Alex Tabarrok's Forthcoming or Published Papers

    Where possible I have provided a link to a PDF file, preferably to the final journal version.  In some cases direct linking was not possible and it may take a click or two.  If there is no link or you have any problems reading the PDF email me and I can either email you an electronic copy or snail mail a hardcopy.

More chapters in books and other publications are below.

Is Regulation to Blame for the Decline in American Entrepreneurship?

Mounting evidence suggests that economic dynamism and entrepreneurial activity are declining in the United States. Over the past thirty years, the annual number of new business startups and the pace of job reallocation have declined significantly. A variety of causes for these trends have been suggested, including an increasing ability of firms to respond to idiosyncratic shocks, technology induced changes in the costs of hiring and training, and increasing regulation. This research combines data from the Statistics of U.S. Businesses, which contains measures of the decline in economic dynamism, with RegData, a novel dataset leveraging the textual content of the Code of Federal Regulations. RegData contains annual industry level measures of the stringency of regulation. By combining these data, we are able to estimate the extent to which changes in the level of federal regulation can explain decreasing entrepreneurial activity and dynamism. We find that Federal regulation has had little to no effect on declining dynamism.

Goldschlag and Tabarrok, forthcoming.

Is Entrepreneurship in Decline?

Comment: Written for Cato Conference on Growth, video presentation.

The US economy has been one of the most dynamic economies in the world but recent research suggests that US entrepreneurship and dynamism are in decline (Decker, Haltiwanger, Jarmin and Miranda 2014). We offer a brief survey of the decline in dynamism literature and some of the potential causes. We find that Federal regulation, is probably not a causes of declining dynamism. Taking a closer look at some of the ways that dynamism and entrepreneurship have been measured suggests that we may be mismeasuring. If entrepreneurship is measured as new firm creation, for example, we miss the entrepreneurship inherent in rebuilding and revitalizing larger and older firms. Since most workers work for larger and older firms, revitalizing these firms may be a more important use of entrepreneurship than starting new firms. In an increasing global economy we may also miss some of the outsourcing of dynamism that has occurred in recent decades. Dynamism as measured by, for example, job reallocation has a negative side, churn. Information technology may allow us to reduce churn while still allowing adaption and innovation. Creative destruction is necessary for a growing economy but if we can boost the ratio of creative to destruction that counts as an improvement in welfare. The relationship between dynamism and entrepreneurship, flexibility and growth is uncertain and welfare conclusions are not yet clear.

Tabarrok and Goldschlag. forthcoming.

Lessons from Gurgaon, India's Private City

In just thirty years, Gurgaon has grown from a tiny hamlet to a city of nearly two million people and it has done so based almost entirely on the private provision of public goods, including transportation, utilities, and security. In some rankings, Gurgaon is the best city in India in which to live and work (Behl 2009). Gurgaon, however, lacks important infrastructure, especially in areas such as sewage and electricity where the optimal scale exceeds that of most builders. Thus, for large-scale infrastructure, important externalities are not internalized. We examine where Gurgaon has succeeded, where it has failed, and how people are adapting to both the successes and the failures. We compare Gurgaon with other private cities built on a different model, including Jamshedpur in India and Walt Disney World in the United States. The developing world, including India, is urbanizing rapidly. We draw lessons from Gurgaon to suggest how new private cities could be built on an even-greater scale, thus internalizing externalities while still keeping the advantages of private provision.

Rajagopalan, S., & Tabarrok, A. 2014. Lessons from Gurgaon, India’s private city. Cities and Private Planning (pp. 199–231). Edward Elgar Publishing. Retrieved from http://www.elgaronline.com/view/9781783475056.00018.xml

Public Choice Perspectives on Intellectual Property

Abstract: We mine two public choice traditions for insights into intellectual property rights: the Virginia school, centered on James Buchanan and Gordon Tullock, and the Bloomington or Institutional Analysis and Development school, centered on Elinor Ostrom and Vincent Ostrom. We apply the perspectives of each school to issues of intellectual property and develop new insights, questions, and focuses of attention. We also explore tensions and synergies between the two schools on issues of intellectual property.

Dourado, E., Tabarrok, A., 2014. Public choice perspectives on intellectual property. Public Choice 1–23. doi:10.1007/s11127-014-0195-x

The Industrial Organization of Online Education

Abstract: Online education has flexibility and cost advantages over in-class teaching and these advantages will grow with improvements in information technology. We consider likely market structures given that the quality aspects of online education exhibit endogenous fixed costs. Concentration in the market for courses could be high, as it is currently in the market for textbooks. The not-for-profit sector will exhibit lower costs, lower concentration, and possibly zero price.

