Recently, I joined two podcasts to discuss No Free Lunch.
Here’s The Tom Woods Show.
And here’s The Economics Review with Aadi Golcha.
As a follow-up to Caleb’s Org Econ reading list, here’s what I’d assign to graduate students in Law and Econ.
Alchian, A. A. (1950). Uncertainty, evolution, and economic theory. Journal of Political Economy, 58(3), 211-221.
Stigler, G. J., & Becker, G. S. (1977). De gustibus non est disputandum. The American Economic Review, 67(2), 76-90.
Becker, G. S. (1993). The economic way of looking at behavior. Journal of Political Economy, 101(3), 385-409.
Barzel, Y. (1997), The Economic Analysis of Property Rights. Cambridge University Press. Chapter 1: The Property Rights Model, pp. 3-15.
Coase, R. H. (1960). The Problem of Social Cost. Journal of Law and Economics, 3(1).
Barzel, Y. (1977). Some fallacies in the interpretation of information costs. The Journal of Law and Economics, 20(2), 291-307.
Allen, Douglas W. (1991). What are Transaction Costs? Research in Law and Economics, 14, 1-18.
Stigler, G. J. (1992). Law or economics?. The Journal of Law and Economics, 35(2), 455-468.
Cheung, S. N. (1970). The structure of a contract and the theory of a non-exclusive resource. The Journal of Law and Economics, 13(1), 49-70.
Johnson, R. N., & Libecap, G. D. (1982). Contracting problems and regulation: the case of the fishery. The American Economic Review, 72(5), 1005-1022.
Lueck, D. (1994). Common property as an egalitarian share contract. Journal of Economic Behavior & Organization, 25(1), 93-108.
Barzel, Y. (1997), The Economic Analysis of Property Rights. Cambridge University Press. Chapter 2: The Public Domain, pp. 16-32.
Umbeck, J. (1977). A theory of contract choice and the California gold rush. The Journal of Law and Economics, 20(2), 421-437.
Ellickson, R. C. (1989). A hypothesis of wealth-maximizing norms: Evidence from the whaling industry. JL Econ. & Org., 5, 83-97.
Lueck, D. (1995). The rule of first possession and the design of the law. The Journal of Law and Economics, 38(2), 393-436.
Barzel, Y. (1997), The Economic Analysis of Property Rights. Cambridge University Press. Chapter 4: Divided Ownership, pp. 55-64.
Libecap, G. D., & Lueck, D. (2011). The demarcation of land and the role of coordinating property institutions. Journal of Political Economy, 119(3), 426-467.
Barzel, Y. (1997), The Economic Analysis of Property Rights. Cambridge University Press. Chapter 8: Wealth Maximizing Constraints on Property Rights, pp. 55-64.
Andolfatto, D. (2002). A theory of inalienable property rights. Journal of Political Economy, 110(2), 382-393.
Allen, D. W. (2002). The rhino’s horn: incomplete property rights and the optimal value of an asset. The Journal of Legal Studies, 31(S2), S339-S358.
Fleck, R. K. (2014). Can prohibitions on price gouging reduce deadweight losses?. International Review of Law and Economics, 37, 100-107.
Alchian, A. A., & Demsetz, H. (1972). Production, information costs, and economic organization. The American Economic Review, 62(5), 777-795.
Barzel, Y. (1997), The Economic Analysis of Property Rights. Cambridge University Press. Chapter 5: The Old Firm and the New Organization, pp. 65-84.
Holmstrom, B. (1999). The firm as a subeconomy. Journal of Law, Economics, and Organization, 15(1), 74-102.
Baker, G. P., & Hubbard, T. N. (2004). Contractibility and asset ownership: On-board computers and governance in US trucking. The Quarterly Journal of Economics, 119(4), 1443-1479.
Cheung, S. N. (1983). The contractual nature of the firm. The Journal of Law and Economics, 26(1), 1-21.
