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James M. Buchanan 1919-2013

Center For Study of Public

Annual Report 2012 From the Director

James Buchanan (1919-2013) founded The Center for Study of and was for over five decades the intellectual leader of the Public Choice movement. I interacted with Jim both as a student and as a colleague, and I mark his passing with sadness. When I look back on his achievements, however, I cannot help but celebrate a life well lived. Jim organized the Thomas Jefferson Center for Studies in Political , the direct ancestor of the CSPC, at the University of Virginia in 1957. In explaining what the Center was all about, he said: In the century from 1750 to 1850 political were among the intellectual leaders guiding those political changes that had the results of removing many artificial restraints upon individual choice and initiative. …We live today in the Western World, on the heritage of this greatest of all in human history. Jim was concerned, however, that in the twentieth century “ and political economists seem to have been increasingly less influential.” had become separated from and . Too many students were focusing on minor issues and missing the big picture. But without an articulated conception of the good social order, a “political-economic philosophy,” statesmen and citizens would lose their bearings amid economic and social complexities. Without political economy as a guide, Jim warned: There is an ever present danger that the , which are vital to the preservation of individual liberty, may be undermined and eroded through an overly-close attention to current minor irritations in the social fabric, accompanied by heedless neglect of larger issues of more lasting importance. Twentieth century American can well commit the irrevocable sin of "social carelessness," of allowing its institutions to be modified out of all recognition, of allowing them to be divorced bit by bit from their original intent and purpose in the social structure. Individual liberty or freedom remains the fundamental organizing principle of the free society, and the temporary pursuit of will-of-the-wisp current objectives at the expense of individual freedoms must be examined much more carefully and thoroughly than scholars and makers now seem willing to attempt. Out of ideas such as these, [the Center] was born. The Center represents the institutional embodiment of an effort deliberately made to bring about a rebirth of Political Economy. To bring about a rebirth of Political Economy , that is what Buchanan set out to do in 1957 and that is exactly what he achieved. The Center for Study of Public Choice has inherited Buchanan’s mission; we seek to unite economics, political philosophy and political science, to continue the rebirth and maturing of the , to expand and extend these ideas in new directions and to continue to build on the foundations which were built by people such as , Thomas Jefferson, James Madison, and Jim Buchanan.

Alex Tabarrok [email protected] Twitter: @ATabarrok Tel. 703-993-2314

2 Spotlight on Thomas Stratmann

Q: Your recent work with GMU chairman Daniel Houser is in experimental public choice. Could you tell us more about EPC?

A: Experimental Public Choice is the application of experimental methods to questions of political economy; it builds on the work of ’s two Nobel Laureates, James Buchanan and Vernon Smith. Many questions in political science are difficult to study. How would changes in laws influence ? How would different rules influence the choice of candidates? How would changes in constitutional structure, the rules of the game, change daily politics? It’s hard to study these questions empirically because it’s difficult to control for other factors, and we may be interested in new rules that have never yet been implemented. We can apply theory but it’s hard to trust theory when it can’t be verified. Experimental techniques let us test out new ideas in the lab, under precise, controlled, repeatable conditions.

Q: Tell us a little more about your experiments on campaign advertising and what you learned. A: In most of the political science literature on political advertising it’s almost always assumed that politicians are telling the truth. Yet we know that politicians sometimes lie! We set up a lab experiment in which candidates can send voters advertisements. In some of the experiments the advertisements must tell the truth while in others there is a small probability that the advertisement is deceptive. We found that the mere possibility of deceptive advertisement had big effects on how people voted. Even informed voters came to see advertising itself as a negative signal so they would sometimes vote for a candidate who did not advertise. Deceptive advertisement compromised the efficiency of much more than we had predicted. Q: You have also been working on personality types and their influence on economic outcomes with your student David Hedengren, who just graduated from GMU with his PhD. Why should economists be interested in personality? A: Nobel Laureate observed, “It is common knowledge outside of academic journals that motivation, tenacity, trustworthiness, and perseverance are important traits for success in life... [Yet] academic discussions of skill and skill formation almost exclusively focus on measure of cognitive ability.” By integrating these types of characteristics we will be able to better understand a wide variety of human behavior. For example, GED recipients and high school graduates have similar levels of cognitive ability but very different . After controlling for personality factors the mystery of the gap between GED recipients dissolves. Personality has also been shown to be an effective predictor of outcomes as diverse as longevity and earnings.

3 Spotlight on Thomas Stratmann

Q: You and Hedengren have discovered a hidden source of information buried in previous tests that no one previously suspected existed. Can you tell us more about what you have uncovered?

A: Taking surveys is a rather annoying task and those taking the survey always have the option to skip questions or stop answering altogether. We hypothesize that those with higher levels of conscientiousness and IQ tend not to skip as many questions. Thus, the fraction of questions a person chooses not to answer is a task-based measure of her personality and IQ. We’ve found that this measure is correlated with traditional measures of conscientiousness and IQ. It is also correlated with the kinds of outcomes other research has shown for IQ and conscientiousness. For example, it is good predictor of earnings and longevity.

An "laboratory" doesn't have many test tubes but understanding how people choose under different incentive structures can help us to improve and design new economic and political institutions.

4 Spotlight on Tyler Cowen

Q: Tyler, you have a world famous blog, Marginal , and now with co-blogger Alex Tabarrok you have created Marginal Revolution University (MRUniversity.com). What is MRUniversity?

A: Alex and I were inspired by Khan Academy and Sebastian Thrun’s Udacity project to create MRUniversity, as the world’s best source of online classes in economics.

Q: Why did you choose as your first course?