Cowen, T., Tabarrok, A., 2014. The Industrial Organization of Online Education. American Economic Review 104, 519–522. doi:10.1257/aer.104.5.519

AN FDA REPORT CARD: Wide Variance in Performance Found Among Agency’s Drug Review Divisions

Comment: With DiMasi and Milne and a foreword by Dr. Andrew C. von Eschenbach, former commissioner, U.S. Food and Drug Administration; director, National Cancer Institute

Abstract: The United States Food and Drug Administration (FDA) reviews and must ultimately approve any new drug as "safe and effective" before it can be marketed for sale in the United States. The question of whether the agency is too cautious in its reviews (delaying access to critically needed treatments), or too fast in issuing approvals (potentially exposing patients to undetected risks from new products), has long been a subject of public debate.

This study attempts to provide a more objective examination of the FDA's performance by examining disparities in review and approval times across 12 review divisions within the FDA's Center for Drug Evaluation and Research (CDER). After reviewing nearly 200 products accounting for 80 percent of new drug and biologic launches from 2004 to 2012, the authors find wide variation in division performance. In fact, the most productive divisions (Oncology and Antivirals) approve new drugs roughly twice as fast as the CDER average and three times faster than the least efficient divisions—without the benefit of greater resources, reduced complexity of task, or reduction in safety. The authors estimate that a modest narrowing of the CDER divisional productivity gap would reduce drug costs by nearly $900 million annually. The worth to patients, however, would be far greater if the agency could accelerate access to an additional generation of (about 25) drugs. Greater agency efficiency in approving a single generation of drugs would be worth about $4 trillion in value to patients, from enhanced U.S. life expectancy. To reap such gains, this study encourages Congress and the FDA to more closely evaluate the agency's most efficient drug review divisions, and apply the lessons learned across CDER. We also propose a number of reforms that the FDA and Congress should consider to improve efficiency, transparency, and consistency at the divisional level.

DiMasi, J.A., Milne, C.-P., Tabarrok, A., 2014. AN FDA REPORT CARD: Wide Variance in Performance Found Among Agency’s Drug Review Divisions. Manhattan Institute.

Firearms and Suicides in US States (working paper version)

Comment (with Justin Thomas Briggs)

ABSTRACT: This study investigates the relationship between firearm prevalence and suicide in a sample of all US states over the years 2000–2009. We find strong, positive effects of gun prevalence on suicide using OLS estimation, across a variety of measures for gun possession, and with several sets of controls. When using instrumental variable estimation, the effect remains significant, despite also finding significant evidence that gun ownership causes substitution towards gun-suicide rather than other methods of suicide. There is also evidence for non-linearities in the effects of guns on suicide.

Briggs Justin T. and A. Tabarrok. 2014. Firearms and suicides in US states. International Review of Law and Economics 37: 180-188. http://dx.doi.org/10.1016/j.irle.2013.10.004. (http://www.sciencedirect.com/science/article/pii/S014481881300077X)

Ill-Conceived, Even If Competently Administered: Software Patents, Litigation and Innovation

Comment: -A Comment on Graham and Vishnubhakat in the JEP.

Abstract: The number of patents has increased dramatically in the past three decades, as has the number of patent-related lawsuits, particularly in the field of software. Industry and academic experts have expressed concern that many of the patents being issued are of low quality. Writing in the Journal of Economic Perspectives, Stuart Graham and Saurabh Vishnubhakat have defended the United States Patent and Trademark Office, arguing that the PTO has acted responsibly in issuing patents that are legally valid and that it is handling problems constructively. We accept some of Graham and Vishnubhakat’s defense of the PTO, but argue that the most important issue is not whether the law is being competently administered but whether patent law, particularly as applied to software, is creating patents that are overly broad and ambiguous. We maintain that it is, and that the results are less innovation and more costly and unproductive litigation.

Miller, Shawn, and Alexander Tabarrok. 2014. Ill-Conceived, Even If Competently Administered: Software Patents, Litigation and Innovation-A Comment on Graham and Vishnubhakat. Econ Journal Watch 11 (1).

Private Education in India: A Novel Test of Cream Skimming

Abstract: Students in private schools routinely outperform those in public schools both in the United States and around the world. But do private schools make students better or do they simply cream skim better students? In this article I take advantage of the remarkable fact that in many districts in India a majority of students attend private schools. As the private share of school enrollment increases, cream skimming becomes less plausible as the explanation for a higher rate of achievement in private schools. Evidence for cream skimming is found when the private share of schooling is low, in the range of 0–15%, and thus private schools have a large public pool from which to skim. But the private effect on achievement does not appear to diminish greatly even in districts where more than 70% of students are in private schools. Most importantly, mean scores taken over the entire population of students, private and public, increase with the share of private schooling. These findings support a significant productivity effect of private schools. (JEL I25, I2, L33)

Tabarrok, A., 2013. Private Education in India: A Novel Test of Cream Skimming. Contemporary Economic Policy 31, 1–12. doi:10.1111/j.1465-7287.2011.00286.x

Product Liability and Moral Hazard: Evidence from General Aviation

Abstract: Product liability law reduces the costs of accidents to consumers, thus reducing their incentives to invest in safety. We estimate the impact of tort liability on a subset of consumers who have significant control over the probability of an accident: the consumers of general aviation aircraft. The General Aviation Revitalization Act of 1994 exempted manufacturers of small aircraft from product liability claims when their aircraft reached 18 years of age. We use the exemption at age 18 to estimate the impact of tort liability on accidents as well as on a wide variety of behaviors and safety investments by pilots and owners. The results are consistent with moral hazard. When an aircraft is exempted from tort liability, the probability that the aircraft will be involved in an accident declines. Direct evidence of pilots’ and owners’ behavior is also consistent with moral hazard.

