Young Economics.

Interesting Stuff: The Suffering Men Edition

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When does libertarian paternalism work?

We develop a theoretical model to study the effects of libertarian paternalism on knowledge acquisition and social learning. Individuals in our model are permitted to appreciate and use the information content in the default options set by the government. We show that in some settings libertarian paternalism may decrease welfare because default options slow information aggregation in the market. We also analyze what happens when the government acquires imprecise information about individuals, and characterize its incentives to avoid full disclosure of its information to the market, even when it has perfect information. Finally, we consider a market in which individuals can sell their information to others and show that the presence of default options causes the quality of advice to decrease, which may lower social welfare.

— Two new papers, here and here, question the effectiveness of tax incentives to control harmful alcohol and tobacco consumption in the presence of heterogeneous responses.  Basically, the people most likely to impose negative externalities are the people least responsive to the tax.  “[T]hose least likely to impose costs on others are more responsive, thus suffering greater deadweight loss yet with less prevention of negative externalities.”

Feeling Validated Versus Being Correct: A Meta-Analysis of Selective Exposure to Information.  I take this as evidence for what Bryan Caplan calls ‘rational irrationality.’ People have a bias in favour of information that validates their priors, but only in circumstances when the cost of that bias is very low (e.g. when choosing who to vote for).  The bias can be overcome when people need to access the uncongenial information in order to achieve a goal — that is, when the cost of avoiding that information would be high.

—   A new ‘wonder material’ is causing excitement in the scientific community.  “Imagine a carbon sheet that’s only one atom thick but is stronger than diamond and conducts electricity 100 times faster than the silicon in computer chips.  That’s graphene. . . .”

— People are experimenting with a lot of different ways to draw energy from the oceans.

— And finally:  It’s not just a recession.  It’s a mancession! “Nine out of ten construction workers are male, and seven out of ten manufacturing workers are men. Those sectors alone have lost more than 2.5 million jobs. … Three of the top six occupations for women are in the rare sectors that have been growing over the last decade. The Great Mancession, as silly as it sounds, could be deeper, and more long lasting, than the Great Recession.”


Written by Alex

July 13, 2009 at 1:10 pm

Posted in Uncategorized

Tagged with , ,

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