A: We think that economics is important—and in the case of development economics, the lessons may literally be of life and death importance for billions of people. Development economics also covers a wide range of approaches to economics—micro, macro, applied and theoretical—and a wide range of topics on health, education, and of course lots of public choice, so we think the course has something for everyone. We also wanted to reach out to people in the developing world not only to teach but also to learn. We are inviting people from all over the world to submit material to MRU. Q: I noticed you have a section on India. Will there be more country sections in the future? A: Definitely! We have a section on Mexico by Robin Grier, that will be up by the time you are reading this and we want more country sections—that’s one reason why we are encouraging more people to contribute. Q: What’s next for MRU? A: In addition to development we have courses on the Euro Crisis, the mortgage finance industry, the economics of media, and great thinkers in economics. Many more courses are on the way. Q: Is online education a counter-point to The Great Stagnation ? More generally, where do you see technology taking education in the next decade or so? A: Within five years, there will be an excellent, on-line and free or nearly free education in most major subjects. The question is how many people will care to take advantage of it. We are about to run a rather terrifying social experiment and the results may either thrill or dishearten us, we will see!

5 2012 Doctorates

Nakul Kumar defended his dissertation, “The Political Economy of Indian Disaster Relief” under Dr. John Nye.

Ronald Baty defended his dissertation, “Uncertainty and Bias in Global Warming” under Dr. Donald Boudreaux. Dr. David Levy served on his committee.

Alberto Batinti

Alberto Bantiti defended his dissertation, “The Political Economy of Health Care: Technology and Public R&D” under Dr. Thomas Stratmann. Dr. Alex Tabarrok served on his committee.

Jared Barton defended his dissertation, Shawn Miller “Lies, Damned Lies, and Elections: Shawn Miller defended his Three Essays in Experimental Public dissertation, “Are Software Patents Choice” Dr. Thomas Stratmann served Different? Evidence from the on his committee. Empirical Analysis of Litigation” under Dr. Alex Tabarrok. Dr. Robin Kenneth Conrad defended his Hanson served on his committee. dissertation, “Signals From the Equity and Options Markets for Stock Selection” under Dr. . Dr. Garett Jones served on his committee.

6 Eric Schmidt Visit

In late November the Center for Study of Public Choice was pleased to host Eric Schmidt, Chairman of Google, for an informal meeting. Eric’s father, Wilson Schmidt played a key role as an intellectual entrepreneur in the formation of the Center. Wilson Schmidt was chairman of the economics department at Virginia Tech University beginning in the mid-1960s and under his leadership Virginia Tech recruited Charles J. Goetz, and then Jim Buchanan. It was thus Schmidt’s leadership and vision which after the exodus and dispersion from University of Virginia created the public choice renaissance.

At our November meeting, Jim and Eric reminisced about department events that had been held at Eric’s family home in Blacksburg, VA. As a teenager, Eric thus grew up surrounded by economists! Moreover, Eric’s grandfather, Emerson Schmidt, was also an who for twenty years served as the Director of Economic Research of the Chamber of Commerce of the United States. Thus Eric’s background in economics is strong by both nature and nurture. In fact, one of the interesting things Eric mentioned in our discussion is that he credits his economic background as a key part of his success. Eric’s early access to computers made him a classic computer nerd and whiz-kid programmer and his background in economics gave him an appreciation for business and the economic way of From left, Eric Schmidt, Wilson Schmidt (in photo), thinking but it was the intersection of these two skills and James Buchanan. that made him uniquely valuable.

Jim’s visit to the Center to meet with Eric along with myself, Tyler Cowen, Robin Hanson and Dan Houser was his last visit to the center and I am pleased that it was a very memorable and enjoyable event.

Robin Hanson discusses the promise of prediction markets with Dan Houser, Tyler Cowen, Eric Schmidt, James Buchanan and Alex Tabarrok.

7 Wednesday Public Choice Seminar Series

The Seminar Series, now over 30 years old, invites scholars from around Spring the world to share their work in a formal lecture, followed by a rigorous question and answer session with students and faculty. We thank Drs. Nye 2012 and Johnson along with Jane Perry for coordinating the program, and the following scholars for presenting papers in 2012: Name Affiliation Paper Karl Smith University of North Carolina Austrian Business Cycles and the Great Timur Kuran Duke University Economic Modernization in Late British India: Hindu-Muslim Differences Agnieszka Anna Tymula New York University Tacit Quid Pro Quo Agreements: An Experimental Study Suresh Naidu Columbia University & Santa Fe Institute Coercive Contract Enforcement: Law and the Labor in 19th Century Industrial Britain Panu Poutvaara University of Munich & Ifo Institute The Right Look: Conservative Politicians Look Better and Voters Reward It Fabian Lange Yale University Duration Dependence and Labor Market Conditions: Theory and Evidence from a Field Experiment Jean-Paul Carvalho University of California - Irvine Faith-Based Organizations Eric Schliesser Ghent University Private Epistemic Virtue, Public Vices: Moral Responsibility in the Policy Sciences James Kung Hong Kong University & Harvard University Diffusing Knowledge While Spreading God's Message: Protestantism and Economic Prosperity in China 1840-1920 Alan Dye Barnard College Creative Destruction and Entrepreneurial Obstruction: Cuban Sugar, 1898-1939 Prachi Mishra International Monetary Fund Three's Company: Wall Street, Capitol Hill and K Street

Eric Hilt Wellesley College The Panic of 1907: JP Morgan, Trust Companies, and the Impact of the Financial Crisis Fall 2012

Name Affiliation Paper Stephen Quinn Texas Christian University Responding to a Shadow Banking Crisis: The Lessons of 1763 John Earle George Mason Complementarity and Custom in Wage Contract Violation Marian Moszoro IESE Business School, University of Navarra, Third-Party Opportunism and the (In) Efficiency of Public Contracts Spain John Van Reenen London School of Economics, Centre for The Impact of on Management Quality: Evidence from Economic Performance Public Hospitals Naomi Lamoreaux Yale University Patent Alchemy: The Market for Technology in U.S. History Peter Grajzl Washington & Lee University Jusrisdiction, Crime and Development: The Impact of Public Law 280 in Indian Country Zorina Khan Bowdoin College Related Investing: Corporate Ownership and the Dynamics of Capital Mobilization Eugene White Rutgers University Bagehot on the Continent? How the Banque de France Managed the Crisis of 1889 Carl Magnus Bjuggren University of Linkoping The Effect of Protection Rules on Firm - A Natural Experiment Daniel Chen ETH Zurich, Switzerland The Deterrent Effect of the Death Penalty? Evidence from British Communtations During World I Benito Arrunada Pompeu Fabra The Role of Verifiable Contract Publicity in Impersonal Trade

