Research

My research generally falls in one of three sub-fields in economics—political economy, entrepreneurship, and industrial organization—although I have published some pedagogical work as well. My research in political economy focuses primarily on the theory and practice of the welfare state and the analysis of compulsory voting rules. This work has been published in Public Choice, European Journal of Political Economy, European Journal of Law and Economics, Public Finance Review and as a book chapter in Lindberg’s (ed.) Knowledge and Policy Change (2013). Some of my ongoing work in political economy focuses on the role of social order and incentives in failed states, an analysis of the media’s role in Brazil’s recent political turmoil, and a reappraisal of Coase’s notion of transaction costs. I also maintain a couple of projects in compulsory voting.

My work in entrepreneurship aims to develop a “process-oriented” approach to an area that remains underdeveloped and under-appreciated in mainstream economics. This approach attempts to combine the notion of “radical uncertainty” with recent work in the study of social institutions. I have published articles on entrepreneurship in Journal of History of Economic Thought, Division of Labour and Transaction Costs, and as a chapter in Metcalfe and Cantner’s (eds.) Change, Transformation and Development (2003). I am currently working on a joint project with a colleague in psychology that attempts to merge the psychological research in creativity with my approach to entrepreneurship.

I am also involved in an array of industrial organization (or applied microeconomics) projects. Several of these developed with students following various classroom research assignments. They include analyzing issues in the sports and alcohol industries, published in Sport Management Review and Applied Economics; the latter work also appears as  a case study in Waldman and Jensen’s Industrial Organization: Theory and Practice (2007). I have other work published in Tourism Economics. Ongoing projects include work in the area of status goods, sports economics, and property taxes.

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You can find my published work and numerous current projects, below. Clicking on the references/titles will open an abstract and download link. Most of the work-in-progress is password protected, so contact me if you would like to access any of those papers.

Published Work

Political Economy

“The 1992–93 Swedish Crisis Debate: How Economic Consensus Overturns Tradition.” 2013. In Henrik Lindberg (ed.) Knowledge and Policy Change. Newcastle upon Tyne, UK: Cambridge Scholars Publishing.

In a more extensive study, presented at the RATIO Conference on Knowledge and Policy Change in August of 2011, I examined the role economists played in the Swedish public debate over its financial and economic crisis of 1992 and 1993. I argued that this Swedish experience is highly relevant for the financial crises faced by the United States and Europe, post-2007. The very survival of Sweden’s famed welfare state was fiercely debated during the 1992–93 crisis, just as the redistributive polices of Western Europe and the United States were debated in the wake of their own crises. Ultimately, Sweden’s welfare state survived, but was fundamentally reformed nearly twenty years ago. This paper argues contemporary policy analysts can gain insights into the process whereby expert, theoretical views of the economy clash with the world views of both laymen and other non-economist experts. In particular, how do non-economists understand the policies that shape their lives and how do economic experts try to persuade non-experts when it comes to the latter’s understanding of policy and “the economy?” While the RATIO paper dealt with these broad questions, the current chapter focuses on one aspect raised in the larger study: the strong degree of consensus over Swedish economic analysis that dominated the public forums in Sweden. I discuss the implications of this phenomenon, some potential reasons for its existence, and draw some parallels and contrasts with previous policy debates in Sweden. Indeed, the strong consensus over economic policy by Swedish economic “experts” sets up a profound clash between different generations of economists (with different theoretical outlooks) and between economists and other social scientists. Indeed, as the title suggests, the question of how the views of one generation of economists give way to the next generation is of fundamental concern here. Besides simply understanding the Swedish case better, this study attempts to add to the literature on policy formation and change. It also attempts to add to a separate literature on the “rhetoric of economics,” which has, for the most part, focused on how economists persuade one another, in other words, how they argue among themselves, how they decide what constitutes a valid argument, and what metaphors or stories they use.