Goldin, C. (1986). Monitoring costs and occupational segregation by sex: a historical analysis. Journal of Labor Economics, 4(1), 1-27.
Leffler, K. B., & Rucker, R. R. (1991). Transactions costs and the efficient organization of production: a study of timber-harvesting contracts. Journal of Political Economy, 99(5), 1060-1087.
Allen, D., & Lueck, D. (1992). Contract choice in modern agriculture: cash rent versus cropshare. The Journal of Law and Economics, 35(2), 397-426.
Allen, D. W., & Borchers, A. (2016). Conservation practices and the growth of US cash rent leases. Journal of Agricultural Economics, 67(2), 491-509.
Posner, R. A. (1980). A theory of primitive society, with special reference to law. The Journal of Law and Economics, 23(1), 1-53.
Allen, D. W. (1990). An inquiry into the state’s role in marriage. Journal of Economic Behavior & Organization, 13(2), 171-191.
Botticini, M., & Siow, A. (2003). Why dowries?. American Economic Review, 93(4), 1385-1398.
Geddes, R., Lueck, D., & Tennyson, S. (2012). Human capital accumulation and the expansion of women’s economic rights. The Journal of Law and Economics, 55(4), 839-867.
Leeson, P. T., & Pierson, J. (2016). Prenups. The Journal of Legal Studies, 45(2), 367-400.
Epstein, R. A. (1973). A theory of strict liability. The Journal of Legal Studies, 2(1), 151-204.
Posner, R. A. (1973). Strict liability: A comment. The Journal of Legal Studies, 2(1), 205-221.
Landes, W. M., & Posner, R. A. (1980). Joint and multiple tortfeasors: An economic analysis. The Journal of Legal Studies, 9(3), 517-555.
Lott Jr, J. R. (1987). Should the wealthy be able to buy justice?. Journal of Political Economy, 95(6), 1307-1316.
Brooks, R. R. (2002). Liability and organizational choice. The Journal of Law and Economics, 45(1), 91-125.
Becker, G. S. (1968). Crime and Punishment: An Economic Approach. Journal of Political Economy, 76(2), 169-217.
Lott, Jr, J. R., & Mustard, D. B. (1997). Crime, deterrence, and right-to-carry concealed handguns. The Journal of Legal Studies, 26(1), 1-68.
Klick, J., & Tabarrok, A. (2005). Using terror alert levels to estimate the effect of police on crime. The Journal of Law and Economics, 48(1), 267-279.
Allen, D. W., & Barzel, Y. (2011). The evolution of criminal law and police during the pre-modern era. The Journal of Law, Economics, & Organization, 27(3), 540-567.
Tullock, G. (1975). On The Efficient Organization Of Trials. Kyklos, 28(4), 745-762.
Posner, R. A. (1993). What do judges and justices maximize? (The same thing everybody else does). Supreme Court Economic Review, 3, 1-41.
Glaeser, E., Johnson, S., & Shleifer, A. (2001). Coase versus the Coasians. The Quarterly Journal of Economics, 116(3), 853-899.
Leeson, P. T. (2012). Ordeals. The Journal of Law and Economics, 55(3), 691-714.
Becker, G. S., & Stigler, G. J. (1974). Law enforcement, malfeasance, and compensation of enforcers. The Journal of Legal Studies, 3(1), 1-18.
Klein, B., & Leffler, K. B. (1981). The role of market forces in assuring contractual performance. Journal of Political Economy, 89(4), 615-641.
Friedman, D. (1984). Efficient institutions for the private enforcement of law. The Journal of Legal Studies, 13(2), 379-397.
MacLeod, W. B. (2007). Reputations, relationships, and contract enforcement. Journal of Economic Literature, 45(3), 595-628.
Leeson, P. T. (2009). The laws of lawlessness. The Journal of Legal Studies, 38(2), 471-503.
Ellickson, R. C. (1985). Of Coase and cattle: Dispute resolution among neighbors in Shasta County. Stan. L. Rev., 38, 623-687.