Melissa Dell Melissa Dell Trafficking Networks and the Mexican Drug War

8 The Public Choice Outreach Conference 2012

The annual Public Choice Outreach conference was an immense success. We brought in students from all over the United States and the world to learn the principles of public choice from a superb group of teachers including Jim Buchanan, Tyler Cowen, Todd Zywicki and many others. The students spanned the range from freshman, to graduate students nearing completion of their PhDs, to professional academics looking for new insights. Here are some of the responses from a few of our 2012 attendees:

Thanks again for inviting me to the Public I want to take this opportunity to express my deepest Choice Outreach weekend. I had a great gratitude for considering and inviting me to the Public time, and learned a lot. I came away from the Choice Outreach Conference, 2012. The experience weekend with about five research projects I'd was more than I could have expected and allowed me like to do. That, to me, is the sign of a good to understand the area very well. It was an conference. unforgettable memory to have a chance to meet with very eminent scholars and very successful friends. William Winecoff, PhD student Political Science, I was truly inspired by the energy and dedication to UNC Chapel Hill. the PCT that you brought to conference. I The conference was a great way for me to appreciated both the extensive presentation you review my 18 year career in the delivered about PCT, its history and innovative Massachusetts through the lens of researches about it. In particular, I want to thank you public choice theory. Now, as a college for the time you spent with us at lunch and dinner professor and Director of Graduate Public times discussing and replying to every question , I hope to share the theory of public without hesitation. After the conference, I feel I have choice with my students so that they have a a good understanding of the theory and I hope that I better understanding of how politics really can make a real contribution to the applications of the works or as Buchanan delightfully put it, theory. “politics without romance ” Please extend my thanks and appreciation to the Atty. John F. Quinn entire stuff and scholars of Center for Study of Public Director of Graduate Public Service Choice for such a substantive experience. University of Massachusetts-Dartmouth With my most sincere thanks,

Yurdagul ADANALI Middle East Technical University Ankara, Turkey

Alex Tabarrok (center) and some of the students at the 2012 Public Choice Outreach Conference.

9 Focus on Faculty

James Buchanan was a strong proponent of the work ethic, never more so than in regards to himself, and he continued developing his ideas into his last days. In 2012 Buchanan lectured on “Institutional Sources of America’s Fiscal Tragedy,” to the Summer Institute in Richmond, VA in June. The month of August brought Buchanan to Fairfax and the annual Outreach program with Buchanan presenting “Challenges to Public Choice.” “The of as a James Buchanan Constitutionalized Parameter,” was presented at a Liberty Fund Colloquium, In Search of A Monetary Revisited, organized by Viktor Vanberg and Larry White, in Freiburg, Germany, in April. The fiftieth anniversary since the publication of The Calculus of Consent was marked by several programs organized to honor Buchanan and Tullock, including sessions at the Public Choice Society meetings in Miami, FL, in March, and a Liberty Fund conference organized by Hartmut Kliemt in Charlottesville, VA, in September.

Buchanan’s latest article was a coauthored piece with Yong J. Yoon entitled “Choosing for Others: A Neglected Element in the Theory of .” An interview by John Long, newspaper correspondent and director of the Salem Museum, focused on Buchanan’s wartime experiences and resulted in two pieces published in the Roanoke Times , “An Encounter to Savor” and “A Wise Man’s Philosophy.” William Niskanen was honored in a memorial note for the , “Niskanen and Discriminatory Democracy.”

In September, Buchanan and long-time coauthor Yong Yoon outlined a book project for 2013 entitled and Political Disorder . Primarily comprised of papers published since the Collected Works series, this book will be in comparison and contrast to Hayek’s Individualism and Economic Order . Additional, unpublished chapters will include an introduction and two others tentatively titled “Institutional Sources of American Fiscal Tragedy” and “The Tea Party Logic or Lunch-Club Dilemma.”

Don Boudreaux completed and published his book Hypocrites & Half-Wits: A Daily Dose of Sanity from Café Hayek (Free to Choose Press, 2012). The book features a collection of his one hundred best letters written to editors of major American publications, generally in response to an absurdity offered by a columnist or politician, or an eye- catching fact misleadingly taken out of context. The letters aimed to explain either basic principles of economics or a Don Boudreaux relevant fact of . Café Hayek, the blog he continues to write with Dr. Russell Roberts, can be found at www.cafehayek.com.

10 Bryan Caplan had another very productive year. After global media attention for his book Selfish Reasons to Have More Kids (Basic Books, 2011) slowly diminished, he began working full-time on his third book, The Case Against Education . This multi-year project argues that the neglected signaling model of education explains most of what goes on in classrooms around the world – and that, contrary to popular and academic belief, the of education are therefore Bryan Caplan largely negative. To a large extent, the “return to education” reflects rent-seeking rather than genuine creation of . Dr. Caplan’s book argues that support for education primarily rests not on -group politics, but on popular neglect of the negative externalities of education.

Dr. Caplan also published the lead article in the Cato Journal ’s special issue on immigration, and co-authored “A Search-Theoretic Critique of ” with Ph.D. student Zachary Gochenour. He also continues to blog for EconLog at econlog.econlib.org.

Tyler Cowen published his book An Economist Gets Lunch: New Rules for Everyday Foodies with Penguin/Dutton in April 2012. This book is Dr. Cowen’s response to current fashionable thinking about food, and argues that “food snobbery” is hurting entrepreneurship and innovation.

His new on-line education project, focusing on economics, co- created with CSPC colleague Dr. Alex Tabarrok, can be found Tyler Cowen at MRUniversity.com.

