Economics Detective Radio

Today's guest is economic historian Gregory Clark, and our topic is England's New Poor Law of 1834. Gregory and his co-author, Marianne E. Page, wrote a paper on the topic entitled "Welfare reform, 1834: Did the New Poor Law in England produce significant economic gains?" Spoiler alert: It didn't. The English Old Poor Law, which before 1834 provided welfare to the elderly, children, the improvident, and the unfortunate, was a bête noire of the new discipline of Political Economy. Smith, Bentham, Malthus, and Ricardo all claimed it created significant social costs and increased rather than reduced poverty. The Poor Law Amendment Act of 1834, drafted by Political Economists, cuts payments sharply. Because local rules on eligibility and provision varied greatly before the 1834 reform, we can estimate the social costs of the extensive welfare provision of the Old Poor Law. Surprisingly there is no evidence of any of the alleged social costs that prompted the harsh treatment of the poor after 1834. Political econo

Today's guest is Mikayla Novak (Twitter, SSRN) of the RMIT Blockchain Innovation Hub at RMIT University. Her work focuses on some innovative new and potential uses for blockchain technology. As we all know at this point, the first use of blockchain technology was to create decentralized digital currencies like Bitcoin and Ethereum. But a blockchain is a much more general technology than this: it is a decentralized ledger that is resistant to tampering by any one individual. As such, it is a technical innovation that can allow us to coordinate activities that a lack of trust may have prevented otherwise. Mikayla discusses institutional cryptoeconomics, an emerging field of research centered on the ways blockchain technology can improve both private and public institutions. Links Mikayla's Medium article on Crypto Fiscal Federalism discusses how blockchain could make the system of making government grants more transparent and efficient. This article by Mikayla's colleagues at RMIT gives a detailed and accessib

Today's guest is Martin Gurri (Twitter, blog), author of The Revolt of the Public. We discuss his book, which deals with the impact of information technology on political trends and populism. In the words of economist and scholar Arnold Kling, “Martin Gurri saw it coming.” Technology has categorically reversed the information balance of power between the public and the elites who manage the great hierarchical institutions of the industrial age—government, political parties, the media. The Revolt of the Public tells the story of how insurgencies, enabled by digital devices and a vast information sphere, have mobilized millions of ordinary people around the world. Originally published in 2014, this updated edition of The Revolt of the Public includes an extensive analysis of Donald Trump’s improbable rise to the presidency and the electoral triumphs of “Brexit” and concludes with a speculative look forward, pondering whether the current elite class can bring about a reformation of the democratic process, and wh

Today on the podcast, Ash Navabi returns to discuss his recent work on housing and rent control. Ash published an opinion piece entitled "Why low-income earners should actually welcome Ontario's reversal on rent control." In that article, Ash pushes back on the kneejerk reaction to the Ontario government's reversal of its rent control policy on new units: There's no question that there are problems with affordability and livability in certain areas of Ontario, but implementing rigid rent control measures is not the way to fix them. Economists agree: rent control reduces both the quantity and quality of housing available. In a 1988 survey of 443 Canadian economists, fully 95 per cent agreed (in full or with some provisos) with that statement. A more recent survey of 40 economists (including several Nobel laureates) yielded a similar result: only one respondent believed that rent control increased quantity and quality of the housing supply. The reason there is near unanimity on this question is simple: there

Today's guest is Jonathan Meer of Texas A&M. We discuss his work on the minimum wage. The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. For both theoretical and econometric reasons, we argue that the effect of the minimum wage should be more apparent in new employment growth than in employment levels. In addition, we conduct a simulation showing that the common practice of including state-specific time trends will attenuate the measured effects of the minimum wage on employment if the true effect is in fact on the rate of job growth. Using three separate state panels of administrative employment data, we find that the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments. These effects are most pronounced for younger workers and in industries with a higher proportion of low-wage workers.  

Today's guest is Bryan Cutsinger of George Mason University, discussing his paper, "Seigniorage in the Civil War South." During the U.S. Civil War, the Confederate Congress adopted three currency reforms that were intended to reduce the quantity of Treasury notes in circulation by inducing the money-holding public to exchange their notes for long-term bonds. In this paper, we examine the political factors that influenced the adoption of the reforms and their effect on the flow of seigniorage - revenue that the government derived by using the newly-printed Treasury notes to purchase the goods and services it required. We argue that the bifurcation of the Confederate Congress into two groups – those legislators that represented the Confederacy's interior and those from areas no longer under Confederate control – contributed to the adoption of the reforms. Our findings indicate that representing an area outside of the rebel government's control increased the likelihood that a legislator would support efforts to

