LATEST
Marginal Tax Rate above 30% Likely Suboptimizes Social Welfare
Stanford's Charles Jones corrects glaring shortcomings in the Diamond/Saez’s optimal tax analysis to show why top marginal tax rates of 30% or less likely maximize social welfare in an innovation-driven economy. Jones concludes: "Because ideas are nonrival, each person’s wage is an increasing function of the entire stock of ideas. A distortion that reduces the production of new ideas therefore impacts everyone’s income, not just the income of the inventor herself. These conditions lead to a new term in the Saez (2001) formula for the optimal top tax rate: by slowing the creation… Read More
Economists Agree by a 3:1 Margin; Raising Marginal Tax Rates to 70% Is a Bad Idea
Economists agree by a 3:1 margin; raising marginal tax rates to 70% is a bad idea. Read More
Americans Pay 26% Less Than the True Cost of Government
In a Wall Street Journal op-ed, economists Steve Hanke and Stephen Walters show how most Americans pay 26% less than the true cost of the government services they consume because politicians hide the true cost in long-term deficits. When taxpayers pay 26% less than the true cost of government—even less as they earn less—what incentive do they have to optimize government spending and taxes? I wrote about this in my book The Upside of Inequality (pp. 108 and 248). Read More
Ed Conard Says a 70% Top Tax Rate Would Be “A Growth Killer” on Fox News “Cavuto: Coast to Coast”
Ed Conard says liberal Rep. Alexandria Ocasio-Cortez’s 70% top tax rate proposal would be “a growth killer” on Fox Business Network’s “Cavuto: Coast to Coast.” Read More
Ed Conard Discusses Potential U.S. Bond Rating Downgrade, China Trade on Fox Business’s “Varney & Co”
Ed Conard joins Stuart Varney on Fox Business’s “Varney & Co.” to discuss the status of trade talks with China and Fitch’s threat to downgrade the U.S. bond rating if the partial government shutdown doesn’t end soon. Read More
Krueger and Katz Agree Impact of Gig Economy Smaller Than They Claimed
According the Wall Street Journal, famed labor economists Larry Katz and Alan Krueger, former Chairman of President Obama’s Council of Economic Advisors, now admit their estimate of the gig economy was overstated, after the Bureau of Labor Statistics released a study in June showing the gig economy had not grown significantly since 2005, contrary to their claim. Read More
Preponderance of Significant Results Fell From 57% to 8% of Experiments When Protocols Preregistered
Another worrisome story in the New York Times reports "...A 2015 study published in PLOS ONE followed how many null results were found in trials funded by the National Heart, Lung and Blood Institute before and after researchers were required to register their protocols at a public website. This rule was introduced in 2000 in part because of a general sense that researchers were subtly altering their work — after it was begun — to achieve positive results. In the 30 years before 2000, 57 percent of trials published showed a 'significant… Read More
Market Risen to Top Decile Equity Risk Premium
Aswath Damodaran finds the equity premium has risen to 6%—in the top decile historically. He estimates shocks from 2 of the following have already been priced in: • Slower growth • Political/economic crisis • Higher interest rates • Reduced corporate cash flows Read More
Ed Conard Discusses the Economy and Impact of Midterm Elections on Stock Market on Fox Business’s “Varney & Co”
Ed Conard discusses the state of the economy and the impact of the midterm elections on the stock market with Stuart Varney on Fox Business's "Varney & Co." Read More
Atlanta’s Living Standard Is Higher Than San Francisco (When Adjusted for Real Estate Cost)
After adjusting for the cost of real estate, Demographia finds the median standard of living in Atlanta is higher than San Francisco. Read More
Millennial Incomes Are Comparable to Prior Generations
A new Pew study finds Millennial household incomes are higher today than they have been for every other comparable generation, except in the year 2000. Using the Pew data, Ernie Tedeschi finds Millennial household incomes today are comparable to past generations after adjusting for education. But such comparisons assume education is as productivity-enhancing today as it was in the past when America educated fewer people at the margin. Bryan Caplan, for example, claims education does not increase productivity significantly at the margin, which would render Tedeschi’s adjustments unnecessary. However, a… Read More
U.S. Is Not An Outlier on Economic Mobility
Scott Winship’s indispensable review of economic mobility studies finds the “U.S. (is) not an outlier” even if absolute mobility is less because growing income gap between rich and poor “says nothing” about whether it’s harder for poor kids to become rich. Read More
Study Finds 72% of SSDI Applications Result of Recession
A new NBER study finds 72% of Social Security Disability Insurance applicants between 2008-2012 wouldn’t have applied but for the recession, resulting in 400,000 beneficiaries who otherwise would not have entered the system and increasing present value costs by $100 billion. Read More
