Potpourri

House Ag Committee chair Conaway comments on the state of the ag economy.

Don Boudreaux corrects Paul Krugman on the definition of a public good.

Bryan Caplan blogs about an interesting article by Niclas Berggen on the pro-govt bias of behavioral economists. Berggen's results:

Our main findings are that 20.7% of all articles in behavioral economics in the ten journals contain a policy recommendation and that 95.5% of these do not contain any analysis at all of the rationality or cognitive ability of policymakers. In fact, only two of the 67 articles in behavioral economics with a policy recommendation contain an assumption or analysis of policymakers of the same kind as that applied to economic decision-makers. In the remaining 65 articles, policy recommendations are proffered anyway.

Potpourri

Ag Econ Research & Extension
Jayson Lusk discusses an article on returns to publicly-funded agricultural research and extension. He also tackles the question: "Is ag econ academic research cited?" and answers in the affirmative.

Is Econ 101 Worthless?

David Henderson and Don Boudreaux respond to Noah Smith's contention that most of what we teach in Econ 101 is wrong.

Healthcare Reform
Two perspectives on recent developments related to Obamacare: one from Shikha Dalmia and another from Paul Krugman.

I, Pencil Revisited?
George Leef responds to a criticism of the famous essay "I, Pencil."

Regulatory Announcements
The Obama administration picks some interesting dates to announce new regulations.

A student gives a creative example of an externality.
David Henderson's student has a good understanding of Public Choice.

A new edition of Alchian and Allen's textbook.
Don Boudreaux lists some myths busted in a forthcoming edition of Alchian and Allen.

Potpourri

Ag Regulation

Pointing to recent studies, Jayson Lusk discusses the cost of animal welfare regulation.

In a classic Independence Institute article, ag economist E.C. Pasour Jr. looks at the history of meat inspection regulation.

Meat & Cancer Risk Studies

Matt Bogard and Jayson Lusk both discuss a recent study of the relationship between red meat consumption and cancer risk. There's a great lesson on statistical inference in this episode!

The Importance of (Good) Economics

Don Boudreaux discusses the value of Econ 101.

Alex Teytelboym reports on an unlikely collaboration between Chicago economists and the country's largest food bank.

Arnold Kling brings some realism to the theory of financial markets.

Parisomony in Academic Writing

Victoria Clayton discusses "The Needless Complexity of Academic Writing."

Potpourri

Brent Gloy and David Widmar at Agricultural Economic Insights revisit the issue of declining farmland values and come to roughly the same conclusion they did earlier this year.

Farmland values and cash rents in the Corn belt continue to come under downward pressure. When current cash rents are compared to current farmland values, the outcome is a capitalization rate of around 3%. This value is reasonable given current longer term interest rates. However, the bigger question is whether cash rents can be sustained at current levels in this economic environment. 

When one considers the returns that would be generated by a farmland owner-operator relative to current farmland values the rate of return is very low. This means that farmland values and cash rents are likely too high to be justified given the current economics of crop production. This low rate of return can be addressed through farmland values and cash rental rates falling and/or the row crop income situation improving.

Jayson Lusk points to an interesting article that he says should be filed under "Unintended Consequences."

Researchers find that a ban on bottled water on the University of Vermont campus (presumably to cut down on waste) led to more plastic bottles being shipped to campus and to more soda consumption. 

Marian Tupy and Chelsea German at HumanProgress.org tackle Akerloff and Shiller's recent op-ed in the Washington post on the effects of markets on our well-being.

Arnold Kling provides some wisdom on proper critiques of economics. My favorite bit:

A bias toward “engineers” rather than “ecologists.” That distinction comes from Greg Ip’s new book, Foolproof. The engineer is like Adam Smith’s man of system, who ignores evolution, both as a factor that may permit markets to over come their own failures and as a factor that may cause government “solutions” to become obsolete.

Continuing this theme, Steve Forbes provides a critique of economic theory. I enjoyed reading the first page, but lost interest on the second.

Don Boudreaux points to Gene Epstein's response to some of Bill Gates' comments in an interview.

Potpourri

Bob Murphy of the Texas Tech Free Market Institute goes through the recent literature on the minimum wage.
Bob concludes:

In the 1980s, there was a genuine consensus that a 10-percent hike in the minimum wage would reduce teenage employment by 1 to 3 percent. However, in the 1990s, various "case studies" began challenging this orthodox view, and more recent studies have generalized techniques to apparently find negligible employment effects. Many economists have used this new research to assure policymakers and the public to pay no heed to warnings about harmful job losses from even aggressive minimum wage hikes.

