News

My article with Paul Sharp and Maja Pedersen is now available online at Social Science History. The link to the ungated version is here. The article makes a very potent (I believe) in that it uses the trade policy preferences that Canada enjoyed with Britain from 1760 to 1870 to triangulate how the level of market integration in the North Atlantic (i.e., UK, US, Canada) was determined by policy or by natural barriers. Our conclusion is that policy mattered most. Market integration was largely hindered by trade barriers, not by natural barriers. I believe this is probably one of my consequential paper because it suggests multiple things.

First, if the United States had remained in the British Empire, there would have been a highly integrated market by the late 18th century. The first age of globalization would have occurred a century earlier.

Second, we have overstated the role of natural barriers. Agents were able to arbitrage price differences easily. It thus amplifies (although we do not discuss it much) the importance of trade policy reforms such as the 1831 Canada Trade Act, the abolition of the Corn Laws and the tariffs of abominations in the United States.

My article with Peter Leeson and Nicholas Snow is now available online at Rationality and Society. The article makes a simple point — there is a rational choice explanation for the emergence and enforcement of a taboo on pigs with Judaism. That explanation is rooted in the idea that pigs are trespassers that can damage higher-value properties of non-pig owners. The pig is an externality when raised the way it was during the Iron Age (and in Judea). A taboo is a way to define property rights and to enforce them. The reason is that those who suffered trespass were also the lowest-cost managers of the externality (or, phrased differently, they were those who were best able to maximize wealth net of transaction costs). The abstract is below and you can email me for the full paper in case its gated:

Judaic law famously bans pigs. For millennia, scholars have wondered why. This paper uses the economics of property rights to resolve the puzzle. We argue that the Judaic pig ban was an instrument for internalizing swine externalities. Free ranging pigs in search of sustenance trespass on agricultural landowners’ property, wreaking destruction. Activities that foster such pigs thus create negative externalities that can cripple agricultural economies. When the expected cost of swine externalities becomes large, internalization becomes worthwhile: lawmakers with a vested interest in the agricultural economy ban activities that foster free ranging pigs. That is what transpired in ancient Judah, where lawmakers were priests whose livelihoods depended on agriculture, where all swine ranged freely, and where the expected cost of swine externalities surged during the late Iron Age. Lawmakers invoked God to enjoin involvement with pigs because a supernatural injunction was cheaper to enforce than a natural one: in a land of faithful Hebrews, Yahweh’s swine prohibition enforced itself. The Judaic pig ban’s features are consistent with pig bans recently adopted by US states such as Montana, which everyone agrees are instruments for internalizing swine externalities.

I have another working paper out (it was out a few weeks ago, I just forgot to share it here). Its with two of my graduate students (Jacob Hall and Patrick Fitzsimmons) at George Mason University. We recollected the state-level IRS SOI data in order to create corrections for state-level disparities in price levels from 1921 to 1941. The idea was to better measure “real income” inequality across the United States during the first half of the 20th century. We find that adjusting for state-level price differences attenuates the level of inequality in the United States but also leads to a faster collapse from 1921 to 1941. The abstract is below and the link to the SSRN paper is here.

The U-Curve of income inequality in the United States is a longstanding stylized fact in economic history. The “Great Levelling” that led to the trough that lasted from the 1940s to the early 1980s is argued by scholars like Piketty and Saez (2003) to have happened precipitously during the 1940s whereas others like Geloso et al. (2022) argue that it was a gradual levelling that began with the Great Depression. In this paper, we argue that large regional price level differences make it hard to measure “real” inequality levels. More importantly, as these price differences collapsed in the first half of the 20th century, the trends in “real” income inequality could be far different than those using “nominal” income. Adjusting income levels from 1921 to 1941 for regional price levels shows a faster decline in inequality during the period. We argue that this indicates that the Great Levelling was a gradual process than began far earlier than the 1940s.

A few days ago, another working paper of mine came out publicly. Its on intergenerational income mobility in the United States and the importance of economic freedom in promoting it. Its co-authored with Justin Callais and Alicia Plemmons.

Many scholars have examined the role of social capital in determining economic and social mobility. However, few have tied the role of market institutions (namely, economic freedom) in determining social mobility. We combine the economic freedom data at the MSA-level with social capital data from Chetty et al. 2022 to estimate their effects on social mobility within the United States. We find that economic freedom almost always matters for absolute and relative mobility. While the literature is already clear on the fact that economic freedom increases incomes, this study is the first within the United States to show that the effects of economic freedom help those at the bottom more relative to those at the top. Social capital (specifically “economic connectedness”) also matters for mobility, but to a lesser extent than economic freedom. A person born in the freest quartile of American metropolitan experiences 5% to 12% more intergenerational income mobility than the person born in the least free quartile. This is a big deal.

I (along with Justin and Alicia) thank the Archbridge Institute — which is a think tank dedicated to studying social mobility in all its aspects — for accepting to host our working paper which you can find HERE on their website.