Class Information

Economics 224: Economics and Current Policy Issues

2006 Edition (second semester)

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Times and places

Class meets Mondays. 9h00-11h00, C3

Crampton's office hours: Wednesdays, 10h00-12h00

Tutorial Sessions. Please sign up for a tutorial via the online tutorial system

Update 7 December 2006

CDF of econ 224 scores

This will be the last update of this page. Over time, link rot will set in, so don't expect that all the links will continue working forever. I'm not going to be going back and fixing things as this happens. The url for this page will eventually be migrated to 224-2006.html in order to make room for next year's version of the site. The cumulative frequency distribution of grades for the course should appear at left if everything's working correctly. The bottom axis traces the percentage of people in the class earning the score listed on the y-axis or lower. So if you trace upwards from 50 on the x-axis, you'll find the median grade for the class (a 63).

Update 29 November 2006

In the first term, I talked about ways folks produce misleading cost-benefit analyses, with dodgy discounting rates being right up at the top. More folks are cottoning on to that the Stern report relies on this kind of practice. Moreover, Stern relies on a combo of dodgy discounting and a log utility function that has the implication that, if his analysis were applied consistently across other areas of the economy, we should be saving about 97% of our income so that future generations are made better off. Commentary from some of the better blogs: Mankiw, Kling, Cato, and Cowen.

Update 21 November 2006

Russ Roberts reports on an interesting matching donors case in the US.

I've submitted my proposed grades for the course; of course, only registry can assign grades and the Calendar forbids me from telling you your grade (so please do not email me asking). I don't think anything stops me from letting folks know the averages though. The median final grade for the course, not including students who did not drop the class but did not write the final, was 65. The average was 64, with a standard deviation of 18. Most people (83%) did better on the final than they did on the midterm, most much better. On average, folks showed an improvement of 12 percentage points on the final; including only those who did better on the final, the improvement was 16 percentage points.

What has always confused me is the number of students who de facto drop the course but fail to put through the paperwork to do so. Seven students were awarded a grade of zero for the course, which you only get if you've not completed any items of assessment. Two additional students seem to have dropped after the midterm (given that they didn't attend the final) but their names still appear on my rolls as they haven't officially dropped the course. Under what conditions is it preferable to stay on the books and get an E rather than officially drop out of the class? I don't know. One of these students seems to have dropped as of the first day -- she never enrolled in a tutorial section and never replied to emails exhorting her to tell us whether she intended to sign up to a tutorial or whether she would be dropping the course. If anybody can explain this sort of thing to me, I'd be much obliged.

Update 9 November 2006

John Ogier of the Survey and Testing Unit requests that the student who included the following comment in the course survey drop him a note: part of your survey response wasn't coded correctly, preventing him from matching the evaluations to the student ID. I never get to see the matching, but Survey and Testing will eventually release to me results that are sorted by students' final grades. This is moderately important because how I adapt the course depends at least a bit on which sorts of suggestions come from folks who wound up doing well, doing ok, or doing poorly. The bit of the comment that the author should recognise reads:

We are left thinking that he could curse our grandmothers and rationalise doing so as an economic rationality. I initially raised an eyebrow but once we understood where he's coming from it just seemed completely inoffensive and indeed logical.

John can be emailed at . For the record, I do not support the cursing of grandmothers. Especially my own. They're very nice people. And might read this website. At least Grandma Crampton might as she's fairly web-savvy. My maternal grandmother, on the other hand, refers to her computer as the monster in the basement and won't go near it.

Update 24 October 2006

Anna points me to a new Freakonomics Blog posting on Organ markets in the US. Thanks for the tip!

I'll be holding normal office hours during the break: Wednesday mornings. If we start hitting too much congestion, I may either ration current supply, increase supply, or increase price to equilibrate the market. I've not encountered any congestion problems to date, but if you're particularly worried about it, you can always book in a time by email. If you want to come and see me, I'm a lot more helpful when folks have specific questions about particular things in readings or lectures that they found confusing or in need of clarification (i.e. questions like "If demand increases in the economic model of rational addiction, do we shift the A curve up or down?"); I'm a lot less helpful for vague and open ended questions (like "I wasn't at lecture in week 10; what do I need to know?").

