Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't (30 page)
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Authors: John R. Lott Jr.
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54
Unfortunately, Ayres and Levitt were unable to provide the primary data used in their paper to others on the number of LoJack devices installed in cars. An attempt to test whether there was a drop in auto thefts did not confirm these original claims. John R. Lott Jr., “Does a Helping Hand Put Others at Risk?”
Unfortunately, Ayres and Levitt were unable to provide the primary data used in their paper to others on the number of LoJack devices installed in cars. An attempt to test whether there was a drop in auto thefts did not confirm these original claims. John R. Lott Jr., “Does a Helping Hand Put Others at Risk?”
55
Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965) (
http://www.scu.edu/law/FacWebPage/Neustadter/e-books/abridged/main/cases/Williams.html
).
Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965) (
http://www.scu.edu/law/FacWebPage/Neustadter/e-books/abridged/main/cases/Williams.html
).
56
Reyes
v.
Wyeth Laboratories
, 498 F.2d 1264 (5th Cir. 07/31/1974) (
http://biotech.law.lsu.edu/cases/vaccines/reyes_v_wyeth_laboratories.htm
).
Reyes
v.
Wyeth Laboratories
, 498 F.2d 1264 (5th Cir. 07/31/1974) (
http://biotech.law.lsu.edu/cases/vaccines/reyes_v_wyeth_laboratories.htm
).
57
The award was for $200,000 in 1970.
The award was for $200,000 in 1970.
58
For example, take something as simple as football helmets, where helmet makers are now held liable for neck injuries even though manufacturers warn customers that helmets will only protect the skull, not the neck. (
Bell Sports
v
. Brian j. Yarusso,
Supreme Court of the State of Delaware, C.A. No. 93C-10-132, September 7, 2000) In hopes of avoiding liability, helmet manufacturers are placed in the absurd situation of having to warn their customers not to play
sports. Some helmets now carry the following warning: “NO HELMET SYSTEM CAN PROTECT YOU FROM SERIOUS BRAIN AND/OR NECK INJURIES INCLUDING PARALYSIS OR DEATH. TO AVOID THESE RISKS, DO NOT ENGAGE IN THE SPORT OF FOOTBALL” (emphasis in the original). See
http://www.amazon.com/Schutt-Air-Jr-Football-Helmet/dp/B0000AQKCS
). The columnist George Will also ridiculed the climate of corporate fear created by excessive litigation, citing the example of a baby stroller carrying the warning, “Remove baby before folding.” See “The Law vs. Good Sense,”
http://www.jewishworldreview.com/cols/will060302.asp
.
For example, take something as simple as football helmets, where helmet makers are now held liable for neck injuries even though manufacturers warn customers that helmets will only protect the skull, not the neck. (
Bell Sports
v
. Brian j. Yarusso,
Supreme Court of the State of Delaware, C.A. No. 93C-10-132, September 7, 2000) In hopes of avoiding liability, helmet manufacturers are placed in the absurd situation of having to warn their customers not to play
sports. Some helmets now carry the following warning: “NO HELMET SYSTEM CAN PROTECT YOU FROM SERIOUS BRAIN AND/OR NECK INJURIES INCLUDING PARALYSIS OR DEATH. TO AVOID THESE RISKS, DO NOT ENGAGE IN THE SPORT OF FOOTBALL” (emphasis in the original). See
http://www.amazon.com/Schutt-Air-Jr-Football-Helmet/dp/B0000AQKCS
). The columnist George Will also ridiculed the climate of corporate fear created by excessive litigation, citing the example of a baby stroller carrying the warning, “Remove baby before folding.” See “The Law vs. Good Sense,”
http://www.jewishworldreview.com/cols/will060302.asp
.
59
Richard L Manning, “Changing Rules in Tort Law and the Market for Childhood Vaccines,”
Journal of Law and Economics
, vol. 37, 1994.
Richard L Manning, “Changing Rules in Tort Law and the Market for Childhood Vaccines,”
Journal of Law and Economics
, vol. 37, 1994.
