Archive for Dwight R. Lee

Dwight R. Lee is professor of economics at Southern Methodist University.

The Economics of Caring and Sharing

The author would like to thank the Earhart Foundation for supporting his previous research on happiness, which led to considerations on which the present paper is based. If we were to apply the unmodified, uncurbed rules of the micro-cosmos (i.e., of the small band or troop, or say our families) to the macro-cosmos (our wider [...]

22Jun2011 | Dwight R. Lee | 4 comments | Continued

Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism

Neoclassical economic theory (in which I include Austrian economics, ignoring the methodological differences) doesn’t explain everything in the world, not even everything that occurs in what is considered the economic realm. In recent years this has been the theme of the growing subdiscipline “behavioral economics,” which has, often usefully, focused attention on economic anomalies—outcomes inconsistent [...]

25Aug2010 | Dwight R. Lee | 0 comments | Continued

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 | Continued

Making Social Security More Harmful

Social Security is a fundamentally flawed system. If a private firm offered such a retirement system and made the same claims for it that the federal government makes for Social Security, that firm would quickly become a poster child for corporate fraud, and its managers would soon be convicted of criminal charges. There are two [...]

1Oct2008 | and and J. R. Clark | 2 comments | Continued

Thank 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 | 1 comment | Continued

Libertarian 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 | Continued

The Disconnect Between Political Promises and Performance

What can politicians do to create more higher paying jobs? Politicians must think that most of us believe the answer is: a lot. One of the most persistent campaign promises is the creation of good jobs at good wages. I shall argue that politicians can do quite a number of things to increase high-wage employment. [...]

1Apr2006 | Dwight R. Lee | 0 comments | Continued

Mitigating 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 | Continued

Social Security Can Be Good for Your Health

Until recently I took every opportunity to inform my students about the financial fraud of Social Security. Given demographic realities and the Ponzi-scheme nature of Social Security, those about to enter the work force will receive an anemic return on their “investment,” assuming they receive any return at all. They would be far better off, [...]

1Sep2005 | Dwight R. Lee | 3 comments | Continued

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 | Continued

Public 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 | Continued

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 | Continued

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 | Continued

The 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 | Continued

Energy 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 | Continued

Maximum 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 | Continued

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 | Continued
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