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Center for Study of Public Choice James M. Buchanan 1919-2013 Center For Study of Public Choice Annual Report 2012 From the Director James Buchanan (1919-2013) founded The Center for Study of Public Choice 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 Economy, 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 economists 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 revolutions in human history. Jim was concerned, however, that in the twentieth century “political economy and political economists seem to have been increasingly less influential.” Economics had become separated from political philosophy and political science. 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 institutions, 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 democracy 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 policy 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 new political economy, to expand and extend these ideas in new directions and to continue to build on the foundations which were built by people such as Adam Smith, 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 George Mason University’s two Nobel Laureates, James Buchanan and Vernon Smith. Many questions in political science are difficult to study. How would changes in campaign finance laws influence politics? How would different voting 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 elections 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 James Heckman 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 wages. After controlling for personality factors the mystery of the wage 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 experimental economics "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 Revolution, 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 development economics 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.
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