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Alex Tabarrok

Alex Tabarrok

Alex Tabarrok is Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University and a professor of economics at George Mason University. He specializes in patent-system reform, the effectiveness of bounty hunters compared to the police, how judicial elections bias judges, and how local poverty rates impact trial decisions by juries. He also examines methods for increasing the supply of human organs for transplant, the regulation of pharmaceuticals by the FDA, and voting systems.

Articles by Alex Tabarrok

Air Pollution Kills

1 day ago

In recent years I have substantially increased my estimate of the deadly nature of air pollution. It’s not that I had a contrary opinion earlier but the number and range of studies showing surprisingly large effects has raised this issue in relative importance in my mind. I would not have guessed, for example, that the introduction of EZ Pass could reduce pollution near toll booths enough to reduce the number of premature and low birth weight babies. I also find the following result hard to believe yet also hard to dismiss given the the accumulating body of evidence. Diane Alexander and Hannes Schwandt find that Volkswagen’s cheating diesel cars increased the number of low birth weight babies and asthma rates. Here are some details:
In 2008, a new generation of supposedly clean diesel

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Zoning Out Shade

3 days ago

Is it too hot to walk around the block? Sure, blame global warming, but in many parts of the country there is also a noticeable absence of shade. Why? As Nolan Gray, a city planner in New York, argues one reason is that shade has been zoned out.

…vernacular architecture in the U.S. was often designed around natural climate control. In the humid Southeast, large windows and central corridors encouraged airflow. In the arid Southwest, thick facades and small windows kept cool air inside. In both cases, most houses were packed tightly together to cast shadows over streets, with awnings, balconies, and roof overhangs used to protect indoor spaces from direct sunlight.
These design elements survive and thrive in cities built before air conditioning, like New Orleans, but are conspicuously

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The AEA’s New Data Policy

6 days ago

The AEA has long had a data repository but no one was responsible for examining the data or replicating a paper’s results and confidential data was treated as an exception. All that is about to change. The AEA has hired a Data Editor, Lars Vilhuber. Vilhuber will be responsible for verifying that the author’s code produces the claimed results from the given data. In some cases Vilhuber will even verify results from raw data all the way to table output.
The new data policy is a significant increase in the requirements to publish in an AEA journal. It takes an immense amount of work to document in a replicable way every step of the empirical process. It’s all to the good, of course, but it is remarkable how little economists train our students in these techniques and make no mistake writing

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India’s Tallest Building Cut Down To Size

7 days ago

The FT writes about the bust in India’s construction sector:
It was meant to be the tallest building in India, with luxury flats, a swimming pool and cinema where billionaires and Bollywood stars could enjoy a life of perfect splendour looking down over the Mumbai skyline.
But the Palais Royale complex now sits unfinished alongside other partially built structures tangled in the megacity’s traffic-choked downtown streets, an apt symbol of a crisis that threatens a key part of India’s financial system.
Part of the problem is cyclic, a shadow banking system that overextended credit and is now having to deleverage. India’s construction sector, however, is also plagued by systematic issues including the fact that major construction projects are invariably sued and thus become entangled with

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Compensating Kidney Donors

9 days ago

The Trump administration will allow greater compensation for live kidney donors.
Supporting Living Organ Donors.  Within 90 days of the date of this order, the Secretary shall propose a regulation to remove financial barriers to living organ donation.  The regulation should expand the definition of allowable costs that can be reimbursed under the Reimbursement of Travel and Subsistence Expenses Incurred Toward Living Organ Donation program, raise the limit on the income of donors eligible for reimbursement under the program, allow reimbursement for lost-wage expenses, and provide for reimbursement of child-care and elder-care expenses.
While pure compensation is still illegal this goes a long way to recouping costs. In addition the executive order improves the rules that govern the organ

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Is Democracy Doomed?

