Today’s guest is Viktor Vanberg of the Walter Eucken Institute. We discuss a recent working paper of his entitled Individual Choice and Social Welfare: Theoretical Foundations of Political Economy.

What we call an economy, i.e. the nexus of economic activities and relations within some defined regional limits – e.g. a local, a national or the world economy –, has always been subject to measures taken, or constraints imposed by political authorities. How economies work is inevitably, and to a significant extent, contingent on the political environment within which they operate.

It is not surprising that economists studying the working principles of economic systems have rarely been content with confining their work to describing and explaining the economic realities they observe. Their ambitions always extended to passing judgments on the policies that shaped these realities and to providing guidance for what politics ought to do to improve economic matters. In economics explanations of what is and judgments on what politics should do are often not only more closely intertwined than in most other fields of scientific inquiry, and more than from practitioners in other fields the general public expects economists to pass such policy judgments.

We discuss welfare economics, what it means for economics to be an applied science, and the work of the late James Buchanan.

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Today’s guest is Peter Boettke of George Mason University and we’re discussing his recent book in the Great Thinkers in Economics series: F. A. Hayek: Economics, Political Economy and Social Philosophy.

This book explores the life and work of Austrian-British economist, political economist, and social philosopher, Friedrich Hayek. Set within a context of the recent financial crisis, alongside the renewed interest in Hayek and the Hayek-Keynes debate, the book introduces the main themes of Hayek’s thought. These include the division of knowledge, the importance of rules, the problems with planning and economic management, and the role of constitutional constraints in enabling the emergence of unplanned order in the market by limiting the perverse incentives and distortions in information often associated with political discretion. Key to understanding Hayek’s development as a thinker is his emphasis on the knowledge problem that economic decision makers face and how alternative institutional arrangements either hinder or assist them in overcoming that epistemic dilemma. Hayek saw order emerging from individual action and responsibility under the appropriate institutional order that itself emerges from actors discovering new and better ways to coordinate their behavior. This book will be of interest to all those keen to gain a deeper understanding of this great 20th century thinker in economics.

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Corey A. DeAngelis of the Cato Institute joins the podcast to discuss his review of the school choice research.

Is public schooling a public good, a merit good, or a demerit good? Public schooling fails both conditions specified in the standard economic definition of a public good. In order to place public schooling into one of the remaining two categories, I first assess all of the theoretical positive and negative externalities resulting from public schooling as opposed to publicly financed universal school vouchers. Then, in an original contribution to the literature, I quantify the magnitude and sign of the net externality of government schooling in the United States using the preponderance of the most rigorous scientific evidence.

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My guest today, Mario Macis of Johns Hopkins University, has done a number of interesting studies related to blood and organ donation, particularly the compensation of blood and organ donors. For instance, Mario and his coauthor, Nicola Lacetera, observed the effect of an incentive system that offered symbolic rewards to blood donors in a particular Italian town. They found that when prizes for frequent donation were publicly announced, people donated more blood, indicating that social image concerns are a factor in blood donation.

Through a large-scale natural field experiment with the American Red Cross, Mario and his coauthors showed that offering donors economic incentives to donate blood increases donation without increasing the fraction of ineligible donors.

Mario’s more recent research deals with people’s attitudes towards compensated kidney donation. Using a choice experiment, Mario and his coauthors study the determinants of Americans’ views on these repugnant transactions:

Regulation and public policies are often the result of competition and compromise between different views and interests. In several cases, strongly held moral beliefs voiced by societal groups lead lawmakers to prohibit certain transactions or to prevent them from occurring through markets. However, there is limited evidence about the specific nature of the general population’s opposition to using prices in such contentious transactions. We conducted a choice experiment on a representative sample of Americans to examine preferences for legalizing payments to kidney donors. We found strong polarization, with many participants in favor or against payments regardless of potential supply gains. However, about 20% of respondents would switch to supporting payments for large enough supply gains. Preferences for compensation have strong moral foundations. Respondents especially reject direct payments by patients, which they find would violate principles of fairness. We corroborate the interpretation of our findings with the analysis of a costly decision to donate money to a foundation that supports donor compensation.

Finally, we discuss some proposed legislation that would allow limited experiments in compensating kidney donors.