60
Richard L. Manning, “Is the Insurance Aspect of Producer Liability Valued by Consumers?: Liability Changes and Childhood Vaccine Consumption,”
Journal of Risk and Uncertainty
, 37-51.
Richard L. Manning, “Is the Insurance Aspect of Producer Liability Valued by Consumers?: Liability Changes and Childhood Vaccine Consumption,”
Journal of Risk and Uncertainty
, 37-51.
61
John R. Lott, Jr. And Richard L Manning, “Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards?: Earnings Premium and Cancer Risks,”
Journal of Legal Studies
, January 2000.
John R. Lott, Jr. And Richard L Manning, “Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards?: Earnings Premium and Cancer Risks,”
Journal of Legal Studies
, January 2000.
62
This assumes a real interest rate of 3 percent.
This assumes a real interest rate of 3 percent.
63
Lott and Manning, “Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards?”
Lott and Manning, “Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards?”
64
The premiums fell by 43 to 108 percent. A drop of 108 percent indicates that workers were being overcompensated by the ability to sue and now took on low wages to get this right.
The premiums fell by 43 to 108 percent. A drop of 108 percent indicates that workers were being overcompensated by the ability to sue and now took on low wages to get this right.
65
Lott and Manning, “Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards?”
Chapter Two: ReputationsLott and Manning, “Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards?”
1
This according to Michael Moore’s official website,
http://www.michael-moore.com/books-films/index.php
.
This according to Michael Moore’s official website,
http://www.michael-moore.com/books-films/index.php
.
2
Benjamin Klein and Keith Leffler, “The Role of Market Forces in Assuring Contractual Performance,”
Journal of Political Economy
, 1981, 265-267. See also John R. Lott, Jr. “Brand names, Ignorance, and Quality Guaranteeing Premiums,”
Applied Economics
, 1988, 165-176 and Benjamin Klein, “Hold-ups Occur: The Self-Enforcing Range of Contractual Relationships,”
Economic Inquiry
, July 1996, 444-463.
Benjamin Klein and Keith Leffler, “The Role of Market Forces in Assuring Contractual Performance,”
Journal of Political Economy
, 1981, 265-267. See also John R. Lott, Jr. “Brand names, Ignorance, and Quality Guaranteeing Premiums,”
Applied Economics
, 1988, 165-176 and Benjamin Klein, “Hold-ups Occur: The Self-Enforcing Range of Contractual Relationships,”
Economic Inquiry
, July 1996, 444-463.
3
Ibid.
Ibid.
5
About a quarter of this 40 percent announced that the upcoming term would be their last. See John R. Lott, Jr., “Political Cheating,” 169-186. See also Stephen G. Bronars and John R. Lott, Jr., “Do Campaign Donations Alter How Politicians Vote?”
Journal of Law and Economics
, 1997.
About a quarter of this 40 percent announced that the upcoming term would be their last. See John R. Lott, Jr., “Political Cheating,” 169-186. See also Stephen G. Bronars and John R. Lott, Jr., “Do Campaign Donations Alter How Politicians Vote?”
Journal of Law and Economics
, 1997.
6
Ibid.
Ibid.
7
David Laband and Bernard Lentz,
The Roots of Success: Why Children Follow in Their Parent’s Career Footsteps
, Praeger Publishers: New York, New York, 1985, 64. This refers to the numbers where the father’s occupation is known. See also John R. Lott, Jr., “Political Cheating,” 169-186.
David Laband and Bernard Lentz,
The Roots of Success: Why Children Follow in Their Parent’s Career Footsteps
, Praeger Publishers: New York, New York, 1985, 64. This refers to the numbers where the father’s occupation is known. See also John R. Lott, Jr., “Political Cheating,” 169-186.
8
Children of parents who are self-employed, licensed professionals will become self-employed, licensed professionals themselves at a rate of nearly 15 percent. This example, however, includes children choosing other self-employed, licenses careers than their parents, such as a doctor’s child becoming a lawyer, accountant, or even a plumber. Laband and Lentz,
The Roots of Success
, 23.