Today's guest is Bob Murphy of Texas Tech University. We discuss his work on climate change and the social cost of carbon. Bob started working on issues related to climate change when he started working with the Institute for Energy Research. We discuss the implications of the Integrated Assessment Models (IAMs) used to evaluate the impact of climate change, the pivotal role played by discount rates in evaluating any kind of climate policy, the pitfalls of carbon taxation, and the opportunities presented by geo-engineering technologies. Here are some links to articles we mentioned in the episode: William Nordhaus versus the United Nations on Climate Change Economics The Case Against a U.S. Carbon Tax The Benefits of Procrastination: The Economics of Geo-engineering  

Today I discuss one of my own papers: "Instructions" by Freeman, Kimbrough, Petersen, and Tong. This research project on experimental instructions has been ongoing for years, but it was recently conditionally accepted for publication. I tell the story of how the research came together and detail some of the results. A survey of instruction delivery and reinforcement methods in recent laboratory experiments reveals a wide and inconsistently-reported variety of practices and limited research evaluating their effectiveness. Thus we experimentally compare how methods of delivering and reinforcing experiment instructions impact subjects' understanding and retention. We report a one-shot individual decision task in which mistakes can be unambiguously identified in behavior and find that mistakes are prevalent in our base-line treatment which uses plain, but relatively standard experimental instructions. We find combinations of reinforcement methods that can eliminate half of subjects' mistakes, and we find that we

Today's guest is Viktor Vanberg of the Walter Eucken Institute. We discuss a recent working paper of his entitled Individual Choice and Social Welfare: Theoretical Foundations of Political Economy. What we call an economy, i.e. the nexus of economic activities and relations within some defined regional limits – e.g. a local, a national or the world economy –, has always been subject to measures taken, or constraints imposed by political authorities. How economies work is inevitably, and to a significant extent, contingent on the political environment within which they operate. It is not surprising that economists studying the working principles of economic systems have rarely been content with confining their work to describing and explaining the economic realities they observe. Their ambitions always extended to passing judgments on the policies that shaped these realities and to providing guidance for what politics ought to do to improve economic matters. In economics explanations of what is and judgments

Today's guest is Peter Boettke of George Mason University and we're discussing his recent book in the Great Thinkers in Economics series: F. A. Hayek: Economics, Political Economy and Social Philosophy. This book explores the life and work of Austrian-British economist, political economist, and social philosopher, Friedrich Hayek. Set within a context of the recent financial crisis, alongside the renewed interest in Hayek and the Hayek-Keynes debate, the book introduces the main themes of Hayek’s thought. These include the division of knowledge, the importance of rules, the problems with planning and economic management, and the role of constitutional constraints in enabling the emergence of unplanned order in the market by limiting the perverse incentives and distortions in information often associated with political discretion. Key to understanding Hayek's development as a thinker is his emphasis on the knowledge problem that economic decision makers face and how alternative institutional arrangements eithe

Corey A. DeAngelis of the Cato Institute joins the podcast to discuss his review of the school choice research. Is public schooling a public good, a merit good, or a demerit good? Public schooling fails both conditions specified in the standard economic definition of a public good. In order to place public schooling into one of the remaining two categories, I first assess all of the theoretical positive and negative externalities resulting from public schooling as opposed to publicly financed universal school vouchers. Then, in an original contribution to the literature, I quantify the magnitude and sign of the net externality of government schooling in the United States using the preponderance of the most rigorous scientific evidence. We discuss this paper in addition to a recent blog post Corey wrote entitled "We Shouldn’t Need to Use Science to Grant Educational Freedom." Corey argues that we should have a strong presumption in favour of letting families choose where their kids go to school. In the academi

My guest today, Mario Macis of Johns Hopkins University, has done a number of interesting studies related to blood and organ donation, particularly the compensation of blood and organ donors. For instance, Mario and his coauthor, Nicola Lacetera, observed the effect of an incentive system that offered symbolic rewards to blood donors in a particular Italian town. They found that when prizes for frequent donation were publicly announced, people donated more blood, indicating that social image concerns are a factor in blood donation. Through a large-scale natural field experiment with the American Red Cross, Mario and his coauthors showed that offering donors economic incentives to donate blood increases donation without increasing the fraction of ineligible donors. Mario's more recent research deals with people's attitudes towards compensated kidney donation. Using a choice experiment, Mario and his coauthors study the determinants of Americans' views on these repugnant transactions: Regulation and public poli

Here on Economics Detective Radio, we've had many discussions about the early modern period, and the circumstances that gave rise to the modern levels of sustained economic growth that were heretofore unheard of in human history. One important question is, what was it about England and the Low Countries in the early modern period that made them the first to transition to modern-style economies? A related, and equally important question is why other times and places throughout history failed to produce an industrial revolution. My guest today, George Tridimas, has done interesting work exploring the question of why the Greek golden age of 500-300 BCE didn't produce sustained economic growth. He gives a number of explanations, ranging from cultural and political factors to Greece's acute lack of the energy sources necessary to produce enough heat to smelt steel.  

