People are not fully rational. Moreover, people’s expectations of future conditions often play as much of a role as the current situation in their willingness to buy or sell things at different prices. Keep that in mind when digesting news…
Category: Other
Global market reality trumps gas price fantasy
Holding out the promise of cheaper gasoline is a popular activity for political candidates right now. They suggest that if we just did a few simple things — research alternative energy, drill offshore or in the Alaskan National Wildlife Refuge,…
Brush up on math to grasp economy
Everybody is familiar with percentages but their details still trip people up, particularly when communicating economic news. Here are a few pitfalls to avoid. There is an important distinction between an ‘increase of X percent’ and an ‘X percentage point…
Weighing the tradeoffs of off-shore drilling
President Bush’s proposal Wednesday to end decades-long bans on offshore oil and gas drilling may be a cynical political ploy, but he opens a useful debate. What trade-offs are there between the environment and energy production? Should we change policies…
Fair is fair in unemployment benefits
As unemployment continues to rise, the question of extending the maximum term of unemployment benefits keeps coming back. Expected effects of the economic stimulus passed last fall always were dubious. Now, for most households, the stimulus effects of the $600…
Understanding the futures markets
Most people don’t understand how futures markets work. Unfortunately, one needs to understand the basic mechanics of these markets to understand much of the news in recent weeks. The Commodity Futures Trading Commission has launched an investigation into the possible…
Social Security needs new incentives
As baby boomers retire, we are confronted with a dilemma. On the one hand, it will be good for society if more people work later into life. But Social Security, the primary source of retirement income for most U.S. households,…
High commodity prices revive argument about what’s best for poor nations
Talk to a farmer about the high prices for commodities these days, and it’s likely you’ll hear how much more a combine or other farm equipment now costs. The relationship between the prices of raw materials and manufactured goods was…
In price cycles, some bound to feel squeezed
If Leon Walras’ auctioneer did his job, running a business would be easier. One might say the U.S. economy ‘is in a dynamic state’ right now. (That’s an old Vietnam War phrase for ‘nobody knows what is going on.’) Rapidly…
U.S. gave the world model for agricultural research
Prices of basic foods like rice and wheat have risen rapidly around the world. This refocuses attention on two related policy questions long thought important but largely ignored recently: Should government fund agricultural research? What should wealthy nations do to…