Children of parents who are self-employed, licensed professionals will become self-employed, licensed professionals themselves at a rate of nearly 15 percent. This example, however, includes children choosing other self-employed, licenses careers than their parents, such as a doctor’s child becoming a lawyer, accountant, or even a plumber. Laband and Lentz,
The Roots of Success
, 23.
9
See, for example, Jeremy Rabkin’s “The Sorry Tale of David Souter, Stealth Justice,”
The Weekly Standard
, vol. 1, no. 8, 1996, 30.
See, for example, Jeremy Rabkin’s “The Sorry Tale of David Souter, Stealth Justice,”
The Weekly Standard
, vol. 1, no. 8, 1996, 30.
10
This is not to say that the tenure system functions perfectly in this respect, or that unproductive professors never gain tenure. Studies have found relatively small drops in productivity among professors after receiving tenure. These, however, are most pronounced among those professors who were least productive to begin with. See Sharon M. Oster and Daniel S. Hamermesh, “Aging and Productivity Among Economists,”
Review of Economics and Statistics
, vol. 80, no. 1, (1998): 154-157. See also Flora F. Tien and Robert T. Blackburn, “Faculty Rank System, Research Motivation, and Faculty Research Productivity,”
Journal of Higher Education
, vol. 67 (January /February, 1996): 13 and 14.
This is not to say that the tenure system functions perfectly in this respect, or that unproductive professors never gain tenure. Studies have found relatively small drops in productivity among professors after receiving tenure. These, however, are most pronounced among those professors who were least productive to begin with. See Sharon M. Oster and Daniel S. Hamermesh, “Aging and Productivity Among Economists,”
Review of Economics and Statistics
, vol. 80, no. 1, (1998): 154-157. See also Flora F. Tien and Robert T. Blackburn, “Faculty Rank System, Research Motivation, and Faculty Research Productivity,”
Journal of Higher Education
, vol. 67 (January /February, 1996): 13 and 14.
11
Daniel B. Klein and Charlotta Stern, “Professors and Their Politics: The Policy Views of Social Scientists,”
Critical Review
, vol. 17 (2005): 257-303.
Daniel B. Klein and Charlotta Stern, “Professors and Their Politics: The Policy Views of Social Scientists,”
Critical Review
, vol. 17 (2005): 257-303.
12
Including the hard sciences at other schools such as the University of California at Berkeley and Stanford, professors who are registered as Democrats out number Republicans by a 9 to 1 ratio. Daniel B. Klein and Andrew Western, “How Many Democrats per Republican at UC Berkeley and Stanford: Voter Registration Data Across 23 Academic Departments,” Department of Economics, Santa Clara University Working Paper, 2004.
See also Christopher Cardiff and Daniel B. Klein, “Faculty Partisan Affiliations in all Disciplines: A Voter-Registration Study,”
Critical Review
, vol. 17 (2005): 237-256.
Including the hard sciences at other schools such as the University of California at Berkeley and Stanford, professors who are registered as Democrats out number Republicans by a 9 to 1 ratio. Daniel B. Klein and Andrew Western, “How Many Democrats per Republican at UC Berkeley and Stanford: Voter Registration Data Across 23 Academic Departments,” Department of Economics, Santa Clara University Working Paper, 2004.
See also Christopher Cardiff and Daniel B. Klein, “Faculty Partisan Affiliations in all Disciplines: A Voter-Registration Study,”
Critical Review
, vol. 17 (2005): 237-256.
13
Cass Sunstein, David Schkade, and Lisa Ellman of the University of Chicago Law School examined 4,488 published circuit court panel decisions from 1982 to 2002 on the most ideologically controversial issues—abortion, capital punishment, affirmative action, the Americans with Disabilities Act, campaign-finance laws, criminal procedure, federalism, race and sex discrimination, and takings (the rules under which the government can seize private property). They argue that for many of these decisions the way judges vote “can be predicted by the party of the appointing president.” Sunstein, Schkade, and Ellman, “Ideological Voting on Federal Courts of Appeals: A Preliminary Investigation,” working paper no. 03-9, University of Chicago Law School, September 2003. I think that they exaggerate this finding some, but their work is the most comprehensive on the topic to date.