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“How Safe are “Safe” Seats? A Comparison of Voluntary and Compulsory Voting Systems.” 2009. Brazilian Political Science Review, 3(2): 93–103. (with Tim Fry and Martin Kenneally)

Many observers have expressed concern that low voter turnout reflects an acute shortcoming in democratic politics. One proposed remedy, making voting compulsory, has garnered increasing attention among academics over recent years. Our article focuses on some of the technical properties of compulsory voting rules (CVR) while ignoring the philosophical debate over whether voting should be an obligation or a right. Using basic probability analysis, we compare a voluntary voting rule (VVR) to a compulsory one. We show that, under certain conditions, an electoral seat or district can become safer—or less competitive—with the imposition of a CVR. We also discuss some political implications of our analysis. For example, when generalized to, say, the national political system, this result implies fewer competitive seats in a CVR compared to a VVR, everything else equal. We contend that, because fewer seats will be “in play” in a CVR, CVRs should exhibit lower turnover of seats. Also, political suppliers can be expected to more narrowly focus their attention—and resources—on this smaller set of competitive seats than we would expect under a VVR.

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“Is Compulsory Voting More Democratic?” 2006. Public Choice, 129(1–2/Oct.): 61–75. (with Guang-Zhen Sun)

Lijphart (1997) endorses compulsory voting as a means to increase voter turnout. Considering the likely effects of the role of information (including its costs) on the decision to vote and taking an expressive view of voting, however, compels us to investigate two unexamined claims by such advocates: (i) that individuals are transformed by forcing them to vote, and (ii) that a compulsory electoral outcome is a more accurate reflection of community preferences.We argue that compelling those who are not particularly interested in, or informed about, the political process to vote increases the proportion of random votes and we show that under simple majority rule, compulsory voting may violate the Pareto principle; the less popular candidate is more likely to be elected. Our results cast doubt on the “miracle of aggregation” argument, which optimistically concludes that as long as uninformed votes are not systematically biased, they will have no effect on voting outcomes. We also briefly consider how information cascades can exacerbate this problem.

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“External Habit Formation and Dependency in the Welfare State.” 2005. European Journal of Political Economy, 21(1/Jan): 83–98. (with Guang-Zhen Sun)

External habit formation explains why welfare states can be expected to exhibit increasing dependency over time expressed in the share of the population receiving welfare transfers. At the same time, the average number of hours worked decreases. Under plausible parameter values, the rate of taxation and the welfare expenditure share of national income monotonically increase over time and asymptotically approach a steady state. A positive interactive feedback loop between slow moving external habits and welfare policies makes the extent of redistribution a ‘‘moving target’’. Consequently, setting arbitrary redistributive goals may never satisfy redistributional demands in future periods. Technological progress may mask the underlying dynamic effects of the welfare state.

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“The Welfare State as a Fiscal Commons: Problems of Incentives versus Problems of Cognition.” 2002. Public Finance Review, 30(6): 481–508. (with Stephen Turner)

A mounting empirical literature clearly indicates that the core programs of the welfare state are unsustainable in their present form. The proximate cause of this growing fiscal instability is a demographic imbalance between younger contributors and older beneficiaries. The authors argue, however, that the ultimate cause is the institutional structure of the welfare state itself. Specifically, if its fiscal institutions are modeled as a common pool resource, the tools and analysis emerging from the growing literature on common pools can be used. Such an analysis suggests that the apparent non-sustainability of current welfare state programs is rooted in the failure to resolve two distinct problems in institutional design. The first problem concerns how to limit the scope of opportunism among rational self-interested individuals. The second problem concerns how to limit the adverse effects of the knowledge problem among boundedly rational individual actors.

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“Destructive Competition, or Competition Destroyed? Regulatory Theory and the History of Irish Transportation Legislation.” 1998. European Journal of Law and Economics, 5(1): 13–50. (with Leonie Allen)

The principal aim of our study is to contribute to the debate over whether regulation is enacted in the interest of consumers, producers, political agents, or some combination of these. We examine the legislative debates and subsequent regulatory bills surrounding road transportation regulation in Ireland in light of the three dominant theories which purport to explain the existence of regulation: the public interest theory and the so-called Chicago and Virginia theories. A unique feature of our study is an attempt to integrate specific rhetorical concepts used in the public policy debates into the theoretical analysis of regulation. One noteworthy conclusion of our study is that theories of economic processes affect the shaping and results of public policy.