Posner, R. A. (1997). Social norms and the law: An economic approach. The American economic review, 87(2), 365-369.
Posner, R. A., & Rasmusen, E. B. (1999). Creating and enforcing norms, with special reference to sanctions. International Review of Law and Economics, 19(3), 369-382.
Allen, D. W., & Lueck, D. (2009). Customs and incentives in contracts. American Journal of Agricultural Economics, 91(4), 880-894.
That’s the title of a recent paper in the Journal of Economic Psychology.
Here’s the abstract:
Some popular views about the workings of the economy are completely at odds with solid empirical evidence and congruent theoretical explanations and therefore can be qualified as misconceptions. Such beliefs lead to support for harmful policies. Cognitive biases may contribute to explaining why misconceptions persist even when scientific information is provided to people. We conduct two experimental studies to investigate, for the first time in economics, whether presenting information in a refutational way affects people’s beliefs about an important socio-economic issue on which expert consensus is very strong: the harmful effects of rent controls. In the laboratory (Study 1) both our refutational and non-refutational messages induce a belief change in the direction of expert knowledge. The refutational message, however, does not improve significantly on the non-refutational one. In the field (Study 2), where participants are college students receiving economic training, the refutational text improves, subject to some caveats, on standard instruction but not on the non-refutational message. The main overall implications of our results are that providing information moderately reduces the misconception, but does not eliminate it, and that the refutational approach does not work better than providing the same information in a non-refutational manner.
The paper’s results don’t bode well for my book’s prospects of winning friends and influencing people.
I’m reminded of a comment Bryan Caplan made in PhD micro during grad school. Something like: “All the studies show it’s near-impossible to teach the economic way of thinking. We’re going to try anyway. None of the studies were on me.”
Caleb Fuller, an economist who teaches at Grove City College, thinks that many people have a mistaken conception of economics. It is, they think, a dull and dry subject, the “dismal science,” of primary interest to specialists. Fuller disagrees. He says that “economics changed my life” (p. 11; all page references are to the Amazon Kindle edition), and in this wonderful short book, which can be read in an hour or so, he conveys his infectious enthusiasm for it.
What is the reason for his enthusiasm? Fuller says that he can provide readers with “a pair of eyeglasses that can extend our vision beyond where we’re accustomed to looking” (p. 12), and this is the “opportunity cost lens.” (One wonders how a pair of eyeglasses can be at the same time a lens, but this is a quibble.) By using this lens properly, readers will be able to unmask six common fallacies that exercise a malign influence on current thought. In carrying out his project, he follows Frédéric Bastiat and Henry Hazlitt, and he is a worthy successor of them, whom he calls “economics’ greatest communicators” (p. 12).
Before closing with a little price theory puzzle:
No Free Lunch is an ideal book for introductory economics classes and for anyone who wants to understand how the free market works. It would be a good test to see if you understand the book to explain why the lesson summarized in the book’s title is consistent with the fact that the book is, at least as of this writing, available on Amazon Kindle for free.
P.S. David, I’ll work on my grasp of “pair” and “lens.”
Here’s the reading list for the undergraduate seminar in Organizational Economics that I taught this semester.