Update 11 October 2006

Marginal Revolution today has a nice write up on the effect of prohibitions on organ sales on the number of transplant centres in the US. Not at all out of line with the analysis in class...

Update 10 October 2006

I have no control over the date, location, or time of the final exam; final exams are scheduled by some central admin agency that seeks to avoid clashes between various courses. Their listing is available here and tells me that the exam will be held 07 November at 2:30 PM. I have no clue where. I also strongly recommend that you follow the advice of the central webpage; it may change, and I'm unlikely to check it again.

The final exam will be comprehensive but with a heavy weighting towards topics covered in the second term.

Update 9 October 2006

Check my sources!

Update 4 October 2006

Bryce sends a YouTube link to Steve Agnew, who sends it on to me, showing a BBC story on sales of organs in China. People fly into China to have organ transplants. This wouldn't be so bad except for that there's good evidence that many of these organs are harvested from Falun Gong prisoners who are killed for their organs. This seems indistinguishable from murder. Now, ask yourself whether there'd be more or less of this sort of thing going on if we were able to reduce the waiting lists for organs by the kinds of mechanisms we talked about in class.

Update 1 October 2006

Check my sources!

Update 26 Sept 2006

Check my sources!

Some other fun sources on the topic:

A big thanks to Andy Tookey for a fascinating talk!

Update 22 Sept 2006

I'll be joined in Monday's lecture by Andy Tookey of Give Life New Zealand who'll tell us more about the current organ donation system in New Zealand and about his work in trying to improve outcomes. Look forward to it.

Update 19 Sept 2006

Check my sources! All are available via the library or its e-journal subscriptions.

Update 11 Sept 2006

First, the exam is tomorrow. 7:15 PM - 9:15 PM. In the same room as the lectures -- C3. All material from weeks 1-6 is covered. You're expected to know all the stuff from the lectures, the required readings, and to have read and understood about 40 pages of material from each week (in total).

Second, I've been told some folks are having problems accessing the David Schmidtz article from week 2. The link I give in the reading list is That link still works for me, but some folks may be getting a log-in page. If you were having problems, try it again -- it's working for me currently. If anyone confirms that it isn't working, I'll put it up on WebCT instead. I'm guessing that there may have been a temporary server problem at the other end that's now resolved.

Third, check my sources!

Update 4 Sept 2006

Check my sources!

Update 3 Sept 2006

The Institute for Humane Studies, a research institute affiliated with George Mason University, my alma mater, informs me of some student essay competitions coming up. Each contest awards $5,000 US in prizes and are open to all full-time students of any nationality and age. Contest deadlines are 1 December 2006. The first contest opens 5 September and will be available here.

Update 17 August 2006

I'd mentioned the fights between Lott and Levitt. Chicago Magazine has a fantastic summary of it here. Go check it out.

As always, feel free to check my sources:

Update 9 August 2006

In week 3, I talked about how the Endangered Species Act in the United States creates perverse incentives: land owners fearing that their land is going to be listed as habitat for a species about to be listed as endangered will take extensive efforts to make sure that there's no habitat left by the time the species gets listed. Why? Because if their land is listed as critical habitat, they're faced with large costs for which they're not compensated.

From the News & Observer, 7 August 2006:

The sharp chirps of the endangered red-cockaded woodpeckers and the whine of chain saws sound discordantly in this coastal community of old pine forests.

Since word got around this spring that owners could face problems selling land or building houses where the birds lived, people have been rushing to clear undeveloped lots of pine trees and yanking the woodpecker welcome mat.


"People are just afraid a bird might fly in and make a nest and their property is worth nothing," said Joan Kinney, mayor of Boiling Spring Lakes in Brunswick County. "It is causing a tremendous amount of clear-cutting."

The sight of wooded lots scraped bare to the white sandy soil is harming the appearance of the community, leaders say. So while town officials figure out what to do about the woodpecker, they are now considering a ban on clear-cutting.