Helland, E.A., Tabarrok, A., 2012. Product Liability and Moral Hazard: Evidence from General Aviation. Journal of Law and Economics 55, 593–630. doi:10.1086/666363

Do Off-Label Drug Practices  Argue Against FDA Efficacy Requirements? Testing an Argument by Stuctured Conversations with Experts

Comment: (with Dan Klein).   The heart of this paper is an analysis of the written comments that physicians made to the "consistency argument" (see the paper).  We provide all the comments here as Word documents.  The responses are split into three categories; the comments of challengers who disputed the consistency argument, the comments of liberalizers who agreed with the consistency argument, and final comments on the survey made by both challengers and liberalizers.  In the text these are denoted as the "g", "c" and "f" comments respectively.

ABSTRACT: The amended Food, Drug and Cosmetics Act requires efficacy certification for a drug’s initial uses (“on-label”), but does not require certification before physicians may prescribe the drug for subsequent uses (“off-label”).  Does it make sense to require FDA efficacy certification for new drugs but not for new uses of old drugs?  Using a sequential online survey we carried on a “virtual conversation” with some 500 physicians.  The survey asked whether efficacy requirements should be imposed on off-label uses; almost all physicians said no.  It asked whether the efficacy requirements for initial uses should be dropped, and most physicians said no.  We then asked respondents whether opposing efficacy requirements in one case but not the other involved an inconsistency.  In response, we received hundreds of written commentaries.  We organize and discuss these commentaries with an eye to understanding how the medical market certifies off-label drug uses and how this compares to FDA certification.  Does off-label medicine suggest that efficacy requirements should be placed on new uses of old drugs?  Does it suggest that efficacy requirements on new drugs should be lifted?

Does Three Strikes Deter? A Non-Parametric Investigation

Comment (with Eric Helland)

ABSTRACT: We take advantage of the fortuitous randomization of trial outcome to provide a novel strategy to identify the deterrent effect exclusive of incapacitation.  We compare the post-sentencing criminal activity of criminals who were convicted of a strikeable offense with those who were tried for a strikeable offense but convicted of a non-strikeable offense.  As a robustness check, we also make this comparison in states without three strikes laws.  The identification strategy lets us estimate the deterrent effect non-parametrically using data solely from the three-strikes era.  We find that California’s three strike legislation significantly reduces felony arrest rates among the class of criminals with two strikes by 17-20 percent.

Helland, E. and A. Tabarrok. 2007. Does Three Strikes Deter: A Non-Parametric Investigation. Journal of Human Resources XLII (2): 309-330.

Missing the Mark

In their paper “Members First: The Ethics of Donating Organs and Tissues to Groups,” Timothy Murphy and Robert Veatch question the ethical underpinnings of LifeSharers, a grass-roots effort to increase the supply of organs by giving organ donors preferred access to organs  Tabarrok and Undis respond.
.
Tabarrok, A. and David Undis. 2006. Missing the Mark. Cambridge Quarterly Journal of HealthCare Ethics. 15(4):450-456.

The Problem of Contingent Fees for Waiters

ABSTRACT: In a series of influential papers, Lester Brickman (2003a, 2003b, 2004) has argued that the income and effective hourly rate of tort lawyers using contingent fees has increased by 1400% since 1960 and that the market for contingent fee lawyers is uncompetitive as evidenced by lack of price advertising and uniform pricing across practitioners, cases and time.  He also argues that contingent fee lawyers use “contingent-fee math” to build up additional costs and fees.  I critically examine Brickman’s calculations and compare contingent fees in the market for lawyers with contingent fees, usually called tips, in the market for waiters.

Tabarrok, A. 2005. The Problem of Contingent Fees for Waiters. The Green Bag. Summer 2005: 377-381.

What are Private Governments Worth?

Comment (with Amanda Agan)

ABSTRACT: “Private governments” such as homeowners associations and condominium cooperatives provide all manner of collective consumption goods, from road maintenance, trash collection, and snow removal to transportation, policing, and medical care. These organizations were practically unheard of in 1960, but today some 54.6 million people in the United States live in various neighborhood associations. Using data from Northern Virginia we show houses in HOAs are worth, on average, more than 5 percent more than similar houses in the same neighborhood but outside of HOAs. Given those large advantages, it is not surprising that HOAs are growing rapidly.  Implications for the future are discussed.

Agan, A. and A. Tabarrok. 2005. What are Private Governments Worth? Regulation. 28 (3: Fall): 14-17.

