The Salary Cap in Sports: Part 2 (Basketball)

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In our first post about the salary cap in sports, we learned about how unlimited the baseball cap was while higher revenue teams reap the benefits. In the second part of the three part series, we will be looking at the growing NBA salary cap as it looks to make a big leap in the next couple of years, increasing the player’s benefits. The salary cap has slowly been moving up over the past three years, from nearly $59 million in the 2013-2014 season up to $70 million flat for the 2015-2016 season. For the five seasons before that, it Continue reading The Salary Cap in Sports: Part 2 (Basketball)→

Moral Hazard and Health care

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Moral Hazard is a term that Economist are familiar with when discussing market failures, or the inefficient allocation of resources. The definition of moral hazard is when there is hidden action taken by one party that incurs costs of another party. But this is just the definition of the term, what does moral hazard truly mean in everyday life? One example that is brought up a lot is when an auto mobile owner becomes more of a reckless driver and justifies it by saying, “It’s fine, I have car insurance.” Obviously auto insurance doesn’t quite work this way, but moral Continue reading Moral Hazard and Health care→

The Economy as a Complex Adaptive System

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Lately, I’ve been reading up on emergent phenomena, systems in which complex behavior “emerges” from small scale interactions between relatively simple elements. Free market economies is a poster child of emergence–no one entity plans out every actor’s behavior. Rather, resource allocation decisions “emerge” from the local interactions of a large number of economic actors. I found some of the comments that Keith Downing made on free market economics in his book “Intelligence Emerging” fascinating, and figured I’d share them here for you all to appreciate. The eye-opening fact that the world works without excessive global manipulation and without many guarantees may initially Continue reading The Economy as a Complex Adaptive System→

Pennies Suck.

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Pennies are useless. Actually, they are worse than useless. In a way, they are actually harmful. Why? Because they are supposed to function as money. Money is used to “facilitate the exchange of goods and services” and pennies simply aren’t valuable enough to do that. They used to, but thanks to inflation, the buying power of the penny is so small that its practically useless. When is the last time you saw a penny on the ground and actually bothered to pick it up? Never, I know. Simply put, the opportunity cost to pick up, sort and deal with pennies Continue reading Pennies Suck.→

Free Trade or Protectionism?

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“When goods are not allowed to cross borders, soldiers will.” —Frederic Bastiat It’s safe to say that the majority of economists agree in favor of free trade and against protectionism. Many argue against political candidates that threaten to end trade agreements, and employ tariffs on Mexico and China. But it’s also important to be aware of some of the problems with free trade: The first problem with free trade is that people use GDP as a conventional argument. Or when economic value is taken away, or created without a price tag. Free trade can dissolve industries with hidden values. People Continue reading Free Trade or Protectionism?→

Reflection on The Why Axis: the Role of Time Discounting in the Education Gap.

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Two eeks ago I wrote about chapter 4 of The Why Axis. I hope you continue (or begin) to read along with us as we make our way through the book and enjoy it as much as we are! The authors do a great job relaying some tricky behavioral economic ideas while they tackle profound topics in a fun way. One such topic, the gap in childhood education between inner city kids and many wealthy even simply middle class kids, was central in the fourth chapter. I found Gneezy’s and List’s discussion provoking and I have given some thought to Continue reading Reflection on The Why Axis: the Role of Time Discounting in the Education Gap.→

Some Economists Think China’s Monetary Easing Policy is Hitting Home.

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In response to China’s stock market crash in the third quarter of 2015 China began a monetary easing policy which consisted of “pumping funds into state lenders known as policy banks to finance government-backed programs.” The stock market crash marked the end of China’s good fortune, as well the end of the stream of foreign investment which funded much of their economies productivity. Weak demand for Chinese products, along with less foreign investment, both added to the case for more stimulus. (Surprisingly China’s unemployment rate has floated consistently at around 4%.) And now just a few months later in 2016 China’s reserves Continue reading Some Economists Think China’s Monetary Easing Policy is Hitting Home.→

We Performed a Free Money Experiment, Results: Very Few Takers

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Last Friday fellow blog writer Janne and I decided to run a little experiment. The idea was simple enough: offer free money to everyone and see if they take it. The results were not so simple: hardly anyone took our money. Now it leaves us wondering why. Let’s set up the circumstances. Janne and I began tabling outside the SUB at 10:30 and stayed there until 12:00. All that was on our table was a jar of coins and 1 dollar bills, as well as sizeable sign that read “Free Money, No Joke No questions” with an arrow pointing to Continue reading We Performed a Free Money Experiment, Results: Very Few Takers→

The “Anything” You Can Do with an Economics Degree Part 3:  Grad School

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The final portion of this 3-part series discusses the pros and cons of pursuing a graduate degree in economics. A graduate degree in economics is very valuable and useful if you are pursuing a career in advanced economic analysis, teaching, or research.  However, there are careers out there for economics students that do not require a Master’s degree; two of those careers are discussed in parts 1 and 2 of this series. So is the extra schooling worth the additional time and money?  As economics students know is often the case, it depends. Some Ph.D. programs offer a Master’s degree upon Continue reading The “Anything” You Can Do with an Economics Degree Part 3:  Grad School→

Thesis Corner: Jordyn McLuen

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Lukie Crowley (LC): To start it off, what is your topic? Jordyn McLuen (JM): I did a policy theory paper on apple production in Washington State and how it’s impacted by potentially the implementation of a carbon tax or a cap-and-trade system. LC: Why did you choose (topic)? JM: I have always found environmental issues interesting, so I knew that I would like to do something related to climate change and try to apply a macro topic in climate change policy into a micro area in terms of Washington State apple production being one relatively small market. LC: Was there Continue reading Thesis Corner: Jordyn McLuen→