Dr. Cowen and his co-author, Alex Tabarrok, also continued to work on revised editions of their and textbooks Modern Principles: Macroeconomics and Modern Principles: Microeconomics.

In 2013 Dr. Cowen will be publishing Average is Over: Powering America Out of the Great Stagnation . This book will focus on how and technological progress will resume in America, the importance of artificial intelligence for our future, and the forthcoming evolution of labor markets.

He also continues to work on his manuscript on the case for a free society.

Dr. Cowen also wrote for numerous media outlets. He continued his monthly columns for The New York Times on , wrote for the Times on-line, and his weekly book review column for The New York Times Sunday Magazine . He also continued to write an economics of sports column at Grantland.com with Kevin Grier. He and Alex Tabarrok continued their daily weblog Marginal Revolution, which now has over fifty-three million unique visits and was named the top economics blog by the Wall Street Journal .

11 Robin Hanson completed a year and a half of a four year IARPA (Intelligence Advanced Research Projects Activity) ACE (Aggregative Contingent Estimation) grant for the project DAGGRE (Decomposition-Based Elicitation & Aggregation). This year DAGGRE developed and fielded a new combinatorial market technology, allowing one to exactly calculate new and user assets when thousands of related variables are tied together. Previous systems have been limited to roughly fifteen tied variables. This new tech was published at the Uncertainty in AI conference this summer, one of the main computer science Robin Hanson venues for presenting probability technology.

Robin also finally published his article proposing a new betting-market-based form of government in the Journal of Political Philosophy, the main journal in that field. In addition, he began in earnest to write a book on the social implications of mass adoption of the technology of whole brain emulation. He is now circulating a thirty thousand word draft among diverse kinds of experts for criticism. He expects to greatly revise the book in response to this criticism, and in order to make the book accessible and engaging to a wider audience.

Robin gave fourteen academic presentations, had nine media mentions, and wrote many dozens of posts at his blog Overcoming Bias, found at http://www.overcomingbias.com/.

Ron Heiner continued his work on the evolution of cooperation in one-shot prisoners’ dilemmas. His analysis incorporates communication and signaling costs, and demonstrates how contingent cooperators can maintain their against always defecting players; even at the limit where their forecasting ability is no better than pure chance.

He is currently writing a book titled Cooperation in Prisoners’ Dilemmas: the Ron Heiner Critical Case of One-Shot Interactions (World Scientific Press, 2014). The book investigates the causal basis for analyzing behavior in strategic settings. This includes using signals to forecast a partner’s future decisions, showing that it rests on the same causal basis used to forecast events in the natural sciences — analogous to forecasting future weather conditions with barometer signals caused by current changes in atmospheric pressure that also causally influence tomorrow’s weather.

Noel Johnson wrote three papers this year with his colleague at CSPC, Mark Koyama. “Standardizing the Fiscal State: Tax Farming as an Intermediate in Early-Modern England and France” is on a first-round revise and resubmit at the Journal of Law, Economics, and Organization . They also wrote “Legal Centralization and the Birth of the Secular State,” which will be presented at the Association of Religion, Economics and Culture conference in Spring 2013. Finally, they just completed “From the Persecuting to the Protective State? Jewish Expulsions and Weather Shocks from 1100 to 1800.” This last paper was Noel Johnson presented at King’s College London, and in the Seminar in Philosophy, Politics, and Economics at Mason in early Spring 2013. Professor Johnson also wrote “Corruption as a Response to ” with Jason Sorens, Steven Yamarik, and William Ruger.

12 In addition to journal articles, Dr. Johnson also published three book reviews. Two were in the Journal of Economic History. The first was a review of Jan Luiten van Zanden’s The Long Road to the Industrial Revolution: The European Economy in a Global Perspective, 1000-1800 . The second was a review of Mark Dincecco’s Political Transformations and Public Finances: Europe, 1650 – 1913 . Dr. Johnson also reviewed James Simpson’s Creating Wine: The Emergence of a World Industry, 1840-1914 for EH. Economic History Services.

During the year, Dr. Johnson also gave talks at Harvard University, the Southern Economics Association, and the OSHER Lifelong Learning Center.

In addition to his research, he enjoyed organizing the weekly Public Choice Seminar with his colleagues Drs. Mark Koyama and John Nye. Dr. Johnson also organizes and runs a bi-weekly Economic History Workshop that brings in scholars from around the greater Washington area to discuss their research. He is also an organizer of the Washington Area Economic History Seminar, which meets once a month and brings in prominent economic historians from around the world.

Garett Jones continued his research into the causes of economic growth. His paper with Hudson Institute economist Tim Kane demonstrating that nations with more U.S. troops have faster economic growth was published in Defence and Peace Economics, and his work on the strong relationship between national worker skill levels and productivity growth was published in Economic Systems .

Further, Dr. Jones’ first general equilibrium – showing how human capital might have a strikingly large effect on national productivity while Garett Jones having only a small effect on individual wages – was accepted for publication in the Journal of Economic Behavior and Organization . In addition, a team research project with his Public Choice Center colleague Dr. John Nye into the links between prenatal testosterone and academic performance was published in Public Library of Science (PLoS) ONE . And finally, Dr. Jones published an essay in Econ Journal Watch on public choice-driven reasons for believing that the U.S. government is unlikely to default on its debt.

In 2012 Dr. Jones also published three book reviews for Barron’s , spoke at a Chicago Ideas Week session along with former chair of the Council of Economic Advisers Austan Goolsbee and former White House Chief of Staff William Daley, and appeared in a variety of print, radio, and television media. Finally, in 2012 he was a guest blogger at The Atlantic and at EconLog.

Dr. Jones is currently at work on a book under contract with Stanford University Press entitled Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own.