13 days ago

Democracies are much richer than non-democracies and their wealth has made them the envy of the world. The close correlation between democracy, high GDP per capita, and economic, military, and cultural power has made modernity appear to be a package deal. When people look at rich, powerful countries they typically see a democracy and they think, “I want that.”
At the same time, however, the academic literature on the causal effect of democracy on growth has shown at best weak results. Here is the all-star team of Acemoglu, Naidu, Restrepo, and Robinson (ungated) in the JPE summarizing:
With the spectacular economic growth under nondemocracy in China, the eclipse of the Arab Spring, and the recent rise of populist politics in Europe and the United States, the view that democratic

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Phonics Based Direct Instruction

15 days ago

Linguist John McWhorter strongly supports phonics and direct instruction:
Now that it’s summer, I have a suggestion for how parents can grant their wee kiddies the magic of reading by Labor Day: Pick up Siegfried Engelmann’s Teach Your Child to Read in 100 Easy Lessons. My wife and I used it a while ago with our then-4-year-old daughter, and after a mere 20 cozy minutes a night, a little girl who on Memorial Day could recognize on paper only the words no and stop and the names of herself and her family members could, by the time the leaves turned, read simple books.
…Engelmann’s book, which he co-wrote with Phyllis Haddox and Elaine Bruner, was first published in the early 1980s, but it was based on work from the late 1960s. That’s when Engelmann was involved in the government-sponsored

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Allegedly Unique Events

21 days ago

One common response to yesterday’s post, What is the Probability of a Nuclear War?, was to claim that probability cannot be assigned to “unique” events. That’s an odd response. Do such respondents really believe that the probability of a nuclear war was not higher during the Cuban Missile Crisis than immediately afterwards when a hotline was established and the Partial Nuclear Test Ban Treaty signed?
Claiming that probability cannot be assigned to unique events seems more like an excuse to ignore best estimates than a credible epistemic position. Moreover, the claim that probability cannot be assigned to “unique” events is testable, as Phillip Tetlock points out in an excellent 80,000 Hours Podcast with Robert Wiblin.
I mean, you take that objection, which you hear repeatedly from

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What is the Probability of a Nuclear War?

22 days ago

I agree with Tyler who wrote recently that “the risk of nuclear war remains the world’s No. 1 problem, even if that risk does not seem so pressing on any particular day.”
The probability of a nuclear war is inherently difficult to predict but what strikes me in this careful survey by Luisa Rodriguez for the Effective Altruism Forum is how much higher all the expert predictions and model forecasts are compared to what we would like them to be. Keep in mind that the following are annualized probabilities. For a child born today (say 75 year life expectancy) these probabilities (.0117) suggest that the chance of a nuclear war in their lifetime is nearly 60%, (1-(1-.0117)^75). At an annualized probability of .009 which is the probability from accident analysis it’s approximately 50%. See

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Is Bitcoin Halal?

25 days ago

Press TV: A report by Iran’s Mehr news agency last week showed that bitcoin miners were using power in buildings and properties that enjoy a lower price for electricity, including factories, greenhouses, government offices and mosques.
…A spokesman of Iran’s Ministry of Energy said on Monday that the country’s power grid had become unstable as a result of increased mining of cryptocurrencies.
Bitcoin mining in a mosque may seem outré but at least it’s not money lenders in the mosque. In fact, Bitcoin is halal, at least according to one source (quoted here):
As a payment network, Bitcoin is halal. In fact, Bitcoin goes beyond what more conventional closed banking networks offer. Unlike conventional bank networks which use private ledgers where there’s no guarantee that the originator

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Prisoners

26 days ago

New Yorker: On May 13, 1943, Axis forces in North Africa surrendered. The Allies suddenly found themselves saddled with nearly three hundred thousand prisoners of war, including the bulk of General Erwin Rommel’s famed Afrika Korps. Unable to feed or house their share, the British asked their American comrades to relieve them of the burden. And so, by the tens of thousands, German soldiers were loaded aboard Liberty Ships, which had carried American troops across the Atlantic. Eventually, some five hundred P.O.W. camps, scattered across forty-five of the forty-eight United States, housed some four hundred thousand men. In every one of those camps, the Geneva conventions were adhered to so scrupulously that, after the war, not a few of the inmates decided to stick around and become

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Tearing Up an Economics Textbook

28 days ago

Robert Samuelson, the economics columnist, has written a column titled, It’s time we tear up our economics textbooks and start over. What he actually says is we should tear up Greg Mankiw’s Principles of Economics:

But as a teaching device, [Mankiw’s] “Principles of Economics” has fallen behind. There’s little analysis of the impact of the Internet and digitalization on competition and markets. I couldn’t find either Apple or Facebook in the index; Google gets a few mentions.
Likewise, little attention is paid to the 2007-2009 Great Recession, the worst business downturn since the Great Depression, which also receives scant coverage relative to its significance. (Together, the two recessions receive about three pages, from 725 to 727.)
There’s some misleading information about the Great

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The Economist covers Why Are the Prices So D*mn High?

