Archive for Dwight R. Lee
Dwight R. Lee is William J. O’Neil Professor of Global Markets and Freedom at Southern Methodist University.
Predictably Irrational: The Hidden Forces that Shape Our Decisions
As the title suggests, Predictably Irrational is another offering on behavioral economics. The overriding theme is that people not only tend to behave irrationally, but they do so in systematic and predictable ways. Thus our lapses from rational behavior reinforce each other rather than cancelling out. The evidence for this comes largely from experiments which [...]
21May2009 | Dwight R. Lee | 1 comment | ContinuedThank You, Internal-Combustion Engine, for Cleaning up the Environment
The internal-combustion engine is widely believed to have been an environmental disaster. It has been accused of harming our health by reducing air quality and contributing to what is currently claimed to be the most threatening of all environmental problems, global warming. But long before carbon dioxide was declared a major pollutant, a car was [...]
1Oct2007 | Dwight R. Lee | 0 comments | ContinuedLibertarian Paternalism: A Test
Behavioral economics is a growing subfield of economics based on the finding that people are not as rational as economic models have traditionally assumed. Numerous experiments have shown that people’s choices are systematically altered in response to changes in how those choices are framed, even though the framing is irrelevant to the consequences of those [...]
1Jul2007 | Dwight R. Lee | 0 comments | ContinuedMitigating Disaster: Abolish FEMA and Let Gas Prices Rise
The waste, delays, and incompetence that characterize FEMA are the result of a free-rider problem inherent in all federal spending programs.
1Dec2005 | Dwight R. Lee | 0 comments | ContinuedEconomic Notions ~ The Bias Favoring Governments over Markets
The thrust of my columns could be summarized as follows: We would be better off increasing our reliance on the voluntary cooperation of the marketplace and reducing our reliance on government commands. This is not an idle assertion reflecting blind ideology or religious zeal, as some would claim. It is based on an impressive foundation [...]
1Jun2002 | Dwight R. Lee | 0 comments | ContinuedPublic Interest or Private Interest?
That private interest dominates market decisions is widely accepted, if not always applauded. Farmers don’t get up early on cold mornings in Nebraska to plant crops because of concern over world hunger, but because they want more income for themselves and their families. People don’t invest in pharmaceutical firms because they want to help the [...]
1May2002 | Dwight R. Lee | 0 comments | ContinuedEconomic Notions ~ The Cure Can Be Worse than the Disease
Last month I discussed the prisoners’ dilemma, in which everyone is motivated to behave in a way that leaves everyone worse off. One can appreciate market exchange by understanding how private property and voluntary exchange eliminate a destructive prisoners’ dilemma-one in which the best choice for everyone is to try to live at everyone else’s [...]
1Mar2002 | Dwight R. Lee | 0 comments | ContinuedEconomic Notions ~ Prisoners’ Dilemmas and Cooperation
Economics is largely about how people cooperate so each can best pursue his or her objectives, whatever they may be. Decentralized market-based economies are wealthier than those based on central direction because markets facilitate the communication of the information and motivation necessary for people to cooperate, while central direction always censors that communication. Even market-based [...]
1Feb2002 | Dwight R. Lee | 0 comments | ContinuedThe Market Makes Diversity Worth Celebrating
The mantra on university campuses today is “celebrating diversity.” There are good reasons to encourage a greater appreciation of the rich diversity in the world. We are increasingly part of a global community; it’s important that we interact cooperatively with people of diverse backgrounds, understandings, skills, and motivations.
1Jan2002 | Dwight R. Lee | 0 comments | ContinuedEnergy Production versus Conservation
One of the most important insights in economics was made by F.A. Hayek in a famous article titled “The Use of Knowledge in Society” (American Economic Review, September 1945). Hayek’s insight was simple, but powerful: the information necessary for making sensible economic choices is far too dispersed and difficult to articulate ever to be possessed by any one person or group of experts.
1Dec2001 | Dwight R. Lee | 0 comments | ContinuedMaximum Cooperation Means Minimum Cost
There are two big advantages to a pollution-control policy that relies on transferable pollution permits. First, firms can reduce pollution any way they choose, which will be the cheapest way possible. Second, firms will coordinate their reduction with one another so that the pollution target is achieved as efficiently as possible.
1Nov2001 | Dwight R. Lee | 0 comments | ContinuedEconomic Notions ~ Getting the Most Out of Pollution
The Environmental Protection Agency’s attempt to reduce pollution with command and control suffers from the same problem as attempting to direct the economy with socialism—central authorities dictate outcomes without knowing what the outcomes should be or how they are best achieved.
1Oct2001 | Dwight R. Lee | 0 comments | ContinuedEconomic Notions: The Perverse Popularity of Command and Control
Most government attempts to protect the environment involve imposing detailed regulations on how, and how much, pollution must be reduced. This command-and-control approach does reduce pollution, but as I explained last month, it does so at high cost.
1Sep2001 | Dwight R. Lee | 1 comment | ContinuedEconomic Notions ~ The High Cost of Command and Control
We may not all agree on how much pollution to reduce, but we certainly should agree to reduce it as cheaply as possible. Since cleaning up at least cost is exactly the same as maximizing the cleanup for any given cost, cost minimization should appeal even to those who dislike thinking about the cost of protecting the environment.
1Aug2001 | Dwight R. Lee | 0 comments | ContinuedAre People Pleased with the Efficient Amount of Pollution?
It is clear that zero pollution is not a reasonable goal once we recognize that polluting creates benefits as well as costs. Long before we reduced pollution to zero, there would be so much environmental quality and so few manufactured goods that the marginal value gained from increasing pollution would be greater than the marginal cost.
1Jun2001 | Dwight R. Lee | 0 comments | Continued-
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Book Reviews
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The End of Prosperity: How Higher Taxes Will Doom the Economy–If We Let it Happen
By Arthur B. Laffer, Stephen Moore, and Peter J. Tanous