However, in reality, the employment effect of the minimum wage is still an open question even for modest hikes. Since the 1990s, scores of articles have found negative effects of minimum wage increases. These include "case studies," with one serving as the mirror image of the famous Card and Krueger study. Furthermore, critics have challenged the entire premise of the new techniques, which claim to construct better control groups than the traditional approaches.

Finally, even if we take the very best examples of the "new" results at face value, they provide little comfort that large hikes in the minimum wage—such as a doubling to $15 per hour—will have modest impacts. Policymakers and the public should be wary of the glib assurances of some prominent economists when they claim that such large hikes will not cause teenagers to lose their jobs. The odds are very high that they will.

Arnold Kling has some more thoughts on economic methods.

Two blogs I follow both posted on Instrumental Variables regressions on the same day (here and here). I pointed this out on Twitter and they both wrote responses (here and here). Interesting stuff, but certainly wonkish.

Some interesting commentary on globalization and poor cities in the US from Kevin Williamson.

Peter Klein (and Larry Summers) on behavioral economics as a re-statement of clever (but old and well-known) business practices.
From the article Peter points to:

Have behavioral economists really discovered anything new, or have they simply replaced some wrong-headed notions of post-World War II economics with insights that people in business have understood for decades and maybe even centuries?

Potpourri

I haven't done one of these in awhile, so I thought it was time to share a handful of links to some great stuff I've read recently.

Richard Ebeling at The Citadel offers a fantastic take down of the Keynesian view of recessions for the layman. It's certainly worth a read for the non-specialist in macro.

The always-insightful Don Boudreaux recently discussed the role of theory in measuring the effects of the minimum wage. He also provided a short note on the role of institutions in economic analysis in response to a reader's question and an interesting take on the economic way of thinking. Very good stuff.

Jayson Lusk recently weighed in on the fight between scientific integrity and consumer sovereignty in the food world. He also provided a short discussion of an article on crop insurance subsidies and risk taking.

John Tamny reviews a recent book on the myriad ways gov't policy has and will negatively affect the millennial generation.

Potpourri

Jayson Lusk provides an update and some thoughts on meat prices. Beef prices are predicted to stay relatively high due to biological factors affecting supply.

Here's an interesting comparison of unemployment rates for European countries with and without the minimum wage. The standard supply/demand story apparently applies in the case of wage controls.

Matt Bogard productively and convincingly tackles the inequality puzzle. Real wealth consists in the goods/services available to us, not our dollar incomes.

Don Boudreaux dissects the "You didn't build that!" meme.

Potpourri

Don Boudreaux discusses the issue of monopsony power and the minimum wage in an interesting fashion.

Prompted by criticism from local food advocates, Jayson Lusk clarifies his position. It continually baffles me that so many people equate opposition to subsidies for or outright government provision of some good or service with opposition to that good or service itself.

Paul Krugman's most recent comments on the minimum wage have sparked several productive discussions in the blogosphere. One post in particular stands out to me. In it, Scott Sumner uses this episode to illustrate the difference between economists who take basic theory seriously when it comes to practical matters of policy and those who don't.

The EPA continues to generate policy uncertainty in the corn markets by failing to set volume obligations. On top of this, repeal of the Renewable Fuels Standard continues to garner support on both sides of the aisle. What exactly this potential repeal would mean for corn producers, I don't know. My initial thought would be that corn prices would fall, causing losses in the short run, but that input prices and planted acres would adjust (over time) and the policy-change-induced losses would cease. Additionally, we could expect lower fuel costs and slightly lower food prices if the RFS were repealed.

Potpourri

- John Tamny, Forbes contributor and senior economic adviser to Toreador Research & Trading has an interesting piece on oil prices with a provocative title: "Let's Be Serious, Falling Oil Prices Are Not Causing The Busts In Texas And North Dakota." His basic point is that the weak dollar has pushed up nominal oil prices over the last several years. This led to a lot of investment in Texas, North Dakota, and other regions. As the dollar has strengthened recently (thanks at least in part on the ending of the Fed's third round of quantitative easing), nominal oil prices plummeted causing a lot of pain for oil investors, employees, and others in oil-rich regions.

He concludes:

The oil patch isn’t suffering cheap oil, rather it’s being wiped out by an unstable dollar.  We’ve seen this movie before as this column has been repeating in annoying fashion since 2005.  Cheap oil isn’t what’s shaking the oil patch simply because the oil in the ground was never expensive to begin with.  It’s the unstable dollar that caused an artificial boom, and it’s that same unstable dollar that’s authoring the bust.  Until the U.S. Treasury gets serious and gifts the U.S. economy with a dollar that is constant in value, the gut-wrenching reversal that’s taking place now in economies reliant on commodities will be the tragic norm.