13 Mark Koyama published several papers during the year. In addition to papers written with CSPC colleague Dr. Noel Johnson, Dr. Koyama’s “Prosecution Associations in Industrial Revolution England” appeared in volume 41 of the Journal of Legal Studies . His paper “The Transformation of Labor Supply in the Pre-Industrial World” appeared in the Journal of Economic Behavior and Organization . Another paper, “The of Private Prosecutions in Industrial Revolution England,” is forthcoming in Public Choice . In addition to this, he wrote book reviews of Douglas Allen’s The Institutional Revolution and Timur Mark Koyama Kuran’s The Long Divergence – the latter review is forthcoming in Public Choice while the former appeared in EH.Net.

In March Dr. Koyama spent a week at the University of California, Irvine where he presented his work. On the same trip, he gave a paper at ASREC, which was held at Chapman University. He attended the Conference in Tucson Arizona as a discussant in May. In June he presented his paper “Taxes, Lawyers, and the Decline of Witch Trials in France” at the ICMA Centre at the University of Reading’s Henley Business School in the UK.

In the Fall of 2012 Dr. Koyama was invited to join the Editor Board for the journal Economic Affairs published by the IEA in London. In the Fall of 2012 he became Job Market Placement Officer for the PhD program in Economics. In addition to this, Dr. Koyama has taken on responsibility for organizing the weekly Public Choice Seminar (Spring 2013 onwards).

Peter Leeson is Professor of Economics and BB&T Professor for the Study of Capitalism at George Mason University. He is also the North American Editor of Public Choice and a Senior Scholar of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics.

Dr. Leeson’s work studies the economics of non-market decision making, in particular law and legal systems. His most recent research uses to understand the role that superstition plays in promoting social Peter Leeson cooperation.

To follow his current work or find his published papers, visit his personal website: www.PeterLeeson.com.

14 David Levy was named a Distinguished Fellow of the History of Economics Society at the 2012 Annual Meeting. This is the award the Society gives for a lifetime of work in history of economics. The book Levy and his long-time co-author Sandra Peart have been working on since their award-winning Vanity of the Philosopher now exists in draft form. One of the central chapters “The Ethics Problem: Solving the Collective Action Problem of Economic Expertise” was presented at the 2013 Allied Social Sciences Association meetings in San Diego. We offer a revival of the view of developed by and presupposed by John Rawls. David Levy Dr. Levy also published 2 papers with co-author Sandra Peart: “If Germs Could Sponsor Research” in Advances in Austrian Economics and “Tullock on Motivated Inquiry: Expert-Induced Uncertainty Disguised as Risk” in Public Choice . He also published “Economic Liberals as Quasi-Public Intellectuals: The Democratic Dimension” with Margaret Albert and Sandra J. Peart in Research in the History of Economic Thought and Methodology .

January 2013 was marked with great sadness with the passing of James Buchanan. Jim – as he insisted – traditionally opened every meeting of the Summer Institute for the Preservation of the History of Economics, co-directed by Dr. Levy and Dr. Sandra Peart. The session in the 2013 meeting on the 50th anniversary of the controversy over the Thomas Jefferson Center will take on a special meaning in his absence. All of us have lost the last link in memory to the teachings of Frank Knight.

John Nye continued his joint work with scholars at GMU, HSE-Moscow, and the University of the Philippines on the biological correlates of student performance. One paper from this project – “2D:4D Asymmetry and Academic Performance: Evidence from Moscow and Manila” with Grigory Androuschak, Desirée Desierto, Garett Jones, and Maria Yudkevich – was accepted and published in PLoS ONE . Several related papers based on multiple surveys of students in Moscow and Manila are in draft form or are under review. Dr. Nye also continued to serve over the summer as a Research Director at the Higher School of Economics in Moscow. John Nye Another paper on the role of market primes in promoting trust – “The causal effect of market participation on trust: An experimental investigation using randomized control” with Omar Al-Ubaydli, Dan Houser, Maria Pia Paganelli, and Sophie Pan – was also accepted by PLoS ONE and will appear in 2013.

In April of 2012, Dr. Nye spoke at a roundtable on the Philippine economy organized by the Carnegie Endowment in Washington, DC. In the summer of 2012, Dr. Nye went to Manila where he worked with the and the Department of Agrarian Reform on issues concerning Philippine development. He helped launch the Angara Centre for Law and Economics in Manila, and organized an inaugural conference in August which brought Nye and Dr. Tyler Cowen to Manila as featured speakers on growth and development. Drs. Nye and Cowen were prominently featured in the Philippine press and both gave an interview on national television. In December of 2012, Dr. Nye also worked with the Angara Centre and the World Bank to organize a round table in Manila featuring James Robinson of Harvard discussing his book with Daron Acemoglu, Why Nations Fail . That same month, Dr. Nye also lectured at the Workshop on of the Institute in Santiago, Chile.

Dr. Nye has received a contract for a volume – Innovation, Industrialization, and Institutions – to be edited jointly with Lynne Kiesling and Avner Greif for Princeton University Press; the book is scheduled for publication in 2013. 15 Thomas Stratmann worked on several projects in the field of experimental public choice. In one of his experimental public choice projects, he is developing an answer to the long-standing puzzle in economics and political science of why people vote, given that voting is costly and the likelihood of affecting the outcome of the is small. Drs. Stratmann and Houser have written a forthcoming paper in Public Choice , which shows how Gordon Tullock influenced the current thinking in experimental economics. Thomas Stratmann Further, Dr. Stratmann published an article in the Journal of Law and Economics which shows the effectiveness of traffic law enforcement on the reduction in car accidents. He continues his work in other areas of applied microeconomics. One recent example of his successful work with GMU graduate students is an article published in the highly ranked Journal of Financial Markets .

Alex Tabarrok is working hard as the director of the Center for Study of Public Choice, the Bartley J. Madden Chair in Economics at the Mercatus Center, and the director of research for The Independent Institute.

Dr. Tabarrok’s major project this year was the launch of Marginal Revolution University (with Tyler Cowen). MRU opened for business in October 2012 with an online course in development Alex Tabarrok economics. Lectures from that course have now been accessed by students all over the world. New courses on the Euro Crisis, Great Economists and Media Economics debuted in February of 2013, and more are on the way.

