By Jonathan B. Wight

When regulators in America clamped down on cigarette smoking—after decades of lies and denials by the industry of its pernicious health effects—the industry simply went global.  After all, there are 1.4 billion Chinese and nearly 1.3 billion Indians and many other countries with poor people who buy carcinogenic and addictive products.

As poor countries eventually prosper they are increasingly turning their attention to human capital, and the scourge of smoking. Hence the rise of taxes and regulations around the world.  Yes, these actions are paternalistic and yes, it would be preferable for people to quit on their own, but in this case the bans to prevent kids from getting started and the heavy nudges to deter adults from smoking are warranted by the huge persuasive powers of the industry.

Recall that virtually every movie in the 1930s and 1940s depicted smoking as essential to transacting a deal—whether business or lovemaking. This wasn’t an accident: it was intentional product placement designed to imbed smoking in the culture.  A 30-second public service announcement against smoking is hardly effective against this: it is like a BB gun against an M1 tank.  And the Joe Camel ads were seemingly targeted directly at kids.

The New York Times reports today on the campaign waged by the U.S. Chamber of Commerce to smother those attempts at improving health abroad. This is a sad real-guard action, a last-ditch attempt to save a dying and unworthy cause.

Image: http://tobacco.stanford.edu/tobacco_main/images.php?token2=fm_st138.php&token1=fm_img4072.php&theme_file=fm_mt015.php&theme_name=Targeting%20Teens&subtheme_name=Joe%20Camel

Mark D. White

Today the Supreme Court of the United States—now, thanks to Justice Scalia's dissent in yesterday's King v Burwell dissent, "officially" known as SCOTUS—declared marriage to be a right for all, covering both same-sex and opposite-sex couples. In his majority opinion, Justice Kennedy affirms same-sex marriage to be a matter of rights and dignity; Chief Justice Roberts, in his dissent, regards it as a matter of policy best left to the voters.

I agree with Kennedy, as I explain at Psychology Today. For more details on the opinions themselves (found here), I recommend Orin Kerr's summary at The Volokh Conspiracy.

By Jonathan B. Wight

I don’t have time to listen to this… but I did catch the opening of Donald’s rambling and disjointed announcement, as reported by the Wall Street Journal:

“Our country is in serious trouble. We don’t have victories anymore. We used to have victories, but we don’t have them. When was the last time anybody saw us beating, let’s say, China in a trade deal? They kill us. I beat China all the time. All the time.”

So trade is war, and the objective is to kill the guy on the other end of the deal?  

What a great concept!  Let's cultivate trade and relations with other countries by announcing how much we're going to screw them!  That'll show them we mean business, and they'll be falling all over themselves to get more of it.  People are really just masochists, and Trump shows you've just got to know how to treat 'em.

Why not indeed, when the Governor of Texas wants to build the state’s own repository for storing gold -- and take it out of the hands of those damn northern financiers of the Fed in New York!  Returning to gold as a legal backing for money is a great idea (endorsed by lots of common sense business types)—until you examine it for 30 seconds using economic logic.

One would think that economics advanced somewhat in the 20^th century, but not according to the rhetoric in the nightly news.

By Jonathan B. Wight

The title for this post comes from Hunter Rawlings op-ed in today’s Washington Post.  Rawlings is the former president of Cornell, and currently president of the Association of American Universities, so he is no stranger to the industry.  The claim he makes is that colleges and universities are wrongly ranked on whether their graduates achieve a big enough bang-for-their-tuition-buck.

In other words, are colleges efficient at taking low performing high school students and turning them into money making productive machines?

Everyone already knows the answer to this: students who are high performers before college would likely be high performers without college, and in fact, college can sometimes get in the way (as it did for Steve Jobs and Bill Gates, who both dropped out to start companies).

Yet the tendency to see everything in stark economic terms has led people to evaluate the process of education as if it could be commoditized.  “I bought this TV, and dammit I want to see high def!”