Lea Anne Werder, a real estate agent, said the woodpeckers had scared off several interested land buyers, and she'd lost two sales.

"I have a client whose property I listed," Werder said. "That was two weeks before we knew anything about the woodpeckers. It so happened that it had an active nest in the middle of it. He was told he wouldn't be able to develop his property. He yelled and screamed and called Fish and Wildlife to complain. Until they get this issue resolved, it's basically worthless."

Werder said there still is property in town for people who are ready to build a house, but that buying property as investment in certain areas is more risky until the issue is settled.

Bonner Stiller, a state lawmaker from Brunswick County, has owned a pair of lots as an investment here for more than 20 years. He cleared them recently. Stiller said he was sorry to lose the trees but wanted to protect his investment.

"You had to get in line to get somebody with a chain saw," Stiller said. "I have not a single pine tree left. Folks around here are terrified of the prospect of losing their property. That causes people to get out there and find out what they can do to protect themselves."

Current policy: massive tax on people with habitat, and so they get rid of habitat prior to being faced with the tax. Alternative policy: pay landowners to maintain and enhance habitat. That creates some pretty big expenses in the budget though. The current policy makes landowners bear all the costs, which then don't show up on the government's accounts.

Environmentalists will claim high existence values for endangered species: they'll run surveys showing that people claim to be willing to spend $20 each (or there abouts) to help save just about any species. If those studies are right, it should be fairly simple to just raise taxes, switch from current policy to the alternate policy, and actually save endangered species. That we haven't suggests that people don't really value endangered species all that much, which is fine - economists respect peoples' preferences. The current policy actually does harm though. Perhaps better to have no policy than one that actively encourages habitat destruction.

Update 8 August 2006

Some neat stats available from the Ministry of Social Development. Some of them are relevant to the topics we're discussing; some of them are utterly bizarre. They keep track of how many people spend time with their parents?! Very odd.

Update 7 August 2006

Check my sources!

In lecture, I was asked what incentive the bail bondsman has to capture the fugitive. Helland and Tabarrok note that the bond dealer is granted 90-180 days to recapture the fugitive before bond is forfeited.

Update 2 August 2006

Nice piece in the 1 August Wall Street Journal, which you can get via the library's online journal holdings. David Henderson, p. A.12, "If Only Most Americans Understood". Abstract below:

"The Right Minimum Wage: $0.00." So read an editorial headline in one of the most respected newspapers in America. The editorial stated: "There's a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage by a substantial amount would price working poor people out of the job market." Can you guess the newspaper? The Wall Street Journal, perhaps? Right city; wrong paper. This editorial appeared on Jan. 14, 1987, in the New York Times.

Economists' consensus estimate is that a 10% increase in the minimum wage would destroy 1% to 2% of youths' jobs. A federal increase to $7.25 would, therefore, destroy about 800,000 to 1.6 million youths' jobs. Some older low-skilled workers would also suffer. And the hurt to youths isn't just short-term, according to economists David Neumark of the University of California, Irvine, and Olena Nizalova of Michigan State University. In a 2004 National Bureau of Economic Research study, they found that even as people reached their late 20s, they worked less and earned less the longer they had been exposed to a higher minimum wage, especially as teenagers.

Couldn't a job loss of 1% to 2% be worth it, if the remaining 98% to 99% get a wage increase? This isn't the tradeoff, for two reasons. First and most important, the majority of youths are already earning more than the higher minimum that is typically proposed. For instance, in a study of a proposed minimum-wage increase in California from to $7.75 from $6.75, economist David A. Macpherson of Florida State University and Craig Garthwaite of the employer-funded Employment Policies Institute found that of 1.48 million California youths with jobs, 79% earned a wage higher than $7.75, and there's no guarantee that these workers would get an increase. Some, but probably not most, would get what are called "spillover benefits" because of the new pressure on the wage structure.

Read the whole thing via the library's ProQuest subscription.

