Seminar: Jeff Williamson

The economics department will sponsor its first seminar speaker of the 2011-12 season on Friday, October 7th. Jeff Williamson, Laird Bell Professor emeritus, Harvard University, and Professor of Economics, University of Wisconsin - Madison, will be here to discuss his latest book, "Trade and Poverty: When the Third World Fell Behind." We will meet in room 122 Wimberly Hall at 3:30 pm.

Taxi Cartel

Here is a nice piece on the Milwaukee Taxi Cartel. Who is helped and who is hurt by the fact that no new taxi permits have been issued since 1992?

The city of Milwaukee capped the number of taxi permits at 321 way back in 1992, and consequently the price of a permit on the secondary market has risen to $150,000. That’s excellent news for people who made well-timed investments in Milwaukee taxis, but obviously it’s bad news for would-be taxi entrepreneurs who’d like to get into the market. Fewer permits means fewer jobs for cab drivers, and it means less access to taxis in the city. Dynamics of who uses taxis, what they cost, and where they’re available differ a lot from city to city and I’m not familiar with Milwaukee so I can’t say who in particular is disadvantaged by taxi scarcity but it’s not the sort of thing that helps a city’s quality of life or economy. Apparently the Institute of Justice, a libertarian law firm, thinks they have a chance of winning a legal argument that this is unconstitutional which I actually would find pretty surprising, but there’s no doubt that it’s bad policy. As I’ve noted before, when it comes to taxi cartels the proponents normally don’t even bother to make a public interest argument:

Deficit and Stimulus

Here is a very useful graphic on the budget deficit and its history. And here is a useful collection of papers on the effectiveness of the previous stimulus.

How to Study

Welcome to the Fall 2011 semester. Want to know how to do a better job of studying this semester? Check out this quick series of videos from a cognitive psychologist.

Research: James Murray

James Murray's research is featured in the news.

Thousands of UW-La Crosse students will be moving onto campus this weekend. A study co-authored by a UW-L professor shows such a move could help them make the grade.

James Murray, UW-La Crosse assistant professor of economics, has found evidence that living on campus causes students to perform better academically.

The study of about 360 students at Indiana University-Purdue University found both an immediate effect and a more long-term effect of on-campus living. Students who were presently living on campus had a GPA from .3 to .9 higher than those who didn’t. Students who had once lived on campus continued to perform better academically even after moving off campus. Their GPA was from .3 to .5 higher.

“This may help universities take measures to improve their on-campus student life — to try to encourage behavior that leads to better academic performance,” says Murray.

See the story in this Metro News online article.

Reasoning in Economics

Here is a discussion about behavioral econ, psych, and inductive versus deductive reasoning. It is wonderful throughout.

Lessons in Tax Incidence

Apparently FAA taxes are temporarily suspended since congress has failed to act on renewing them. And it appears airlines are charging rates as if they were still collecting the tax. Any student of economics will recognize this as an issue of tax incidence. The fact that the price to the consumer remains unchanged, suggests that the incidence of the tax fell entirely on the airlines (suppliers). Rather than being angry this is something to be happy about. It means that consumers weren't harmed by the FAA taxes in the first place, and it also means demand for flying is highly elastic. The quote at the end of the block below suggests this might be true:

Several aviation taxes expired after midnight Friday when Congress failed to reauthorize the Federal Aviation Administration, which collects the revenue. The suspended taxes could save passengers 10% to 15% on their ticket prices, but most U.S. carriers have boosted fares to the levels ticket prices would have been with the taxes still in place, allowing the airlines to take in roughly an extra $25 million a day, says Rick Seaney of FareCompare.com.

As of Tuesday, only Spirit and Alaska seemed to be bucking the trend, Seaney says.

Frequent fliers have noticed.

"While I respect any business' right to set prices as they see fit, this is another example of the airline 'gotcha game,'" says Steven Gordon, a sales manager who lives in Virginia Beach. "It is getting to the point that I feel better about buying a used car than an airline ticket."