Using Terror Alert Levels To Estimate the Effect of Police on Crime

Comment: (with Jon Klick)

ABSTRACT:  We argue that changes in the terror alert level set by the Department of Homeland Security provide a shock to police presence in the Mall area of Washington, D.C. Using daily crime data during the period the terror alert system has been in place, we show that crime drops significantly, both statistically and economically, in the Mall area relative to the other areas of Washington DC.  This provides strong evidence of the causal effect of police on crime and suggests a research strategy that can be used in other cities.
 
Klick, J. and A. Tabarrok. 2005. Using Terror Alert Levels to Estimate the Effect of Police on Crime. Journal of Law and Economics. 48(1): 267-280.

The Fugitive: Evidence on Public versus Private Law Enforcement from Bail Jumping

Comment: (with Eric Helland)

ABSTRACT: After being arrested and booked, most felony defendants are released to await trial.  On the day of the trial, a substantial percentage fail to appear. If the failure to appear is not quickly explained, warrants are issued and two quite different systems of pursuit and rearrest are put into action.  Public police have the primary responsibility for pursuing and rearresting defendants who were released on their own recognizance or on cash or government bail.  Defendants who made bail by borrowing from a bond dealer, however, must worry about an entirely different pursuer.  When a defendant who has borrowed money skips trial, the bond dealer forfeits the bond unless the fugitive is soon returned.  As a result, bond dealers have an incentive to monitor their charges and ensure that they do not skip.  When a defendant does skip, bond dealers hire bail enforcement agents, more colloquially known as bounty hunters, to pursue and return the defendants to custody.  We compare the effectiveness of these two different systems by examining failure to appear rates, fugitive rates and capture rates of felony defendants who fall under the respective systems.  We apply propensity score and matching techniques.

Helland, E. and A. Tabarrok. 2004. The Fugitive: Evidence on Public versus Private Law Enforcement from Bail Jumping. Journal of Law and Economics XLVII (1): 83-122.

Using Placebo Laws to Test “More Guns, Less Crime”

Comment: (with Eric Helland).  Working paper version in Word format here.

ABSTRACT:  We reexamine Mustard and Lott’s controversial study on the affect of “shall-issue” gun laws on crime using an empirical standard error function randomly generated from “placebo” laws. We find that the effect of shall-issue laws on crime is much less well-estimated than the Mustard and Lott (1997) and Lott (2000) results suggest. We also find, however, that the cross equation restrictions implied by the Lott-Mustard theory are supported. A boomlet has occurred in recent years in the use of quasi-natural experiments to answer important questions of public policy. The intuitive power of this approach, however, has sometimes diverted attention from the statistical assumptions that must be made, particularly regarding standard errors. Failing to take into account serial correlation and grouped data can dramatically reduce standard errors suggesting greater certainty in effects than is actually the case. We find that the placebo law technique (Bertrand, Duflo and Mullainathan 2002) is a useful addition to the econometrician’s toolkit.

Helland, E. and A. Tabarrok. 2004. Using Placebo Laws to Test “More Guns, Less Crime”. Advances in Economic Analysis & Policy 4 (1): Article 1. http://www.bepress.com/bejeap/advances/vol4/iss1/art

Contingency Fees, Settlement Delay and Low-Quality Litigation: Empirical Evidence from Two Datasets

Comment: (with Eric Helland)

ABSTRACT: Although flat fees are common for divorces, wills and trusts and probate, lawyers in personal injury cases generally are paid by contingency fee or at an hourly rate.  Arguments have been made that contingency fees increase low-quality, "frivolous" litigation but counter-arguments suggest that contingency fees actually limit such litigation and instead it is hourly-fees that increase low-quality litigation. Using a difference in differences test and data on a cross section of states in 1992 we test whether legal quality is lower under contingency or hourly fees.  We also examine medical malpractice claims in Florida using a time series centered around a law change that limited contigency fees.  We also examine the impact of fee arrangements on the expected time to settlement. We find that hourly fees encourage the filing of low-quality suits and increase the time to settlement (i.e. contingency fees increase legal-quality and decrease the time to settlement).

Helland, E. and A. Tabarrok. 2003. Contingency Fees, Settlement Delay and Low-Quality Litigation: Empirical Evidence from Two Datasets. Journal of Law, Economics and Organization 19 (2): 517-542.

Patent Theory versus Patent Law

ABSTRACT: According to the economic theory of patents, patents are needed so that pioneer firm have time to recoup their sunk costs of research and development. The key element in the economic theory is that pioneer firms have large, hard to recoup, sunk costs. Yet patents are not awarded on the basis of a firm's sunk costs. Patent law, in fact, ignores costs. The disconnect between patent law and patent theory suggests either that modifying patent law so that it better fits with patent theory would reduce the costs and inefficiencies associated with current patent practice or that the standard economic theory of patents is wrong.

Tabarrok, Alexander. 2002. Patent Theory versus Patent Law.  Contributions to Economic Analysis & Policy 1 (1), Article 9. http://www.bepress.com/bejeap/contributions/vol1/iss1/art9

Race, Poverty, and American Tort Awards: Evidence from Three Datasets

Comment:  Working paper version here.  (The above link requires subscription or university access to the JLS).

