Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)
December 31
A Half Dozen Short Takes
Six economists suggest ways to improve the economy in 2012.
Textbook References:
Pages 480-485 “Behavioral Economics”Page 683 “The Euro”
Pages 758-767 “How Monetary Policy Influences Aggregate Demand”
Pages 767-773 “How Fiscal Policy Influences Aggregate Demand”
Pages 773-779 “Using Policy To Stabilize The Economy”
December 13
Shiller on Neuroeconomics
Robert Shiller expects Neuroeconomics to revolutionize economics by showing us how the brain really works.
Textbook References:
Pages 480-485 “Behavioral Economics”November 8
A Profile of Daniel Kahneman
Michael Lewis discusses the work of the founders of behavioral economics, Daniel Kahneman and Amos Tversky.
Textbook References:
Pages 480-485 “Behavioral Economics”October 4
Sin Taxes on College Sports?
Allen Sanderson argues for a sin tax on the revenue generated by college.
Textbook References:
Pages 482-483 “Sin Taxes”September 29
Left-Digit Bias
The price difference between cars with 79,900 miles and cars with 79,800 miles is much smaller than the price difference between cars with 79,900 miles and cars with 80,000 miles. In other words, the left-hand digit matters more than it should.
Textbook References:
Pages 480-481 “People Aren't Always Rational”July 21
The Subprime Mortgage Crisis
Christopher Foote and Paul Willen examine two different theories of why the subprime mortgage crisis occurred.
Textbook References:
Pages 468-473 “Asymmetric Information”Pages 480-481 “People Aren't Always Rational”
Page 561 “Financial Crises”
Pages 745-748 “The Recession of 2008-2009”
June 11
George Akerlof
Prakash Loungani interviews Nobel laureate George Akerlof.
Textbook References:
Pages 468-473 “Asymmetric Information”Pages 480-485 “Behavioral Economics”
April 19
A Free Book Well Worth Your Time
Mankiw recommends Policy and Choice: Public Finance through the Lens of Behavioral Economics by William J. Congdon, Jeffrey R. Kling, and Sendhil Mullainathan. A link allows you to download the book for free.
Textbook References:
Chapter 10 “Externalities”Chapter 11 “Public Goods and Common Resources”
Chapter 12 “The Design of the Tax System”
Pages 484-489 “Asymmetric Information”
April 3
A Profile of Al Roth
Al Roth improves how markets function, especially those where money or price do not play a central role.
Textbook References:
Chapter 22 “Frontiers of Microeconomics”February 9
Incentivizing Customers to Monitor Workers
A sign in South Africa offers customers a reward if an employee fails to provide a correct receipt.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 484-485 “Hidden Actions: Principals, Agents, and Moral Hazard”
February 7
A Behavioral Econ Business Plan
A new type of gym membership forces people to pay more if they do not work out.
Textbook References:
Pages 494-500 “Behavioral Economics”February 2
Moral Hazard
Mankiw provides an example of moral hazard from his own life.
Textbook References:
Pages 484-485 “Hidden Actions, Principals, Agents, and Moral Hazard”Pages 601-603 “The Market for Insurance”
December 16
The Economics of Seinfeld
Clips from the TV show "Seinfeld" are used to illustrate a variety of economic concepts.
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Pages 5-6 “Principle 2: The Cost of Something is What You Give Up to Get It”
Page 6 “Principle 3: Rational People Think at the Margin”
Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Chapter 3 “Interdependence and the Gains from Trade”
Pages 67-72 “Demand”
Pages 73-76 “Supply”
Pages 144-153 “Controls on Prices”
Chapter 10 “Externalities”
Pages 226-227 “The Different Kinds of Goods”
Pages 227-232 “Public Goods”
Pages 230-232 “The Difficult Job of Cost-Benefit Analysis”
Pages 232-237 “Common Resources”
Pages 274-275 “Fixed and Variable Costs”
Page 281 “Economies and Diseconomies of Scale”
Pages 312-315 “Why Monopolies Arise”
Chapter 16 “Monopolistic Competition”
Pages 370-378 “The Economics of Cooperation”
Pages 399-400 “The Supply of Labor”
Page 414 “Compensating Differentials”
Page 442 “Utility”
Page 465 “Utility: An Alternative Way to Describe Preferences and Optimization”
Pages 484-489 “Asymmetric Information”
Pages 556-558 “Technological Knowledge”
Pages 578-580 “Financial Intermediaries”
Pages 598-600 “Present Value: Measuring the Time Value of Money”
Pages 603-604 “Diversification of Firm-Specific Risk”
Pages 606-609 “The Efficient Market Hypothesis”
Pages 630-631 “The Economics of Unions”
Pages 703-705 “The Prices for International Transactions: Real and Nominal Exchange Rates”
Pages 707-708 “The Basic Logic of Purchasing Power Parity”
Page 833 “Time Inconsistency”
July 2
A New Problem for Insurance Markets
The discovery of genetic markers for longevity will affect markets for life insurance and annuities.
Textbook References:
Pages 485-486 “Hidden Characteristics: Adverse Selection and the Lemons Problem”Page 488 “Screening to Induce Information Revelation”
Pages 601-603 “The Markets for Insurance”
March 7
A Life in Finance
Eugene Fama writes an autobiographical sketch.
Textbook References:
Pages 606-609 “The Efficient Markets Hypothes”Pages 484-485 “Hidden Actions: Principals, Agents, and Moral Hazard”
December 21
Rolling the Dice on Medicare
The rate of increase of spending on Medicare is scheduled to decline, but it isn't clear how the savings will be achieved.
Textbook References:
Pages 4-5 “Principle 1: People Face Trade-offs”Page 493 “Politicians are People Too”
December 21
Sachs on the Copenhagen Summit
Jeffrey Sachs argues that the Copenhagen summit was a complete failure.
Textbook References:
Pages 232-237 “Common Resources”
Page 493 “Politicians are People Too”
November 25
Take Out Your Pencils 3
Mankiw poses a problem about Arrow's Impossibility Theorem suitable for introductory students.
Textbook References:
Page 491 “Arrow's Impossibility Theorem”
October 14
Maskin on the Financial Crisis
Nobel laureate Eric Maskin discusses the financial crisis. He contends that economists did anticipate the crisis but that policymakers did not listen. He also provides a reading list on the subject.
Textbook References:
Pages 484-485 “Hidden Actions: Principals, Agents, and Moral Hazard”
Pages 601-603 “The Markets for Insurance”
Pages 642-643 “The Functions of Money”
Pages 649-658 “Banks and the Money Supply”
Pages 779-781 “The Theory of Liquidity Preference”
Pages 783-785 “Changes in the Money Supply”