Plain Sense Economics

Jasen Hartford, a friend and past student, recently asked me,
As we all know, the European Union has recently been under the lime light with their budget deficit problem – causing a lot of anxiety for investors in the U.S. I’m curious if there’s a reason why the even greater deficit in [...]

This is why economists sometimes have a bad reputation (in addition to forecasting 9 of the last 5 recessions…) This op-ed piece in the Boston Globe poses a question on whether sellers should raise prices in times of acute demand – i.e. price gouging. The straight up economic answer is that gouging should be allowed. [...]

Esther Duflo teaches economics at MIT, and is this year’s recipient of the John Bates Clark medal to an American economist under the age of 40 who is judged to have made the most significant contribution to economic thought and knowledge. From an MIT web site:
Duflo, a 37-year-old native of France, is the Abdul [...]

N. Gregory Mankiw posted a semi-tongue-in-cheek note on his blog suggesting that we consider a system where email senders pay to send a message. One of Mankiw’s readers opined…
I think an excellent Pigouvian tax would be a tax on emails. Many emails involve a negative externality (I don’t really want to receive [...]

For my Principles of Microeconomics students there is an interesting article in The New York Times about gas prices and miles driven each year. In a rough way this is like a demand curve – price on the vertical axis, and quantity (in this case miles driven) on the horizontal axis. A comment from the [...]