who want increased government control over our lives, the lessons from these books are quite timely and desperately needed. The political and economic lessons fromThe Hunger Games are so relevant that our children, and pretty much everyone else, would do well to read them.

Broadway Economics Featured in Times Higher Education

Link here

Excerpt:

The effectiveness of this is not an indication that economics “is not exciting enough as a subject”, Professor Rousu said. “But many students taking economics for the first time really don’t have any idea what they’re coming into. It’s another way a student might be able to learn a topic that can be tough for some people to learn, in a very non-threatening way.”

60-second lectures

Last week I gave a (very) short presentation titled "What Poker Teaches Us" at an event hosted by Honor's students.  Here is a short write up about the event.

Excerpt:

Matthew Rousu, professor and the department chair of economics, has been involved in six of the last ten Poker World Series. 

He spoke about the benefits of understanding the mathematical concepts of poker, strategies involved, emotional maturity of winning or losing, money management and how poker can be applied to the world outside of poker, especially in business.

Free-Market Environmentalism by Carrie Kerekes

I am pleased to announce that Carrie Kerekes will be the second speaker of the 2015-2016 Liberty and Economic Freedom Speaker Series.  Dr. Kerekes will present “Free-Market Environmentalism” on Thursday, November 5^th at 7:30 PM in Isaacs Auditorium. 

Dr. Carrie B. Kerekes is an Associate Professor of Economics at Florida Gulf Coast University.  She received her Ph.D. in Economics from West Virginia University in 2008.  Her research interests are in the areas of applied microeconomics; public economics; and economic development, with an emphasis on institutions and private property rights.  Dr. Kerekes has published several articles in refereed journals including the Journal of Law and Economics, the American Law and Economics Review, The American Journal of Economics and Sociology, the Cato Journal and the Review of Law and Economics.  Dr. Kerekes regularly attends the meetings of the Association of Private Enterprise Education (APEE) and the Southern Economic Association (SEA).  Dr. Kerekes serves on the Executive Board of APEE and also serves on the Board of the Freedom and Virtue Institute (FVI).  She has participated in seminars sponsored by the Foundation for Economic Education (FEE), the Institute for Humane Studies (IHS), Liberty Fund, and the Charles Koch Foundation.  Dr. Kerekes conducted field research on land titling in rural Peru in 2007.

My new website: Broadway Economics!

Link here

Visit my new website, BroadwayEconomics.com.  The site has over 30 songs from musicals that all illustrate economic concepts.  New songs are being added monthly, so be sure to check back often!

You can also follow BroadwayEconomics on Twitter: @broadwayecon

SU Crusader story covering David Kendall visit

Link here

Really nice write-up in the student newspaper!  Excerpt:

Kendall explained, “Real capitalism has four tenants…the first is private property, the second, which is the heart and soul of capitalism, is called voluntary exchange…the third tenant is personal freedom and the fourth principle is just law.”

Video of my interview of David Kendall

The 1-hour video is here!  Watch below or click here to watch through YouTube.

David Kendall visits Susquehanna

David Kendall visited Susquehanna today!  He presented "Morality and Capitalism" at 7:30 PM, but was busy all day.  He had a chance to meet with students during a class and at a meet-and-greet session.  He was also "On the Mark" (on the local radio show).

Here is a link to his radio appearance.  (It is great!)

Here are some pictures of Dr. Kendall meeting with students and with me at the speech.

Making your own sandwich and gains from trade

Vox has a great video about a person who creates his own sandwich.  It takes 6 months and costs $1,500.

We sometimes forget how much better off our lives are because of trade.  This video does a great job reminding us there are incredibly large gains from trade!

My new article on using monetary incentives when teaching

Recently published in the Journal of Economic Education.

Abstract:

Using 641 principles of economics students across four universities, the authors examine whether providing monetary incentives in a prisoner's dilemma game enhances student learning as measured by a set of common exam questions. Subjects either play a two-player prisoner's dilemma game for real money, play the same game with no money at stake (i.e., play a hypothetical version), or are in a control group where no game is played. The authors find strong evidence that students who played the classroom game for real money earned higher test scores than students who played the hypothetical game or where no game was played. Their findings challenge the conventional wisdom that monetary incentives are unnecessary in classroom experiments.

Great point by David Henderson

Link here

Henderson writes:

I hit a point where it would have made sense to hire an employee part-time if I could have paid her hourly and kept zero or minimal records. But I knew enough about the law to know that that could get me in trouble.

I think that lawmakers who want to "do something" about problems don't imagine their "solutions" will cause harm.  Unfortunately, they do.