Update 31 July 2006

Gary Becker is one of the best economists out there. Richard Posner is a federal judge who knows more law and economics than anybody - a chapter from his text is on your recommended readings for this week. Becker and Posner blog together at The Becker-Posner Blog. Today's posting has their thoughts on the Chicago minimum wage legislation. Richard Posner is circumspect in his comments -- it's very likely there'll be a court challenge of the constitutionality of the legislation, and very likely it would wind up before his court. So, he restricts his analysis to the economics of the legislation rather than the constitutionality.

Sometimes, you might think Crampton's a bit nutty. Sometimes, I am a bit nutty. Here are some clips from Becker and Posner, though, posted after I delivered my lecture but reading like they could have been part of it. Here's Gary Becker:

The City Council of Chicago recently passed an ordinance that makes Chicago the largest city in the United States to impose special wage and fringe benefit requirements for "big box" retailers. The ordinance requires that beginning next July, companies with more than $1 billion in annual sales and having stores in Chicago with at least 90,000 square feet of space will have to pay Chicago employees a minimum of $9.25 an hour in wages and $1.50 an hour in fringe benefits, such as health insurance. By 2010 these will rise to $10 an hour in wages and $3 an hour in benefits. These minimums far exceed Illinois' minimum wage of $6.50 per hours. About 40 existing stores in the city would be affected.

The ordinance was supported by 35 out of 49 alderman on the Council despite the vehement opposition of Mayor Richard Daley, who in the past could dictate the Council's policies. The mayor is right to be opposed, for it is indeed a bad ordinance, and will hurt the very groups, African-Americans and other poor or lower middle class individuals, that supporters claim would be helped.


Who would favor such a bad ordinance that will harm the very groups it is claimed to help? Support for the ordinance from more conventional supermarket chains and clothing stores is easy to understand since the mega stores drain away customers and force prices down. The absence of opposition from low-income consumers who shop at these stores is not surprising since they are not well organized to exert political pressure on the City Council.

The strong backing of the ordinance by Chicago unions is also to be expected. Unions always favor increases in minimum wages, even when as in this case the minimum only apply to some employers. Any increase in the minimum wage would raise the demand for unionized skilled workers who would substitute for the less skilled employees displaced by the minimum.


It is more difficult to understand the aggressive support of the Chicago ordinance by most African-American members of the Council and other leaders of the African-American community. However, it should be noted that some of those who represent predominantly African-American communities voted against the ordinance, including Leslie Hairston who represents the 5th Ward (where I live). Not only will fewer jobs be available for African-Americans, but also the prices they pay for food, clothing, and many other retail goods would go up.

One explanation for why most African-American leaders support the ordinance is that they are politically allied with unions and possibly other groups that benefit from this ordinance. These leaders may recognize that their constituents will generally be harmed by the ordinance, but in return for taking this hit they expect the support of unions on issues like more generous Medicaid support that help low income families.

Sound at all familiar? Here's Richard Posner:

What seems relatively clear, however, is that the brunt of the disemployment effect of the minimum wage will be felt by marginal workers. For example, some teenagers whose marginal product (that is, their contribution to the employer's profits) was just at or only slightly above the minimum wage will if the minimum wage is raised be replaced by slightly more productive teenagers from affluent households who were not attracted to working when the wage was lower.

Go to the Becker-Posner blog and read the whole thing. Entry dated 30 July, 10 PM US time (2 PM Monday, 31 July our time -- well after your lecture, in case you think I was cribbing lecture notes from them! I do acknowledge being rather strongly influenced by their work though.)

Update 31 July 2006

Check my sources!

Update 30 July 2006

Some further interesting thoughts on minimum wages from Greg Mankiw

Update 28 July 2006

In week 4 we'll be covering labour market regulation and minimum wages. Chicago has just decided to impose a $13 minimum wage on large employers -- the legislation is targeted at Wal-Mart. Interesting discussion by Will Wilkinson and Saul Levmore.

Update 14 July 2006

It looks like running the midterm exam the evening of September 12th should minimise clashes with other exams. It's the same night as the Econ 104 exam. Since Econ 104 is a prereq for this class, you can't have a clash with it. And since most other classes try to work around Econ 104 exams because so many people take Econ 104, there shouldn't be other exams that would conflict. If you have an exam clash for the evening of 12 September, tell me which course is causing the clash and I'll see what can be done. The exam will run 7:15PM to 9:15PM. Location to be announced. Don't email me asking the location - if it's on the website, you don't need to ask me, and if it isn't on the website, it's 'cause I don't know yet.