My guest today is Roman Yampolskiy, computer scientist and AI safety researcher. He is the author of multiple books, including Artificial Superintelligence: A Futuristic Approach. He is also the editor of the forthcoming volume Artificial Intelligence Safety and Security, featuring contributions from many leading AI safety researchers. We discuss the nature of AI risk, the state of the current research on the topic, and some of the more and less promising lines of research.

Could cultural attitudes about gender reflect economic conditions hundreds of years ago? My guest today says they do! Melanie Meng Xue of Northwestern University has shown that China's cotton revolution had far-reaching consequences extending even to the modern day: The cotton revolution (1300-1840 AD) in imperial China constituted a substantial shock to the value of women's work. Using historical gazetteers, I exploit variation in cotton textile production across 1,489 counties and establish a robust negative relationship between high-value work opportunities for women in the past and sex ratio at birth in 2000. To overcome potential endogeneity in location, I use an instrument pertaining to suitability for cotton weaving. I find evidence that premodern cotton textile production permanently changed cultural beliefs about women's worth, and that its effects have persisted beyond 1840 and endured under various political and economic regimes.  

Today's episode of Economics Detective Radio features a conversation with Robert Poole of the Reason Foundation. Robert is the author of Rethinking America's Highways: A 21st-Century Vision for Better Infrastructure, a book on how to fix America's infrastructure woes by changing the way roadways are funded: Americans spend hours every day sitting in traffic. And the roads they idle on are often rough and potholed, their exits, tunnels, guardrails, and bridges in terrible disrepair. According to transportation expert Robert Poole, this congestion and deterioration are outcomes of the way America provides its highways. Our twentieth-century model overly politicizes highway investment decisions, short-changing maintenance and often investing in projects whose costs exceed their benefits. We discuss this book, as well as Robert's recent controversial piece in Reason, "Stop Trying to Get Workers Out of Their Cars." I challenge him on the issue of upzoning and we discuss the some of the necessary conditions for a

Today's guest is Thibault Schrepel of the University of Utrecht. We discuss his work on the relationship between blockchain technology, which allows for the decentralization of firms and organizations, and anti-trust law. Here's a quote from his article on the topic: But in the end, one question arises as follows: is blockchain the death of antitrust law? Should it be? Answering them today is not easy as blockchain is still prone to drastic evolution, but some initial answers are to be provided nonetheless. In order to do so, this paper proceeds in three parts. The first details how unilateral practices can be implemented on blockchain and further establish a risk map. The second part focuses on the challenges for enforcers and presents a new theory entitled “regulatory infiltration." The last part questions the legitimacy of competition law in the face of this technology - the "blockchain antitrust paradox" - and the need to decentralize competition authorities.  

Fabio Rojas returns to the podcast to discuss his work researching social media. He has three main papers on the subject. The first is "More Tweets, More Votes: Social Media as a Quantitative Indicator of Political Behavior," which shows how Twitter activity predicted the outcomes of the 2010 and 2012 US congressional elections. The second is "The social media response to Black Lives Matter: how Twitter users interact with Black Lives Matter through hashtag use" which tracks the spread of the #BlackLivesMatter movement through social media. The third is "Twitter’s Glass Ceiling: The Effect of Perceived Gender on Online Visibility" which shows how Twitter users treat each other differently based on how they perceive each other's gender. We discuss these three papers and more on this episode of Economics Detective Radio.  

Today's episode features Zachary Greenberg of the Foundation for Individual Rights in Education. We discuss freedom of speech, FIRE's work to protect it on college campuses, and its importance for maintaining a liberal society.  

Phil Magness returns to the podcast to discuss the life and work of James Buchanan and to defend him against some of the more bizarre criticisms levied against him. James Buchanan was a Chicago-school economist who created the field of public choice economics along with Gordon Tullock. He was awarded the Nobel prize in 1986. Buchanan has received criticism recently from Duke historian Nancy MacLean, whose book Democracy in Chains places Buchanan at the center of a grand right-wing conspiracy to maintain segregation and undermine democratic institutions. Phil shows that the theory of Buchanan as a segregationist falls apart under scrutiny. It all stems from a typo in a footnote that erroneously placed Buchanan's article on school choice in a segregationist newspaper (the Richmond News-Leader) when in fact the article was published in the competing (and not segregationist) Richmond Times-Dispatch.