David Kendall visiting Susquehanna University

My Political Economic Thought reading list ...

This semester I'm teaching Political Economic Thought for the third time.  The first two times were (in my opinion) wildly successful, so I'm excited about this opportunity.  Here's the course reading list:

Conard, Edward.  “Unintended Consequences: Why everything you’ve been told about the economy is wrong.”  Penguin Books Ltd.  2012 

Friedman, Milton.  “Capitalism and Freedom, Fortieth Anniversary Version.”  The University of Chicago Press.  2002.

Kendall, David.  “Morality and Capitalism: A Dialogue on Freedom.”  CreateSpace Independent Publishing Platform.  2014.

Krugman, Paul. “End this Depression Now.”  W.W. Norton & Company Inc.  2012. 

Marx, Karl and Friedrich Engels.  “The Communist Manifesto.”  Signet Classic.  1998.

Murray, Charles.  “By the People”.  Crown Forum.  2015.

Pikkety, Thomas.  “Capital in the Twenty-First Century.”  Belknap Press. 2014.

Powell, Jim.  “FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression.”  Three Rivers Press.  2003. 

Sowell, Thomas.  “The Quest for Cosmic Justice.”  Simon & Schuster.  1999.

Stiglitz, Joseph.  “The Great Divide.” W.W. Norton & Company. 2015.

                        

Thaler, Richard H. “Misbehaving.”  W.W. Norton & Company.  2015.

Learning Economics Through Pictures - Uber and Ride-Share restrictions. (Guest post)

This is a guest post by Courtney Conrad.  She is a junior economics major at Susquehanna University and has served as my research assistant since her freshman year. 

While I vacationed in Florida a few times this summer, I noticed new signage popping up all around Orlando International Airport (MCO). As I read the content on the signs, I couldn’t help but think of governmental interference in economic/consumer freedom. These signs, and the policies they promote, threaten fines and even arrest if ride services such as Uber, Lyft, etc. attempt to pick up passengers at MCO.

Being an economics major, I immediately realized the negative implications of such a policy – loss of freedom of choice for the consumer. Since passengers are restricted as to how they can pay to depart the airport, their consumer freedoms are ultimately hindered. With a loss of freedom of choice, and passengers only able to pay for a ride service from permitted ground transportation, this causes a negative ripple effect for people interested in working for ride share operators. If Uber, for example, is limited in the locations they are allowed to offer their service, they will not need to hire drivers to accommodate those “off limits” areas – thus, potential/current Uber drivers’ chances of making a living are potentially stunted due to Uber needing less drivers.

Furthermore, to the naked eye, travelers reading this sign will think MCO has their passengers’ safety and well-being in mind through this action. Admittedly, this is the true case to some extent; but, there are more predominant agendas behind-the-scenes here. The airport claims to have passengers’ safety as their top priority -- however, restricting competition is of the same prioritization and importance (if not more) to MCO in this instance. By infringing on consumer freedoms and limiting airport departure transportation, ground transportation with a permit can charge very expensively for their service(s). The permitted transportation knowingly charges such a high amount since they realize that they are the passengers’ only option and the passengers are practically forced to pay the designated price due to no other ground transport options. Also, by cutting off ride share operators in the area around MCO, the airport profits from the (costly) permitted ground transportation they are associated with and does not lose out to Uber, Lyft, etc. With the benefits MCO and permitted transportation gain while forbidding ride share operators, safety seems far from the main reason for the restriction.

So, to the typical passerby in Orlando International Airport, this sign simply lets them know that their mobile Uber app will not be allowed/applicable in the area. However, to the passionate economics major passing through, this sign does not just mean consumers are losing out on using an app – but freedom, too. 

Great video about fair trade ...

Working at a university, there are often people who want to "do something" about a particular cause.  Many times, however, a group's activism might make matters worse.

One area where where I've noticed activists on college campuses is in promoting fair trade foods.  But would that help the poor?  This short video by Marginal Revolution University explains why fair trade foods are unlikely to help the poor:

Is "lame" the right word to describe the minimum wage?

Link here

Republican presidential candidate Scott Walker called the minimum wage "lame".  But is that the right word?  It's a good start to attack terrible policies like the minimum wage - but simply calling it "lame" makes it seem like it causes no harm.

A better term is needed.  That said, what is the right word for a policy that:

* Keeps teens from gaining important life skills that would have helped them not only earn money now, but gain valuable work experience which will help them get better jobs later?

* Causes firms to switch from hiring people to hiring machines?

* Prompts people who would have worked for $5/hour but can't get a job at $7.25/hour or higher to seek other options for income?  Some will choose to work in illegal markets (selling drugs, etc.).