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Entrepreneurship

“The Normative Bias in Entrepreneurial Theory.” 2011. Division of Labour and Transaction Costs, 3(2): 81–105. (Heath Spong)

This article highlights the normative bias in the entrepreneurial theories of Schumpeter and Kirzner. This bias, while significant, has remained largely implicit, and the approaches of both authors, we argue, entail “Panglossian” views of entrepreneurial processes. We trace these problems to each of the theories’ teleological foundations and suggest that defining entrepreneurial “outcomes”, and normatively judging those outcomes, will be more problematic than commonly admitted. We suggest analysing entrepreneurship from a non-teleological approach that decouples the entrepreneurial act from the complex and unpredictable processes that follow from that act. Such an approach should eliminate the normative priors that currently exist and should open up a range of new areas to explore under the rubric of “entrepreneurship”. We also hope to stimulate discussion between entrepreneurship and new classical theorists, since, as we argue, there appear to be affinities between the approaches. In particular, our approach to entrepreneurial analysis implies the kinds of discontinuities that have become the hallmark of the new classical method. Our arguments are briefly illustrated by references to several brief examples at the end of the article.

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“Praxeology, Entrepreneurship and the Market Process: A Review of Kirzner’s Contribution.” 2003. Journal of History of Economic Thought, 25(4/Dec): 461–486. (with Heath Spong)

It is surely Israel M. Kirzner who has promoted the role of the entrepreneur more than any other author in the second half of the twentieth century. His description of the market process and entrepreneurship in his Competition and the Market Process (1973) represents a seminal contribution to Austrian thinking, although it has been slow to catch on in broader circles. The standard core of microeconomics allows little room for entrepreneurial elements, particularly if the latter are defined in terms of uncertainty, intuition, ignorance, and disequilibrium. In light of this intellectual discord and given his recent retirement, it is timely to reconsider Kirzner’s unceasing efforts to resurrect the role of the entrepreneur, and especially his effort to reconcile this role with conventional neoclassical approaches.

We shall see that Kirzner has not avoided criticism even from like-minded travelers. Radical subjectivists labeled his early descriptions of the entrepreneurial process as deterministic and questioned their worth in the wider context of market process theories. Further developments in his theory (e.g., 1979, 1980, 1982, 1985a, 1992) were instrumental in generating additional academic debate regarding the role of equilibrium. And, while Kirzner has attempted to modify his position over time, for example in describing the equilibrium concept as representative of ‘‘market induced tendencies’’ (see Kirzner 1992, pp. 25–30), we will argue that he has not been entirely convincing.

We intend to re-examine Kirzner’s strong methodological assertions regarding praxeology, the study of ‘‘human action.’’ This methodological statement will be examined in the context of the methodological discussions that were dominating the broader discipline at that time. One of the paper’s principal emphases is on Kirzner’s theory of the market process and the entrepreneurial role. We trace its development from its original conception (1967) and the seminal contribution (1973), through to more recent descriptions (i.e., 1992). We will argue that by introducing the entrepreneurial element, Kirzner was able to alleviate a glaring shortcoming in neoclassical theory by explaining the mechanics of arbitrage. We will also attempt to show that while Kirzner may not have always explicitly intended to describe the market process as deterministic, his repeated use of certain economic concepts signaled otherwise. Finally, while identifying the limitations in Kirzner’s notion of entrepreneurial ‘‘alertness,’’ we will also underline the need to build on this valuable contribution.