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Here on Economics Detective Radio, we’ve had many discussions about the early modern period, and the circumstances that gave rise to the modern levels of sustained economic growth that were heretofore unheard of in human history. One important question is, what was it about England and the Low Countries in the early modern period that made them the first to transition to modern-style economies? A related, and equally important question is why other times and places throughout history failed to produce an industrial revolution.

My guest today, George Tridimas, has done interesting work exploring the question of why the Greek golden age of 500-300 BCE didn’t produce sustained economic growth. He gives a number of explanations, ranging from cultural and political factors to Greece’s acute lack of the energy sources necessary to produce enough heat to smelt steel.

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My guest today is Roman Yampolskiy, computer scientist and AI safety researcher. He is the author of multiple books, including Artificial Superintelligence: A Futuristic Approach. He is also the editor of the forthcoming volume Artificial Intelligence Safety and Security, featuring contributions from many leading AI safety researchers.

We discuss the nature of AI risk, the state of the current research on the topic, and some of the more and less promising lines of research.

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Could cultural attitudes about gender reflect economic conditions hundreds of years ago? My guest today says they do!

Melanie Meng Xue of Northwestern University has shown that China’s cotton revolution had far-reaching consequences extending even to the modern day:

The cotton revolution (1300-1840 AD) in imperial China constituted a substantial shock to the value of women’s work. Using historical gazetteers, I exploit variation in cotton textile production across 1,489 counties and establish a robust negative relationship between high-value work opportunities for women in the past and sex ratio at birth in 2000. To overcome potential endogeneity in location, I use an instrument pertaining to suitability for cotton weaving. I find evidence that premodern cotton textile production permanently changed cultural beliefs about women’s worth, and that its effects have persisted beyond 1840 and endured under various political and economic regimes.

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Today’s episode of Economics Detective Radio features a conversation with Robert Poole of the Reason Foundation. Robert is the author of Rethinking America’s Highways: A 21st-Century Vision for Better Infrastructure, a book on how to fix America’s infrastructure woes by changing the way roadways are funded:

Americans spend hours every day sitting in traffic. And the roads they idle on are often rough and potholed, their exits, tunnels, guardrails, and bridges in terrible disrepair. According to transportation expert Robert Poole, this congestion and deterioration are outcomes of the way America provides its highways. Our twentieth-century model overly politicizes highway investment decisions, short-changing maintenance and often investing in projects whose costs exceed their benefits.

We discuss this book, as well as Robert’s recent controversial piece in Reason, “Stop Trying to Get Workers Out of Their Cars.” I challenge him on the issue of upzoning and we discuss the some of the necessary conditions for a successful implementation of mass transit. Robert argues that mass transit works best in cities with a high concentration of jobs in a central business district. Without a single concentrated area that many thousands of people want to commute to and from, a mass transit system often can’t get the necessary ridership to justify its cost.

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Today’s guest is Thibault Schrepel of the University of Utrecht. We discuss his work on the relationship between blockchain technology, which allows for the decentralization of firms and organizations, and anti-trust law. Here’s a quote from his article on the topic:

But in the end, one question arises as follows: is blockchain the death of antitrust law? Should it be? Answering them today is not easy as blockchain is still prone to drastic evolution, but some initial answers are to be provided nonetheless. In order to do so, this paper proceeds in three parts. The first details how unilateral practices can be implemented on blockchain and further establish a risk map. The second part focuses on the challenges for enforcers and presents a new theory entitled “regulatory infiltration.” The last part questions the legitimacy of competition law in the face of this technology – the “blockchain antitrust paradox” – and the need to decentralize competition authorities.

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Fabio Rojas returns to the podcast to discuss his work researching social media. He has three main papers on the subject. The first is “More Tweets, More Votes: Social Media as a Quantitative Indicator of Political Behavior,” which shows how Twitter activity predicted the outcomes of the 2010 and 2012 US congressional elections. The second is “The social media response to Black Lives Matter: how Twitter users interact with Black Lives Matter through hashtag use” which tracks the spread of the #BlackLivesMatter movement through social media. The third is “Twitter’s Glass Ceiling: The Effect of Perceived Gender on Online Visibility” which shows how Twitter users treat each other differently based on how they perceive each other’s gender.

We discuss these three papers and more on this episode of Economics Detective Radio.

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