Economics

The baby formula problem is an application of Newmark's Third Law

"When you see puzzling behavior in a market or a hard-to-explain institution, ask first: is a government regulation or bureaucracy involved?"

See "How Government Made the Baby-Formula Shortage Worse," "The U.S. Baby Formula Shortage Is the FDA's Fault," and "Rock‐​a‐​Bye Trade Restrictions on Baby Formula". (Note that there is little overlap in the explanations offered by these three pieces.)

And for a spirited critique of the administration's plan to deal with the shortage see "The White House Plan on Baby Formula Is Classic Biden".


"Robbing Peter to Pay Paul? The Redistribution of Wealth Caused by Rent Control"

Yet another government policy touted as helping the poor that apparently . . . doesn't.

We use the price effects caused by the passage of rent control in St. Paul, Minnesota in 2021, to study the transfer of wealth across income groups. First, we find that rent control caused property values to fall by 6-7%, for an aggregate loss of $1.6 billion. Both owner-occupied and rental properties lost value, but the losses were larger for rental properties, and in neighborhoods with a higher concentration of rentals. Second, leveraging administrative parcel-level data, we find that the tenants who gained the most from rent control had higher incomes and were more likely to be white, while the owners who lost the most had lower incomes and were more likely to be minorities. For properties with high-income owners and low-income tenants, the transfer of wealth was close to zero. Thus, to the extent that rent control is intended to transfer wealth from high-income to low-income households, the realized impact of the law was the opposite of its intention.


"Why Are There 10 Hot Dogs to a Pack But Only 8 Buns?"

Mental Floss tackles a Big Question of our time. Their answer is not fully satisfying but it could be true

(For those of you with an academic bent, here's a link to an abstract of a paper co-authored by a long-time-ago colleague of mine. I remember virtually all my colleagues being interested in the topic, but most, I think, weren't persuaded by the paper.)


"Publication, Publication"

This a terrific piece by Harvard professor Gary King advising students how to properly replicate a published paper. Everything is here: if students follow the advice, they will have a fine chance of getting published.

Trying to replicate a published paper is, I think, a fine--albeit demanding for both student and professor--exercise for a graduate econometrics class. (Prof. King apparently also assigns this to undergraduates as well, but he teaches at . . . Harvard.)

UPDATE: Link fixed now.