|Method and the Firm||1. Leeson: “Economics is Not Statistics (and Vice Versa)” |
2. Langlois: “The Institutional Approach to Economic History: Connecting the Two Strands”
3. Coase: “The Nature of the Firm”
4. Allen: “Transaction Costs”
|Transaction Cost Economics||5. Klein et al.: “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process” |
6. Klein and Shelanski: “Empirical Research in Transaction Cost Economics: A Review and Assessment” (optional)
|Measurement||7. Barzel: “Measurement Costs and the Organization of Markets” |
8. Alchian and Demsetz: “Production, Information Costs, and Economic Organization” (optional)
|Agency||9. Manne: “Mergers and the Market for Corporate Control” |
10. Silverman and Ingram: “Asset Ownership and Incentives in Early Shareholder Capitalism: Liverpool Shipping in the Eighteenth Century”
|Labor Contracts||11. Chisholm: “Profit-Sharing versus Fixed-Payment Contracts: Evidence from the Motion Pictures Industry”|
If time permits: Austrian Perspectives on the Firm
|12. Hansmann: “Ownership of the Firm” |
13. Klein: “Economic Calculation and the Limits of Organization”
14. Langlois: “The Austrian Theory of the Firm: Retrospect and Prospect”
15. Piano and Rouanet: “Economic Calculation and the Organization of Markets” (optional—on mygcc)
16. Foss and Klein: “Entrepreneurship and the Economic Theory of the Firm: Any Gains from Trade?” (optional—on mygcc)
|Hybrids||17. Dnes: “A Case-Study Analysis of Franchise Contracts” |
18. Menard: “The Economics of Hybrid Organizations” (optional)
|Contracts, Brands, Quality||19. Klein and Leffler: “The Role of Market Forces in Assuring Contractual Performance” |
20. Png and Reitman: “Why are some Products Branded and Others Not?”
|Non-Profits||21. Hansmann: “Economic Theories of Nonprofit Organization” (pp. 28-37) |
22. Allen: “Order in the Church: A Property Rights Perspective”
|Clubs||23. Leeson: “Governments, Clubs, and Constitutions” |
24. Barzel and Sass: “The Allocation of Resources by Voting”
25. Greif: “The Fundamental Problem of Exchange” (pp. 265-272)
|Criminal Organizations||26. Leeson: “An-arrgh-chy: The Law and Economics of Pirate Organization” |
27. Leeson and Rogers: “Organizing Crime”
28. Skarbek et al.: “The Organization of Danish Gangs: A Transaction Cost Approach”
|Bureaucracies||29. Mises: Bureaucracy (pp. 40-56) |
30. Coyne: “The Politics of Bureaucracy and the Failure of Post-War Reconstruction”
|Families||31. Brinig: “Rings and Promises” |
32. Bring and Crafton: “Marriage and Opportunism”
|Miscellaneous Topics||33. Piano: “Organizing High-End Restaurants” (on mygcc) |
34. Wernerfelt and Simester: “Determinants of Asset Ownership: A Study of the Carpentry Trade”
35. Brown: “University Governance and Academic Tenure: A Property Rights Explanation”
I don’t know of many other undergraduate organizational economics courses in United States colleges/universities. However, there are a few noteworthy exceptions that deserve a shout-out. Tom Nonnenmacher at nearby Allegheny College has an excellent course in “Organizations and Contracts.” Also, check out his book on “institutional and organizational analysis.”
Dick Langlois at UConn has a course called “The Economics of Organization.”
Of course, there are a few classics missing from my reading list. That’s because I take a broad view of what’s encompassed by organizational economics (as does Prufer’s syllabus). Rather than an exclusive focus on the for-profit firm, we also discuss non-profits, criminal organizations, families, bureaucracies, and states. This is along the lines of what Robert Gibbons and John Roberts write in an overview of the field:
Moving beyond business firms, we also hope to see much more research on different organizational forms. Legislatures, government bureaus and departments, courts, political parties, clubs, cooperatives, mutuals, family firms, state-owned enterprises, charities and not-for-profits, hospitals, universities, and schools—all raise interesting organizational issues and deserve more attention than they have received.
IFF: What’s one important lesson economics teaches us?
Each of us depends on an intricate, complex division of labor for the most basic of our daily needs. Adam Smith wrestled with this problem 250 years ago by discussing the numerous workers who all contribute to fashioning a simple “woolen coat” on a “day laborer’s back.” Smith observes that in a single person’s lifetime, he scarce has time to make more than a few close friends. Yet, for every article of clothing he wears, he relies on the cooperation of a vast, anonymous multitude. It’s that cooperation which makes material flourishing possible in this present vail of tears. Economics explains the institutions that facilitate (and impede) that cooperation.