Dr. Tabarrok sees online education as a revolutionary force in education not just in the United States but all over the world. His article “Why Online Education Works” at CATO Unbound explains some of the advantages of online education.

Dr. Tabarrok’s e-book Launching the Innovation Renaissance (TED books) received media attention from The Wall Street Journal, The New York Times, The Economist, The Irish Times and many others. Op-eds based on the book by Dr. Tabarrok included “The No-Brainer Issue of the Year: Let High-Skill Immigrants Stay” (The Atlantic , Dec. 2011) and “The Innovation Nation vs. the Warfare- State” ( The Atlantic , Jan. 2012). The Chronicle of Higher Education published “Tuning in to the Dropping Out” (March 2012), which generated a great deal of attention.

Dr. Tabarrok continued to travel widely – this year he was invited by Google to speak in Korea about innovation and while in Korea he also spoke at the World Knowledge Forum. He also spoke on patents and innovation at the Kauffman Foundation and on patents at the American Enterprise Institute in Washington, D.C. among many other talks. His short animated video, End Software Patents, was widely viewed.

Dr. Tabarrok published two academic papers: “Product Liability and Moral Hazard: Evidence from General Aviation” appeared in the Journal of Law and Economics and “Fugitives, Outlaws, and the Lessons of Safe Surrender” was published in Criminology and Public Policy . He also continued to write regularly at Marginal Revolution, which Columbia Journalism Review recently said was “A showcase of the wide-ranging, urbane tastes of economists Tyler Cowen and Alex Tabarrok, it’s the go-to blog for polymaths and aspiring James Bond villains.”!

16 Yong Yoon continued to work on his two major research projects in 2012. One was on the Extent of Markets, a joint project with James M. Buchanan, and the other was on Collective Action, also a joint project with Dr. Buchanan. The second project includes a book project. Drs. Buchanan and Yoon proposed to publish a book with the title Individualism and Political Disorder . The title suggests the book’s theme that is in contrast and comparison to Hayek’s theme and title of his book, Individualism and Economic Order . The eleven papers to appear as chapters were written by Dr. Buchanan after the publication of his Collected Works Yong Yoon volumes, with and without co-authorship with Dr. Yoon. In addition to the listed published papers, they planned to add three unpublished papers. One is the introductory chapter. The others are “Institutional Sources of American Fiscal Tragedy” and “The Cost of Collectivization, Per Se.” Dr. Yoon had several activities related to the second project on Collective Action. He and Dr. Buchanan published a paper entitled “Choosing for Others: A Neglected Element in the Theory of Collective Action” in Public Choice .

Dr. Yoon presented a related paper, “How to Choose for Others” at the Korean Economic Association meetings in Seoul in June, 2012. In this paper, he developed mathematical models in which alternatives voters choose are vectors. The paper discusses results that are not discussed in standard voting models.

He also published “An Analogy: Symmetric Tragedies and The Calculus of Consent” in Journal of and Public Choice , forthcoming 2013. In this paper, he analyzes the logical elements for collective decision making in The Calculus of Consent and “Symmetric Tragedies: Commons and Anti-commons” (Buchanan and Yoon), Journal of Law and Economics , April 2000 XLIII (1) pp. 1-13.

Drs. Buchanan and Yoon also worked on the draft paper, “The Cost of Collectivization, Per Se,” which Yoon plans to present at the 2013 Public Choice meetings in New Orleans.

Tyler Cowen talks to students at the 2012 Public Choice Outreach Conference.

17 Center Staff

Jo Ann Burgess Lisa Hill-Corley Jane Perry

Jo Ann Burgess began work for a major book project for Professors Buchanan and Yoon titled Individualism and Political Disorder , thematically related and contrasted to Hayek’s Individualism and Economic Order . Three major projects were concluded in 2012: celebration of the fiftieth anniversary of The Calculus of Consent: Logical Foundations of Constitutional Democracy by James M. Buchanan and Gordon Tullock; the Public Choice Society’s second world congress; and the Otto A. “Toby” Davis Memorial Lecture, “An Analytical Theory of Just Market Exchange,” coauthored by Michael C. Munger and Ricardo Andrés Guzmán.

In her daily duties, Jo Ann is the Archivist/Librarian of the Buchanan House collection of Buchanan’s papers, books and memorabilia. In addition, she plays an important role as the Center’s Visiting Scholar Facilitator in administering and coordinating with the Office of International Programs and Services. When the occasion warrants, she is also the center’s videographer.

She would also like to take this time to thank Cambridge, Liberty Fund, and Springer for their generous contributions at the conclusion of the public choice society meetings to our small, but select, center library.

Lisa Hill-Corley assists with the support of the main resident faculty at Carow Hall with administrative, visitor and office manager tasks. She also coordinates the main budget and grants for Center, and maintains the Center website. In addition, Lisa took on the new job of coordinating graduate funding for all of the Economics Department.

Lisa also coordinated another successful Outreach Conference at Mason Inn, which welcomed thirty-five participants from all over the country and overseas. Lisa is now a Mason alumni—she completed her work for a Masters in Fine Arts in Creative Writing and graduated in December.

She is grateful for the support of the valuable Admin team: Jane Perry, Jo-Ann Burgess, Mary Jackson and Dana Vogel. Here’s to another successful year in 2013!

Jane Perry shares duties of providing daily administrative support to resident Carow Hall faculty, as well as for the daily admin operations and coordination of Carow Hall. She enjoys welcoming and assisting faculty, students, visiting scholars, and other visitors at the Center for Study of Public Choice.

Jane serves as the staff administrative and logistical coordinator for each of the weekly Public Choice Seminar presentations. Additionally, Jane’s proofreading skills are increasingly in demand for numerous projects, including a number of professional journal articles authored by Center faculty.

As always, she enjoys and appreciates working with talented admin team colleagues Lisa Hill-Corley, Jo Ann Burgess, Dana Vogel, and Mary Jackson on various projects and events throughout the year.

