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Congestion Pricing in Manhattan: About to Arrive? - Conversable Economist
Lawsuits are still pending, but the current schedule if for a congestion pricing scheme to begin in Manhattan on June 30. An online issue of Vital City published on May 1 has a group of short and readable explainer articles on aspects of the plan. In the opening essay, Josh Greenman lays out the basics
Some Economics of Tipping - Conversable Economist
Why leave a tip? You have already received whatever food or service you are going to receive. Maybe if you are a very regular customer, tipping could lead to better service in the future. But most people who leave tips do so even if they are stopping off at, say, a restaurant in a city
Reallocation Within an Industry: A Secret Strength for the US Economy - Conversable Economist
It would be nice if the processes of economic growth were well-mannered: for example, if it benefited all workers and industries and groups equally--or perhaps with some additional benefit for those with lower incomes. But of course, growth isn't a neat process. As technology and tastes evolve over time, some firms do better, some industries
The Jones Act: Consequences of a Destructive Industrial Policy - Conversable Economist
The United States has had an industrial policy aimed at boosting its domestic shipbuilding industry since the passage of the Merchant Marine Act of 1920, commonly known as the Jones Act. Whatever the arguments for the passage of the bill a century ago, it has over time been a disaster for the US maritime industry,
Three Options for Taxing Wealth - Conversable Economist
Extremely high levels of wealth are were not typically generated by people who were saving out of the income that they earned. Instead, high levels of wealth are typically about assets that rose considerably in value--sometimes land or real estate, often stock in a company. Billionaires like Elon Musk or Kim Kardashian don't have a
The IMF Warns about US Budget Deficits - Conversable Economist
The IMF publishes a Fiscal Monitor report twice a year about levels of spending and taxes around the world. The April 2024 report, subtitles "Fiscal Policy in the Great Election Year," contains some warnings about the size of US budget deficits. For context, here a table with fiscal balances for high-income countries, with actual data
Interview with David Dunning, of Dunning-Kruger Fame - Conversable Economist
The Dunning-Kruger effect can be paraphrased in this way: "On any particular topic, people who are not experts lack the very expertise they need in order to know just how much expertise they lack." Corey S. Powell interviews David Dunning on how the underlying idea has been developed since the original paper published in 2000
Interview with Ulrike Malmendier: Remembrance of Crises Past - Conversable Economist
David A. Price interviews Ulrike Malmendier, "On law versus economics, the long-term effects of inflation, and the remembrance of crises past" (Econ Focus: Federal Reserve Bank of Richmond, First/Second Quarter 2024, pp. 22-26). One theme of the interview is Malmendier's recent work which emphasizes that living through a salient event can leave a lasting mark.
Why So Many Shareholders of US Firms are Untaxed - Conversable Economist
Over the last half-century or so, the share of corporate stock that is owned by investors with taxable mutual funds or brokerage accounts has fallen dramatically. Steven M. Rosenthal and Livia Mucciolo tell the story in "Who’s Left to Tax? Grappling With a Dwindling Shareholder Tax Base" (Tax Notes, April 1, 2024). Here's their figure
Statistics is (Literally) Statecraft - Conversable Economist
Statistics are not reality, but they are a map to reality, and that map is central to the basic knowledge needed for modern government. Or at least so argues Michel Foucault in Security, Territory, and Population: Lectures at the College du France, 1977-1978 (edited by Michel Senellart, translated by Graham Burchell, originally published 2004, translation
What Are the Objectives of First-Year College Students? - Conversable Economist
For more than a half-century, a UCLA-based research group has been carrying out surveys of incoming first-year college students. There are lots of questions about the decision process the students went through in applying, and about their expectations and priorities. The data tables from the 2022 survey, from the Higher Education Research Institute at UCLA,
The State of Globalization: Both More and Less Than You May Think - Conversable Economist
The widespread current belief about globalization, I would say, is that it has been in decline since the Trump presidency, as a result of increased tariffs, a sharpening of global conflicts with China and Russia, and disruptions from the pandemic. But even with this perceived decline, a common belief is that globalization is an overwhelming
Snapshots of Corporate Bonds in the Long Run - Conversable Economist
Certain basic investment models are based on just two investment options: a safe asset like US Treasury bonds and a risky asset like a stock-market index fund. The underlying idea is that you can choose the riskiness of your preferred portfolio by having a larger or smaller share of the safe asset. For example, a
Why Aren’t More Patents Leading to More Productivity? - Conversable Economist
The number of US patents granted has been rising rapidly. However, US productivity has not been rising. Why aren't more patents leading to more productivity? Aakash Kalyani of the St. Louis Federal Reserve discusses research that suggests an intriguing possibility in "The Innovation Puzzle: Patents and Productivity Growth" (Economic Syn0pses: Federal Reserve Bank of St.