* And has other bad consequences?

No, lame is not the right word for the minimum wage.  But it's better than what most politicians are saying.

Learning Economics Through Pictures - Washing Cloths

Thanks to Dirk Mateer for taking and posting this great picture on his facebook feed!  (And for his permission to use it!)

As Dirk writes:

Check out the photo at the self laundry facility! See the old black and white photo of the women washing and drying by hand above the new stainless machine? Those labor intensive jobs are long gone but society is better off because it takes less time to wash and dry than before.

He's absolutely correct here.  This is a great example of an innovation that displaced labor.  Throughout history, there have been thousands of innovations that have caused tasks to be completed less expensively and with less labor.  At the time, however, those tasks could cause some pain to those who are displaced.

Even today we hear about machines replacing people at tasks (and some previous pictures I've posted have covered that).  In the long run, however, when more is produced using less labor - society is better off!

The 2015-2016 Liberty and Economic Freedom Speaker Series

Exciting news from the economics department at Susquehanna University!  In 2015-2016 we will be bringing three speakers to campus!  This is a continuation of the Liberty and Economic Freedom Speaker Series started last year.  We had a great lineup last year, and the 2015-2016 academic year should be just as fun and educational.

We have three speakers now confirmed for the 2015-2016 Liberty and Economic Freedom Speaker Series!  They are ...


David Kendall 

Morality and Capitalism: A Dialogue on Freedom. 
Tuesday, September 29, 2015

David Kendall is a Professor of Economics and Finance and Chair of the Department of Business and Economics at the University of Virginia's College at Wise. Previously he was the Dean of the School of Business at St. Edward's University in Austin, TX and Chief Economist for Empire Funding Corporation, also in Austin. While a senior economist with RTI International in Research Triangle Park, NC, Dr. Kendall led numerous applied economics research projects conducted for FDA, EPA, and USDA. 

Dr. Kendall is the author of the book Morality and Capitalism: A Dialogue on Freedom. He earned his Ph.D. from NC State University.  Matthew Rousu, professor of economics and Warehime Chair, will interview Dr. Kendall on stage in a conversational style and there will be opportunities for audience members to ask questions.  

Carrie Kerekes 

Free-Market Environmentalism
Thursday, November 5, 2015

Dr. Carrie B. Kerekes is an Associate Professor of Economics at Florida Gulf Coast University.  Her research interests are in the areas of applied microeconomics; public economics; and economic development, with an emphasis on institutions and private property rights.  Dr. Kerekes has published several articles in refereed journals including the Journal of Law and Economics, the American Law and Economics Review, The American Journal of Economics and Sociology, the Cato Journal and the Review of Law and Economics.  Dr. Kerekes conducted field research on land titling in rural Peru in 2007.  She regularly attends the meetings of the Association of Private Enterprise Education (APEE) and the Southern Economic Association (SEA).  Dr. Kerekes serves on the Executive Board of APEE and also serves on the Board of the Freedom and Virtue Institute (FVI).  She has participated in seminars sponsored by the Foundation for Economic Education (FEE), the Institute for Humane Studies (IHS), and the Charles Koch Foundation.  She received her Ph.D. in Economics from West Virginia University in 2008.  

Dirk Mateer 

Economics in the Movies
Thursday, February 25, 2016

Dr. Dirk Mateer is the Gerald J. Swanson Chair in Economic Education at the University of Arizona. Dr. Mateer’s research has appeared in the Journal of Economic Education as well as other journals and focuses on media-enriched learning. He is the author of Economics in the Movies (2005) and Principles of Economics (2013, with Lee Coppock). 

Dr. Mateer is also an award-winning instructor. He has been featured in the "Great Teachers in Economics" series put out by the Gus A. Stavros Economic Education Center at Florida State University. He was also the inaugural winner of the Economic Communicator Contest sponsored by the Association of Private Enterprise Education. While he was at Penn State, he received the George W. Atherton Award, the university’s highest teaching award, and was voted the best overall teacher in the Smeal College of Business by the readers of Critique Magazine. Now at Arizona, Dirk received the Large Class Faculty Member of the Year award from the Eller College of Management in 2015.

Theme Park Economics - Disney and Universal Orlando

I just returned from Orlando after a trip with my family.  We visited both Universal Orlando theme parks and Disney World.  The parks are pretty fascinating for an economist to visit as a couple economic principles are demonstrated quite vividly. 

First, you see the monopoly power these parks have when selling concessions inside the parks based on the prices they charge.  Meals that would cost $5.00 or less outside a park are considerably more.  For example - how much do you think a fast food restaurant would charge for a hot dog and fries with no drink?  Naturally, it would depend on the place, but it's tough to imagine paying more than $4.00 or $5.00.  At Disney you pay $7.49 for the same meal.