29 days ago

The Economist does a very nice job covering Why Are the Prices So D*mn High.
Baumol’s earliest work on the subject, written with William Bowen, was published in 1965. Analyses like that of Messrs Helland and Tabarrok nonetheless feel novel, because the implications of cost disease remain so underappreciated in policy circles. For instance, the steadily rising expense of education and health care is almost universally deplored as an economic scourge, despite being caused by something indubitably good: rapid, if unevenly spread, productivity growth. Higher prices, if driven by cost disease, need not mean reduced affordability, since they reflect greater productive capacity elsewhere in the economy. The authors use an analogy: as a person’s salary increases, the cost of doing things other

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Glenn Loury Speaks

June 21, 2019

On a Thursday evening in April, Glenn Loury is talking about race, ethics, and affirmative action. And he’s getting emotional. “Don’t patronize my people,” he told an audience at the College of the Holy Cross, in Massachusetts. “Don’t judge us by a different standard. Don’t lower the bar! Why are you lowering the bar? What’s going on there? Is that about guilt or pity?” He let the question hang in silence for a moment. “Tell me a pathway to equality that is rooted in either one of those things.”

That’s the opening to a sharp and very candid interview of Glenn Loury by Evan Goldstein in the Chronicle of Higher Education. Loury continues on affirmative action:
Equality is the only legitimate long-term goal — racial equality, not head-counting. I’m talking about equality of dignity,

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How to Become a Federal Criminal

June 20, 2019

Mike Chase, author of the excellent twitter feed @CrimeADay, has now written the illustrated handbook, How to Become a Federal Criminal. In truth, a handbook wasn’t necessary because it is very easy to become a federal criminal.
You may know that you are required to report if you are traveling to or from the United States with $10,000 or more in cash. Don’t hop over the Canadian border to buy a used car, for example, or the Feds may confiscate your cash (millions of dollars are confiscated every year). Did you also know that you can’t leave the United States with more than $5 in nickels??? That’s a federal crime punishable by up to five years in prison. How about carrying a metal detector in a national park–up to six months in prison. And God forbid you should use your metal detector and

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Storyline!

June 17, 2019

Here’s a neat game to test your knowledge of statistical trends.
Created by the graphic designer Olivier Ballou. And here is a link to the website.
The post Storyline! appeared first on Marginal REVOLUTION.

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SlateStarCodex and Caplan on ‘Why Are the Prices So D*mn High?’

June 12, 2019

SlateStarCodex, whose 2017 post on the cost disease was one of the motivations for our investigation, says Why Are the Prices so D*mn High (now available in print, ePub, and PDF) is “the best thing I’ve heard all year. It restores my faith in humanity.” I wouldn’t go that far.
SSC does have some lingering doubts and points to certain areas where the data isn’t clear and where we could have been clearer. I think this is inevitable. A lot has happened in the post World War II era. In dealing with very long run trends so much else is going on that answers will never be conclusive. It’s hard to see the signal in the noise. I think of the Baumol effect as something analogous to global warming. The tides come and go but the sea level is slowly rising.
In contrast, my friend Bryan Caplan is not

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Fleabag and Killing Eve

June 6, 2019

Fleabag (Amazon) and Killing Eve (BBC America) are two television shows written by the absolutely brilliant Phoebe Waller-Bridge who also stars in the former. I tweeted:
Fleabag 2nd Season even better than 1st. An indelible portrait of toxic femininity. No accident that the brilliant Phoebe Waller-Bridge also wrote Killing-Eve featuring a different female killer but in male style and fantasy form rather than the more mature & realistic Fleabag.
Not everyone understood the tweet and some were confused. How could Fleabag be about toxic femininity when Waller-Bridge is a feminist? Fleabag is misunderstood because people try to frame it in terms of victimhood and Waller-Bridge is having none of that. Her method for illustrating the equality of the sexes is to show that women can be just as

