The Basic Income Guarantee, Freedom, and the Welfare State with Otto Lehto

What follows is an edited transcript of my conversation with Otto Lehto.


Petersen: You’re listening to Economics Detective Radio. My guest today is Otto Lehto of King’s College London. He is formerly the chair of Finland’s Basic Income Network. Otto, welcome to Economics Detective Radio.

Lehto: Oh it’s my pleasure to be here.

Petersen: So our topic for today is the basic income guarantee. Otto, you approach this idea from the perspective of political philosophy, so let’s start by discussing that. How about we start by talking about two of the major figures in political philosophy: John Rawls and Robert Nozick. What do each of them have to say about the welfare state and where do your views diverge from theirs?

Lehto: That is a good point to start indeed, although it is I think a bit lamentable that we have to start from those two figures because they have dominated the discussion so much during the last 50 years. In fact, it’s very hard to have a conversation outside the boundaries set by those two figures, but they’re both geniuses. They set the stage for the discussion, certainly in philosophy but also in public policy in many respects. Continue reading The Basic Income Guarantee, Freedom, and the Welfare State with Otto Lehto

Subscribe to Economics Detective Radio on iTunes, Android, or Stitcher.

Supersonic Flight, Technology, and the Overland Ban with Sam Hammond

What follows is an edited transcript of my conversation with Sam Hammond.


Petersen: My guest today is Sam Hammond. He’s a policy analyst at the Niskanen Center. Sam, welcome to Economics Detective Radio.

Hammond: Hi!

Petersen: Our topic today is supersonic air travel.

Sam has written an article titled “Make America Boom Again” along with co-author Eli Dourado which revisits the U.S. Federal Aviation Administration’s ban on supersonic flight over the United States. So Sam let’s start at the very start. Let’s start by talking about the history of flight. How do we get from the Wright brothers to supersonic flight?

Hammond: Well I think the most notable thing about the early history of aviation is how quickly and how rapidly we innovated. So the Wright brothers flew their initial voyage, their milestone flight in 1903 at seven miles per hour and within forty years we were already breaking the speed of sound. And actually very shortly after that not only were we breaking the speed of sound within military jets but we were on the cusp of commercializing it through the Concorde. Continue reading Supersonic Flight, Technology, and the Overland Ban with Sam Hammond

Subscribe to Economics Detective Radio on iTunes, Android, or Stitcher.

Understanding the Karni Belief-Revelation Mechanism

Suppose you wanted to find out someone’s subjective belief in the likelihood of a given event. Your first instinct might be to offer them betting odds on the event. If they would accept odds of 2:1 but no lower, you might conclude that they believe the event to have a 33.3% chance of occurring.

This would be correct if the person you’re offering the bet to is risk neutral. But if they’re risk averse, they might actually believe the event has a 50% likelihood of occurring, and they just require more favourable odds to compensate them for accepting risk.

Luckily, there’s a better way to elicit subjective probabilities. It comes from Karni (2009), a short paper published in Econometrica.* Continue reading Understanding the Karni Belief-Revelation Mechanism

The Second Ehrlich-Simon Wager with Joanna Szurmak

Today’s interview features Joanna Szurmak of the University of Toronto. Our topic for today is the second proposed bet between Paul Ehrlich and Julian Simon. Joanna has written a paper titled “Care to Wager Again? An Appraisal of Paul Ehrlich’s Counter-Bet Offer to Julian Simon” along with coauthors Vincent Geloso and Pierre Desrochers, both former guests of this show. We mentioned the original Simon-Ehrlich bet briefly in my conversation with Steve Horwitz, but in this episode we talk about it in more detail.

Julian Simon had a cornucopian vision of development and humanity. In his view, things are getting better as we develop new ideas for improving our lives and our world. Paul Ehrlich has precisely the opposite vision. He has been predicting environmental catastrophe since the 1960s. Continue reading The Second Ehrlich-Simon Wager with Joanna Szurmak

Subscribe to Economics Detective Radio on iTunes, Android, or Stitcher.

Prediction Contest 2: Electric Boogaloo

Following the success of the EGSS’ first prediction contest, I have organized a second contest! The predictions were made on November 17th, 2016 and will resolve on March 17th, 2017. The three contestants with the lowest Brier scores (average squared errors) will win gift cards!

