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Taxation Tales and the Window Tax

1 day ago

H.L. Mencken once wrote: “Taxation . . . is eternally lively; it concerns nine-tenths of us more directly than either smallpox or golf, and has just as much drama in it; moreover, it has been mellowed and made gay by as many gaudy, preposterous theories.” Michael Keen and Joel Slemrod quote Mencken and then make his point in many vivid ways in their gallop through tax policy in their just-published book Rebellion, Rascals, and Revenue: Tax Follies and Wisdom Through the Ages. For those (including economics instructors) looking to replenish and refresh their dusty anecdotes about offbeat tax policies, this is the book you’ve been waiting for. The book itself is an easy read, with copious footnotes leading to the research literature for those who want more detail. They write at the

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What is Behind People’s Views on Tax Policy?

26 days ago

When economists study taxation, they typically separate two issues: one is the distributional issue of which groups are paying more or less; the other is the ways in which taxes reduce efficient economic incentives for work, savings, investment, innovation, and so on on. Today is the deadline for when US individual income tax returns are due with the federal Internal Revenue Service as well as with state-level income tax authorities. According to the research of Stefanie Stantcheva, most of those taxpayers focus almost entirely on the distributional question, not the efficiency question. 
Stancheva discusses the topic as part of an interview with David Cutler on the occasion of winning the 2020 Elaine Bennett Research Prize, which is ”awarded every two years to recognize and honor

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What is Behind People’s Views on Tax Policy?

26 days ago

When economists study taxation, they typically separate two issues: one is the distributional issue of which groups are paying more or less; the other is the ways in which taxes reduce efficient economic incentives for work, savings, investment, innovation, and so on on. Today is the deadline for when US individual income tax returns are due with the federal Internal Revenue Service as well as with state-level income tax authorities. According to the research of Stefanie Stantcheva, most of those taxpayers focus almost entirely on the distributional question, not the efficiency question. 
Stancheva discusses the topic as part of an interview with David Cutler on the occasion of winning the 2020 Elaine Bennett Research Prize, which is ”awarded every two years to recognize and honor

Read More »

Interview with Christopher Pissarides: Unemployment and Labor Markets

28 days ago

Michael Chui and Anna Bernasek of the McKinsey Global Institute interview Christopher Pissarides (Nobel, ’10) ”about how he developed the matching theory of unemployment, how COVID-19 affected his research, and what might be in store for labor markets after the pandemic” (May 12, 2021, ”Forward Thinking on unemployment with Sir Christopher Pissarides”). At the website, audio is available for the half-hour interview, along with an edited transcript, upon which I will draw here.
As a starting point, it’s useful to remember that labor markets always have, at the same time, both unemployed workers who are looking for jobs and employers who have job vacancies. For example, the US economy had about 9.7 million unemployed workers in March 2021, and at the same time, employers were

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Interview with Christopher Pissarides: Unemployment and Labor Markets

28 days ago

Michael Chui and Anna Bernasek of the McKinsey Global Institute interview Christopher Pissarides (Nobel, ’10) ”about how he developed the matching theory of unemployment, how COVID-19 affected his research, and what might be in store for labor markets after the pandemic” (May 12, 2021, ”Forward Thinking on unemployment with Sir Christopher Pissarides”). At the website, audio is available for the half-hour interview, along with an edited transcript, upon which I will draw here.
As a starting point, it’s useful to remember that labor markets always have, at the same time, both unemployed workers who are looking for jobs and employers who have job vacancies. For example, the US economy had about 9.7 million unemployed workers in March 2021, and at the same time, employers were

Read More »

Political Economy of the Pandemic Response

May 13, 2021

[F]rom the perspective of promoting overall societal well‐being, we believe that governments in the United States and around the world made significant errors in their policy response to the COVID‐19 pandemic. … [A] political economy perspective challenges the assumptions of omniscience and benevolence of all actors—politicians, regulators, scientists, and members of the public—in response to the pandemic. We live in an imperfect world, populated by imperfect beings, who interact in imperfect institutional environments …
What are some ways in which pandemic policies based in micro theory and welfare economics might differ from the policies actually used? The potential answers seems to me both of interest in themselves, but also a good live subject for classroom discussions and

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Political Economy of the Pandemic Response

May 13, 2021

If economics-minded policy-makers rules made decisions in response to the pandemic, what might they do differently, and why? Peter Boettke and Benjamin Powell suggest some answers to that question in ”The political economy of the COVID‐19 pandemic” (Southern Economic Journal, April 2021, pp. 1090-1106). Their paper leads off a symposium on the topic. I’ll list all the papers in the symposium below. I’m told that they are all freely available online now, and for the next few weeks, so if you don’t have library access to the journal, you might want to check them out sooner rather than later. Boettke and Powell write: 

[F]rom the perspective of promoting overall societal well‐being, we believe that governments in the United States and around the world made significant errors in their

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Is the Pandemic Worse in Lower- or Higher-Income Countries?