This monopoly power holds when purchasing drinks as well.  A 20 ounce soda that costs about $1.50 at a gas station or McDonalds costs about $3 in either Disney or Universal Studios.

Second, you see great examples of price discrimination.  Disney does this in several ways.  First, look at the pricing schemes for tickets based on the number of days you're visiting ....

The first three days in the park each cost about $100 - after that it drops quickly.  (Note: these admissions to the park must be used within a 14-day period)

Disney also charges a bit more than other local hotels for those who want to stay on Disney property.  The benefits include more of the "Disney experience", quicker access to the parks, earlier access to ride-reservations, along with more convenient busing access across the properties.  Disney offers more immersion into the "Disney Magic" for those willing to pay more.

Within the Disney properties, you also see dramatic differences in pricing schemes for different hotels, as you can see from this image:

(Note - this includes tickets for a family of 4 - but those costs remain the same regardless of the property.)  The

Universal Studios in Orlando price discriminates as well, but they take it a step further with their Universal Express program.

This option isn't cheap for a family, however.  There are two ways to obtain these passes.  You can purchase them outright - for our family of five this would have cost over $300 for a day (after taxes).  

Instead we chose to spend one night at a Universal hotel to obtain these passes.  The hotel was walking distance to the parks, which was nice, but it was literally three times as expensive as a comparable room that was 1.5 miles away.  That said, our hotel reservation meant we received Universal Express passes for two days - the day we arrived and the day we departed.  While expensive, the total hotel price was less than if we'd paid for one day of express passes separately.  They also allow early park access.

We found this incredibly valuable!  Having the express pass for two days, we saved several hours of time we would have spent in line, allowing us to enjoy the parks far more.  When you have a limited amount of vacation time, an hour of vacation time is far more valuable than an hour of non-vacation time, and we found that Universal Express was well-worth the extra money to stay in the on-site hotel.  

The Universal Express option is an excellent way for Universal to price discriminate.  Those whose demand is lower can simply buy the regular admission tickets.  But through express passes, Universal offers a way to extract more money from those who have a higher demand.

We enjoyed our vacation!  But it is also interesting for me to see the economics at play in the parks.

Quoted in NPR on fracking story

Link here

Rousu was quick to point out that he disagrees with Wolf on many issues. For example, he’s not convinced the state needs a new tax on gas production.

“I think they’re doing a lot of things wrong.” Rousu says of the Wolf administration. “But this change seems pretty reasonable to me. The previous jobs number did seem high. But 90,000 is an enormous number. It’s 1.5 percent of workers in the state.”

Proper benefit-cost analysis when taking death penalty positions

Story here on murderers who escaped from prison

Excerpt:

In a sensational “Shawshank Redemption”-style prison break, a pair of cunning convicted murderers used power tools and tunnels to escape an upstate maximum-security penitentiary near the Canadian border.

A massive manhunt was underway Saturday after killers Richard Matt, 48, and David Sweat, 34, were discovered missing from the Clinton Correctional Facility in Dannemora, about 25 miles from Canada, officials said.

The inmates made their extraordinary dash to freedom after faking out guards with makeshift dummies made out of hooded sweatshirts to appear as if they were still sleeping inside their cells. And once officials discovered they were gone, they found a note from convicts telling them to "Have a nice day!"

When people argue about whether society should have a death penalty, sometimes the argument is strictly based on moral arguments.  But when it is not, sometimes the costs of the death penalty are brought up, and usually by those opposed to the death penalty as the costs of imposing the death penalty are high.

I don't buy into this argument against the death penalty, however, as the reason it is high is precisely because death penalty opponents use (and abuse?) the legal process to drag out appeals for decades. Regardless, some will use this argument to say that life-in-prison sentences should be used instead of going for the death penalty.

However, one thing that is rarely considered in these arguments is that when someone isn't executed, there is a non-trivial chance they'll murder again.  This can happen within the prison or, like the story above, when prisoners escape.

A true benefit cost analysis should factor in that "life in prison" for a convict really means "will probably spend life in prison".

Learning Economics Through Pictures - The Egg Shortage

Source - Twitter feed of Ezra Company (I think it is a Penn State student of Jadrian Wooten and James Tierney).

My appearance on Economic Rockstar podcast

I went on the Economics Rockstar Podcast recently with Frank Conway and had a great time.

The link is here.