1. The price of West Texas Intermediate crude oil will exceed 40 USD per barrel on
2017-03-17.
2. The price of West Texas Intermediate crude oil will exceed 50 USD per barrel on
2017-03-17.
3. The price of West Texas Intermediate crude oil will exceed 60 USD/barrel at any
point before 2017-03-17.
4. The Canadian dollar will exceed 0.74 USD on 2017-03-17.
5. The Canadian dollar will exceed 0.85 USD at any point before 2017-03-17.
6. The US Federal Government will eliminate the individual mandate of the Af fordable Care Act.
7. At lease one Canadian province will legalize the use of recreational marijuana.
8. The media will report on at least one assassination attempt against Donald Trump.
9. Bashar al-Assad will remain the President of Syria.
10. Brendan Dassey will be released from prison.
11. The S&P 500 will exceed 2,200 on 2017-03-17.
12. The S&P 500 will exceed 2,500 at any point before 2017-03-17.
13. The S&P 500 will fall below 1,900 at any point before 2017-03-17.
14. An Englishman will win the 2017 William Hill World Darts Championship.
15. The Canadian team will win the 2017 World Junior Ice Hockey Championships.
16. A single terrorist attack will kill at least 30 people in an OECD country.
17. ISIS will retain control of al-Raqqa.
18. The DJ at the econ department’s holiday party will play “Stayin’ Alive.”
19. The movie “Underworld: Blood Wars” will have a Rotten Tomatoes score below 35%.
20. An artifi cial intelligence will beat the world champion at Starcraft 2.

Here are the predictions:

TV FA WS ML CY BY XS PN JC RM GP HT MC EA KL MM Mean Outcome
1 80 70 60 60 30 50 60 100 85 80 70 70 90 100 100 70 72
2 50 70 40 40 50 40 50 100 70 50 30 10 50 50 0 50 50
3 100 40 20 20 70 30 30 50 47 30 20 10 5 0 0 20 34
4 90 70 50 20 50 100 10 0 65 100 50 100 80 100 20 40 63
5 100 70 0 0 70 30 0 0 40 0 25 0 25 60 0 30 30
6 50 65 99 100 80 100 50 100 35 0 40 50 30 70 60 80 62
7 20 70 20 90 100 80 0 100 15 30 30 50 50 0 5 10 47
8 0 57 100 10 100 100 100 100 30 20 10 50 50 20 80 50 53
9 80 75 30 50 50 30 50 100 100 100 90 50 75 100 90 90 70
10 10 60 20 40 30 0 100 100 55 90 80 50 65 50 60 75 54
11 20 50 90 50 50 10 80 75 60 100 90 50 70 100 30 50 64
12 20 45 20 30 30 10 60 0 75 50 10 50 30 30 0 20 33
13 60 60 70 30 70 50 40 80 45 50 10 50 25 0 40 30 46
14 20 50 0 60 50 50 50 100 65 40 50 50 75 50 70 50 51
15 80 67 100 70 100 100 100 100 70 70 30 50 30 50 70 40 73
16 100 60 0 20 70 0 100 75 40 80 40 50 30 50 10 20 51
17 70 0 80 90 70 50 100 0 25 50 60 50 50 50 30 65 53
18 70 60 80 90 70 80 100 100 55 100 95 100 70 100 80 20 84 FALSE
19 90 50 90 30 80 90 98 100 85 10 80 50 80 90 80 80 73
20 10 60 0 0 0 10 80 0 50 80 5 50 20 0 30 1 26
Score 0.49 0.36 0.64 0.81 0.49 0.64 1.00 1.00 0.30 1.00 0.90 1.00 0.49 1.00 0.64 0.04 0.70

The Upside of Inequality with Ed Conard

My guest today is Ed Conard, here to discuss his recent book, The Upside of Inequality: How Good Intentions Undermine the Middle Class. He is a visiting scholar at the American Enterprise Institute and a former managing director at Bain Capital.

His 2012 book, Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong was a New York Times bestseller. Because his business partner Mitt Romney was running for President at the time, many people expected the book to be a defense of the one percent. It wasn’t, but this new book is!

We had a wide-ranging discussion that touched on inequality, immigration, entrepreneurship, finance, and housing.
Download this episode.

Subscribe to Economics Detective Radio on iTunes, Android, or Stitcher.

Space Debris, Governance, and the Economics of Space with Alex Salter

What follows is an edited transcript of my interview with Alex Salter about the economics of space. The first half deals primarily with the issue of space debris, while the second half deals with the possibility of private governance in space. There’s something in this episode for everyone to enjoy, so I hope you’ll listen, read, and share it with your friends.


Petersen: My guest today is Alex Salter of Texas Tech University. Alex, welcome to Economics Detective Radio.

Salter: Thanks very much for having me.

Petersen: Our topic today is the economics of space. Alex has written two papers on the subject. The first is entitled, “Space Debris: A Law and Economics Analysis of the Orbital Commons.” The second is, “Ordering the Cosmos: Private Law and Celestial Property Rights.”

So Alex, let’s start by talking about space debris. What is it and why does it matter?