No lunch may be had for free…but for $14.99 plus shipping, you have may my new book, “No Free Lunch: Six Economic Lies You’ve Been Taught and Probably Believe.”
As I explain in the intro, the book was a bit of an accident. Its subject matter was not!
I’ve written here before about credible commitments, which I’ve come to see as severely under-studied by social scientists.
In an attempt to fill that lacuna, I’m in the very early stages of sketching a book on the topic. What follows is excerpted from my sabbatical proposal.
“…throughout history [commitment] is overwhelmingly the most pressing issue.”
~ Douglass North, 1993
The Economics of Commitment
I have been thinking about commitment problems in economic life since my junior year as a student at Grove City College. My interest was initially sparked by considering the problems of quality assurance in medicine during a course on health economics. Since then, credible commitments have featured in some of my published research (Fuller and DelliSanti 2017; Fuller 2019). Additionally, a few semesters ago, I gave a talk through the Institute for Faith and Freedom’s “Freedom Readers” series on the role credible commitments play in facilitating cooperation in various contexts.
“Commitment”—and derivative problems, like “quality assurance”—are at once fundamental to our understanding of human behavior and under-studied by economists. I say “under-studied,” not “ignored,” as seminal papers like Williamson’s (1983) “Credible Commitments: Using Hostages to Support Exchange” have garnered thousands of citations.
Yet, relative to the attention it deserves, “commitment” has received disproportionately little scrutiny from the so-called “New Institutional” economists. “Commitment,” defined simply as “keeping a promise,” is fundamental to all human endeavors. Sometimes promises—commitments—are explicit, but just as often, and more intractably, they are implicit.
Why is commitment so fundamental to our understanding of the social world? Aside from isolated, purely autarkic actors (see Schelling 1996 for how commitment problems apply even to these), all other action involves interaction with others. Humans form associations with others because cooperation is highly beneficial (Mises 1949). Foremost among such benefits are the gains to productivity stemming from the division of labor, which Mises calls “the fundamental social phenomenon” (1949). If trust is lacking between exchange partners, then those parties curtail investment in favor of increased consumption. The parties will seize fewer gains from trade. Likewise, when transactors anticipate a third party may expropriate their surplus, they cut back on investment (North 1993; Higgs 1997). With less capital accumulation, the ability to generate additional rounds of saving and investment is also mitigated. With less capital widening and deepening, the division of labor shrinks. Society is poorer. Hence, commitment matters.
In what follows, I describe commitment problems in market contexts, other associative relationships, and finally in political economy settings.
Spot Markets. In market contexts, commitment problems primarily show up in two ways. First, they can arise in simple “spot exchanges” due to asymmetric information between exchange partners. Information asymmetries can give rise to ex post psychic losses, as well as to contractions of exchange activity (Akerlof 1970). This occurs most often when the goods being traded are what Nelson calls “experience” or “credence” goods—goods whose attributes cannot be completely inspected prior to purchase (Nelson 1970; Barzel 1982; Png and Reitman 1995; Ekelund and Thornton 2019). In the absence of other constraints, it may be possible for sellers of these goods to systematically lower their quality to earn larger profits. Yet, even most “experience” and “credence” goods consistently meet the expectations of buyers. Markets for these goods often flourish. This quality assurance is achieved through a host of commitment mechanisms. However, these have not been catalogued.
Contractual Transactions. The second way commitment problems arise in markets is even more intractable. Most market activity is not a spot exchange, but instead involves the much more complex “contractual transaction” (Alchian and Woodward 1988). Contractual transactions involve the passage of time. Particularly for Austrian and New Institutional economists, the issue of “time” in economic life has received significant attention relative to mainstream counterparts, but these valuable analyses have tended to focus on issues such as time preference, the time structure of production, economic growth, or path dependence. Yet, as Alchian and Woodward put it: “In contract a promise of future performance is exchanged, and investments are made, the value of which becomes dependent on the fulfillment of the other party’s promises,” (1988, p. 66).
