Dr. Keith Jakee

Research/Publications

My research generally falls in one of three sub-fields in economics—political economy, entrepreneurship, and industrial organization—although I have been working considerably less in industrial organization recently and more in the cross-disciplinary area of “politics, philosophy, and economics” (PPE).  My research in political economy focuses primarily on problems of (governmental) fiscal discipline, the welfare state, and voting (specifically “compulsory” voting). This work has been published in, for example, Public Choice, European Journal of Political Economy, European Journal of Law and Economics, Public Finance Review, Quarterly Review of Economics and Finance, the Independent Review, and Politics and Policy. Some recent work that falls under the PPE umbrella examines the role of the “rule of law” in failed states. Other papers focus on the evolution of Nobel Laureate James Buchanan’s political theory, and an analysis of contrasting political theories of the “right” and “left” in the 1960s and 70s. I also have a recent book chapter arguing the transaction costs of subsidizing global trade have been underappreciated, and that they have, moreover, been increasing. Another article critically analyzes the claim that the data firm, Cambridge Analytica, which worked for the 2016 Trump campaign,  “weakened” democracy. 

 

I also have a TED-FAU talk emphasizing the problems of population decline over the more popular notion of population “explosion.” 

 

My work in entrepreneurship aims to develop a “process-oriented” approach to an area that remains underdeveloped and under-appreciated in mainstream economics. My approach combines the notion of “radical uncertainty” with contemporary research in social institutions; this work also has a philosophical bent. A recent book chapter in this area combines entrepreneurship with my interest in transaction cost analysis. Another working paper explores how early macroeconomic models were purged of any role for the entrepreneur.  

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My industrial organization (or applied microeconomics) projects include several that were developed with students following various classroom research assignments and theses. These include analyses of the sports, alcohol, tourism and education industries. This work has been published in Journal of Education Finance, Sport Management Review, Tourism Economics, and Applied Economics. One of these, for example, attempts to estimate the hidden costs of standardized tests in Florida (Jakee and Keller, 2017). An ongoing industrial organization project includes a reappraisal of Coase’s notion of transaction costs.

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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. Publications are also available on my ResearchGate page. 

Published Work

Political Economy

A growing body of experts has identified the shift towards deglobalization as a major threat to both economic prosperity and the extensive international cooperation that has long characterized the “liberal world order.” These experts contend that policy makers have failed to comprehend the extraordinary positive-sum nature of international trade. We call this narrative into question, and argue that free-trade advocates have frequently ignored the substantial transaction costs underpinning global commerce, especially those subsidized by the United States. We claim US policies supporting globalization after WWII were broadly consistent with the country’s vital national security objectives until recently. Those broad objectives have shifted as a result of structural changes in geopolitical dynamics, technology, military costs, and the US’s fiscal capacity. In sum, the costs of subsidizing global trade have been increasing, while the expected benefits of globalization have fallen. For these reasons, we argue deglobalization is here to stay.

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Book Link

Cambridge Analytica, a data analytics firm that worked for the 2016 Trump campaign, provoked considerable controversy: its “psychographic profiling” or “microtargeting” was said to manipulate the outcome of the election, weakening American democracy itself. However, these arguments ignore that other major US presidential campaigns—for the last several cycles—contracted with firms to profile voters, including the Obama and Sanders campaigns. We compare Cambridge Analytica’s origins and processes to its competitors, and we carefully analyze the steps involved in microtargeting. We find the firm’s activities were fundamentally similar to other firms, and not likely as effective at changing behavior as much of the commentary around it has claimed.

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Journal Link

This article introduces untrained readers to modern political economy, also known as public choice, rational choice, and the economic theory of politics. It is an intellectual history approach, meaning it clearly associates the principal insights to specific individuals. It provides some brief context that reaches back to the still-relevant ideas of classical economics. The main focus is, however, on the concepts developed by the first generation of public choice theorists from about 1950 to 1970.

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This article builds on a companion piece (Jakee, 2022), which introduced untrained readers to the history of modern political economy, or public choice. While the other article focused on the concepts developed by the first generation of public choice theorists—from about 1950 to 1970—the current article focuses on several major issues that the sub-discipline continues to wrestle with. These issues include collective action, voting, constitutions, bureaucracy, game theory as a tool, representative government (including political parties and interest groups), regulation, and non-coercive solutions to collective choice problems.

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Venezuela was the fastest-growing economy of the twentieth century until the 1970s, and it still has the world’s largest known oil reserves. Yet in recent years, it has experienced the greatest economic collapse in South America’s history, condemning 96 per cent of its people to poverty. Much of the existing literature blames foreign sanctions or a decline in oil prices, or both. We disagree, arguing the breakdown was caused by explicit institutional changes that politicised the oil industry and replaced market mechanisms with central planning. The institutional restructuring also disregarded monetary stability and basic infrastructure, including electricity supply, telecommunications, and even security.

