Market Power

The Evil Economist and the Market for Organs

Do we economists repulse you?

Economists are asking the wrong question, Mr. Bloom said at the panel. They assume that “everything is subject to market pricing unless proven otherwise.”

“The problem is not that economists are unreasonable people, it’s that they’re evil people,” he said. “They work in a different moral universe. The burden of proof is on someone who wants to include” a transaction in the marketplace.

Well, that's a bit harsh.  In any case, Mr. (Paul) Bloom (a Yale psychologist) is incorrect.  It's not that we think that everything is subject to market pricing or that it should be.  It's that we think most things are subject to conditions of scarcity:  unlimited wants - limited resources.  We study human behavior, rational and self-interested human behavior, under conditions of scarcity.  We believe that things have costs and that trade-offs exist.  The belief in markets is an extension.

When the lack of a market results in lower social welfare, we comment on that.  For instance:

You can donate a kidney to prevent a death and be hailed as a hero, but if you take any money for your life-saving offer in the United States, you’ll be jailed.

Some are repulsed at the thought of someone taking cash for a kidney.  Yet many no doubt find no problem whatsoever in a medical team receiving payment for surgically implanting a kidney in someone.  Why can they receive payment for their services but no-one can receive a legal payment for a kidney?

Moreover, the law against the sale of kidneys, livers, and hearts has created shortages that lead some to their death, some who would gladly have paid for a new organ.  Surely that thought is repulsive too.

HT Greg Mankiw

Tax Burden and Relative Elasticity?

Doc writes:

Many textbooks, including Greg Mankiw's, argue that if a per unit tax is imposed on a good, the portion of the tax eventually borne by sellers and buyers depends on the comparative price elasticities of demand and supply [pp 135-6 of the 4th Cdn edition].

I think that is incorrect.

I think it depends on the comparative slopes, not comparative elasticities. Here is a graph to illustrate this point (which might also appear, I vaguely recall, using calculus in an old edition of Henderson and Quandt [thanks to Brian Ferguson, I see this material on p154 of the 3rd edition]):

Since my drawing skills are not great, please assume that the upward-sloping lines are supply curves, that all four of them are parallel and that each pair shows the effect of levying the same per-unit (or excise) tax on the sellers of the good.

The demand curve (downward-sloping but unlabeled) is a straight line; it has a constant slope, but the price elasticity of demand varies all along it from greater than one (in absolute value) near the vertical axis to less than one near the horizontal axis, and equal to one at its midpoint.

If the "burden of the tax" (which I take to mean the portion of the per unit tax paid by buyers and sellers, respectively, using partial equilibrium analysis) depends on elasticities, it should vary along this linear demand curve, shouldn't it? But it is easy to see that the portion of the tax paid by consumers and sellers is invariant with the elasticities because the relative slopes are the same for both pairs of supply curves.

Kip notes in the comments:

You can argue the same thing in reverse: use a constant elasticity demand curve (i.e., a rectangular hyperbola) and then draw your parallel pairs of supply curves. You'll see that (delta-P)/T is very different at the two extreme ends of the demand curve.

My initial reaction was that the supply curves are intersected at a different point in the upper left than in the lower right.  The slopes are the same, but that doesn't mean the elasticity of supply necessarily takes the same value. 

However, the elasticity can be constant along every point of a linear supply curve.  For example, consider the supply curve Q = mP where m > 0.  dQ/dP = m and P/Q = P/mP = 1/m.  So the elasticity of supply is constant at 1 regardless of the P-Q combination.

I, Hamburger

Reader Mark sends this along.

The fourth panel is a bit of letdown, no?  I'd dare say that if people thought that McDonald's hamburgers tasted like a reconstituted foot, it wouldn't be so readily blamed for causing obesity. 

9 Times?

I go to the dentist tomorrow morning.  If it's anything like my recent visits, I'll go there, get chatted up while I'm chewing on rolls of cotton, get mildly chastised for not flossing too well or flossing too hard (I've learned that you can't please the dental assistant), and then I'll leave.  I just hope everything goes better than Eldest's visit to the dentist on Tuesday.

Tuesday is Tae Kwon Do (for both boys) and swim lesson (again, for both) day.  My wife, however set up an appointment to have the kids checked on Tuesday, putting a serious cramp in their athletic training.  I asked her to change the appointment to sometime in March, the month when the next appointment is available.  She adamantly said that Eldest had to be checked NOW.

I figure she carried him inside her for 9 months and she has a unique connection to him that I'll never understand.  So I figure she's got a better sense for such things than I.  And, as usual, she was right.

Eldest gets to have 9 teeth pulled.  9 baby teeth.  But still 9 teeth.