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“Uncertainty, Institutional Structure and the Entrepreneurial Process.” 2003. In Stan Metcalfe and Uwe Cantner (eds.) Change, Transformation and Development. New York: Springer-Physica. (with Heath Spong)

While there exist numerous theories of entrepreneurship, we aim to construct an account of that is thoroughly process-oriented and is thus consistent with non-teleological evolutionary foundations. To accomplish this, we combine theories of structural uncertainty with recent work in the theory of social institutions. From such a perspective, creatively thinking and acting entrepreneurial individuals can account for endogenous social change through their effect on institutions. Our approach helps to clarify many of the inconsistencies that arise in the existing entrepreneurial literature and we are able to clarify issues of entrepreneurial failure, self-employment versus entrepreneurship, entrepreneurs versus managers, and incentives for entrepreneurs in formal versus informal institutional settings.

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Pedagogy

“Overhauling Technical Handouts for Active Student Participation: A Model for Improving Lecture Efficiency and Increasing Attendance.” 2011. International Journal of Teaching and Learning in Higher Education, 23(1): 98–108.

This instructional paper is intended to provide an alternative approach to developing lecture materials, including handouts and PowerPoint slides, successfully developed over several years. The principal objective is to aid in the bridging of traditional “chalk and talk” lecture approaches with more active learning techniques, especially in more technically-oriented disciplines that employ data or require carefully structured graphs or mathematical manipulation. Using several examples, the paper shows how scarce lecture time can be used more efficiently, thus freeing up students to focus on higher order cognitive issues. Such an approach lends itself to more active-centered techniques. It also improves the incentives for students to attend lectures. The approach is time consuming in its initial development, but arguably pays for itself over the long run.

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"Instructor’s Manual" for David Colander’s Economics, 7th ed. 2007. Boston: McGraw Hill.

Complete revision and structural overhaul of textbook manual; designed to provide improved pedagogical support.

Industrial Organization

"The Price of High-Stakes Educational Testing: Estimating the Aggregate Costs of Florida’s FCAT" Exam (with Erin Keller). Forthcoming in Journal of Education Finance.

The No Child Left Behind Act of 2001 (NCLB) made schools accountable for student performance through standardized testing. Some have claimed that high-stakes testing is an inexpensive vehicle through which to raise educational standards, however, these studies typically count only the administrative costs of test development, test delivery, and test grading. In contrast, we attempt to calculate the social costs of high-stakes testing as comprehensively as possible, in one state, Florida. For example, previous research finds lower earnings and lower tax revenue for those who do not graduate from high school, and we know that Florida’s testing regime under NCLB has increased the number of students who do not graduate; we bring these two findings together to estimate how much the mandatory tests have cost students who do not graduate and who are held back at least one grade; we also calculate the loss of tax revenue caused by failure to graduate. We list an array of other non-quantifiable “costs” of the program, such as the tendency to re-classify more students as “disabled,” to cheat, and to narrow the curriculum. We find the direct and indirect costs of the program are considerable and should prompt further analysis into whether the benefits justify the sizable costs.

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“It's Population Decline We Need to Worry About.” 2013. TEDxFAU Presentation (FAU).

In the late 1960s, Paul Ehrlich predicted widespread human suffering from population explosion, just as Thomas Malthus did centuries earlier.  Jakee argues that not enough intellectual attention has been devoted to recognizing and considering the implications of exactly the opposite trend: the coming population decline.

Go To Youtube video of the lecture

“Satellite Accounts of the Tourism Industry: Structure, Representation and Estimates for Ireland.” 2012. Tourism Economics, 18 (5): 971–997. (with Martin Kenneally)

This article constructs tourism satellite accounts (TSAs) for Ireland and provides a simple matrix representation of how TSAs estimate value added, domestic product and employment. The authors calculate how much tourism has contributed, directly and in total, to Irish value added, domestic product and employment. They find that TSA-measured domestic tourism consumption in Ireland is over five times the traditional official estimate and that tourism indirectly contributes around a further 50% of its direct contribution to Irish GDP. As such, tourism is found to be Ireland’s second largest ‘industry’ in terms of gross value added and that it is Ireland’s largest employer. The analysis shows why tourism policies based on traditional estimates of the tourism industry are likely to be misguided.

