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.
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
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.
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.
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
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
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
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.
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
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
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,
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
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
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
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 respond.
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: 377-381.
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):
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.
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
Comment: (with Eric Helland). Working paper version in Word
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
Helland, E. and A. Tabarrok. 2004. Using Placebo Laws to Test “More
Guns, Less Crime”. Advances in
Economic Analysis & Policy 4 (1): Article 1.
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
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
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.
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
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):
(The above is a link to the JSTOR PDF. Email me if you do not have
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
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
however, implies that the believer is willing to accept any finite
cost to achieve any positive probability, no matter how small, of
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
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
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
Tabarrok, A., and E. Helland. 1999. Court Politics: The Political
Economy of Tort Awards. Journal
of Law and Economics XLII,1(April): 157-188.
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
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
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
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
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
Tabarrok, A. 1998. The Separation of Commercial and Investment
Banking: Morgans Vs Rockefellers. The Quarterly Journal of Austrian Economics 1
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
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
Tabarrok, A. 1996. Genetic Testing and Human Welfare: Reply to Hall.
Journal of Health Economics
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
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
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
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
Chapters in Books, Other
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
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. 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