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In modeling state failure, many international relations and development scholars focus on formal institutions, which we take to be largely synonymous with the “rule of law.” By contrast, we argue that failed states—and particularly the persistence of failed states—cannot be understood without accounting for informal social norms that underpin the rule of law. We operationalize social norms in failed states by positing the absence of a norm to comply with national laws. Specifically, we argue that political leaders and high-level ministers, civil servants, and citizens in failed states lack a generalized social norm to adhere to national laws. Without such a norm, socio-political dynamics in these states lead to incapacity, autocratic leadership, an inefficient and exploitative bureaucracy, a constant threat of violence, and poverty. Our approach explains why state failure is, despite many interventions, so persistent, and why state incapacity is a consequence of other, more deeply-seated social phenomena, not a cause of them…

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Abstract: Defying an international trend among industrialized nations, Sweden is one of the few countries to fundamentally restructure its public pension system. This reform spurred interest in explaining why the Swedish political system accomplished these changes when so many other nations have not. Anderson claims it was possible because politically-powerful unions and industrial groups supported government efforts, while Feltenius counters that Anderson underestimates the influence of smaller, issue-oriented pressure groups, the pensioners’ organizations. The Anderson-Feltenius dispute reflects disagreement over Pierson’s theory of welfare state development and retrenchment, as well as the persistence and influence of corporatism. We reexamine, in detail, the argument proffered by Feltenius and suggest, as a theoretical matter, both he and Pierson neglect the importance of informal rules in political decision-making. We also present additional evidence, ignored by Feltenius, that unions—and by inference corporatism—remained influential during Sweden’s reform. We thus argue Sweden’s experience is unlikely to be instructive for non-corporatist countries.

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The debate over whether corruption “sands” or “greases” the wheels of income growth has generated a substantial empirical literature; the “greases” argument—that corruption may help firms overcome deleterious governmental obstacles—seems to be advancing, recently. However, as virtually all empirical studies in this area depend upon often-criticized aggregate corruption indices, they fail to take account for the multifarious nature of corruption. We revisit the dispute using newer and more nuanced data that allow for disassembly of corruption into a number of specific types. We also improve upon the problem of missing data, afflicting most related studies, with the use of a better imputation method. We find that although certain types of corruption may help “grease” business transactions, evidence in favor of the “sand” hypothesis is stronger.

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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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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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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 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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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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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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Entreneurship

We contend microeconomic theory’s inability to confront the essence of entrepreneurship is due, at least in part, to marginal analysis, which implies infinitely fine adjustments as external parameters change. If, as we argue, entrepreneurs make decisions over complex bundles of choices, entrepreneurial decisions will be discrete or inframarginal. Marginal analysis will, in this setting, be unworkable and even misleading. Building on Yang and colleagues’ inframarginal approach, we model entrepreneurs as consumer-producers who weigh expected total net benefits across their bundled decisions rather than marginal ones. Introducing real time gives rise to path dependence—or a status quo bias—because of the transaction costs of acquiring/liquidating assets and the change in entrepreneurial productivity from learning-by-doing. This path dependence does not however imply inefficiency.

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Link to book

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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It is surely Israel 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. While he is to be lauded for his 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 he has not been entirely successful. Radical subjectivists labeled his early descriptions of the entrepreneurial process as deterministic and questioned their worth in the wider context of market process theories. We re-examine Kirzner’s strong methodological assertions regarding praxeology, and argue that by introducing the entrepreneurial element, he was able to alleviate a glaring shortcoming in neoclassical theory by explaining the mechanics of arbitrage. We also show that while Kirzner may not have always explicitly intended to describe the market process as deterministic, his continued reliance on certain economic concepts signaled otherwise. We conclude that a non-deterministic approach to entrepreneurship is needed to fully appreciate this function in social processes. 

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

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

Industrial Organization

While competitive balance is often assumed to be a primary objective of all sport leagues, this assumption should be questioned, particularly if it conflicts with revenue or profit-maximizing objectives. Indeed, many of the collective decisions made by league executives have distributional consequences that might be inconsistent with promoting competitive balance. We analyze the allocation of game-day scheduling slots to teams—a largely overlooked aspect of league scheduling—in the Australian Football League and ask whether more lucrative slot allocations to certain teams are consistent with competitive balance or revenue maximization goals. A key aim of our study is to determine whether the introduction of a historically lucrative broadcasting contract in the early 2000s altered game-day scheduling since broadcasters prefer matches between strong or popular teams over match ups that might better promote competitive balance. We find the broadcasting contract did alter scheduling allocations and that none of the other variables consistent with competitive balance were statistically significant. As such, the redistributions likely run in the direction of financially weak teams to strong ones, contrary to some previous suggestions.

