Exam Week

Exams are finally here. :(

Don't expect any new posts anytime soon. I'm glad my last post was the one on Soda Fountain Economics. :) I wanna get some responces on what y'all think.

Wish me luck!

Soda Fountain Economics

There is one economics question I am having trouble answering lately. Why are there no free re-fills at the Taco Bell on NCSU campus, but I can get free re-fills at the Taco Bell on Western Blvd. two minutes down the road? None of the other prices seem any different, but they have decided to raise the price of sodas on campus. Why?

The best answer I can come up with (and that ain't saying much) is this:

Off campus having free re-fills makes it more inviting to sit a spell in a Taco Bell resteraunt. Chances are that if you sit there long enough you might go back to order some more food (I ussually do). So the lower price of coke off campus is probably off set by the extra revenue from the extra food you buy.

On campus this isn't the case. Most people going to Taco Bell are doing so on a meal plan and that means you get one meal worth $5.50 and that's it for the afternoon. So rather than attracting people that will buy more food it probably just attracts college students wanting free soda, which might crowd the seating area and repel other people from going to the Campus Taco Bell.

That's what I've come up with, but I'm sure it's probably wrong somehow. If anyone would like to take a whack at it or at me, you're more than welcome.

Roberts Losing His Touch?

As much as I love Russel Roberts I was a bit disappointed with his post responding to Paul Krugman's latest healthcare article.

His responce basically comes down to begging the question ("No one wants single payer health care, after all noone goes to Canada for it") and complaining about Krugman refering to pro-market solutions as religious-esque--motivated by faith and not reason.

Correct me if I'm wrong, but didn't Roberts' blog-mate Don Boudreaux say the exact same thing about the "other side" when he compared "liberals" to Creationists? Where were Robert's complaints then? Is it different when we talk about "liberals"/"statists"?

I consider myself a libertarian, but I ussually expect better arguments from Cafe Hayek. This isn't the first time they've let me down, though. I think preaching to the choir at GMU has gone to their heads and made them soft.

Mises Blog Diminished My Expectations

The folks at Mises Blog never fail to disappoint me. This week William Anderson advocates defrocking economist Paul Krugman for writing this little gem in his NYT column:

In the 1970's soaring prices of oil and other commodities led to stagflation - a combination of high inflation and high unemployment, which left no good policy options.

According to Anderson, what Krugman is saying here is that "the cause of inflation is the fact that prices rise". How could Krugman use such silly circular logic?

Anderson is using some clever rhetorical spin, but all the spin in the world wont change the fact that Krugman is right. What Krugman is actually saying is that a negative supply shock will reduce output and put upward pressure on prices, which is exactly what we saw with the oil embargos of the 1970's. This isn't circular logic at all, it's basic principles of macroeconomics.

Now, I will admit that Krugman's story of how stagflation started in the 1970's is a bit over simplified, but when your column is confined to a few hundred words you have to sacrifice subtlety to make your point clear.

Gay Marriage Is Wealth Maximizing?

Over the weekend the Oregon Supreme Court nullified 3,000 marriage licenses issued to gay couples saying that a county cannot go against state matrimonial law.

I know I know this stuff has been played out, but i thought it might be interesting to bring some economics to the discussion. :)

First let's answer why people get married in the first place. There is nothing that you can do in marriage that you can't do outside of it. You can live together, have kids, have fights, and all of that fun stuff. So why do you need a slip of paper from the government that says you're going to do those things? I think an example might help answer that question.

Let's say that two people live together and do all the things married couples do, but they aren't officially married. It could be that after they have been "married" for a while they both become specialized to the "family". For example, I can't just go out and get another husband. The replacement wouldn't be our children's father, he wouldn't know my erogenous zones, he wouldn't know how I like my eggs, he just wouldn't be the same. So my husband is like a specialized asset. This puts him in the position of being able to threaten to leave the "family" if I don't compensate him for staying. IOW: He might try to appropriate some of the quasi-rents i recieve from being "married" to him.

This threat of spousal "hold-out" might lead to couples devoting resources to avoid "hold-out" or might prevent them from getting "married" at all. One way of avoiding this problem might be to establish a long term contrat between the two of them that is costly to get out of. That's exactly what marriage is. You agree to love and live with one person for the rest of your life and if you break the contract you will pay dearly (according to some Christians the cost of breach is eternal damnation).

So by preventing gay couples from entering into this contract we are generally discouraging them from getting "married" at all. For social conservaitves that's exactly what they want, but this means that the economy is generating less "family production" and even if that doesn't show up in GDP estimates it's still a loss we should recognize. Does thi mean the gain to gay couples will exceed the loss to social conservatives? I don't know. That's an empirical question that's probably impossible to answer. So I guess even utilitarianism and welfare economics have their limits.

What do y'all think? Is the story convincing? What am I leaving out? Is Gay Marriage REALLY Wealth Maximizing?

PS* I'm not really married fellas. :)

The Pope Is Not Dead?

No need to elect a new pope! Pope Michael, The Pope of the TRUE Catholic Church (not the heretical one created after Vatican II) is alive and well in Kansas.

Here's his website

The guy maybe a fruit cake, but having the Pope in Kansas has so many possibilities. Can anyone else say hemmy? Yeeeeeee-haw!

Back In The Pink!

Now I'm back and better than ever!! After a forced vacation (computer breakdown) I am now back and ready to blog!

But I'm sad to say that "Hutch" will no longer be blogging, he's on permanent vacation (marriage). So, I guess it's just me. :) One Econ-Punk v. The Whole World. Let's dance.

Maybe Sociology Isn't Non-Sense!

Sociology is a popular whipping-boy among economists, I'm sure we've all heard the jokes (if you haven't I can tell you a few). But Pub Sociology delievers an example (as it so often does) that makes me think sociology isn't the joke some economists make it out to be.

Check out: A Sociological Apporach To College Drinking

Political differences aside this is really interesting to me.

I'd imagine that a typical economist's approach to curbing binge drinking would be to "raise the price" of the activity--probably by establishing tougher fines/punishments or raising the probability of being caught. Sociologists are trying a different approach by trying to change behavior directly by removing the social norm that binge drinking is an accepted and popular activity.

IOW: While economists are busy adjusting the parameters of the utility function, while sociologists are attempting to change the utility function itself.

I don't think the Sociological approach in this case is any less reasonable than Economical approach, and it might actually be less costly and more effective. Maybe, just maybe, we should consider listening to people outside of our own discipline. Sometimes, SOMETIMES, they might have something informative to say.

Marginal Revolution Agrees with [Econ_Punks]

I doubt he reads our stupid blog, but Alex Tabarrok seems to agree with our point that Paul Krugman is ignoring the growth effects of social security privitization. But, we said it first! So nah nah nah nah!

Here's their post:
http://www.marginalrevolution.com/
marginalrevolution/
2005/02/equity_returnse.html

Here's our post:
http://econpunks.blogspot.com/2005/
02/did-krugman-forget-hazlitts-lesson.html