Five Tigers Suspended

It had to be done:

Late Tuesday afternoon Anderson indefinitely sat down Marshall Brown, Darryl Butterfield, Jason Horton, Leo Lyons and Stefhon Hannah for a violation of team rules.

That means Missouri is down to six scholarship players and two walk-ons for tonight’s game at 7 against Nebraska at Mizzou Arena.

...“I am very disappointed in the actions of these young men,” Anderson said. “We have defined team rules, and when those rules aren’t followed our guys must be held accountable for their actions.”

Early Sunday morning Hannah received a broken jaw in an altercation outside the Athena Night Club in downtown Columbia. Police were called to the scene at 1:07 a.m., well past the midnight curfew that is part of Anderson’s “zero tolerance” code of conduct.

MU officials declined to confirm a link between that incident and the suspensions. But Anderson’s mass suspensions made a definitive statement that was as decisive as it was quick.

The Market for Beauty and the Fall of Communism

The Door finds us a nugget about the fall of the Soviet Union, Russian beauties, and the market for beauty.  An excerpt will  not do it justice.  Read the whole thing

The Economic Consequences of the Piece

What did Keynes write?  Well there was The General Theory of Employment, Interest, and Money and The Economic Consequences of the Peace.  And two sex diaries.  Wait.  What?

Keynes obsessively counted and tabulated almost everything; it was a life-long habit. As a child, he counted the number of front steps of every house on his street. Later he kept a running record (not surprisingly) of his expenses and his golf scores. He also counted and tabulated his sex life.

The first diary is easy: Keynes lists his sexual partners, either by their initials (GLS for Lytton Strachey, DG for Duncan Grant) or their nicknames ("Tressider," for J. T. Sheppard, the King's College Provost). When he apparently had a quick, anonymous hook-up, he listed that sex partner generically: "16-year-old under Etna" and "Lift boy of Vauxhall" in 1911, for instance, and "Jew boy," in 1912.

...The other sex diary is more puzzling and, in a way, more informative. An economist to the core, Keynes organized the second sex diary also year-by-year, but this time in quarterly increments (typical macroeconomist! PM)

Unfortunately for us, however, this second sex diary is in code. And as far as I know, no one yet has been prurient enough to crack it.

What a great History of Thought thesis/dissertation topic!  You can use this post's title.  Who said economists were boring? 

HT to MR

Godspeed, Coach Smith

Former Mizzou coach Larry Smith has passed.  RIP

I will always remember what you did for Mizzou football.  Thank you.

Update:  the Kansas City Star has an online guest book for interested folks to sign.

Report: Former Mizzou Larry Smith Coach is Fighting For His Life

From Dave Matter's blog:

Keep former Missouri Coach Larry Smith in your thoughts this week. As of this weekend, Smith was fighting for his life in Northwest Hospital in Tucson, Ariz. He is suffering from both leukemia and lymphoma.

Thanks to commenter Travis for giving me the heads up on Smith's condition. 

I last saw coach Smith at the Iowa State game this past year.  He had come back to be honored with some of his players during halftime and my first thought was that he looked great for having cancer.  But I didn't get a close-up look at him.

My thoughts are with you and your family, coach Smith.

Here is one of my past posts on coach Smith.

Update: Travis notes in the comments to my past post that Smith may not make it through the night.  Some commenters at Tigerboard have said the same thing.  Here is a video made by ZouDave that contains highlights of one of the best games I ever saw:  Mizzou - Nebraska 1997.

Update 2:  A post on Tigerboard notes that coach Smith has passed. Godspeed, coach.

Update 3:  My most memorable coach Smith moments:

1.  The 1997 Colorado game:  the game where Mizzou became bowl-eligible for the first time in 15 years.

2.  The 1997 Nebraska game:  sure, the Tigers lost.  But, oh, what a game.

3.  The 2000 Kansas State game.  I was a "coach of the game" and got to meet coach Smith.  I also got to see his last press conference, memorable for all of us in attendance because we all knew it would be his last at Mizzou.

Update 4:  Here is a Tucson Citizen article about coach Smith's passing (HT to Tigerboard - from a KU fan.  Thanks!).

The New Official Game Bird of Missouri?

From the Larryville Journal World:

A Missouri senator has introduced a bill to make the Kansas Jayhawk the official game bird of the state of Missouri.

What’s a game bird, you might ask? It’s the official bird to be hunted throughout the state. A Jayhawk, remember, is a mythical creature.

The problem with Jayhawk is twofold.  In basketball, unfortunately, recent varieties have been a bit too tough to be a good meal.  In football, however, it's so dang fatty that by cooking it, there isn't much left to eat.  Besides, you run the risk of fire when cooking with so much fat.

Rather than killing Jayhawks, I suggesting flipping the birds.

HT to John LaPlante