ABSTRACT: We investigate the impact of the race and income of the jury pool on trial awards.  We find that the average tort award increases as black and Hispanic county population rates increase and especially as black and Hispanic county poverty rates increase.  An increase in the black county-poverty rate of 1 percentage point tends to raise the average personal injury tort award by 3 to 10 percent.  An increase in the Hispanic county-poverty rate of 1 percentage point tends to raise awards by as much as 7 percent although this effect is less well estimated.  These effects imply that forum shopping for high-poverty minority counties could raise awards by hundreds of thousands of dollars.  Average awards fall with increases in white (non-black, non-Hispanic) poverty rates in two of our datasets, thus making these findings even more surprising.  Awards increase with black and Hispanic county-poverty rates even after controlling for a wide variety of other potential causes.

Helland, Eric. and Alexander Tabarrok. 2003. Race, Poverty, and American Tort Awards: Evidence from Three Datasets. The Journal of Legal Studies 32 (2): 27-58.

Expected Dividend Growth, Valuation Ratios and Rational Optimism

ABSTRACT: Large changes in valuation ratios can be explained by relatively small changes in the expected dividend growth rate.  We use the Gordon growth model to back out an "expected" dividend growth rate and we compare this rate with the actual rate of dividend growth.  We cannot reject the hypothesis that our estimated rate is a rational expectation of the actual.  As a result, a model of valuation ratios based solely on a handful of fundamentals can easily explain the variation in the data.  In particular, the historically high ratios of the late 1990s and today are consistent with rational expectations about dividend growth.  Such expectations, moreover, appear reasonable in the context of slowly accumlating, long-term changes in the economy that are reducing output volatility, increasing the duration of expansions and reducing the duration of  recessions.  Contrary to a number of recent analyses, optimism about the future is not ruled out by the data.

Santoni, G. and A. Tabarrok. 2002. Expected Dividend Growth, Valuation Ratios and Rational Optimism. Journal of Financial and Economic Practice 1 (1): 110-119.

The Effect of Electoral Institutions on Tort Awards

ABSTRACT: We argue that partisan elected judges, have an incentive to redistribute wealth from out-of-state defendants (non-voters) to in-state plaintiffs (voters).  We first test the hypothesis using cross-state data.  We find a significant partisan effect after controlling for differences in injuries, state incomes, poverty levels, selection effects and other factors.  One difference which appears difficult to control for is that each state has its own tort law.  In cases involving citizens of different states, Federal judges decide disputes using state law. Using these diversity of citizenship cases we conclude that differences in awards are caused by differences in electoral systems not by differences in state law.

Helland, E. and A. Tabarrok. 2002. The Effect of Electoral Institutions on Tort Awards. American Law and Economics Review 4 (2): 341-370.


A Geometric Proof of the Neutrality Theorem

ABSTRACT: The neutrality theorem for public goods is proved using a Dolbear triangle diagram.

Tabarrok, A. forthcoming. A Geometric Proof of the Neutrality Theorem. Public Finance/Finances Publiques.


President Perot, or Fundamentals of Voting Theory Illustrated with the 1992 Election

Comments: Mathematica code for most of the calculations in this paper can be found here.  This paper uses the same techniques (but in one less dimension) as Would the Borda Count have Avoided the Civil War? - thus the theory sections overlap.

ABSTRACT: Different voting systems can lead to different election outcomes even when voter preferences are held constant. Using the 1992 election as an example, it is shown how the outcome of every positional vote system can be found.  Similarly, every possible cumulative and approval vote outcome is shown.  Multiple vote systems, like approval and cumulative voting, have disturbing properties. Using the 1992 election as illustration, it is shown how a
candidate who wins under every positional vote system, who wins every pairwise vote (i.e. is the Condorcet winner), and who has the most first place and least last place votes may nevertheless lose under approval or cumulative voting. Similarly, it is shown how a candidate who loses under every positional system, who loses every pairwise vote (i.e. is the Condorcet loser), and who has the least first place and most last place votes may nevertheless win under approval or cumulative voting.

Tabarrok, Alexander. 2001. President Perot, or Fundamentals of Voting Theory Illustrated with the 1992 Election. Public Choice 106 (3-4): 275-297.

An Economic Theory of Avant-Garde and Popular Art, or High and Low Culture

(The above is a link to the JSTOR PDF.  Email me if you do not have access.)

ABSTRACT: Artists face choices between the pecuniary benefits of selling to the market and the non-pecuniary benefits of creating to please their own tastes. We examine how changes in wages, lump sum income, and capital-labor ratios affect the artist's pursuit of self-satisfaction versus market sales. Using our model of labor supply as a guide, we consider the economic forces behind the high/low culture split, why some artistic media offer greater scope for the avant-garde than others, why so many artists dislike the market, and how economic growth and taxation affect the quantity and form of different kinds of art.

Cowen, Tyler and Alexander Tabarrok.  2000.  An Economic Theory of Avant-Garde and Popular Art, or High and Low Culture. Southern Economic Journal 67(2): 232-253.