I hadn't heard much of this podcast before, but was extremely impressed with his preparation prior to our talk and his interviewing ability.  We had a 45-minute chat that seemed like it was 5-minutes.  I've since listened to some of his back episodes, which I recommend.

Guidelines for Conducting Economic Impact Studies on Fracking

My newest paper is titled "Guidelines for Conducting Economic Impact Studies on Fracking" and was recently published in International Advances in Economic Research.  This is collaborative work with Dave Ramsaran (a sociologist at Susquehanna University) and Dylan Furlano (2014 graduate from Susquehanna University).

Here is the abstract:

In recent years, many studies have attempted to estimate the economic impact of fracking. When done properly, economic impact studies can be valuable to both policy makers and researchers. Unfortunately, the quality of these economic impact studies varies. Often times these studies are released with obvious errors or authors clearly exhibit bias either for or against fracking. In this paper, we briefly review the studies that have estimated the economic impact of fracking. We discuss many of the issues researchers face when attempting to estimate the economic impact of fracking, and provide recommendations to those who wish to conduct these studies in the future.

Romney on Obama (on International Trade)

A nice note from Mitt Romney's facebook feed:

Economists overwhelmingly agree freer international trade is good for society.  Many Americans oppose free trade, however.  That's unfortunate, because free trade is good for America.  It will help Americans, both rich and poor, live better lives.

On top of that, free trade is the single greatest thing we can do to help poor people in other countries.  When we buy products from third world countries, they build new factories and employ workers.  This makes those in impoverished countries better off, and is far more effective and sustainable than virtually any other "solution" that's provided to help the poor.

Textbook Confessions: Government Failure

Textbook Confessions: Government Failure.  That's the title of an article recently published in The Journal of Private Enterprise by Eyzaguirre, Ferrarimi, and O'Roark.  Here's the abstract:

What students learn in the Principles of Economics course may become the permanent lens through which they view and understand how the economy works. While most textbooks cover a core of material in a consistent manner, the same cannot be said for the treatment of government failure. We review twelve principles of economics textbooks to analyze the treatment given to government failure. Our analysis shows that authors fall short in adequately addressing this topic, thereby exposing students to the fallacy that government is the solution to market failure and drawing dangerously close to the line between positive and normative analysis.

The rationale for the paper is straightforward.  While almost all textbooks have detailed sections on how markets can fail, the just-as-important coverage of how governments fail is often lacking.  If students in economics only learn about how markets fail and not governments, they'll get a distorted view of the world. 

In their analysis, they found big differences in coverage across textbooks.  One fact I found surprising is that Mankiw, a Republican, covered government failures less than Baumol and Blinder, who are Democrats (or at least worked for them).  I was not surprised that Krugman's book ignored government failures completely. 

The whole paper is very readable, and their paper is motivating me to create and post lecture videos on government failures for my courses.  I'll post links to the lectures when they're available.

Learning Economics Through Pictures - Economic Growth under Reagan and Obama

Story here.

The photo here (Source - The Gateway Pundit):

Great Obama quote (but he could have said more)

The quote here:

In communities where there are no fathers who can provide guidance to young men; communities where there’s no investment, and manufacturing has been stripped away; and drugs have flooded the community, and the drug industry ends up being the primary employer for a whole lot of folks — in those environments, if we think that we’re just going to send the police to do the dirty work of containing the problems that arise there without as a nation and as a society saying what can we do to change those communities, to help lift up those communities and give those kids opportunity, then we’re not going to solve this problem.

Wow - I agree with Obama!  I think he should have added that many of these problems are the direct result of government programs.  For example, many welfare programs give people an incentive to not work and punish people for working.  When parents take advantage of those programs you then will have children who don't grow up with a strong work ethic.  (Which creates a "cycle-of-poverty".)  That can lead to the lack-of-skills that will keep investors out and make drugs look like the best job alternative.

Throw in failing government-run schools, and you have a recipe for disaster.

Is NY's fracking ban temporary?

Link here

Excerpt:

In the radio interview Friday, Martens said the fracking ban — which applies only to fracking that uses more than 300,000 gallons of fluid — will be "permanent until the information changes." Studies that have been in the works for years may draw different conclusions when they're finally released, he said.

"I don't think there's any such thing in the environmental world as permanent," Martens said. "Information changes."

In theory, Martens is correct. NY could reverse their decision. However, 20 years after GM foods have become widespread, the confidence in the safety of GM foods among scientists could not be stronger. The evidence, notably that we have never had anybody ever get sick from GM foods, indicates GM foods are safe, but many people (including many who also dislike fracking) are still opposed to GM foods.

Why should we believe that the same people who dislike GM foods now would like fracking 10 years from now, even if all evidence indicates that fracking is safe?  