- Economist Bob Higgs of the Independent Institute discusses the burdens placed on the private sector of the U.S. economy since WWII. Though the market system is robust, Bob correctly points out that there is a limit to the regulatory burdens the private sector can bear.

- On another note, Don Boudreaux shares a snippet of an e-mail from Bob Higgs on what makes a good economist. His comments are similar to those I made in a previous post. One big difference between my post and Bob's email is tone; assistant professors can't afford to be as blunt as Bob is!

- Randall Holcombe of Florida State University provides a graph of new pages in the Federal Register by decade. Note that regulations (as measured by this page number data) are increasing at an increasing rate. He also discusses the recently-proposed Regulatory Freedom Amendment to the Constitution. Put simply, the amendment would allow the Congress to regain its power to decide the regulatory power of the Executive, rather than regulatory bureaucrats deciding the scope and scale of their power.

Potpourri

Matt Bogard provides a commentary on a recent episode of EconTalk with Greg Page, former CEO of Cargill.

Don Boudreaux discusses, in an entertaining fashion, the political economy of K-12 education and here gives an example of where policy "nudging" leads.

Jayson Lusk discusses regulatory costs in the context of GMO wheat varieites.

Alex Tabarrok of George Mason University points to an interesting case of risk compensation, also known as the Peltzman Effect after Sam Peltzman, a Chicago School economist.

Pete Boettke of George Mason University gives an interview on the rise of an important free-market school of economic thought: the Austrian School.

Potpourri

Jayson Lusk of Oklahoma State University takes on Nassim Taleb's analysis of risk and GMOs. Taleb suggests that catastrophic but statistically improbable events implies we shouldn't use GMOs. Further, he suggests that biologists can't judge risk or causality.

Don Boudreaux of George Mason University has an interesting quotation and short discussion on "sticky wages," one of the fundamental assumptions of Keynesian theory.

With Chipotle on another anti-commercial-ag tirade, here's a post from last year by the world famous Peterson Farm Brothers.

Despite increases in federal gov't spending on cybersecurity, breaches are on the rise.

Nielsen poll suggests that consumers pay more for what they perceive to be "better" food. Of course, this includes food that goes by such scientifically-dubious monikers as "organic" and "all natural." The recent dramatic increases in beef (and therefore calf and breeding stock) prices certainly corroborate this.

McDonald's continues its campaign to assuage the fears of consumers about its food. In this case, it's their french fries.

John Cochrane of the University of Chicago brings up an old paper by former Federal Reserve economist Charles Plosser that reminds us that price deflation isn't necessarily a bad thing.

Potpourri

Jayson Lusk added some interesting questions to the January 2015 Food Demand Survey. The responses are pure gold.

Elise Hilton discusses new technology for reducing the amount of trash that ends up in landfills. Markets generate conservation behavior when the benefit of reusing or recycling a given resource is greater than the cost. Entrepreneurs are agents of change who create these opportunities.

The Cato Institute Blog has a brief roundup of posts around the blogosphere regarding the "common sense" of a carbon tax.

Jeffrey Dorfman at UGA has some suggestions for budget cuts for the new bicameral Republican majority in congress.

Brent Gloy and David Widmar of Purdue discuss 2015 economic issues related to producers and ag bankers.

Don Boudreaux explains why supposed generous behavior by established firms regarding the minimum wage is likely to limit competition.

Matthew Turner of Brown University discusses the economics of land use regulations in an article at PERC.

Bob Murphy's insightful analysis of the Fed's role in recent oil price moves.

Don Boudreaux links to an interesting graph of world-wide incomes in 1820, 1970, and 2000. This graph shows that increases in income and in income equality can happen simultaneously.

Potpourri

Brent Gloy of Purdue University discusses the "margin squeeze" and how to manage when input prices are high and commodity prices are low.

David Henderson gives an example of the problem with confusing "inequality" and "poverty."

The latest edition of Regulation contains some articles about GMOs and "nudging" by governments to improve health.

Matt Bogard has an excellent post on the intersection of beef consumption, the environment, and government.

A graphical food version of Leonard Read's classic monograph "I, Pencil."

Tim Fitzgerald has a long post on the economics of fracking. He summarizes several issues well. It's definitely worth a read, IMO.

Potpourri

More surprises for farmers from the Affordable Care Act. Generally speaking, regulatory costs are the most burdensome for the smallest firms.

Texas A&M economist Parr Rosson discusses the benefits of freer trade with Cuba. Even if you don't smoke cigars, trade with Cuba is likely to benefit you.

Chicago-ites are now unable to benefit from restaurant innovation due to new city policies. We need permissionless innovation in ag and food production.

University of Chicago economist John Cochrane discusses Keynesian policy failure.

Several ag schools make this list of 10 best & worst college towns (none of the worst, of course).