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“Asymmetries in Scheduling Slots Can Drive Asymmetries in Game-Day Revenues: An Example from the Australian Football League.” 2009. Sport Management Review, 13(1): 50–64. (with Martin Kenneally and Hamish Mitchell)

This article investigates three related questions: first, whether the Australian Football League exhibits attendance asymmetries across the available playing slots; second, whether various subgroups of teams in the AFL have equal access to the more highly attended time slots; and, third, whether asymmetries in the first two phenomena can drive meaningful asymmetries in match-day revenues across clubs. We find that asymmetries exist not only across the various playing slots, but also in various teams’ access to the more highly attended slots. Further, by providing some novel estimates of revenue streams from television and gate receipts, we show that these asymmetries can drive substantial differences in game-day revenues. A key implication is that scheduling should be treated with the same critical analysis as the many other factors that affect the financial performance of clubs.

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“Australian Beer Wars and Pub Demand: How Vertical Restraints Improved the Drinking Experience.” 2004. Applied Economics, 36(4): 1613–1622. (with Ryan Donnar)

Recently, Australia’s two largest brewers, Carlton and United Breweries and Lion Nathan, have been aggressively competing for market share in the state of Victoria. Among other strategies, the two breweries have implemented vertical restraints in the form of ‘extensive’ agreements with retailers and the outright purchase of pubs. A key outcome of these purchases and agreements is the renovation of many pubs as brewers attempt to attract increasingly sophisticated drinkers. This paper attempts to quantify the value of these renovations and measure their associated impact on consumers, relying on insights from the hedonic literature. A simple, but novel approach, is used to estimate the implicit price of the pub environment and the effects of renovations on that price.

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Work in Progress

Political Economy

"Sweden’s Welfare State Crisis, 1992–93: Analyzing the Public Economic Debate Using Contemporaneous Interviews with Leading Social Scientists." (with Daniel Béland)

How do economic ideas formulated by academics manifest themselves in policy debates? To answer this question, we turn to Sweden, a country that experienced an overwhelming economic and financial crisis in 1992-93, which presaged the experiences of many countries during the Global Financial Crisis of 2008 and its aftermath. Using an ideational framework, we analyze the Swedish crisis of the 1990s using personal interviews with social science experts involved directly or indirectly in a vigorous public debate over profoundly altering the path of Sweden’s famous welfare state. We rely on a range of literatures, including personal accounts of policymaking economists, the rhetoric of economics literature and several lines of inquiry by non-economists. We focus on four themes: (i) economist “insider” versus “outsider” interpretations of the crisis; (ii) a high degree of consensus among economists about the causes of the crisis; (iii) exaggerations of economic claims; and (iv) the tendency to portray economic thinking as scientifically based. In addition to offering insights into nearly a century of Swedish academic economists’ involvement in the public sphere, we argue the Swedish experience provides numerous insights to more recent events, such as the 2008 Financial Crisis and even the climate change debate that frequently spills over into the public sphere.

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“Modeling Scientific Revolutions: Central Planning Versus Market Liberalism in Economic Thought.” (with Martin Kenneally)

The “social turn” in the sociology of science emphasizes the historical, social and institutional context of the scientific endeavor. Despite this conceptual advance, formal analyses of how scientific knowledge develops and is transformed have remained underdeveloped in both the sociology and the economics of science. In an attempt to rectify this disparity, we integrate into a formal model the social and evidential influences that Kuhn, Merton, and others suggest will impact scientists’ choices between competing theories. We use this model to analyze the scholarly legacy of a fierce intellectual battle among economists over the feasibility of central planning, known as the calculation debate. We empirically test, using citation analysis, the hypothesis that both evidence and socio-professional factors affected economists’ choice of central planning theories over a span of 36 years. We present a number of influences that acted upon economists as they shifted from a more pro-planning stance around the mid-20th century to a more market-oriented position several decades later. Each of the variables tested significantly affected economists’ theoretical choice.