Thus, the passage of time introduces new exchange hazards that spot exchanges do not confront. These include additional chances for opportunism by both parties since the relationship is ongoing. One overlooked aspect of contractual relationships is that, in certain instances, gradual reductions in information asymmetry may even give rise to new openings for opportunistic behavior, as parties begin learning more about their exchange partners (cf. Langlois 1983). Even in the absence of opportunistic intent, however, the passage of time gives rise to shifting circumstances that may cause one party to change their behavior such that it is at odds with the other party’s goals (Klein 1996). However, once again, many long-term contracts exist, and yield large gains from trade for both parties. This is made possible through a host of credible commitment mechanisms (Williamson 1985).
Associative Relationships. Moving beyond “pure market” contexts, a third setting sees commitment issues arise whenever two parties interact in a way that gives rise to either dependency or mutual interdependency. The most obvious of these latter contexts is marriage. Indeed, there is a large and growing literature on the economics of family, and some of this literature does deal explicitly with commitment issues (Cohen 1987; Brinig 1990; Brinig and Crafton 1994). As Cohen (1987) argues, in the face of potential opportunism, marriage partners adjust their behavior in ways that amount to less “investment” in the family. These adjustments may include, for instance, having fewer children or developing more “outside” options at the expense of cultivating domestic skills or learning about one’s marriage partner.
Political Economy. A final and fourth context where commitment issues are prominent concerns the behavior of states (Coyne and Boettke 2009; Piano and Candela 2018). The question of how states credibly refrain from predation is one of the oldest questions humans have asked—far pre-dating the formal development of economics itself. Of course, the inquiry has not always been formulated in economic terms, but the substance of the question is consistent with how contemporary political economists engage this puzzle. The question of how to bind the state’s “grabbing hand” can be seen in some of the earliest written works, such as The Epic of Gilgamesh. The theme is taken up again by Madison in his famous “paradox of power,” described in Federalist 51. In economics, there is an ongoing debate regarding the extent to which “parchments” can effectively bind (Wagner 1993). Indeed, for the question of economic growth, there is likely no more important question than what facilitates effective constraints on states’ tendency toward predation.
My book would attempt a comprehensive examination of commitment in interactive contexts. It will begin by setting these problems in historical context. Historically, the way that economists would have thought about the forgoing commitment problems was to posit an exogenously-given institutional framework (a deus ex machina) that prevents expropriation and opportunism. Most importantly, this would have included a court system that perfectly interpreted and enforced contract terms that the interacting parties had perfectly enumerated (so-called Arrow-Debreu contingent-contracting).
However, the emergence of the New Institutional Economics in the latter 20th century seriously questioned the viability of these assumptions. For starters, all real-world contracts are necessarily incomplete (Grossman and Hart 1986). In some instances, the instances most relevant to commitment problems, the contractual terms are incapable of being specified in a way the courts can verify (Klein and Leffler 1981). Additionally, the older “complete contracting” view glossed over a host of potential problems with the courts themselves, including that they are costly to use (Williamson 1985), make errors, may override voluntarily chosen terms, and are prone to corruption (Benson 1989).
Because contracts are necessarily incomplete and because courts are always imperfect, interacting parties must devise other means of securing commitments. My book will document and describe the endogenous emergence of commitment mechanisms in voluntary contexts. Such commitment mechanisms assume a variety of shapes, including hostages, bonds, third-party contracting, investments, reputations, club membership, and unique organizational forms (see, for example, Williamson 1983; Schelling 1996; Hansmann 1996).
After historical prologue, my goal will be to offer a comprehensive cataloguing of these commitment techniques. This is purely descriptive and taxonomic. Next, I hope to understand the conditions under which certain mechanisms are selected. For instance, do commitment techniques exhibit significant variation between the four commitment situations I described? Lastly, I wish to perform a comparative exercise that demonstrates the relative superiority of commitment in voluntary contexts compared to the persistent commitment problems that plague governments. What are the respective challenges confronted by attempts to stem opportunism in private vs. public contexts? Even in public contexts, though, I seek to understand why some governments have been better “committers” than others. This investigation will contribute to ongoing discussions in political economy of predation and the efficacy of constitutional constraints.