Rawlings’ complaint is that students think that because they are paying a high price for admittance that they are owed a degree. Rather, he argues that the admission price is the opportunity to learn, but no guarantee of anything.

It’s like an admission fee to enter a marathon race lasting four years and 32 courses. Only those who finish get a medal, and many drop out along the road.  Is that the fault of the race organizers, or the fault of the runners who failed to prepare, to hydrate, or to eat proper food for endurance? 

Here is an extended excerpt, with my critique below:

“Unlike a car, college requires the “buyer” to do most of the work to obtain its value. The value of a degree depends more on the student’s input than on the college’s curriculum. I know this because I have seen excellent students

By Jonathan B. Wight

The PBS Newshour recently ran an article by John Komlos that summarizes some of the work by Nobel-Prize winning economist James Heckman and others on inequality and early childhood development.

The bottom line is that the human fetus, and then the infant in its early years, faces serious developmental challenges.  The absence of nutrition or health care at certain critical junctures results in permanent underdevelopment of adult capacities.

The cost to society in terms of lost human capital is staggering, and as you would suspect, the cost of prevention would be much cheaper.  Yet prevention (e.g., through universal health care) has not been a top agenda item in the American political economy landscape.

America is all about the ideology of the individual achiever, overcoming obstacles on his own, with no help from society. 

Yet the fetus and the infant cannot be individual achievers! They are completely dependent on parents or other care givers.  And the culture of low income parents can often lead to behaviors that exacerbate human capital formation in their own offspring. 

Heckman thus concludes that, ““the accident of birth is the greatest source of inequality in America today.”

By Jonathan B. Wight

The generally positive reception to Caitlyn’s coming out may give the transgender movement a needed emotional boost.

Readers who want more depth should remember that many have gone before her.  Our own Deirdre McCloskey covers this ground in her wonderful and moving account, Crossing: A Memoir (1999).  It is a vivid and honest telling of the start, middle, and end of a journey of discovery and identity.

There is plenty of pain and moments of joy. After reading this, no one could argue that transgender people will "get over it" through spiritual or psychological counseling, either voluntary or coercive.  The book is highly recommended.

We will look back positively on the 21st century as a time of unfolding freedom along certain dimensions of human expression and welfare. 

By Jonathan B. Wight

It’s finally out! The book you’ve all been waiting for….

Ethics in Economics (Stanford University Press, 2015)

offers a pluralistic account of the virtues, duties, and outcomes needed for a market system to work in the presence of moral hazards.

Economists can better understand the world, and provide better policy advice, when they place economic analysis within a wider moral lens.

The book explores the hidden ethics behind the standard measure of efficiency, the 2008 economic crisis, Adam Smith's moral sentiments, the moral limits to markets, the ethics of inequality, and other topics. http://www.sup.org/books/title/?id=24196.

The analysis is motivated by the concept of ethical pluralism—the recognition that different ethical systems have appropriate applications and drawbacks. Working in combination, ethical systems can restrain opportunism in the presence of moral hazards. Kenneth Arrow noted that, “The multiplicity of control systems in the real world is probably no accident.”

Considering a wider ethical lens for positive and normative analysis can lead to a richer understanding of human behavior and to better policy decisions. This book is ideal for undergraduates or general interest readers.

Blurbs:

“This book is highly dialogic, bringing students (and faculty) into core debates and resolving them. It is a triumph." —Deirdre McCloskey

 “In this impressive book, Wight draws on sources that range from classical theorists to the very latest neuroscience in order to deftly integrate common moral concerns into an enhanced economics for the twenty-first century. This fast-paced read is a must for economists, policy analysts, and their students."—Paul J. Zak

 "Ethics in Economics is a superb resource for economists and students of economics. It provides a great introduction to the multiple frameworks that influence the ethical thinking of policy-makers, economists, and the human agents who, in their day-to-day interactions, make economies function and malfunction." —Daniel M. Hausman

T0 Order an Exam Copy, go to: http://tinyurl.com/ethics-in-economics