About Me
Edinburgh, 2019
Ph.D (Economics) — George Mason University, 2015
B.A. (Economics) — University of Connecticut, 2011
Specializations:
- Law and Economics
- Austrian Economics
Research interests
- modeling innovation & economic growth
- political economy & economic history of intellectual property
About Me
My face without a mask, 2021
Ph.D (Economics) — George Mason University, 2015
B.A. (Economics) — University of Connecticut, 2011
Specializations:
- Law and Economics
- Austrian Economics
Research interests
- modeling innovation & economic growth
- political economy & economic history of intellectual property
The Reason I am Busy AF Behind the Scenes
And why I wear a mask.
Public Economics
How do we choose in groups?
- Going to dinner together
- Electing a president of the United States
“Public choice”: application of economic tools to the study of politics
- “Non-market decision-making”
Economics as a Way of Thinking
Economics is a way of thinking based on a few core ideas:
People respond to incentives
- Money, punishment, taxes and subsidies, risk of injury, reputation, profits, sex, effort, morals
Economics as a Way of Thinking
Economics is a way of thinking based on a few core ideas:
People respond to incentives
- Money, punishment, taxes and subsidies, risk of injury, reputation, profits, sex, effort, morals
Environments adjust until they are in equilibrium
- People make adjustments until their choices are optimal given others’ actions
Optimization and Equilibrium
If people can learn and change their behavior, they will always switch to a higher-valued option
If there are no alternatives that are better, people are at an optimum
If everyone is at an optimum, the system is in equilibrium
The Two Major Models of Economics as a "Science"
Optimization
Agents have objectives they value
Agents face constraints
Make tradeoffs to maximize objectives within constraints
The Two Major Models of Economics as a "Science"
Optimization
Agents have objectives they value
Agents face constraints
Make tradeoffs to maximize objectives within constraints
Equilibrium
Agents compete with others over scarce resources
Agents adjust behaviors based on prices
Stable outcomes when adjustments stop
Economics Is Broader Than You Think
Economics
Economics begins with interaction between multiple people
Recognizing mutual gains from cooperation
- Specialization
- Exchange
- Team production
The Origins of Exchange I
Why do we trade?
Resources are in the wrong place!
People have better uses of resources than they are currently being used!
The Origins of Exchange II
Why are resources in the wrong place?
We have the same stuff but different preferences
The Origins of Exchange III
Why are resources in the wrong place?
We have different stuff and same/different preferences
Transaction Costs and Exchange I
- But Transaction costs make exchange costly!
- Search costs
- Bargaining costs
- Enforcement costs
Transaction Costs and Exchange II
With high transaction costs, resources cannot be traded
Resources cannot be moved to higher-valued uses
If other people value goods higher than their current owners, resources are inefficiently used!
Social Problems that Markets Solve Well
Problem 1: Resources have multiple uses and are rivalrous
Problem 2: Different people have different subjective valuations for uses of resources
It is inefficient (immoral?) to use a resource in a way that prevents someone else who values it more from using it!
Social Problems that Markets Solve Well I
Markets are institutions that facilitate voluntary impersonal exchange and reduce transaction costs
Prices measure opportunity cost of a particular use of a resource
Social Problems that Markets Solve Well II
Property rights provide a pattern of ownership
Prices give us information about how to use scarce resources
Profits incentivize production and Losses discipline waste
Prices are Signals
Markets are social processes that generate information via prices
Prices are never "given", prices emerge dynamically from negotiation and market decisions of entrepreneurs and consumers
Competition: is a discovery process which discovers what consumer preferences are and what technologies are lowest cost, and how to allocate resources accordingly
The Social Functions of Prices I
A relatively high price:
Conveys information: good is relatively scarce
Creates incentives for:
- Buyers: conserve use of this good, seek substitutes
- Sellers: produce more of this good
- Entrepreneurs: find substitutes and innovations to satisfy this unmet need
The Social Functions of Prices II
A relatively low price
Conveys information: good is relatively abundant
Creates incentives for:
- Buyers: substitute away from expensive goods towards this good
- Sellers: Produce less of this good, talents better served elsewhere
- Entrepreneurs: talents better served elsewhere: find more severe unmet needs
When We Must Choose in Groups I
Markets allocate resources by individual choices between strangers
Possibilities of market failure
- Externalities
- Public Goods
When We Must Choose in Groups II
- Circumstances where people must make a collective choice or know each other
- Justice, fairness, equality
- Team production, public goods
When We Must Choose in Groups III
- Construct a framework for markets to operate within
- Property rights
- Transaction costs
- Regulation
Methodological Individualism
Only individual people act
The individual is the base unit of all economic analysis
"How will action / choice / policy / institution [X] affect each individual's well-being?"
Groups Don't Choose
“Society” is not a choosing-agent or an optimization problem
Individuals have different interests in their different capacities
- Consumers
- Producers
- Voters
- Interest groups
- Elected officials
- Bureaus
They Must Choose In a Unique Environment
No property rights
No prices
No profits or losses
The "Public Sector"
Activities by government(s) occupy a large part of the economy
A major function of economists is to analyze and suggest public policy
Positive vs. normative economics
U.S. Federal Spending as % of GDP
U.S. Federal Revenues as % of GDP
U.S. Federal Budget Surplus/Deficit as % of GDP
U.S. Total Public Debt as % of GDP
Motivations I
Motivations II
Motivations III
Politics Without Romance
- We will make your high school civics teacher proud
Politics Without Romance
- We will make your high school civics teacher proud and cry
Politics Without Romance
What's so great about democracy other than its democratic? - Gordon Tullock
Democracy is the worst form of government, except for all the other forms that have been tried from time to time," - Winston Churchill
Format For the Course
This is a 400-level seminar
A conversation, not just a lecture
- Lectures to introduce topic, give background and context
- Readings-based discussions
Your "Textbooks"
Course Website
Logistics
Office hours: TBD & by appt
- Office: 110 Rosenstock
Slack channel
#c-econ-410-public
Covid/Zoom policy, attendance
See the resources page for tips for success and more helpful resources
Roadmap for the Semester