Overall, my book project seeks to contribute to a large and growing literature devoted to the economics of “self-governance” (Leeson 2014; Skarbek 2014; Stringham 2015; Richman 2017; Shortland 2019). When perfect creation and enforcement of contracts is absent, how do parties devise means of promise-keeping?
Akerlof, George A. “The Market for ‘Lemons:’ Quality Uncertainty and the Market Mechanism.” Quarterly Journal of Economics 84, no. 3 (1970): 488-500.
Alchian, Armen A., and Susan Woodward. “The Firm Is Dead; Long Live the Firm a Review of Oliver E. Williamson’s the Economic Institutions of Capitalism.” Journal of Economic Literature 26, no. 1 (1988): 65-79.
Barzel, Yoram. “Measurement Cost and the Organization of Markets.” The Journal of Law and Economics 25, no. 1 (1982): 27-48.
Benson, Bruce L. “The Spontaneous Evolution of Commercial Law.” Southern Economic Journal (1989): 644-661.
Brinig, Margaret F. “Rings and Promises.” Journal of Law, Economics, and Organization. 6 (1990): 203.
Brinig, Margaret F., and Steven M. Crafton. “Marriage and Opportunism.” The Journal of Legal Studies 23, no. 2 (1994): 869-894.
Cohen, Lloyd. “Marriage, Divorce, and Quasi Rents; Or, “I Gave Him the Best Years of My Life”.” The Journal of Legal Studies 16, no. 2 (1987): 267-303.
Coyne, Christopher J., and Peter J. Boettke. “The Problem of Credible Commitment in Reconstruction.” Journal of Institutional Economics 5, no. 1 (2009): 1-23.
Ekelund, Robert B., and Mark Thornton. “Extreme Credence and Imaginary Goods.” Atlantic Economic Journal 47, no. 3 (2019): 361-371.
Fuller, Caleb S. “Is the Market for Digital Privacy a Failure?” Public Choice 180, no. 3 (2019): 353-381.
Fuller, Caleb, and Dylan DelliSanti. “Spillovers from Public Entrepreneurship: A Case Study.” Journal of Entrepreneurship and Public Policy (2017).
Grossman, Sanford J., and Oliver D. Hart. “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration.” Journal of Political Economy 94, no. 4 (1986): 691-719.
Hansmann, Henry. The Ownership of Enterprise. Harvard University Press, 1996.
Higgs, Robert. “Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed After the War.” The Independent Review 1, no. 4 (1997): 561-590.
Klein, Benjamin. “Why Hold‐Ups Occur: The Self‐Enforcing Range of Contractual Relationships.” Economic Inquiry 34, no. 3 (1996): 444-463.
Klein, Benjamin, and Keith B. Leffler. “The Role of Market Forces in Assuring Contractual Performance.” Journal of Political Economy 89, no. 4 (1981): 615-641.
Langlois, Richard N. Internal Organization in a Dynamic Context: Some Theoretical Considerations. CV Starr Center for Applied Economics, New York University, Faculty of Arts and Science, Department of Economics, 1983.
Leeson, Peter T. Anarchy Unbound: Why Self-Governance Works Better Than You Think. Cambridge University Press, 2014.
Mises, Ludwig. Human Action. Yale University Press, 1949.
Madison, James. “The Federalist Papers: No. 51.” February 8 (1788): 1788.
Nelson, Phillip. “Information and Consumer Behavior.” Journal of Political Economy 78, no. 2 (1970): 311-329.
North, Douglass C. “Institutions and Credible Commitment.” Journal of Institutional and Theoretical Economics 149, no. 1 (1993): 11-23.
Candela, Rosolino, and Ennio Emanuele Piano. “Transition Economies: Rule of Law and Credible Commitment.” Encyclopedia on Law and Economics. New York: Springer (2018).