Worrisome News About Welfare Fraud
Worrisome news from AEI’s Robert Doar in the Wall Street Journal about welfare fraud. 82 of 100 randomly selected Medicaid recipients were not qualified for all benefits received. The Obama Administration gutted income verification requirements. The recession expanded fraud. Read More
Harvard Study Finds 11% MBTA Gender Pay Gap Despite Guaranteed Equal Pay
The WSJ reports on a study by Harvard economists, Valentin Bolotnyy and Natalia Emanuel, that finds an 11% gender pay gap—“60% of the earnings gap across the United States”— among union members of the Massachusetts Bay Transit Authority, despite rigorous seniority rules and guaranteed equal pay for equal work. The authors conclude: “The gap…can be explained entirely by the fact that, while having the same choice sets in the workplace, women and men make different choices. … Women value time and flexibility more than men.” Men worked 83% more overtime… Read More
HIGHLIGHTS
A New Year’s Resolution Worth Making
Real Clear Politics By Edward Conard | December 31, 2014 With oil prices plunging below $60 a barrel, the U.S. economy growing at an annualized 5 percent last quarter, and the Dow soaring above 18,000, it's easy to overlook academic research published in 2014 that will likely have a lasting impact on economic debate. In particular, a half-dozen highly credible studies debunked widely-held economic myths. Each of these studies illustrate the need to confront wishful thinking with a great deal of skepticism. The year began with Harvard's Raj Chetty and… Read More
Ed Conard on The Daily Show with Jon Stewart
On the show, Jon Stewart and Ed discuss Unintended Consequences and why risk-taking isn't the enemy of a properly functioning economy. Read More
Ed Conard debates Vice President Biden’s former chief economist, Jared Bernstein, on income inequality
At the Milken Institute’s Global Conference in Los Angeles on Monday, a top-level discussion of income inequality, economic mobility, and poverty revealed differing interpretations of the data, their causes, and their implications for public policy. AEI visiting scholar Edward Conard faced off against Vice President Biden’s former chief economist Jared Bernstein. The Bernstein/Conard debate over inequality went something like this: Bernstein suggested that inequality was bad for the bottom of the wage scale, as evidenced by stagnant or falling wages at the lower end of the income distribution, relative to many… Read More
Ed Conard defeats the IQ2 Motion: “Income Inequality Impairs the American Dream of Upward Mobility”
Despite a highly partisan crowd of voters, Ed defeated the IQ2 Motion: "Income Inequality Impairs the American Dream of Upward Mobility.” Thirty percent of the voters moved to Ed’s side of the motion—one of the largest swings in the history of IQ2. Opening Statement If income inequality truly impaired mobility, there would be telltale signs: Growing inequality would have reduced mobility. It hasn’t. Even Emanuel Saez, of the liberal Piketty and Saez duo, admits, the chance of a low-income child reaching any higher level of income has increased. Economies with more… Read More
Ed Conard debates Nobel Prize winning economist Joe Stiglitz
Ed and Joe Stiglitz face off on economics and income inequality. Read More
The Purpose of Spectacular Wealth, According to a Spectacularly Wealthy Guy
In the New York Times Magazine Adam Davidson comments on Ed Conard's new book. Read More
Please Don’t Soak the Rich
Wall Street Journal review of Ed book, Unintended Consequences. Read More
Ed Conard on Fareed Zakaria
Ed discusses his new book and the value of risk taking for the economy. Read More
Ed Conard debates Alan Krueger on Obama’s economic record and if he’s to blame for slow growth on Bloomberg TV
Given the last five years of economic activity, is Obama the worst president since WWII? Read More
No Role for Fed in Income Distribution
NEW YORK TIMES by Ed Conard | October 27, 2014 The Federal Reserve has neither the mandate to redistribute wealth nor the tools to do it effectively. Should it try, it will likely fail. Were it to succeed, it would likely lower middle- and working-class incomes. Either way, it would violate one of America’s founding principles — no taxation without representation — as well as its mandate to promote stable prices. A blatant political act like this would justify Congressional intervention and jeopardize the Fed’s critically needed independence. A Federal… Read More
Ed Conard on ABC News
Ed argues that innovation and incentives improve the U.S. economy. Read More
Rescuing Subprime Borrowers Won’t Fix the Economy
Fortune Magazine By Edward Conard | June 11, 2014 In their new book, House of Debt, Atif Mian and Amir Sufi make a persuasive argument that a decline in consumption caused by a drop in home prices slowed the economic recovery more than a weakened banking system. Even if banks were strong, they argue, the demand for loans would still be weak. Mian and Amir Sufi blame a sharp increase in savings by highly levered homeowners for the fall off in consumption and borrowing; as a result, the authors urge taxpayers to… Read More