Assessing the FDA via the Anomaly of Off-Label Drug Prescriptions

ABSTRACT: Most American hospital patients are given drugs not approved by the U.S. Food and Drug Administration for the prescribed use. If off-label prescribing is so widespread and successful, is the FDA's pre-approval process really necessary?

Tabarrok, A. 2000. Assessing the FDA via the Anomaly of Off-Label Drug Prescriptions. The Independent Review V, #1: pp. 25-53.

Runaway Judges? Selection effects and the jury?

ABSTRACT: Reports about runaway jury awards have become so common that it is widely accepted that the US jury system needs to be ‘fixed.’ Proposals to limit the right to a jury trial and increase judicial discretion over awards implicitly assume that judges decide cases differently than juries.  We show that there are large differences in mean awards and win rates across juries and judges.  But if the types of cases coming before juries are different from those coming before judges, mean award and win rates may differ even if judges and juries would make the same decisions when faced with the same cases. We find that most of the difference in judge and jury mean awards can be explained by differences in the sample of cases coming before judges and juries.  On some dimensions, however, there remain robust and suggestive differences between judges and juries.

Helland, Eric and Alexander Tabarrok. 2000. Runaway Judges? Selection effects and the jury? Journal of Law, Economics, and Organization 16 (2): 306-333.

Believe in Pascal's Wager?  Have I got a deal for you!

ABSTRACT: Pascal’s wager is initially compelling because “believing” in God appears to be costless. Believing in the possibility of infinite utility,
however, implies that the believer is willing to accept any finite cost to achieve any positive probability, no matter how small, of attaining
infinite utility. "Tabarrok's offer," although costly, should be compelling to those who accept Pascal's wager.

Tabarrok, A. 2000. Believe in Pascal's Wager?  Have I got a deal for you! Theory and Decision 48: 123-128.

The Ramsey Model of Economic Growth

Comment: The link is to a Mathematica NB file.

ABSTRACT: The Ramsey model of economic growth is a workhorse of contemporary macro-economics.  It's the starting point not only for growth theory but also for modern business cycle theory.  Ask an economist how the economy will react to an increase in government purchases or to a change in the tax rate on capital and the first model he will reach for in a search for answers is the Ramsey model.  In this paper I briefly explain a simple version of the Ramsey model and put the model through its paces using Mathematica's extensive numerical and graphical abilities. 

Tabarrok, Alexander. 2000. The Ramsey Model of Economic Growth. Mathematica in Education and Research 8: 3-4: 43-51.

The Opportunity Costs of Rent Seeking

Comments: May be minor differences from published version.

ABSTRACT: The costs of rent seeking exceed traditional measures when opportunity cost is considered. When the quantity of resources consumed by rent seeking is large, rent seeking draws consumer surplus out of alternative resource employments. The costs of rent seeking differ in partial and general equilibrium frameworks; Tullock (1989) recognizes this but incorrectly argues that rent seeking costs are twice as large in general than in partial equilibrium. Other authors suggest that rent seeking costs are lower once the opportunity costs of resources used in rent seeking are considered. We clear up the confusion in the current literature.

Cowen, T., and A. Tabarrok. 1999. The Opportunity Costs of Rent Seeking. Journal of Public Finance and Public Choice XVII (2-3):121-27.

Court Politics: The Political Economy of Tort Awards

Comments: In most respects superseded by The Effect of Electoral Institutions on Tort Awards which reviews the pertinent findings from this paper.

ABSTRACT: We investigate the forces, which explain why trial awards differ across the U.S. states.  In 23 states judges are elected and in 10 they are elected via partisan elections.  Elections have two important effects.  First, defendants are often out-of-state non-voters while plaintiffs are typically in-state voters.  We predict, therefore, that elected judges will redistribute wealth from out-of-state businesses to in-state plaintiffs.  Second, the realities of campaign financing require judges to seek and accept campaign funding from trial lawyers who uniformly are interested in larger awards.  We hypothesize that these two forces cause awards to be larger in states where the judiciary is elected rather than appointed.  We also hypothesize that the demand for redistribution will increase as poverty increases and thus that awards will be larger in states with greater poverty.  Using a sample of over 7000 cases across 48 of the 50 states we find significant evidence in support of these hypotheses.

Tabarrok, A., and E. Helland. 1999. Court Politics: The Political Economy of Tort Awards. Journal of Law and Economics XLII,1(April): 157-188.

Would the Borda Count have Avoided the Civil War?

Comments: Mathematica code for most of the calculations in this paper can be found here.  This paper uses the same techniques (but in one more dimension) as President Perot - thus the theory sections overlap.