Png, Ivan PL, and David Reitman. “Why Are Some Products Branded and Others Not?” The Journal of Law and Economics 38, no. 1 (1995): 207-224.
Richman, Barak D. Stateless Commerce. Harvard University Press, 2017.
Schelling, Thomas C. “Coping Rationally with Lapses from Rationality.” Eastern Economic Journal 22, no. 3 (1996): 251-269.
Shortland, Anja. Kidnap: Inside the Ransom Business. Oxford University Press, 2019.
Skarbek, David. The Social Order of the Underworld: How Prison Gangs Govern the American Penal System. Oxford University Press, 2014.
Stringham, Edward. Private Governance: Creating Order in Economic and Social Life. Oxford University Press, USA, 2015.
Wagner, Richard E. Parchment, Guns, and Constitutional Order. Edward Elgar, 1993.
Williamson, Oliver E. “Credible Commitments: Using Hostages to Support Exchange.” The American Economic Review 73, no. 4 (1983): 519-540.
Williamson, Oliver E. The Economic Institutions of Capitalism. Free Press, 1985.
ECON 101 has fallen on hard times. I won’t repeat all the rebuttals to this perspective that have been offered by sophisticated true believers or by master teachers of 101.
Instead, I simply wanted to share the approach I take. Each class period centers on a question about the social world that economics illuminates. My goal is to invoke a sense of awe and wonder at the power and beauty of economic reasoning.
Posting these here because I’m always open to new suggestions.
|The Economic Approach I: Do seatbelt laws kill?|
|The Economic Approach II: Do economists agree?|
|Foundations of Economics: Why should you thank your high school geometry teacher?|
|Economic Method: What’s the difference between a rock and a person?|
|Human Action: What did the Martian see at Grand Central Station?|
|Opportunity Cost: Do hurricanes make the world a better place?|
|Economic Goods: If your life depended on it, could you make an omelet?|
|Marginal Utility: Why do quarterbacks earn more than economics professors?|
|Direct Exchange: Should we “cut out the middleman”?|
|Direct Exchange: Are low wages exploitative?|
|Absolute Advantage: Whatever happened to Tasmania?|
|Comparative Advantage: Which state is the best for growing cars?|
|Property and Ownership: Where do the biggest oysters grow?|
|Indirect Exchange: Can you spare a smoke?|
|The Law of Demand I: In ten years, what should you remember from this class?|
|The Law of Demand II: Do sugar tariffs make us fat?|
|The Law of Supply: Why aren’t you a garbage collector?|
|Price Formation I: What is a price?|
|Price Formation II: How do prices turn enemies into friends?|
|Elasticity: Did Prohibition fail?|
|Market Changes I: What happens to ER visits when the price of water changes?|
|Market Changes II: What’s graphite got to do with peanut butter?|
|Market Changes III: How does Uber’s “surge pricing” make the world a safer place?|
|Factor Prices I: Will recycling paper save the trees?|
|Factor Prices II: What’s the deadliest job in America?|
|Profit and Loss I: What does it profit a main to gain the world and lose his soul?|
|Profit and Loss II: Is profit a four-letter word?|
|Cartel: What if I told you that airplane food used to be delicious?|
|Monopoly: Why does the DMV take forever?|
|Labor Unions: Who should we thank for high wages?|
|Price Ceilings I: Need an apartment? Search the obituaries!|
|Price Ceilings II: How do you conquer a city in three days (or less)?|
|Price Floors I: What happened to elevator operators?|
|Price Floors II: Why does Europe have “butter mountains”?|
|Taxes and Subsidies: Where did all the windows go?|
|Regulation I: Will concussions doom the NFL? (And what’s the solution?)|
|Regulation II: Will MySpace ever lose its monopoly?|
|Regulation III: Who wants to be regulated?|
|Economics Everywhere: Where can economics take you?|
Here’s a link to the syllabus itself.