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Special Features of the Baumol Effect

June 4, 2019

I explained the Baumol effect in an earlier post based on Why Are the Prices So D*mn High?. In this post, I want to point out some special features of the Baumol effect that help to explain the data. Namely:

The Baumol effect predicts that more spending will be accompanied by no increase in quality.
The Baumol effect predicts that the increase in the relative price of the low productivity sector will be fastest when the economy is booming. i.e. the cost “disease” will be at its worst when the economy is most healthy!
The Baumol effect cleanly resolves the mystery of higher prices accompanied by higher quantity demanded.

First, in the literature on rising prices it’s common to contrast massive increases in spending with little to no increases in quality, as for example, in contrasting

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The NYTimes is Woke

June 2, 2019

Many trends develop over decades but I’ve never seen change so rapid as the breathtaking success of what one might call social justice concerns. Beginning around 2010-2014 there appears to have been a inflection point. Here from Zach Goldberg on twitter are various words drawn from Lexis-Nexis.

 
 
 
 
 
 
 
 
And here from David Rizardo is a longer list all drawn from the NYTimes. Rizardo has a page where you can graph the trends for words of your own choosing.

 
The post The NYTimes is Woke appeared first on Marginal REVOLUTION.

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The Road Ahead for America’s Colleges & Universities

June 2, 2019

We briefly cover higher education in Why Are the Prices So D*mn High? If you are interested in a longer treatment that covers many more issues I highly recommend Archibald and Feldman’s The Road Ahead for America’s Colleges & Universities. Archibald and Feldman reach the same conclusion we do with regard to dysfunction versus the cost disease:
We have offered two contending viewpoints about the drivers of college cost, and we have made a judgement between them. The dysfunction stories form the dominant narrative in public discussion, but we think it’s a story with weak foundations. Yet we agree that the status quo likely costs more than it could or perhaps should. You might notice that we mounted no defense of lazy rivers. Still, the cost consequences of true excesses probably are small.

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The Baumol Effect

May 31, 2019

After looking at education and health care and doing a statistical analysis covering 139 industries, Helland and I conclude that a big factor in price increases over time in the rising price of skilled labor. Many industries use skilled labor, however, and even so prices decline so that cannot be a full explanation. Moreover, why is the price of skilled labor increasing? The Baumol effect answers both of these questions. In this post, I’ll explain the effect drawing from Why Are the Prices so D*mn High.
The Baumol effect is easy to explain but difficult to grasp. In 1826, when Beethoven’s String Quartet No. 14 was first played, it took four people 40 minutes to produce a performance. In 2010, it still took four people 40 minutes to produce a performance. Stated differently, in the nearly

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The Tremendous Value of Increases in Life Expectancy

May 30, 2019

In this post I shall argue two things which together may confuse people. First, that life expectancy is so valuable that the money the US spends on healthcare relative to Europe could be well spent. Second that the extra spending is not in fact due to higher quality and does not explain rising prices over time.
What explains rising prices in some sectors of the economy? A common argument, at least from economists, is that there may be unmeasured improvements in quality. I don’t think that there have been marked improvements in quality in education so that argument doesn’t get off the ground (see my earlier post and the book for evidence). But health care quality has increased. Moreover, the value of life is so high that the improvements in quality could justify the cost increases. Here

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Physician and Nurse Incomes Have Increased Tremendously

May 29, 2019

There has been a lot of ink spilled over the rising cost of health care and in Why Are the Prices So D*mn High? Helland and I do not cover every theory and cannot satisfy every objection. Our goal is more modest. We can say that one major factor in rising health care costs is the rising price of skilled labor.

We argue that there is a direct, obvious, and measurable cause of higher costs in healthcare—namely, the price of skilled labor. No profession other than physicians has seen such large increases in incomes over the past 50 years. Figure 19 shows the real income of physicians from 1960 to 2016, indexed to 100 in 1960. Since 1960 the real income of physicians has increased by a factor of three. By comparison, barbers and bus drivers have seen essentially no increase in real incomes.