Forensic Economics Course

During the last three weeks of the semester this year, I got the opportunity to teach forensic economics in a course titled "fraud and forensics".

We have 9 class sessions together, where we work well beyond these videos, but these introductory videos were use in this "flipped" class.

Enjoy!

What Does a Forensic Economist Do?

Calculating Present Value and Future Value (parts one and two)

What Data is Needed?  (Overview)

Life and Worklife Expectancy

How to Calculate Earnings

Economic Discrimination

Link to radio interview

I had a 10-minute interview with WKOK radio.  The link is here (for now).  You'll have to scroll to the Monday (April 13) clips to find mine.

I'll see if I can find a permanent link soon ...

Nate Benefield of Commonwealth Foundation visiting Susquehanna University

Teaching Workshop in Denver - Friday, April 17

Assorted Links

1. USA Today is misleading

The title says lower oil prices are costing jobs.  While some sectors are hurt, lower gasoline prices act as a stimulus which boosts the economy by more than the lost jobs.  (I.e., the extra spending with leftover funds from cheaper gas prices will create more jobs than what is lost in the oil industry.)

2. Funny "news" clip. (Note - one curse word makes this NSFW)



3. Spotted on a tweet celebrating "Earth Hour" ...

Nathan Benefield visiting Susquehanna - April 13

Deception in Experiments

My newest paper to come out is titled "Deception in Experiments: Towards Guidelines on use in Applied Economics Research" and is co-authored with Carola Grebitus, Maria Loureiro, Jay Corrigan, and Greg Colson.

Link here

Abstract:

Many applied economics journals ban the use of deception in experiments, which contrasts with the policies in other academic disciplines. We examine the cases for and against deception, and describe the ways deception can be employed in applied economics experiments. We create a general ranking of harms from deception in experiments and present evidence from a survey (conducted in summer 2014) of agricultural and applied economists eliciting attitudes towards ten different deceptive practices. Survey respondents view inflicting physical or psychological harm on participants and not making promised payments as the most severe forms of deception. Less severe forms of deception include providing participants with incomplete product information and conducting an experiment using participants who are not aware they are part of an experiment. Finally, we provide recommendations for policies addressing deception in experiments.

My newest oped: What PA should do about the minimum wage

Link here

Excerpt:

Pennsylvania's new governor, Tom Wolf, has proposed an increase in the minimum wage to $10.10 per hour.

This increase, which would make Pennsylvania's minimum wage one of the highest in the nation, would be a terrible idea.

An alternative put forward by state Sen. Scott Wagner's, R-York, which increases the minimum wage to $8.75 per hour while holding it constant (at $7.25) for teenagers--is better than Wolf's proposal, although it still would be quite bad for Pennsylvanians.

What did you learn at your minimum wage job?

This article from The Federalist looks at how some highly-successful people answer that question.

I like this article as it serves as a good reminder that a minimum wage job can provide many skills that help later in life.  For me, I learned to show up on time, provide good customer service, listen to my boss, and more.

Principles of Macro - Let's Grade Paul Krugman

Link here

Krugman discusses the national debt.  If this were an essay from a freshman student, I'd give it a pretty good grade.  He mentions some important things that any good principles of macro class should cover, and that the good students should learn.

Excerpt:

Suppose that for some reason the government were to decree, arbitrarily, that every American whose last name begins with the letters A through K now owes $100,000 to a special government agency; meanwhile, every American L through Z is given a $100,000 bond to be paid by that agency.

Clearly, the overall level of debt in the U.S. economy has suddenly increased (actually by about $1.6 trillion). But has the nation become any poorer? Is that $1.6 trillion of additional debt money taken from the next generation? No and no: the additional debt represents a claim by one set of Americans on another set of Americans — and we’re talking about people here now, not future generations.

Krugman the principles of macro student would probably get a B for writing this.  It is well thought out and logical.  But it ignores one crucial fact that any good principles of macro course should mention.  The above analysis only holds if all our national debt is owned by other Americans.  Given that the percent of debt owned by foreigners is now over 30% and has been increasing, Krugman's analysis is wrong. The portion that has to be paid to foreigners will make future US citizens worse off.

For a freshman in a principles of macro course, Krugman's analysis might earn a B.  For a Ph.D. economist, however, Krugman earns a F.

Quoted in story on economic impact of pipeline ...

link here 

Excerpt:

Susquehanna University economics professor Matthew Rousu, who reviews economic impact studies related to the state's oil and gas industry, said that although he hasn't yet examined Econsult's study, a $3 billion investment could very well generate a $4.2 billion impact.

