It was both an honor and a pleasure to deliver the annual Hayek Lecture at the Institute for Economic Affairs last week. Here’s the video:
Monthly Archive for November, 2017
Like most bloggers, I assign each of my posts to one or more Categories, which are listed in small print somewhere near the top of the post. Among the categories I use are “Economics”, “Politics”, “Policy”, “Math”, “Logic”, “Cool Stuff”, “History”, “Oddities” and “WTF?”. The last of these is perfect for this post, which is written to call your attention to Peter Leeson‘s rollicking new book WTF?!: An Economic Tour of the Weird.
(Edited to add: I see now that the jacket copy on Leeson’s book describes it as “rollicking”. Apparently I’m not the only one who thought this was the right adjective here.)
Leeson, some of whose work I’ve blogged about here in the past, takes us on a tour of some of the world’s seemingly most inexplicable behavior — both historical and contemporary — and uses economic insight to render that behavior explicable after all. His explanations are generally plausible and provocative, though I’m sure many an insightful reader will find plenty to argue with. That, after all, is part of the fun.
Here are the blurbs from the back of the book:
The government sometimes issues stimulus checks in the hopes that the windfall will induce people to spend and stimulate the economy. Regardless of the merits of this idea generally, the effectiveness is partly reduced because people choose to save the money rather than spending it.
So: What if, instead of issuing stimulus checks, the government issued “exploding debit cards”, which have to be spent in a given time period or the cards cease to work?
This would seem to have several advantages over stimulus checks:
- Rather than cutting checks knowing that some of it will be spent, the government is handing out cards knowing that almost all of it will be spent. This means the dollar amount can be less in order to achieve the same stimulus effect. (Even though this is a political consideration, not an economic consideration.)
- It gives the government more fine-tuned control over when the money is spent — you can issue the cards to different subgroups at different times and require the groups to spend the money in separate time frames.
- Since the card balance is difficult to convert to cash, this reduces the chance that the money will be spent on illicit purchases the government may want to prevent.
Some people would still find ways to work around it — perhaps by buying goods they could re-sell for cash, or selling their cards for cash (if merchants are lazy about doing ID verification), or buying goods and then returning them for store credit — but, given the effort required, the number would be much lower than the number who would simply save their stimulus checks instead of spending them. (Many people would prefer to save, but the goal here is to achieve a specific economy-wide outcome, not to give every person what they would prefer.)
Not everyone agrees with the merits of issuing stimulus checks. But it seems that any argument in favor of stimulus checks would be an even stronger argument for using exploding debit cards instead. Am I missing something?
For a book of brain teasers with economic morals, how do we collectively feel about this title?
I’m interested in whether we like it, but more interested in whether we think it will sell books.
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Those who are possessed of a definite body of doctrine and of deeply-rooted convictions upon it will be in a much better position to deal with the shifts and surprises of daily affairs than those who are merely taking short views, and indulging their natural impulses as they are evoked by what they read from day to day.
| Churchill, The Gathering Storm |