“The Constitution of Failed States: How ‘Alegality’ Explains Incapacity.” (with Stephen Jones)

Most international relations scholars focus on internal insecurity as the fundamental cause of state failure and overwhelmingly support direct intervention as a remedy. In contrast, we contend insecurity is a result of what we term “alegality,” the primary institutional feature of failed states. An alegal system is one in which rules may be written, but are seldom followed. Continual rule breaking implies an empirical lack of behavioral constraints present in more stable societies. Without such constraints, these states are characterized by autocratic leadership, few (if any) publicly-provided goods, an inefficient and exploitative bureaucracy and internal insecurity. Under these circumstances, we expect citizens to retreat from productive activities. Our approach explains why state failure is, despite many ongoing interventions, such a robust equilibrium.

“When Increasing Turnout Can—and Cannot—Alter Outcomes: Implications for Compulsory Voting” (with Martin Kenneally)

Previous studies that have examined the effects of increasing voter turnout have yielded ambiguous results. Much of that debate centers on how preferences of voters differ from those of non-voters. We develop a general measure of the potential effects of increasing turnout that encompasses the entire range of assumptions concerning non-voters’ preferences. Our “turnout competitiveness index” (TCI) and a related “elasticity rule” provide a measure of seat competitiveness that links voluntary voter support for candidates and abstention rates to the potential to alter expected electoral outcomes from increasing turnout alone. This allows us distinguish the traditional measure of “conventional swing” from our concept of “turnout swing.” We analyze the properties of the TCI and use several stylized examples of competitiveness and turnout rates to illustrate, numerically and graphically, the effects that increasing turnout to 100% has on seat competitiveness.

“Forced to Vote: An Empirical Evaluation of Compulsory Voting” (with Terje Hoim & Christina Hamalian)

That low voter turnout has a delegitimizing effect on democratic processes has become a common refrain in both academic and lay thinking. This position largely rests on the argument that low-turnout elections imply unequal electoral participation and unequal electoral participation implies lopsided benefits from the political process. One way to solve what Lijphart has called democracy’s “unresolved dilemma,” is to force all eligible citizens to the polls. Besides eliminating uneven voter participation, proponents of compulsory voting argue that increasing the rate of voting will have a range of positive effects on a country, such as improving female political participation, income equality and citizen political knowledge. However, very few empirical studies have been done to test these claims. We evaluate the effects of compulsory voting on a number of metrics that proponents claim will be improved. For example, we examine income equality, level of government corruption, democracy ranking and others. We use a more comprehensive database than other empirical studies including, for example, the World Values Survey. We find there are no significant differences between the two electoral systems.

Entrepreneurship

"Nonlinearity and Entrepreneurship: A Prolegomena" (with Terje Hoim and Blaine Pflaum)

Entrepreneurship occupies a curious place in economic theory. On one hand, the importance of entrepreneurship is widely recognized, particularly as it pertains to economic growth. However, the entrepreneur lacks a broadly accepted economic theory, and suffers from a dearth of literature on the subject. We believe that this is due to economics’ heavy reliance on linear mathematical theory. In this thesis, we use nonlinear mathematics to construct a model of the entrepreneur that captures the sudden destabilization of a steady state, the unpredictability of a creative action, the possibility of entrepreneurial failure, and sensitivity to small changes in environment.

Pedagogy

Industrial Organization

“New Trends, Old People: The Effect of Population Aging on House Prices in the United States and Japan.” (with Terje Hoim, Martin Kenneally and Neha Shrestha)

A significant number of countries are experiencing a new demographic trend, “population aging,” that can be expected to impact key markets, such as housing. We use regression analysis to determine the relationship between house prices and population in the United States and Japan to assess the impact of population aging on housing in each country. Using the estimated parameters for each country, along with population projections for the period 2015–2050, we simulate future house price trends. While our regression and simulation tests integrate aspects of past models on population aging and housing, they also provide a comparative aspect since Japan and the United States have diverging future population trends. In addition, we extend the forecast later than previous studies, which allows us to update what was once a hotly contested debate in the literature over future house prices. After comparing the effects of population on real house prices in the United States and Japan, we find that the effect of population aging on real house prices depends crucially on assumptions about the change of housing stock in each country. Nonetheless, consistent with intuition, the results of our model predict that, compared to the United States, Japan’s real house prices trend below the United States in all cases.