Learning economics through pictures - wine prices in Pennsylvania and Arizona

Here's the price tag in Arizona for a 1.5 liter bottle of Gallo Pinot Grigio.  The regular price is $9.99, but it is on sale for $6.99.  

Here is the price tag for the same bottle in Pennsylvania:

That's not all - in Arizona, when you buy six bottles at a time you get a 10% discount!

So without a sale, in Pennsylvania the price is $11.49 and in Arizona the price is $9.99.  With a sale and bulk discounts, it's actually a bigger disparity.  Why such a difference?  Wine is sold through free-markets in Arizona.  But in Pennsylvania the wine stores have a monopoly.  What's even worse is that it is a government-run monopoly, so there is not even a push for efficiency.  A simple step would be for the Pennsylvania government to privatize the liquor industry.

David Henderson on minimum wage

Link here

He's responding to a question from a Susquehanna University student (after his visit to talk at our university)...

I recommend reading the entire thing.  Here's an excerpt:

One of the students I met and talked to afterward sent me the following query this morning:

...

I have yet to find an argument that makes economic sense that would be in favor of raising the minimum wage and I was wondering if you could play devil's advocate and make a point about why it would be beneficial if there is any.
...

Here's my answer:

Let me give some context to the minimum wage discussion before answering your specific question about the devil's advocate part. It's very hard to deny the law of demand: so, when the minimum wage rises, there will be fewer low-productivity people employed at that higher wage. Most of the discussion has been about how many fewer. Is the demand for low-skilled workers elastic or inelastic? One thing that seems to be agreed on is that the reduction in employment for the kinds of minimum wage increases we've seen in this country in the last 2 or 3 decades is not large.

Hear David Henderson's radio interview promoting his SU speech

Link here

Review of David Kendall's Morality and Capitalism

Before I get into the book, David Kendall is a professor of economics at UVA-Wise.  I met David when we both worked at RTI International between 2002-2004.  I always knew he was a libertarian, but I had no idea he was such a great writer.

In Morality and Capitalism: A Dialogue on Freedom,David teaches about why capitalism is the only economic system to use if you are concerned about morality.  He does this in an interesting way.  Much of the book contains a dialogue between a wise teacher and an inquisitive student.

The book is great and I highly recommend it.  It's not too long and you can get it for your e-reader for a reasonable price. (Right now it is $4.99.)

I don't want to give much away, but I can't resist listing a few excerpts:

1. All people want to be free.  Freedom is a universal human value.  But we cannot be free if we are compelled by others.  Consequently, if we want to be free, we should be moral.

2. Tyro: So, we should quit using the term "public property"? 

Solon: No, Tyro.  That would be impractical.  It is fine to call certain land "public property," provided we understand that such property is not and cannot be owned "collectively".

3. Rational People have but one right, the right to be free of unjust compulsion of others.

Quoted in NPR Philadelphia story

link here

You can read or listen!

Three great sentences ...

I don't normally read the comments on the articles I write, because often they can turn into harsh personal attacks.  But readers of The Federalist have seemed both intelligent and civil, so I checked out the comments from my recent oped.  Here is a great comment by someone with the screen name of "SpaceCommie":

The median world income is about ten thousand dollars a year, adjusted for buying power by country. A minimum wage worker in the US makes more money than over half the workers in the world.

This is not to say that people working for low wages in the US don't face serious problems, but it should be sufficient to establish that the idea that it's somehow illegitimate to pay workers below $10/hour is silly.

My new oped in the Philadelphia Inquirer

Here is my new oped in the Philadelphia Inquirer titled Three Keys to Prosperity

I think the timing of this is ideal, as it is the day Tom Wolf becomes governor of Pennsylvania.

Here is an excerpt:

For Pennsylvania's economy, 2014 was a good year. The unemployment rate fell, and few new impediments to working were created by our state lawmakers. Looking ahead, here are three recommendations for elected officials in Harrisburg to help make 2015 prosperous.

Anti-fracking insiders didn't disclose position when writing NY report

Very sleazy.  Not surprising, but sleazy nonetheless.

Link here

Excerpt:

One of the three peer-reviewers is Sandra Steingraber, a biologist and environmental advocate who is also co-founder of New Yorkers Against Fracking. Two others, Robert Oswald and Jerome Paulson, are vocal opponents. Several of the study's authors, though not all, are known fracking skeptics and have ties to groups that oppose the practice -- including Denny Larson, study co-author and director of Global Community Monitor, which is sharply critical of fracking.

And ..

“They do the studies to get the results they want,” he said. “They are not going to be objective, they have an agenda.”