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While traditional sports have dominated a segment of the entertainment industry for decades, eSports (electronic sports) have expanded to become a global phenomenon in recent years. This paper explores the likelihood of eSports surpassing traditional American sports in viewership, investment, and sponsorship. Utilizing data from media specialists and internet data aggregators, we find that certain eSports are now surpassing a number of popular sporting events in the United States, such as baseball’s World Series, the National Basketball Association Finals, and hockey’s Stanley Cup Finals, in terms of viewership. We discuss some of the possible reasons for the increasing appeal of eSports and suggest this trend will fundamentally change the industry as corporate sponsors and investors allocate greater amounts of advertising and resources away from traditional sports and in to burgeoning eSports.

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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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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

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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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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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

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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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.

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.

This paper examines James Buchanan’s intellectual development between The Calculus of Consent (1962) and The Limits of Liberty (1975), focusing specifically upon several of his lesser-known works on higher education in the 1960s. We trace several key concepts Buchanan would come to fully develop and analyze in Limits. For example, we show that Academia in Anarchy (with Devletoglou) and “The ‘Social’ Efficiency of Education” (1970) cast informal social norms in a central role in the maintenance of social order; these ideas, moreover, anticipated the notion of “ordered anarchy” that would be later expressed in Limits. We also demonstrate that Buchanan explored a version of law-as-public-capital in Academia before he expanded on the concept in Limits. And finally, we show that Buchanan had a concern for the inheritors of constitutions in “Student Revolts, Academic Liberalism, and Constitutional Attitudes” (1968a) akin to his concern over the “second generation” problem in Limits. We thus conclude that Buchanan’s lesser-known work on education served a pivotal role in exploring and developing the constitutional thinking he later expressed in considerably more nuanced form in Limits.

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.

Entreneurship

Of all the entrepreneurial activities that occur on a daily basis, very few are profoundly successful. Even accounting for various interpretations of “success,” the odds are not in favor of the individual entrepreneur. Following Buchanan and Vanberg (1991) and Jakee and Spong (2003), we propose that entrepreneurial activity is driven by an innate desire to act in a creative and innovative manner, despite the uncertainty and potential risks of failure. This approach de-emphasizes the notion that entrepreneurs are motivated purely, or even principally, by profit. This study supports such a view by summarizing qualitative data collected through interviews with a number of entrepreneurs.

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

Research and research writing are inordinately difficult to teach, which probably accounts for why so few courses exist to teach this specific process at an advanced level. This paper describes a research/writing class, evolving for 20 years, that is designed specifically to teach undergraduate research skills, although the insights are equally applicable to graduate students. Rather than focusing on the mechanics of writing per se, it attempts to convey the key properties of a productive writing process. Among other things, the class employs a well-established device used by professional writers, the writing workshop, as it attempts to convey the point that “practicing” writing improves quality. The class design provides students with tools to meet the following 10 objectives: (1) to start writing “somewhere” (and very early), (2) to separate the stages of writing: Brainstorming, Organizing (outlining), Drafting, Revising after feedback, (3) to demystify research/thesis process, (4) to appreciate that writing is for others (not for the writer or even writer’s advisor), (5) to understand that writing entails different problems than oral discussion: what one writes is not always what readers read, (6) to realize that providing critical feedback on others’ work develops one’s own critical writing skills, (7) to learn that the claim/hypothesis is the anchor to any research (virtually all nonfiction), (8) to accept that responding/revising to criticism is vital to becoming an effective writer/researcher, (9) to acquire research skills that can be applied very generally to other projects in many professional settings, (10) to internalize the value of precision/detail.

Industrial Organization

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.

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.

We argue Coase’s central insights are fundamentally underappreciated because he uses a methodology unsuited to standard neoclassical analysis. We advance Coase’s main line of research by clarifying some modeling details he left opaque. Specifically, we argue a crucial set of transaction costs are never fully anticipatable, ex ante; this special class of transaction costs manifest as productivity shocks that involve unanticipated losses in production and wealth. Following Yang (2001, 2003), we trace an approach to specialization and a class of transaction costs we call unanticipated transaction costs, but which Yang largely ignored in his own prodigious work. Defined as such, unanticipated transaction costs cannot affect choice on the margin, but they do affect choice among paths of future choices. A key implication that emerges is the sequential, or path-dependent, nature of decision making. Using our advances on Coase and Yang, we revisit and reinterpret the Fisher Body case. Interpreting transaction costs in this light explains numerous economic puzzles and reinvigorates Yang’s call for an inframarginal revolution in economics.