Update 12 July 2006

I reiterate my request that you sign up for a tutorial. The system's showing now that only about half of you have done so. Tutorials start tomorrow. We each will have lists of who's signed up for the tutorials when we start them tomorrow. If you're not on the list, you're not in the tutorial, sorry. There's a max of 20 students per tutorial so we can't just let you show up. You have to sign up to be a presenter and discussant this week in the tutorial. This is 20% of your grade. If you sign up for a tutorial late, you'll have last pick of topics for presentation or discussion.

Update 11 July 2006

Make sure you sign up for a tutorial. If you've only recently signed into the class and cannot yet use the tutorial registration system, give it an overnight after having signed into the class. The systems usually reset overnight. If that doesn't work, send me an email. In the email, tell me your name, student number, and your preferences over tutorial sections. Available are:

  1. Thursday, 10am, with your friendly lecturer
  2. Thursday, 11am, with Steve Hickson
  3. Thursday, 1 pm, with Steve Agnew
  4. Friday, 11am, with Steve Agnew

The Hickson section is almost full. My section is a little more than half full. The Agnew sections still have a fair bit of room. We have a maximum tutorial size of 20 students, so a tutorial section closes off once 20 sign up.

Update 10 July 2006

There was a bit of a problem with WebCT that Philip Ashcroft kindly pointed out. It's now been fixed. Hopefully if you were having problems before in downloading the readings, you're now able to get them. Note that reading 1.2, my encyclopedia entry on market failure, is just a supplemental reading, not a recommended reading. It's only in WebCT rather than in the Reader because I hadn't finished writing it before the deadline hit for the printing office to make the readers.

If you're still in the process of signing up for the course and don't have access to WebCT or to the tutorial registration system by Wednesday, pop round my office hours and we'll see what we can do.

Make sure to subscribe to the RSS feed - it makes getting updates like this much easier.

Update 6 July 2006

Jan and Alison at the library will kindly be providing tutorials during your second week of classes (regular tutorial times) that will show you how to find online journal articles via the library's databases. I strongly recommend that you attend one of these sessions. You're responsible for being able to find the readings on the reading list; these tutorials will show you how to do it. Please sign up at the library's registration site. Note that some classes are held in the library level 5 training room and others in the Den on level 2.

Update 6 July 2006

I had, below, recommended SharpReader for following the course's RSS feed. Of course, that isn't going to work if you're accessing from a machine in one of the computer labs. Rojo seems to be a pretty decent web-based RSS aggregator. It's free. So, no excuses for not catching updates now.

Update 5 July 2006

The reader should now be available for purchase at the usual place. Recall that the reader for 224 only contains those supplemental readings which are not otherwise readily available via the library. WebCT contains the recommended readings not otherwise readily available via the library. The text contains the required readings.

Update 4 July 2006

Steve Hickson has taught me how to run the online tutorial registration system. Make sure you sign up for a tutorial using the link above. Tutorials start during the first week of classes so sign up for one as soon as possible. During the first week of tutorials you'll choose the weeks in which you'll serve as presenter and discussant. The second week of tutorials will be spent in library training. In-tutorial assessment begins in week 3!

Update 31 May 2006

I've sorted out access to your readings. Consult your syllabus and reading list.

Update 30 May 2006

I have finally completed the syllabus and reading list for the course. Please consult them in deciding whether you'd like to take Econ 224. I have a few more notes below regarding the style of course I'm offering. I look forward to meeting you in a few weeks!

This webpage will frequently be updated as the course progresses. I've figured out how to make an RSS feed of the page so that you can keep track via your favourite aggregator (I recommend SharpReader). Checking course websites frequently on the off chance of an update is a bit of a pain; hopefully, this will solve the problem. General class information follows below; updates will be inserted above this as the class progresses. Pay attention though to the category in the feed as I also update Econ 336 and Econ 435 via this channel.