Salter: So space debris is basically junk in space that no longer serves any useful purpose. So as you can imagine, since the first piece of space debris launched up in 1957—which was the rocket body from Sputnik I—a lot of orbits around the Earth, especially low Earth orbit, have become kind of cluttered with space junk. And the reason it gets cluttered is because no one has an incentive to clean it up. Continue reading Space Debris, Governance, and the Economics of Space with Alex Salter

Subscribe to Economics Detective Radio on iTunes, Android, or Stitcher.

Re-thinking the U-Curve of Inequality with Vincent Geloso

What follows is an edited transcript of my conversation with Vincent Geloso.


Petersen: My guest today is Vincent Geloso of the Free Market Institute at Texas Tech University. Vincent, welcome to Economics Detective Radio.

Geloso: It’s a pleasure to be here.

Petersen: So the paper we’ll be discussing today is titled “A U-curve of Inequality? Measuring Inequality in the Interwar Period” which Vincent has co-authored with John Moore and Phillips Schlosser. The paper casts doubt on the claim from, most notably, Thomas Piketty and others that inequality fell from the 1920s to the 1960s and rose thereafter. So, Vincent let’s start by discussing the inequality literature prior to this paper. What is this U-curve and where did it come from?

Geloso: The U-curve is probably the most important stylized fact we have now in the debate over inequality and the idea is that, if you look at the twentieth century, there’s a high point of inequality in the 1910s, 1920s and then from the 1930s onwards up to 1970s, it falls dramatically to very low levels and re-increases thereafter, returning to 1920s-like levels of inequality. So the U-curve is the story of inequality in the twentieth century. It’s mostly a U.S. story because for other countries it looks less like the U-curve than an inverted J. So it’s higher in the 1920s, it still falls like in the U.S. but really increases much more modestly than the United States in places like Sweden, or France, or Canada. But the general story is that there was a high level of inequality at the beginning of the century well up to the mid-second-half of the twentieth century and it re-increased in the latter years and then we have been on a surge since then. Continue reading Re-thinking the U-Curve of Inequality with Vincent Geloso

Subscribe to Economics Detective Radio on iTunes, Android, or Stitcher.

Identity is the Mind-Killer

There’s a joke among anarchists: “What’s the difference between a minarchist and an anarchist? Six months!”

For context, a minarchist is someone who believes in a minimal state. The joke is commenting on the large number of people who discover libertarian philosophy and end up gradually becoming more extreme in their views until they conclude that the state should not exist.

This is part if a broader pattern that affects other ideologies as well. Have you noticed that self-professed socialists tend to be left-wing activists? And that left-wing activists are much more likely to identify as socialists than, say, politically inactive non-voters?

In fact, the connection between extreme views and political engagement is so strong, we often don’t bother to distinguish between the two. The word “extremist” is used interchangeably to describe people with extreme viewpoints and people who take extreme action for their views. But there’s no reason why someone with moderate political views can’t be marching in the streets, circulating petitions, joining activist circles, burning down buildings, and the like, all in the name of moderation. There’s also no reason someone can’t have extreme views while not engaging much with political or social activism. And yet, extreme views tend to go hand in hand with activism. To borrow Jason Brennan’s terms, you have the Hobbits, who have low political engagement and moderate views, and the Hooligans, who have high political engagement and relatively extreme views.

Why is this so? And how come the difference between a minarchist and an anarchist is six months? Continue reading Identity is the Mind-Killer

How Land Use Restrictions Make Housing Unaffordable with Emily Hamilton

What follows is an edited transcript of my conversation with Emily Hamilton about land use regulations’ effects on affordable housing.


Petersen: My guest today is Emily Hamilton. She is a researcher at the Mercatus Center at George Mason University. Emily, thanks for being on Economics Detective Radio.

Hamilton: Thanks a lot for having me.

Petersen: So, Emily recently wrote a paper titled “How Land Use Regulation Undermines Affordable Housing” along with her co-author Sanford Ikeda. The paper is a review of many studies looking at land use restrictions and it identifies four of the most common types of land use restrictions. Those are: minimum lots sizes, minimum parking requirements, inclusionary zoning, and urban growth boundaries. So Emily, could you tell us what each of those restrictions entail?

Hamilton: Sure. So, starting off with the first, minimum lots sizes. This is probably what people most commonly associate with zoning. It’s the type of Euclidian zoning that separates residential areas from businesses and then within residential areas limits the number of units that can be on any certain size of land. And this is the most common tool that makes up what is sometimes referred to as Snob Zoning, where residents lobby for larger minimum lots sizes and larger house sizes to ensure that their neighbors are people who can afford only that minimum size of housing. Continue reading How Land Use Restrictions Make Housing Unaffordable with Emily Hamilton

Subscribe to Economics Detective Radio on iTunes, Android, or Stitcher.

Garrett M. Petersen's blog about markets, institutions, and ideas.