ABSTRACT: The election of 1860 was one of the most important and contentious elections in US history. It was also one of the most interesting. Four candidates from three different parties battled for the presidency and all four received a significant number of votes. We ask whether Lincoln's victory was sound, or was it due to a fluke in the electoral system? Did a Lincoln win plausibly represent the will of the voters or would a different voting system have represented their preferences more accurately? Would the outcome have been the same had one or more of the candidates dropped out of the race? These and other questions are answered using new graphical techniques which let us assess voter preferences more accurately. Using these techniques, we are able to show, in a single figure, the outcome of every positional voting system, as well as all possible approval voting outcomes. By comparing the outcome under plurality rule to the outcomes which would have occurred under other voting systems, we conclude that Stephen Douglas, not Lincoln, was plausibly the candidate who best represented the preferences of the voters.

Tabarrok, Alexander. and Lee Spector. 1999.  Would the Borda Count have Avoided the Civil War? Journal of Theoretical Politics 11(2): 261-288.

Voting Theory with Representation Triangles and Cubes

Comments: The link is to a Mathematica NB file.  See the material on voting and mathematica for more complete coverage of the voting package.

Abstract: Voting seems straightforward but on closer inspection even simple voting rules have mysterious and odd properties which often challenge our conception of democracy.  Some of these paradoxes have bothered social scientists for hundreds of years but until recently little theory existed which explained why and when paradoxes might be expected to occur.  In his book, "The Geometry of Voting," the mathematician Donald Saari has shed considerable light on why voting 'paradoxes' occur and how they can be predicted.  The package voting.m uses Mathematica's capabilities to implement many of the functions described in Saari's book "The Geometry of Voting," Springer-Verlag, 1994.  The package allows us to experiment with positional voting systems, pairwise voting, approval voting and cumulative voting.  In this article I will focus on positional and pairwise voting, other package capabilities are explained at length in the electronic supplement.

Tabarrok, A. 1998. Voting Theory with Representation Triangles and Cubes. Mathematica in Education and Research 7 (3):20-28.
 

Who Benefits from Progress?

Abstract: Progress is better for some consumers than for others. We analyze the factors which govern how much a consumer gains from progress, defined as price declines and the introduction of new and improved products, and we show how these factors vary systematically across different consumer groups. Economic developments of the 1980s and 1990s have brought increasing disagreement about the performance of the American and European economies. Economists typically try to account for these dual and contrasting perspectives by citing the increasing gap between the wages of skilled and unskilled labor. We examine differential consumer gains as another factor which may account for the contrasting perspectives. Differential consumer gains can also help to explain contrasting perspectives on the de-socialization of the East European and Soviet economies.

Tabarrok, Alexander and Tyler Cowen. 1998. Who Benefits from Progress?, Kyklos 51 (3):379-397.

The Separation of Commercial and Investment Banking: Morgans Vs Rockefellers


Comment: Too much public choice takes a correlation as proof of (special interest) causation.  This paper is my attempt at an historical public choice.  My most Rothbardian paper.

ABSTRACT: The public interest arguments for the separation of commercial and investment banking are weak and appear unable to explain the passage of the Banking Act.  The separation can best be understood in the context of a bank war between the Morgan and Rockefeller banking groups.  The House of Morgan blended commercial and investment banking to a much greater extent than did the Rockefeller group.  Although separation raised the costs of banking to the Rockefeller group, it hurt the House of Morgan disproportionately and gave the Rockefeller group a decisive advantage in their battle with the Morgans.  The micro-history approach of this paper pinpoints the specific individuals who were responsible for the Act's provisions separating commercial and investment banking.

Tabarrok, A. 1998. The Separation of Commercial and Investment Banking: Morgans Vs Rockefellers.  The Quarterly Journal of Austrian Economics 1 (1):1-18.

A Simple Model of Crime Waves, Riots, and Revolutions

Abstract: Like the title says.

Tabarrok, A. 1997. A Simple Model of Crime Waves, Riots, and Revolutions. Atlantic Economic Review 25 (3):274-288

The Private Provision of Public Goods Via Dominant Assurance Contracts

Comment: My most un(der)appreciated paper!

ABSTRACT:
Many types of public goods can be produced privately by profit seeking entrepreneurs using a modified form of assurance contract, called a dominant assurance contract. I model the dominant assurance contract as a game and show that the pure strategy equilibrium has agents contributing to the public good as a dominant strategy. The game is also modelled under incomplete information as a Bayesian-Nash game.

Tabarrok, A. 1998. The Private Provision of Public Goods Via Dominant Assurance Contracts. Public Choice 96:345-362.

Genetic Testing and Human Welfare: Reply to Hall

ABSTRACT: Short reply.

Tabarrok, A. 1996. Genetic Testing and Human Welfare: Reply to Hall. Journal of Health Economics 15:381-84.

Irrelevance Propositions Are Irrelevant

Comment: Pascal's Wager applied to new-classical economics.

Abstract: Ricardian equivalence theory and other New-Classical neutrality results have generated an enormous debate because they appear to have strong implications for policy.  I argue that irrelevance propositions are policy irrelevant.  If these propositions are true then behaving as if they are false has zero costs, but, if they are false, behaving as if they are true may be very costly.  Thus, even if we beleive these propositions to be true, we should behave as if they were false.  In consequence, we should not be overly concerned with whether these propositions are in fact true.  An interesting corrolary of the above arguments is that if irrelevance propositions are believed to be true much evidence will exist which suggests that they are false.

