Adjusting Inequalities for Regional Price Parities: Importance and Implications

My paper with Youcef Msaid on the impact of adjusting inequality figures with regional price indices (as opposed to national indices) is now available at the Journal of Regional Analysis & Policy.  In the paper we show that doing this adjustment reduces modestly the level of inequality and changes dramatically the geographical distribution of households in the top and bottom deciles of the income distribution. The latter point is crucial to formulating proper policy to deal with inequality. The abstract is below :

Corrections to CPS data dramatically change the geographic distribution of the top and bottom deciles of the income distribution. We correct the measure of real personal and household income with regional price indices from BEA. Uncorrected figures have poorer states over-represented in the bottom decile, while corrected figures have much of that decile living in urban areas in NY and CA. We draw policy-relevant conclusions from these facts, mostly with regard to housing policy.


Forthcoming: Distinct from the Rest of North America: Living Standards in French Canada, 1688 to 1775

I received news yesterday that my paper on real wages in Quebec (French Canada) from 1688 to 1775 has been accepted for publication at Cliometrica. The SSRN version of the paper is no longer the exact version that has been accepted, but its core results are still valid:

This paper uses a novel dataset of prices and wages from the French colony of Quebec (Canada’s second largest province today) between 1688 and 1775 in order to measure living standards during the colonial era. Using these data, I follow a welfare ratios approach and find that Quebec was poorer than the American colonies and England, while being slightly richer than France. However, this last conclusion is sensitive to changes in the basket used to compare wages. When one shifts from a bare-bones basket in the welfare ratio to a respectable basket, Quebec becomes only as rich as France, but remains poorer than the American colonies and England.

This is an important development for me as I have been waiting for the publication of this paper to set up my other papers. Indeed, finding that Canada was poorer (and in line with most of Latin America) during the colonial era suggests that a) Canadian institutions should be considered in the same light as American and Latin American institutions; b) that there is something clearly exceptional that is happening in the American colonies at the time.

Forthcoming: Market Theory and the Lighthouse System (book chapter)

Alongside Rosolino Candela, I have a new paper out. This paper is to be included in a forthcoming edited companion to the work of Israel Kirzner (UFM Companion to Israel Kirzner). The chapter is a reconsideration of the debate on the lighthouse as a public good in the lenses of Israel Kirzner’s emphasis on market processes. The chapter is available here on SSRN and the abstract is down below:

In this chapter, we point out that Kirzner’s focus on the market process and entrepreneurial alertness to profit opportunities that come from improving allocative efficiency (or pushing back the frontiers of production possibilities) is universal in that it can be applied to what appears to be the most unassailable “bailey” of market failure theory. To do so, we consider the historical case of lighthouses which, because the light they produced to guide ships in the age of sail was non-rivalrous and non-excludable, is considered the textbook example of a “pure” public good. We point to recent research that show that the market process could have led to the production of efficient maritime safety services but that it was prevented from operating by state-mandated monopolistic guilds. As such, we argue that even this seemingly impregnable bailey of market failure theory fails to withstand Kirzner’s argument.

Forthcoming: James M. Buchanan and the Political Economy of Desegregation

My article, co-authored with Phil Magness and Art Carden, on James Buchanan and the political economy desegregation is now forthcoming at the Southern Economic Journal. In this article, we do two things: 1) we respond to the claims made by Nancy MacLean (Duke University) in Democracy in Chains that nobel laureate James Buchanan was a closeted racist and segregationist and show that the opposite was true; 2) we situate public choice within debates over racism and desegregation. The article can be downloaded here on SSRN and the abstract is below:

Recent historical works, most notably 2017’s Democracy in Chains, claim that 1986 Nobel Laureate James M. Buchanan’s formative contributions to political economy were inspired in significant part by hostility to Brown v. Board of Education. This argument suggests that the research agenda of public choice economics emerged from an opportunistic alliance with Virginia’s “Massive Resistance” to school integration and should thus be situated within the racially tinged tradition of southern conservatism. While Buchanan wrote very little on the economics of race, an extensive review of archival evidence as well as his published works refutes this claimed association. Buchanan’s work is better understood in the context of his Chicago school mentor Frank Knight as well as his own support for the public choice contributions of W.H. Hutt, rather than the unattested links to southern racial conservatism that are posited by MacLean. To the contrary, we show that Buchanan opposed segregation and believed that the competitive processes of an educational voucher system would undermine the Massive Resistance status quo. We accordingly reject the primary thesis of Democracy in Chains and offer a corrective account of the relationship between Buchanan and the segregation debate.