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Gross Domestic Error

May 28, 2019

Pierre Lemieux at EconLib catches a surprising error from The Economist which wrote this week:
There was some head-scratching this week, as data showed Japan’s economy growing by 2.1% in the first quarter at an annualised rate, defying expectations of a slight contraction. Most of the growth was explained by a huge drop in imports. Because they fell at a faster rate than exports, gdp rose.
Nope. Imports do not influence Gross Domestic Product, at least not in the mechanical way suggested by The Economist. Here’s how Tyler and I explain it in Modern Principles:
It’s important to remember the Domestic in Gross Domestic Product. When we add C+I+G we are adding up all national spending but some of that spending was on imports, goods that were not produced domestically. So we subtract imports

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Chernobyl

May 28, 2019

Chernobyl, HBO’s taut 5-part mini-series, is excellent and it sticks  close to the facts (although one female character played by Emily Watson is clearly made up). By all accounts, the series accurately represents life in the former Soviet Union and through a variety of means from color palette to casting and dialogue it does a remarkable job at capturing the political economy. One thing I learned (so far, it hasn’t all appeared yet) is that it could have been much, much worse but the Russians avoided the worst scenario with a combination of bravery, smarts and luck.
The number of cancer deaths from Chernobyl appears to be quite low. The WHO estimated an additional 9,335 deaths with about half of those coming from workers and nearby residents and other half more distant impacts, other

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Viral Markets in Everything

May 26, 2019

The Persistence of Chaos is an Airgapped Samsung 10.2-Inch Blue Netbook (2008) that is running Windows XP SP3 and 6 pieces of malware that collectively caused some $95 billion in damages. One of the worms trapped on the computer, for example, is:

SoBig
SoBig was a worm and trojan that circulated through emails as viral spam. This piece of malware could copy files, email itself to others, and could damage computer software/hardware. This piece of malware caused $37B in damages and affected hundreds of thousands of PCs.

The terms of sale include the following:

The sale of malware for operational purposes is illegal in the United States. As a buyer you recognize that this work represents a potential security hazard. By submitting a bid you agree and acknowledge that you’re purchasing this

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Why Are the Prices So D*MN High?

May 25, 2019

Why have some prices increased since 1950 by a factor of four while other prices have decreased by a factor of four? Technology is making so many goods and services much cheaper than in the past–that seems to be the normal situation–so why do some industries seem not only to be not progressing but actually retrogessing? As Scott Alexander put it, why are some industries so weird?
Those are the questions that motivated my latest piece, a short book with Eric Helland just released by the Mercatus Center titled, Why are the Prices so D*mn High?
In approaching this question I had some ideas in mind. I assumed that regulation, bloat and bureaucracy, monopoly power and the Baumol effect would each explain some of what is going on. After looking at this in depth, however, my conclusion is that

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America’s Cities Are Unlivable. Blame Wealthy Liberals

May 23, 2019

Farhad Manjoo writing in the New York Times brings the fire:
Then there is the refusal on the part of wealthy progressives to live by the values they profess to support at the national level. Creating dense, economically and socially diverse urban environments ought to be a paramount goal of progressivism. Cities are the standard geographical unit of the global economy. Dense urban areas are quite literally the “real America” — the cities are where two-thirds of Americans live, and they account for almost all national economic output. Urban areas are the most environmentally friendly way we know of housing lots of people. We can’t solve the climate crisis without vastly improving public transportation and increasing urban density. More than that, metropolises are good for the psyche and

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One of the Greatest Environmental Crimes of the 20th Century

May 22, 2019

It was one of the fastest decimations of an animal population in world history—and it had happened almost entirely in secret. The Soviet Union was a party to the International Convention for the Regulation of Whaling, a 1946 treaty that limited countries to a set quota of whales each year. By the time a ban on commercial whaling went into effect, in 1986, the Soviets had reported killing a total of 2,710 humpback whales in the Southern Hemisphere. In fact, the country’s fleets had killed nearly 18 times that many, along with thousands of unreported whales of other species. It had been an elaborate and audacious deception: Soviet captains had disguised ships, tampered with scientific data, and misled international authorities for decades. In the estimation of the marine biologists Yulia

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