My newest oped in The Federalist

Changing these two laws would appropriately commemorate MLK Day

Excerpt:

A day spent not working is a bad tribute to Martin Luther King Jr. We should instead provide more opportunities for African-Americans, and all Americans, to lead productive lives on MLK Day and every other.

Economics of Billy Elliot (The Musical)

I was with Susquehanna University's London Program students this week, and got the opportunity to see the musical Billy Elliot on Monday.

It was wonderful and there are economic issues everywhere in the show.

The show was centered around a boy, Billy Elliot, who's dad, brother, and much of the town are in the middle of a coal miner's strike.  The backdrop for this is the 1984-1985 coal miners' strike, which took place in the UK (wikipedia info here).

While I enjoyed the show, it certainly had a bit of a left-wing perspective.  Much of the show is from the striker's perspective.  That said, the dad is pretty terrible throughout the show, so the fact that he supports the strike and is an abusive father perhaps doesn't give much sympathy to strikers.

The questions I might ask if I took an economics student to this show is:

1. The strikers threatened violence to people who were willing to work for lower wages.  (I.e., the people willing to "cross the picket line".)  Why would society look down on those who are simply willing to work for a lower wage?  Why do so many in society think it is acceptable to commit violent acts against these workers?

2. If the strikers really felt like they were underpaid, why didn't they simply get a different job?

3. When multiple companies band together to force people to pay higher prices for products, this is called collusion and many people (at least in the US) have gone to jail for this.  Why does society treat strikers who are colluding together to force taxpayers or firms to pay higher prices different?  (I say taxpayers, as for government run sectors it is the taxpayers who pay the workers, not firms.)

My final comment isn't as much about economics but about the political realities of the world.  There is a song called "Merry Christmas Maggie Thatcher" ...

The lyrics include the lines "Merry Christmas, Maggie Thatcher; We all celebrate today 'cause it's one day closer to your death."  I wonder what would happen if a musical had the lines "Merry Christmas Barack Obama, we celebrate today because it's one day closer to your death"?  The riots and outrage from the left would be everywhere.  Yet I had heard barely a peep about this song ... Why is that?

Economic Impact Overestimate of the Day ... (updated): I

It comes from the University of Washington

Excerpt:

A new economic study says the University of Washington generates $12.5 billion in economic impact and supports 1 out of every 48 jobs in the state.

What?  

$12.5 billion?  

Well, here's another excerpt:

Of the $12.5 billion in economic impact, UW Medicine — which includes Harborview Medical Center, Northwest Hospital, UW Medical Center and a network of clinics — accounts for $7.8 billion. And UW Medicine was directly or indirectly responsible for 45,330 of the more than 79,000 jobs generated by the university.

To put this economic impact into perspective, for an enrollment of about 1/20 of the size, Susquehanna University's economic impact is about $100 million.  By extrapolating, a reasonable starting point for the economic impact of the University of Washington would be $2 billion, not $12.5 billion.  However, the $2 billion extrapolation figure is probably overestimating the economic impact of the University of Washington.  Given that Susquehanna is in an isolated area, it's reasonable to assume that almost all students who come to SU would not be living in the local area if it weren't for attending college.  

But the University of Washington is in Seattle.  There are other schooling options in that area, so it is likely that some of the people who attend UW would live in the Seattle area even if they didn't attend UW.  Thus, excluding the medical facilities, my initial thought is that it should be less than $2 billion.  

What about the hospital?  Does the hospital really create an $8 billion economic impact?  That is doubtful.  Hospitals are valuable to society, of course, but to have such a large economic impact, one would need significant numbers of people who visit that hospital who instead would have visited a hospital outside of the local area.  I can't find the actual study online to check how they came up with their $8 billion estimate, but that seems far-fetched.  If I can find it - I'll post an update with my analysis.


Update: 

I have now received a copy of the full economic impact report.  The analysis section contains too few details for anybody to really know whether this is accurate.  I think we can say, however:

1. There are almost no details on how they came up with specific calculations.
2. They did not appear to pose a "counterfactual", i.e., what is this economic impact judged against.  It appears that they assume that every dollar spent by the University of Washington would not have been spent in the area (whether the area is the state or local area) if it were not for the University.  That, of course, is a flawed assumption.
3. The economic impact of the University of Washington is going to be large, the question is "how large".  The assumptions used seem to inflate the estimate.
4. The amount of federal (external) research funding received is impressive - and that will have a big local and state impact.

The biggest problem I have with this study is that there is no way for an economist like me, who knows economic impact studies, to verify their estimates.  I'm quite certain that this estimate is inflated above the "true" economic impact.  But I can't be certain of the amount it is inflated