May 12, 2021

It seems obvious that the COVID-19 pandemic must be worse in lower-income countries. After all, it seems as if the opportunities for social  distancing must be lower in urban areas in those countries, and the resources for everything from protective gear to hospital care must be lower. There are certainly cases where the pandemic has hit some areas hard outside of  high-income countries: for example, the current situation in India, or the city of Manaus in Brazil that suffered a a first wave, and then suffered a second wave with a new variant of COVID.  
But that said, Angus Deaton (Nobel ’15) makes a case that the areas outside the high-income countries of the world have, as a group, been less affected by the pandemic in ”Covid-19 and Global Income Inequality” (Milken Institute

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Is the Pandemic Worse in Lower- or Higher-Income Countries?

May 12, 2021

It seems obvious that the COVID-19 pandemic must be worse in lower-income countries. After all, it seems as if the opportunities for social  distancing must be lower in urban areas in those countries, and the resources for everything from protective gear to hospital care must be lower. There are certainly cases where the pandemic has hit some areas hard outside of  high-income countries: for example, the current situation in India, or the city of Manaus in Brazil that suffered a a first wave, and then suffered a second wave with a new variant of COVID.  
But that said, Angus Deaton (Nobel ’15) makes a case that the areas outside the high-income countries of the world have, as a group, been less affected by the pandemic in ”Covid-19 and Global Income Inequality” (Milken Institute

Read More »

The Slow Magic from Agricultural R&D

May 11, 2021

For much of human history, a majority of people have worked in agriculture. In the countries of sub-Saharan Africa, about half of all workers are currently in agriculture–more in lower-income countries. The process of raising the overall standard of living requires a rise in agricultural productivity, so that a substantial share of workers can shift away from agriculture, and thus be able to work in other sectors of the economy. In turn, rises in agricultural productivity are typically driven by research and development, which has been lagging. Julian M. Alston, Philip G. Pardey, and Xudong Rao make the case in ”Rekindling the Slow Magic of Agricultural R&D” (Issues in Science and Technology, May 3, 2021).
The authors discuss CGIAR, which stands for Consultative Group on

Read More »

The Slow Magic from Agricultural R&D

May 11, 2021

For much of human history, a majority of people have worked in agriculture. In the countries of sub-Saharan Africa, about half of all workers are currently in agriculture–more in lower-income countries. The process of raising the overall standard of living requires a rise in agricultural productivity, so that a substantial share of workers can shift away from agriculture, and thus be able to work in other sectors of the economy. In turn, rises in agricultural productivity are typically driven by research and development, which has been lagging. Julian M. Alston, Philip G. Pardey, and Xudong Rao make the case in ”Rekindling the Slow Magic of Agricultural R&D” (Issues in Science and Technology, May 3, 2021).
The authors discuss CGIAR, which stands for Consultative Group on International

Read More »

Interview with Matthew Jackson: Human Networks

May 6, 2021

David A. Price does an ”Interview” with Matthew Jackson, with the subheading ”On human networks, the friendship paradox, and the information economics of protest movements” (Econ Focus: Federal Reserve Bank of Richmond, 2021, Q1, pp. 16-20). Here are a few snippets of the conversation, suggestive of the bigger themes.
Homophily
[O]ne key network phenomenon is known among sociologists and economists as homophily. It’s the fact that friendships are overwhelmingly composed of people who are similar to each other. This is a natural phenomenon, but it’s one that tends to fragment our society. When you put this together with other facts about social networks — for instance, their importance in finding jobs — it means many people end up in the same professions as their friends and most

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Interview with Matthew Jackson: Human Networks

May 6, 2021

David A. Price does an ”Interview” with Matthew Jackson, with the subheading ”On human networks, the friendship paradox, and the information economics of protest movements” (Econ Focus: Federal Reserve Bank of Richmond, 2021, Q1, pp. 16-20). Here are a few snippets of the conversation, suggestive of the bigger themes.
Homophily
[O]ne key network phenomenon is known among sociologists and economists as homophily. It’s the fact that friendships are overwhelmingly composed of people who are similar to each other. This is a natural phenomenon, but it’s one that tends to fragment our society. When you put this together with other facts about social networks — for instance, their importance in finding jobs — it means many people end up in the same professions as their friends and most

Read More »

The Great Texas Power Failure of February 2021

May 5, 2021

In the aftermath of the Texas power failures in February, a number commenters found confirmation that, amazingly, they had been right about everything all along. Thus, those who were against wind power and renewable energy mandated in general blamed the wind farms. Those who are suspicious of competition in markets for generating electrical power blamed deregulation, although blaming ”the market” for what happens in a heavily regulated industry seems peculiar to me. Some critics even blamed Enron, a company that has not existed for years. What actually happened seems simpler, if less reinforcing for various preconceptions: It got really cold. 
Michael Giberson provides an overview in ”Texas Power Failures: What happened in February 2021 and What Can be Done” (Reason Foundation,