“Scheduling Slots and Sports League Objectives: An Empirical Analysis of the Australian Football League.” Centre for Policy Studies Research Papers (10–1) (with Martin Kenneally)

We concentrate on the redistributional aspects of sports league decisions by analyzing the allocation of scheduling slots in the Australian Football League. We model and empirically test a number of team variables that we hypothesize are likely to influence the league’s allocation of scheduling slots to teams. We frame each of these variables in terms of its likelihood of contributing to either competitive balance or “infant industry” objectives versus its likelihood of contributing to increased gate attendance and television viewership (viz profit) objectives. We found no evidence that the league’s distributional choices were consistent with competitive balance-infant industry goals. Rather, our results suggest that the league is pursuing a policy of profit maximization.

"How Much Did the Gothic Churches Cost? An Estimate of the Ecclesiastical Building Costs in the Paris Basin between 1100 and 1250” (with Amy Denning).

While a few scholars have studied the explicit (tangible) costs of the ecclesiastical buildings constructed in the High Middle Ages, no one has, to our knowledge, examined the implicit (opportunity) cost of unskilled labor required for their construction. Neither does there exist an estimate of the total cost of their building as a percentage of GDP. We examine the implicit costs of building the Gothic churches of the Paris Basin built between 1100-1250, and estimate the percentage of the economy that was devoted to build them. We estimate that over this 150-year period, on average, 21.5 percent of the regional economy was devoted to the construction of these Gothic churches, 1.5 percent of which is attributable to the implicit cost of labor.

"Paying for Status: A Study of the US Automobile Market” (with Tina Spogli and Martin Kenneally)

Conspicuous consumption, or status consumption, is a form of consumer purchasing behavior in which products are bought not for their intrinsic quality, but rather for their status-signaling properties. An innate human desire for social conquest, as illustrated in evolutionary psychological theory, is the driving force behind the theory of conspicuous consumption. In evolutionary psychology, the tendency to “keep up with the Joneses” is termed the theory of status competition. Building a positive brand image that also conveys status can allow a firm to gain a competitive advantage due to positive price premiums and greater brand equity. The present study uses a hedonic pricing model to analyze both the luxury status and non-luxury status US market for automobiles in order to detect evidence, if any, of conspicuous consumption. Controlling for other hedonic characteristics that affect price, it was hypothesized that the status and brand of a vehicle would significantly affect its new price. The data set consists of 89 sedans and regression analysis was conducted using Microfit. Status, together with other identified hedonic characteristics, was found to have a significant impact on the new price of a vehicle. Specific brands in this model gave insight into vehicle depreciation rates. The findings have important implications for understanding how firms position their brand in the mind of the consumer.

"A New Classical Partial Equilibrium Model of Transaction Costs" (with Stephen Jones)

The history of human development is one of an ever broadening arena of exchange. With the wider degrees of exchange has come more complex transactions and, thus, more complex transaction costs. While economics has, in general, made great strides since Coase (1937) first introduced the idea of transaction costs as “the costs of using the price mechanism,” economists have been loath to find an acceptable way to model the general phenomenon of transaction costs. We attempt to remedy these shortcomings by providing a general partial equilibrium model of transaction costs and by specifying a key property of transaction costs that heretofore has remained opaque. We argue the most crucial set of transaction costs are fully unanticipatable ex ante and, as a consequence, manifest as productivity shocks constituting unanticipated losses in production and wealth. They cannot, as such, affect choice on the margin, but they crucially affect inframarginal choice. In other words, they affect the choice and path of specialization and not the marginal amount of production.