Tabarrok, A. 1995. Irrelevance Propositions Are Irrelevant. Kyklos 48:409-417.

Good Grapes and Bad Lobsters: Applying the Alchian and Allen Theorem

Abstract:  We consider the well-known theorem of Alchian and Allen that adding a per unit charge to the price of two substitute goods increases the relative consumption of the higher price good.  The current literature misspecifies the conditions under which the theorem holds.  When applying the theorem the fixed cost should be applied on a per unit basis, rather than in terms of an entry fee for consumption.  We state the necessary conditions for the theorem to hold when the the consumers are shipped to the goods.  

Cowen, T., and A. Tabarrok. 1995. Good Grapes and Bad Lobsters: Applying the Alchian and Allen Theorem. Economic Inquiry XXXIII (April):253-56.

Genetic Testing: An Economic and Contractarian Analysis

ABSTRACT: Medical researchers are rapidly identifying the genetic causes of many diseases. Genes that increase the risk of contracting Alzheimer's, colon and breast cancer, Huntington's, cystic fibrosis and numerous other diseases have been identified. Genetic tests can reveal an individual's probable health status many years in advance of sickness. Many fear that this will lead to `genetic discrimination' in the employment and health insurance markets. Solutions such as consent laws are impractical and create adverse selection problems. A new form of insurance, genetic insurance, can eliminate these problems and allow everyone to be insured.

Tabarrok, A. 1994. Genetic Testing: An Economic and Contractarian Analysis. Journal of Health Economics 13:75-91.

A Survey, Critique, and New Defense of Term Limits

ABSTRACT: Like the title says.

Tabarrok, Alexander. 1994. A Survey, Critique, and New Defense of Term Limits. Cato Journal 14 (2):333-50.

The Public Choice Theory of John C. Calhoun

Comments: One of the best pieces on Calhoun in my humble opinion.

Abstract: Like the title says.

Tabarrok, A., and T. Cowen. 1992. The Public Choice Theory of John C. Calhoun. Journal of Institutional and Theoretical Economics 148 (4):655-74.

The Preferred Tax Type: Comment On Herbener

Abstract: "Austrian" economists sometimes object that indifference curves are a poor tool because indifference doesn't exist in the real world.  The premise is questionable but the real issue is, Does the use of i. curves results in mistaken economics?  Herbener was the first to try to proof that it does but his argument is faulty.

Tabarrok, A. 1991. The Preferred Tax Type: Comment On Herbener. Review of Austrian Economics 5 (2):107-10


Chapters in Books, Other Nonrefereed Articles


Tabarrok, A. and D. Klein. 2002. FDAReview.org – an extensive web page on the history and evaluation of the FDA, equivalent in published form to a monograph or a short book.  Peer reviewed by Sam Peltzman, Henry Miller, founding director of the FDA's Office of Biotechnology, Paul Rubin and other FDA experts.

Klein, Daniel B. and A. Tabarrok. 2002. Time to End America's Drug Lag. Consumers' Research Magazine 85 (4): 10-14 (excerpted from FDAReview.org).

Tabarrok, A. 2002. Market Challenges and Government Failure: Lessons from the Voluntary City. In The Voluntary City: Choice, Community, and Civil Society, ed. D. Beito, P. Gordon, and A. Tabarrok. Ann Arbor: University of Michigan Press.

Tabarrok, A.. 2002. The Organ Shortage: A Tragedy of the Commons. In Entrepreneurial Economics: Bright Ideas from the Dismal Science, ed. A. Tabarrok. Oxford: Oxford University Press.

Tabarrok, A. 2001. The Blessed Monopolies. Regulation (Winter): 1-4.

Helland, E., and A. Tabarrok. 2000. Exporting Tort Awards. Regulation 23 (2):21-26.

Tabarrok, A. 1998. Response to Reisman on Capitalism. Quarterly Journal of Austrian Economics 1, (3): 57-60.

Tabarrok, A. and Cecil Bohanon. 1998. A Better Way to Elect School Boards. Indiana Policy Review 9, 2: 20-22.

Tabarrok, A. 1997. Death Taxes: Theory, History, and Ethics. Essays in Political Economy: Ludwig von Mises Institute (Auburn University, Auburn, AL, USA).  Translated into Spanish as Impuestos a la herencia: teoría, historia y ética (Eseade, 2002).

Tabarrok, A. 1997. Trumping the Genetic Tarot Card: Insurance against bad genes. Contingencies 9 (4):20-23.  Reprinted as "Gene Insurance" in Entrepreneurial Economics.

Tabarrok, A. 1997. Review Essay: Capitalism by George Reisman. Review of Austrian Economics 10 (2):115-132.

Tabarrok, A. 1996. Term limits and political conflict. In Legislative Term Limits: Public Choice Perspectives, ed. B. Grofman, 237-44. Boston: Kluwer Academic Publishers.