18 Selected Faculty Publications

James M. Buchanan Conference Presentations: “Institutional Sources of America's Fiscal Tragedy,” at Summer Institute for the History of Economic Thought, University of Richmond, June 2012. “Challenges to Public Choice,” at Public Choice Outreach Conference, George Mason University, August 2012. Articles: “Choosing for Others: A Neglected Element in the Theory of Collective Action,” (with Yong Yoon). Public Choice 153(1) (2012): 9-16.

Don Boudreaux Book: Hypocrites & Half-Wits: A Daily Dose of Sanity from Café Hayek. Erie, PA: Free to Choose Press, 2012. WebBlog: Café Hayek, with Russ Roberts. http://www.cafehayek.com

Bryan Caplan Articles: “Positive vs. : What's the Connection?” (with S. Miller). Public Choice 150(1-2) (January 2012): 241-261. “A Search-Theoretic Critique of Georgism,” (with Zachary Gochenour). Working paper. Available at SSRN: http://ssrn.com/abstract=1999105 or http://dx.doi.org/10.2139/ssrn.1999105 “Why Should We Restrict Immigration?” Cato Journal 32(1) (Winter 2012): 5-22. Media: The Atlantic; The Economist; The Wall Street Journal; and many others. WebBlog: EconLog, with Arnold Kling and David Henderson. http://econlog.econlib.org/

Tyler Cowen Books: An Economist Gets Lunch: New Rules For Everyday Foodies. New York: Dutton, 2012. Modern Principles: Macroeconomics and Microeconomics (with Alex Tabarrok). 2 nd edition. New York: Worth, 2012. Media: The New York Times; The Economist; The Wall Street Journal; The Washington Post; Foreign Policy magazine ; Forbes; Market Watch; and many others. WebBlog: Marginal Revolution, with Alex Tabarrok. http://www.marginalrevolution.com Online education website: MRUniversity, with Alex Tabarrok. http://mruniversity.com/ 19 Robin Hanson WebBlog: Overcoming Bias. http://www.overcomingbias.com/ Ron Heiner Book: The Evolution and Rationality of One-Shot Cooperation. Hackensack, NJ: World Scientific (forthcoming).

Noel Johnson Articles: “How Much Should We Trust the World Values Survey Trust Question?” (with A. Mislin). Economic Letters 116(2) (2012): 210-212. “Legal Centralization and the Birth of the Secular State,” (with Mark Koyama). GMU Working Paper in Economics no. 12- 48 92012). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2134455 “Standardizing the Fiscal State: Tax Farming as an Intermediate Institution in Early-Modern England and France,” (with Mark Koyama). Journal of Law, Economics, and Organization (forthcoming)

Garett Jones Articles: “The Bond Market Wins.” Econ Journal Watch 9(1) (2012): 41-50. “Cognitive Skill and Technology Diffusion: An Empirical Test,” Economic Systems 36(3) ( 2012). “The O-Ring Sector and the Foolproof Sector: An Explanation for Skill Externalities,” Journal of Economic Behavior and Organization (forthcoming). “U.S. Troops and Economic Growth: Regression Analysis with Robustness Tests,” Defence and Peace Economics (2012).

Media: Barron’s, The Atlantic, U.S. News and World Report , EconLog ; and many others.

Mark Koyama Articles: “The Law of Economics of Private Prosecutions in Industrial Revolution England,” Public Choice (forthcoming). “Legal Centralization and the Birth of the Secular State,” Journal of Legal Studies 41(1) (2012): 95-130. “The Transformation of Labor Supply in the Pre-Industrial World,” Journal of Economic Behavior and Organization 81(2) (2012): 505-523.

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Peter Leeson Articles: “An Austrian Approach to Law and Economics, with Special Reference to Superstition,” Review of Austrian Economics 25(3) (2012): 185-198 . “The Brewer, the Baker, and the Monopoly Maker ,” (with D. Thomas). Journal of Entrepreneurship and Public Policy 1(1) (2012): 84-95. “Chicken Soup for the Out-of-Step Scholar’s Soul,” (with G. Callahan). American Journal of Economics and Sociology 71(5) (2012): 1157-1169. “Cultural Codes: An Economic Analysis,” Journal of Multicultural Discourses 7(3) (2012): 227-233. “Hooligans ,” (with D. Smith and N. Snow). Revue d'Économie Politique 122(2) (2012): 213-231. “The Irrelevance of Normative Considerations for Founding an Austrian Law and Economics: Reply to Marciano,” Review of Austrian Economics 25(4) (2012): 355-357.

20 “Ordeals ,” Journal of Law and Economics 55(3) (2012): 691-714. “Organizing Crime ,” (with D. Rogers). Supreme Court Economic Review 20(1) (2012): 89-123. “Poking Hobbes in the Eye: A Plea for Mechanism in Anarchist History,” Common Knowledge 8(3) (2012): 541- 546. “Sassywood,” (with C. Coyne). Journal of Comparative Economics 40(4) (2012): 608-620. “Think Tanks,” (with M. Ryan and C. Williamson). Journal of Comparative Economics 40(1) (2012): 62-77. “Wisdom, Alterability, and Social Rules,” (with C. Coyne). Managerial and Decision Economics 33(5-6) (2012): 441-451.

David Levy Articles: “If Germs Could Sponsor Research,” (with S. Peart). Advances in Austrian Economics 17 (2012): 19-35. “Economic Liberals as Quasi-Public Intellectuals: The Democratic Dimension,” (with M. Albert and S. Peart). Research in the History of Economic Thought and Methodology 30 (2012): 1-116. “Tullock on Motivated Inquiry: Expert-Induced Uncertainty Disguised as Risk,” (with S. Peart). Public Choice 152 (2012): 163-180.

John Nye Book: Innovation, Industrialization, and Institution. Edited by John Nye, Lynne Kiesling, and Avner Greif . Princeton: Princeton University Press, forthcoming.