The Cuban Revolution and Infant Mortality, 1959-1974

I have a new working paper available. This time, it concerns Cuba (again) and I joined efforts with my friend Jamie Bologna Pavlik of Texas Tech University to write up that paper. We used a synthetic control method to assess the effect of the 1959 revolution on Cuba’s infant mortality rate. As health outcomes are often presented as the Castro regime’s best accomplishment (and yet there exists no attempt to disentangle the true effects of the revolution), we decided that this was a paper whose time had come. We find that infant mortality went up relative to the counterfactual between 1959 and 1970 but then reverted back to the counterfactual (a reversal which we attribute to the ramping-up of Soviet subsidies to Cuba). Overall, somewhere between 33,000 and 41,000 extra infant deaths occurred between 1959 and 1974. The paper is available here on SSRN and the abstract is below:

The Cuban government often vaunts its accomplishment of reducing infant mortality post 1959. However, because many Latin American countries experienced similar decreases, it is unclear that this effect is government induced. We use the fact that Cuba underwent momentous and unique political change to consider the legacy of the Fidel Castro regime on infant mortality. We employ a synthetic control method to ascertain the reduction attributable to the regime. We find that in the first years of the regime, infant mortality increased relative to the counterfactual but that – after the introduction of Soviet foreign aid – infant mortality reverted to trend.

Forthcoming: The Lightship in Economics

My article with Rosolino Candela, The Lightship in Economics, has been accepted today for publication at Public Choice. This is the second of a series of articles that we are working on in order to reconsider the role of the lighthouse in economics (a debate that has been vivid since Ronald Coase’s 1974 article in the Journal of Law & Economics). The abstract is below and the paper can be consulted here:

What role does government play in the provision of public goods? Economists have used the lighthouse as an empirical example to illustrate the extent to which the private provision of public goods is possible. This inquiry, however, has neglected the private provision of lightships. We investigate the private operation of the world’s first modern lightship, established in 1731 on the banks of the Thames estuary going in and out of London. First, we show that the Nore lightship was able to operate profitably and without government enforcement in the collection of payment for lighting services. Second, we show how private efforts to build lightships were crowded out by Trinity House, the public authority responsible for the maintaining and establishing lighthouses in England and Wales. By including lightships into the broader lighthouse market, we argue that the provision of lighting services exemplifies not a market failure, but a government failure

Gordon Tullock Meets Phineas Gage: The Political Economy of Lobotomies in the United States

I have a new working paper available. This one is co-authored with Raymond March of North Dakota State University. This paper is the first leg of a research agenda on the topic of the political economy of psychiatric care in the first half of the 20th century. The topic may appear “odd” at first sight, but there is much that this topic (because it deals with marginalized people in a highly information-asymmetric world) can provide in terms of insights for the economics profession (and vice-versa for history). The paper can be consulted here on SSRN and the abstract is below:

In the late 1940s, the United States experienced a “lobotomy boom” where the use of the lobotomy expanded exponentially. We engage in a comparative institutional analysis, following the framework developed by Tullock (2005), to explain why the lobotomy gained popularity and widespread use despite widespread scientific consensus it was ineffective. We argue that government provision and funding for public mental hospitals and asylums expanded and prolonged the use of the lobotomy. We support this claim by noting the lobotomy had virtually disappeared from private mental hospitals and asylums before the boom and was less used beforehand. This paper provides a more robust explanation for the lobotomy boom in the US and expands on the literature examining the relationship between state funding and scientific inquiry.