Follow R-Star? - Conversable Economist
For economists, r* refers to the "natural rate of interest" that emerges from economic theory. It's the "Goldilocks" interest rate that is not too high and not too low: that is, the interest rate that would occur "naturally" in the economy when the economy is at potential output and inflation is stable. A "tight" or
Productivity Syndrome and the Investment Prescription - Conversable Economist
Economic productivity is about growing the size of the pie. I sometimes point out that no matter what your goal--spending increases, tax cuts, greater support for the poor, environmental protection--that goal is easier when the economic pie is growing. When the economic pie isn't growing, after all, then all priorities have to pit potential winners
If Not Unemployment, How To Measure the Labor Market? - Conversable Economist
Economic statistics are all useful, and all imperfect. They must be consumed with care. Consider the unemployment rate, a headline indicator of the US labor market. The US unemployment rate has been below 4% since December 2021. As you can see from the graph, which shows the unemployment rate going back to 1948, there was
What Should Intro Econ Include? - Conversable Economist
For many college students, and high school students as well, a single introductory economics course is the only course in the field they are ever going to take. This is not their fault! People are allowed to be interested in subjects other than economics! Perhaps alternative interests should even be encouraged! But for those of
Some Facts about US Rental Housing - Conversable Economist
About one-third of US households rent, rather than own. The renters are disproportionately lower-income, less-educated, and younger. The public policy concern, of course, is not really about, say, a group of college students or recent graduates sharing a rental, but instead about low-income adults and parents with families for whom rental housing may comprise a
Non-Fungible Tokens: What Are They and How Much Should I Care? - Conversable Economist
I've had a hard time believing that non-fungible tokens (NFTs) matter in an important way, but enough people seem to be paying attention to them that I feel some need to do so as well. Roman Kräussl and Alessandro Tugnetti provide a useful overview of the state of play in "Non-Fungible Tokens (NFTs): A Review
A Market Failure Case for Place-Based Policy - Conversable Economist
Economists have traditionally focused on policies aimed directly at low-income people, rather than at low-income places. For example, programs like welfare payments, food stamps, Medicaid, and Supplemental Security Income are based on individuals. But there has been a push in the last few years for consideration of "place-based policies," which focus on different rules for
Improving Regulatory Targeting: The OSHA Example - Conversable Economist
Many government agencies with enforcement power face a common problem: they only have the resources to visit or audit a tiny fraction of the possibilities, so they need to pick and choose their targets. How should they make that choice? Consider the Occupational Safety an Health Administration, which is responsible for monitoring and passing rules
The Generic Drugs Antitrust Case - Conversable Economist
Imagine that in the market for generic drugs, a group of companies form a cartel to raise prices on the products controlled by their group. Other companies were not involved. What pattern might you expect to see for the prices of drugs controlled by the cartel, or not controlled by the cartel. Amanda Starc and
Interview with Stephen Levitt: My Career and Why I’m Retiring From Academia - Conversable Economist
Jon Hartley has a wonderful interview with Steven Levitt at the "Capitalism and Freedom in the 21st Century" podcast ("Steven D. Levitt (Freakonomics co-author and University of Chicago Economics Professor) on His Career And Decision To Retire From Academic Economics," March 7, 2024). Among a number of other topics, there's a lot of good dishing
One Year Since the Meltdown at Silicon Valley Bank: Commercial Real Estate and Ongoing Threats - Conversable Economist
One year ago in March 2023, Silicon Valley Bank melted down, quickly followed by similar meltdowns at Signature Bank and First Republic Bank. Measured by the nominal size of bank assets, these were three of the biggest four US bank failures in history. (The failure of Washington Mutual Bank in 2008 remains the largest.) Was
A Slowdown in Global Agricultural Productivity - Conversable Economist
The growth of agricultural output matters. About 700 million people in the world live below a poverty line of consuming $2.15 per day, and if that poverty line is raised to $3.85 per day, more than 2 billion people are below it. Raising the standard of living for the very poor requires higher agricultural output.