Articles: “2D:4D Asymmetry and Academic Performance: Evidence from Moscow and Manila,” (with Grigory Androuschak, Desirée Desierto, Garett Jones, and Maria Yudkevich). PLoS ONE 7(10) (2012) “The Causal Effect of Market Participation on Trust: An Experimental Investigation Using Randomized Control,” (with Omar Al-Ubaydli, Dan Houser, Maria Pia Paganelli, and Sophie Pan). PLoS ONE (forthcoming).

Thomas Stratmann Articles: “Does Shareholder Proxy Access Damage Share Value in Small Publicly Traded Companies? ” (with J. W. Verret). Stanford Law Review 64(6) (June 2012): 1431-1468. “The Relationship Between Abortion Liberalization and Sexual Behavior: International Evidence,” (with J. Klick and S. Neelsen). American Law and Economics Review 14(2) (Fall 2012): 457-487. “The Options Market Maker Exception to SEC Regulation SHO,” (with John W. Welborn). Journal of Financial Markets (forthcoming). “Gordon Tullock and Experimental Economics,” (with D. Houser). Public Choice 152 (2012): 211-222. “Long-Run Effects of Prental Influenza-Exposure: Evidence from Switzerland, ” (with S. Neelsen). and Medicine 74(1) (January 2012): 58-66.

21 Alex Tabarrok Books: Modern Principles: Macroeconomics and Microeconomics (with Tyler Cowen). 2 nd edition. New York: Worth, 2012.

Articles: “Fugitives, Outlaws, and the Lessons of Safe Surrender,” Criminology and Public Policy 11(3) (2012): 461-471. “Product Liability and Moral Hazard: Evidence from General Aviation,” (with E. Helland). Journal of Law and Economics 55(3) (August 2012): 593-630. “Why Online Education Works,” Cato Unbound (November 2012) http://www.cato-unbound.org/archives/november- 2012-the-online-education-revolution. Last accessed 2/14/13 .

Op-Eds : “The No-Brainer Issue of the Year: Let High-Skill Immigrants Stay .” The Atlantic . Dec 2011. “The Innovation Nation vs. the Warfare-Welfare State.” The Atlantic . Jan 26 2012. “Tuning in to the Dropping Out.” The Chronicle of Higher Education . March 4, 2012. Reprinted in: America Now: Short Readings from Recent Periodicals, 10/e by Robert Atwan, scheduled 2013.

Yong Yoon Articles: “Choosing for Others: A Neglected Element in the Theory of Collective Action,” (with James M. Buchanan). Public Choice 153(1) (2012): 9-16.

The Center for Study of Public Choice would like to thank the following contributors:

Earhart Foundation

Goodrich Foundation

Koch Foundation

James C. Miller III

Sarah Scaife Foundation

Thank You for your support of the Center!

22 Adjunct Scholars

Peter Bernholz Geoffrey Brennan Roger Congleton

Peter Bernholz Emeritus Professor of Economics, University of Basel Switzerland; Center for Study of Public Choice research fellow. He visited the Center in September.

Geoffrey Brennan Professor of Philosophy, University of North Carolina and on the staff at the Social and Political Theory Program of the Research School of Social Sciences at Australian National University. An economist, Brennan works actively on issues at the intersection of economics, rationality, and political philosophy.

Roger Congleton BB&T Professor of Economics, West Virginia University. Dr. Congleton was a Center faculty member from 1995 to 2011. During this time he served as general director from 1999-2002 and was active in the visitors program, bringing scholars from around the world to George Mason.

Hartmut Kliemt Professor for Practical Philosophy, University of Duisburg-Essen. Main areas of interest: political philosophy, health ethics and economics, philosophy of economics, foundations of game theory and game theoretic modeling.

Dwight Lee Ramsey Professor of Private Enterprise and Economics, Terry College of Business, University of Georgia. Areas of expertise: public choice, public finance, natural resource and environment economics.

James C. Miller III is a Senior Advisor to Husch Blackwell Sanders, LLP, an international commercial law firm; he has been a distinguished fellow since 1988.

Sandra Peart University of Richmond. She and co-author David Levy direct the Summer Institute for the Preservation of the History of Economic Thought. She serves on the Editorial Board of JHET.

Robert Tollison Professor of Economics, Clemson University and BB&T Senior Fellow, is one of the world’s foremost scholars in the field of public choice.

Harmut Kliemt Dwight Lee James C. Miller III Sandra Peart

23 About the Center

The Center for Study of Public Choice is a unique research institution at George Mason University. It provides a single location where eminent scholars conduct innovative research, publish their findings and conclusions in a variety of print and electronic media, and teach the science of public choice. The Center builds on the groundbreaking economic and political science theories for which James Buchanan was awarded the Nobel Prize in economics. The Center draws both visiting and resident scholars and students from all over the world. Its faculty and researchers lecture and conduct seminars locally, across the United States, and abroad.

The Center serves as the institutional home for the Public Choice Research Program, which has developed and matured over the past half-century. Created in 1957 at the University of Virginia, the Center was initially called the Thomas Jefferson Center for Studies in Political Economy. In 1969, the Center was reconstituted at Virginia Tech under its present name. In 1983, the Center shifted its operations to George Mason University. The Center's alumni includes doctoral students from George Mason, Virginia Tech, and the University of Virginia. From its historical association with three of Virginia's major universities, the Center's academic footprint is often dubbed the "Virginia School of Political Economy.“

Public Choice scholarship has profoundly influenced thinking in the scientific community and the formation of public attitudes. Economics traditionally focuses on the behavior of firms and consumers and how individuals interact in market settings. As a research program, public choice extends the tools of economics to analyze the behavior of voters, candidates, legislators, , judges, and expert economists themselves. Research by scholars at the Center also focuses on other non-market institutions such as religion, the family, clubs, and culture.

Center for Study of Public Choice George Mason University 4400 University Drive, MS 1D3 Fairfax, VA 22030 Information: (703) 993-2330 Fax: (703) 993-2323 http://www2.gmu.edu/centers/publicchoice

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