Course synopsis

Econ 224 applies economic tools to interesting current policy problems to bring light to otherwise opaque policy discussions. Might there be a link between abortion and crime? What are the effects of drug prohibition? Does a ban on selling organs save lives or take them? Is fair trade really fair? We apply basic economic concepts; supply and demand; the power of incentives; individual self-interested agents choosing how best to maximize their utilility, and the order that emerges spontaneously from the uncoordinated activities of millions of such individuals. The effects of policies are not always what we think they will be!

Each year's section of topics may vary. Broad topics to be examined will be contrasting of market failure and government failure; law and economics approaches; and the economics of social issues. Particular topics will vary from year to year and may include issues such as the following: market failure and comparative institutional analysis; the environment and externalities; reputation and the economics of information; crime and punishment; the economics of prohibition (alcohol and other drugs); regulation; copyright and file sharing; discrimination in markets; health and organ donation; poverty and welfare; globalisation and trade; culture.


Evaluation will consist of:

A swing weighting system is in place: if you do better on the final than on the midterm, the final will be worth 50% and the midterm 30%.

While attendance at tutorials is not mandatory, a significant portion of assessment is based on performance in tutorials; failure to attend does not assist you in earning points towards that assessment. Tutorials begin during the first week of lectures. During the first week of tutorials, you must choose one week in which you will serve as presenter and one week in which you will serve as discussant.

As presenter, you will be required to provide a 10 minute presentation of one of the starred readings: explain the main point of the reading, how it fits into the general topic under consideration, and the article's broader relevance. You must provide a written summary of your comments to your tutor 2 days prior to your tutorial so that he can send it along to your discussant. You will be strongly penalised for late assignments here as lateness directly affects your discussant's ability to discuss your commentary.

During the week in which you are discussant, you will be provided another student's written summary of a starred reading. Your task is to discuss (5 minutes) both the article and the presenter's comments. Did the presenter get the main point of the article or do you disagree with the summary? Did the presenter identify the broader importance of the article or miss the point of it? Or, is the article just clearly wrong in light of what you've read in other suggested readings (or from your own analysis of New Zealand data?): the presenter correctly summarised the article, but the article is just horribly wrong from an economic perspective.

I fully intend that the in-tutorial discussions be debate oriented. Keep it civil, keep things focused on the ideas and arguments presented, and don't take criticism personally.

Discussants: Right format: "I'm not sure you've accurately described things: the author does point out on page 10 that..." That gets you points. Wrong format: "You're an idiot; only an idiot could possibly make such a stupid mistake." That gets you zero points and kicked out of the tutorial for that week.

Presenters (responding to discussants during debate): Right format: "Of course, the author goes on to state that that condition only holds in a particular case; in general, she disagrees with the statement." Wrong format: "You hate me! Why are you so mean?"

Your tutorial grade is based on the quality of your presentation, discussion, and general contribution to debates following presentations and discussions.


The reading list contains several suggested readings for each week (and one required reading in most weeks). You should aim to read at least two articles each week comprising at least 40 pages worth of reading - so three or four short readings or a couple of longer ones. In each week's tutorial, you'll be expected to contribute to discussion and debate; your contributions there should build on your reading. I will expect you to cite arguments presented in the readings when answering exam questions: I will provide choice among a few open-ended questions that will allow you to draw on your knowledge of the readings in providing an answer. Do not expect to do well on the exam if you have not kept up with the readings.

Any readings not readily available in the library and not available online will be included in a course reader or on WebCT. Chapters from required or recommended texts are not duplicated in the reader. I hope and trust that the library has placed copies on reserve.

Course style

This course is taught very much in the arts tradition within economics. What does that mean?

So, the course will be a lot of work, especially if you're not accustomed to lots of reading and debate. Feel free to peruse the syllabus and reading list, and the web pages of other courses I've taught, to see whether you think this is the right course for you.

Please feel free to contact me via email if you have any questions about the class or if you're wondering about taking it. Hope to see you in the fall!


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