Basic Income Proposals, Labor Market Interactions, and Good Jobs - Conversable Economist
The primary argument for a government-provided basic income is that it will make those with low incomes better off, by increasing their financial resources and by allowing them to negotiate for better jobs. But the extent to which this conclusion holds true will depend on individual circumstances of the recipient, and what other adjustments happen
A Century of Movement Toward Central Bank Independence - Conversable Economist
There been a controversy in recent decades about the independence of central banks from the rest of the government. The ongoing concern--especially have high inflation rates rocked the US and other countries around the world in the 1970s and 1980s--was that governments have a bias toward inflation. Politicians want the central bank to help finance
The Psychology of Poverty: Is There Evidence for a Trap? - Conversable Economist
It seems plausible that being poor will have psychological effects. It seems at least possible that some of these psychological effects could, in turn, make it harder to escape poverty. Johannes Haushofer and Daniel Salicath explore the evidence on these and related issues in "The psychology of poverty: Where do we stand?" ( Social Philosophy and
Blinder on the Gap Between Economic and Politics - Conversable Economist
Alan Blinder delivered the 2023 Daniel Patrick Moynihan Lecture in Social Science and Public Policy to the American Academy of Political and Social Science last October on the topic "Economics and Politics: On Narrowing the Gap" (October 25, 2023; for text, see the Peterson Institute for International Economics website at https://www.piie.com/commentary/speeches-papers/economics-and-politics-narrowing-gap; to watch the presentation
The Oddness of February - Conversable Economist
I understand why the calendar adds an extra day every four years. The revolution of the earth around the sun is approximately 365 and one-quarter days. Every four years, that adds up to one additional day, plus some extra minutes. The modest rounding error in this calculation is offset by steps like dropping the extra
Pricing at Wendy’s: A Surge or a Discount? - Conversable Economist
The fast-food chain Wendy's finds itself in a kerfuffle over comments by its chief executive officer Kirk Tanner that it may shift to digital menu boards, which would in turn allow the firm to adjust prices by time of day. The usual suspects immediately asserted that Wendy's was about to commit "surge pricing" by raising
Warren Buffett on How Size Has Done Him In - Conversable Economist
Each year, investor extraordinaire Warren Buffett publishes a letter to the shareholders of Berkshire Hathaway, a personalized view of how he sees the previous year, the role of capitalism, and (this year) the investment strategies of his sister Bertie. But this year, he also admits that the company he has built has no future possibility
Puzzles about Immigration and Crime - Conversable Economist
In public opinion polls, one of the primary concerns about rising levels of immigration is the extent to which it might increase crime rates. But several puzzles arise here. The evidence that immigration systematically leads to an increase in local crime rates turns out to be meager. However, Olivier Marie and Paolo Pinotti explore these
Three Snapshots of Where US Population is Headed - Conversable Economist
The Congressional Budget Office has published The Demographic Outlook: 2024 to 2054 (January 2024), which offers some recent history and projections of how the US population is evolving. Here are three snapshots: The Role of Immigration in Total US Population Growth The black line shows projected US population growth since 2004, with firm data up
The Pickle Poetry Antitrust Case - Conversable Economist
Back in 2002, the private investment firm called Hicks Muse that owned the Vlasic Pickle Company sought to purchase the Claussen Pickle Company. The Federal Trade Commission blocked the merger. In the press release announcing the action, the FTC said: According to the FTC's complaint, Hicks Muse's proposed acquisition of Claussen would eliminate competition and
US Consumers: Goods Shrink, Services Rise - Conversable Economist
When people think about what an economy produces, they tend to think in terms of solid objects: cars, appliances, clothes, houses, food. But US consumers are in the midst of a long-term shift away from consuming goods and toward consuming services. Here's an illustrative figure from the Congressional Budget Office (The Budget and Economic Outlook:
Provision of Care: A Challenge for Economics - Conversable Economist
The size of an economy is typically measured by Gross Domestic Product, which sums up all the monetary transactions in an economy. Non-monetary actions like household production is not covered by GDP: to use the old classroom example, if two stay-at-home parents hired each other to do all the household tasks, then GDP would go
Pay Transparency: What’s Good to Know? - Conversable Economist
In some countries, like Norway, your income tax forms are public information, so any one can look up what anyone else earns. In a US context, income is mostly considered to be private information, unless you are a public employee or an executive at a public company. Would it be a good thing to have
Server Farms and Electricity Demand - Conversable Economist
There was a time when the electricity for running server farms was an afterthought, but in many place, that time is already past. The International Energy Agency has a discussion of the issue in its recent report, Electricity2024: Analysis and forecast to 2026 (January 2024, pp. 31-36). The light blue and dark blue bars show