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The Great Texas Power Failure of February 2021

May 5, 2021

In the aftermath of the Texas power failures in February, a number commenters found confirmation that, amazingly, they had been right about everything all along. Thus, those who were against wind power and renewable energy mandated in general blamed the wind farms. Those who are suspicious of competition in markets for generating electrical power blamed deregulation, although blaming ”the market” for what happens in a heavily regulated industry seems peculiar to me. Some critics even blamed Enron, a company that has not existed for years. What actually happened seems simpler, if less reinforcing for various preconceptions: It got really cold. 
Michael Giberson provides an overview in ”Texas Power Failures: What happened in February 2021 and What Can be Done” (Reason Foundation,

Read More »

China’s Population: The Coming Decline

May 4, 2021

Pity China’s statisticians, who seem caught in the middle between the facts of arithmetic and the demands of government. The recent kerfuffle started about a week ago when the Financial Times reported, ”China set to report first population decline in five decades” (April 27, 2021).  The report was based on ”people familiar with the research,” who presumably had some insight into the results of China’s population census that was completed last December, with data schedule for released in April. 
But apparently this census data was too hot to handle. The FT quoted Huang Wenzheng, a fellow at the a Beijing-based think-tank, who said: ”The census results will have a huge impact on how the Chinese people see their country and how various government departments work. They need to be

Read More »

China’s Population: The Coming Decline

May 4, 2021

Pity China’s statisticians, who seem caught in the middle between the facts of arithmetic and the demands of government. The recent kerfuffle started about a week ago when the Financial Times reported, ”China set to report first population decline in five decades” (April 27, 2021).  The report was based on ”people familiar with the research,” who presumably had some insight into the results of China’s population census that was completed last December, with data schedule for released in April. 
But apparently this census data was too hot to handle. The FT quoted Huang Wenzheng, a fellow at the a Beijing-based think-tank, who said: ”The census results will have a huge impact on how the Chinese people see their country and how various government departments work. They need to be

Read More »

Spring 2021 Journal of Economic Perspectives Available Online

May 3, 2021

I am now in my 35th year as Managing Editor of the Journal of Economic Perspectives. The JEP is published by the American Economic Association, which decided about a decade ago–to my delight–that the journal would be freely available on-line, from the current issue all the way back to the first issue. You can download individual articles or the entire issue, and it is available in various e-reader formats, too. Here, I’ll start with the Table of Contents for the just-released Spring 2021 issue, which in the Taylor household is known as issue #136. Below that are abstracts and direct links for all of the papers. I will probably blog more specifically about some of the papers in the next week or two, as well.

______________________________________
Symposium on the European Union

”The

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Spring 2021 Journal of Economic Perspectives Available Online

May 3, 2021

I am now in my 35th year as Managing Editor of the Journal of Economic Perspectives. The JEP is published by the American Economic Association, which decided about a decade ago–to my delight–that the journal would be freely available on-line, from the current issue all the way back to the first issue. You can download individual articles or the entire issue, and it is available in various e-reader formats, too. Here, I’ll start with the Table of Contents for the just-released Spring 2021 issue, which in the Taylor household is known as issue #136. Below that are abstracts and direct links for all of the papers. I will probably blog more specifically about some of the papers in the next week or two, as well.

______________________________________
Symposium on the European Union

”The

Read More »

Electrification of Everything: The Transmission Lines Challenge

April 28, 2021

Reducing carbon emissions will require a number of different intertwined steps, and  one  of them is commonly being referred to as ”electrification of everything.” Basically, the more that society can rely for its energy needs on electricity generated from low-carbon or carbon-free methods, the more it can turn away from  burning fossil fuels. In turn, this policy agenda will require a vast expansion of high-voltage electricity transmission lines, especially if a substantial share of that electricity is generated from solar and wind. If there is more reliance on intermittent sources of electricity, there is also more need to ship electricity from place to place–more need for what is sometimes called a National Supergrid.  
However, the prospect of doubling the number of long-distance

Read More »

Electrification of Everything: The Transmission Lines Challenge

April 28, 2021

Reducing carbon emissions will require a number of different intertwined steps, and  one  of them is commonly being referred to as ”electrification of everything.” Basically, the more that society can rely for its energy needs on electricity generated from low-carbon or carbon-free methods, the more it can turn away from  burning fossil fuels. In turn, this policy agenda will require a vast expansion of high-voltage electricity transmission lines, especially if a substantial share of that electricity is generated from solar and wind. If there is more reliance on intermittent sources of electricity, there is also more need to ship electricity from place to place–more need for what is sometimes called a National Supergrid.  
However, the prospect of doubling the number of long-distance

Read More »