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
More chapters in books and other
publications are below.
Millions of crowdfunding campaigns have raised
billions of dollars for local public goods. But most crowdfunding
campaigns fail because, we argue, the standard assurance contract has
weak implementation properties that can lead to conditionally
cooperative behavior and subsequent miscoordination. We extend the
standard assurance contract with refund bonuses payable only if the
campaign’s target is not reached. We experimentally examine various
fixed and proportional refund bonuses. Our special focus is on bonus
designs aimed at encouraging early contributions and, thus, improving
outcomes of conditionally cooperative behavior. We find that such
designs are especially valuable as they nearly double the rate of
campaign success at very low cost and are financially self-sustainable
even after taking into account campaign failures. In short, better
crowdfunding contracts can greatly increase the
private and social value of crowdfunding.
Cason, Tim, Tabarrok, Alex and Robertas
Zubrickas.2019. Better Crowdfunding.
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, N. and
Tabarrok A. 2018-forthcoming. Is
Regulation to Blame for the Decline in American Entrepreneurship?
Economic Policy 93
We can imagine a plausible case for government support of science based on
traditional economic reasons of externalities and public goods. Yet when it
comes to government support of grants from the National Science Foundation
(NSF) for economic research, our sense is that many economists avoid
critical questions, skimp on analysis, and move straight to advocacy. In
this essay, we take a more skeptical attitude toward the efforts of the NSF
to subsidize economic research. We offer two main sets of arguments. First,
a key question is not whether NSF funding is justified relative to
laissez-faire, but rather, what is the marginal value of NSF funding given
already existing government and nongovernment support for economic research?
Second, we consider whether NSF funding might more productively be shifted
in various directions that remain within the legal and traditional purview
of the NSF. Such alternative focuses might include data availability, prizes
rather than grants, broader dissemination of economic insights, and more.
Given these critiques, we suggest some possible ways in which the pattern of
NSF funding, and the arguments for such funding, might be improved.
Cowen, T., &
Tabarrok, A. 2016. A Skeptical View of
the National Science Foundation’s Role in Economic Research. Journal of
Economic Perspectives, 30(3): 235–248.
Comment: Written for Cato Conference on Growth, video
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, A. & N. Goldschlag. 2015. Is Entrepreneurship in Decline? In Understanding the Growth Slowdown (Brink Lindsey (ed).
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
Rajagopalan, S., & Tabarrok, A. 2014. Lessons
from Gurgaon, India’s private city. Cities and Private Planning
(pp. 199–231). Edward Elgar Publishing. Retrieved from
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
Dourado, E., Tabarrok, A., 2014. Public choice
perspectives on intellectual property. Public Choice 1–23.
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.
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
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.
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.
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).
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)
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.
Tabarrok, A., 2013. Private Education in India: A
Novel Test of Cream Skimming. Contemporary Economic Policy 31, 1–12.
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
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
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?
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.
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
Tabarrok, A. and David Undis. 2006. Missing the Mark. Cambridge
Quarterly Journal of HealthCare Ethics. 15(4):450-456.
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:
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.
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.
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
Helland, E. and A. Tabarrok. 2004. The
Evidence on Public versus Private Law Enforcement from Bail Jumping.
Journal of Law and Economics
XLVII (1): 83-122.
Comment: (with Eric Helland).
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.
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.
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.
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.
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.
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.
ABSTRACT: The neutrality theorem for public goods is proved using a Dolbear
Tabarrok, A. forthcoming. A Geometric Proof of the Neutrality
Theorem. Public Finance/Finances
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.
(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.
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.
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.
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:
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.
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
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
Tabarrok, A., and E. Helland. 1999. Court Politics: The Political Economy of
Tort Awards. Journal of Law and Economics
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.
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
Tabarrok, A. 1998. Voting Theory with Representation Triangles and Cubes. Mathematica in Education and Research 7
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
Tabarrok, Alexander and Tyler Cowen. 1998. Who Benefits from Progress?, Kyklos 51 (3):379-397.
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
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
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
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.
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
ABSTRACT: Like the title says.
Tabarrok, Alexander. 1994. A Survey, Critique, and New Defense of Term
Limits. Cato Journal 14
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.
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
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
Tabarrok, A. 2001. The
Helland, E., and A. Tabarrok. 2000. Exporting
Awards. Regulation 23
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
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.