Cass Sunstein, David Schkade, and Lisa Ellman of the University of Chicago Law School examined 4,488 published circuit court panel decisions from 1982 to 2002 on the most ideologically controversial issues—abortion, capital punishment, affirmative action, the Americans with Disabilities Act, campaign-finance laws, criminal procedure, federalism, race and sex discrimination, and takings (the rules under which the government can seize private property). They argue that for many of these decisions the way judges vote “can be predicted by the party of the appointing president.” Sunstein, Schkade, and Ellman, “Ideological Voting on Federal Courts of Appeals: A Preliminary Investigation,” working paper no. 03-9, University of Chicago Law School, September 2003. I think that they exaggerate this finding some, but their work is the most comprehensive on the topic to date.
14
See for example, John R. Lott, Jr. and Stephen G. Bronars, “Time Series Evidence on Shirking by Members of the U.S. House of Representatives,”
Public Choice
, invited conference volume, vol. 76, no. 1-2, June 1993: 125-14 and Bruce Bender and John R. Lott, Jr., “Legislator Voting and Shirking: A Critical Review of the Literature,”
Public Choice
, vol. 87, nos. 1 and 2, April 1996: 67-100.
See for example, John R. Lott, Jr. and Stephen G. Bronars, “Time Series Evidence on Shirking by Members of the U.S. House of Representatives,”
Public Choice
, invited conference volume, vol. 76, no. 1-2, June 1993: 125-14 and Bruce Bender and John R. Lott, Jr., “Legislator Voting and Shirking: A Critical Review of the Literature,”
Public Choice
, vol. 87, nos. 1 and 2, April 1996: 67-100.
15
Stephen G. Bronars and John R. Lott, Jr., “Do Campaign Donations Alter How Politicians Vote?”
Journal of Law and Economics
, 1997.
Stephen G. Bronars and John R. Lott, Jr., “Do Campaign Donations Alter How Politicians Vote?”
Journal of Law and Economics
, 1997.
16
The proof commonly cited to support the notion that donations are systematically used to buy politicians’ votes does not withstand scrutiny. For example, one study found that “contributors who attempt to influence the voting behavior of members of Congress give the most money to legislators whose constituency interest suggests that they are likely to be undecided on how to vote.” (See Thomas Stratmann, “Are Contributors Rational?: Untangling Strategies of Political Action Committees,”
Journal of Political Economy
, 1992, 647.)
The proof commonly cited to support the notion that donations are systematically used to buy politicians’ votes does not withstand scrutiny. For example, one study found that “contributors who attempt to influence the voting behavior of members of Congress give the most money to legislators whose constituency interest suggests that they are likely to be undecided on how to vote.” (See Thomas Stratmann, “Are Contributors Rational?: Untangling Strategies of Political Action Committees,”
Journal of Political Economy
, 1992, 647.)
The study, which examined farm issues, discovered that pro-farmer donors tend not to give to candidates in areas where all the constituents are farmers, nor in districts where none of the constituents are farmers, but in districts that are evenly split. In the view of this study’s author, the results show that donors are buying candidates’ future votes by making their election dependent on the donors’ support.
But the study’s results, while consistent with vote-buying, really just demonstrate that donors don’t want to waste their money on candidates who are highly likely to either win or lose their race. If you care about farmers, why waste your money donating to candidates in districts where all the voters are farmers and candidates from both parties support them. These findings are perfectly consistent with the alternative explanation that donors try to elect candidates who already support their positions.
The same author ostensibly also found pervasive vote buying the timing of political donations. According to this analysis, although a candidate benefits most from donations received early in an election cycle, many donors, when uncertain about a candidate’s beliefs, refrain from donating to him until after he’s elected and casts the desired vote on some key issue. The author interprets this donation as a quid pro quo—a kind of pay-off for voting the right way. This study, however, suffers from the same problem as previously mentioned; donors would behave the same way if they were donating to politicians who already agree with their views. When donors are faced with a candidate without a well-established reputation, they simply wait to learn what he believes before they donate to him. See Thomas Stratmann, “The Market for Congressional Votes: Is Timing of Contributions Everything,”
Journal of Law and Economics
, vol. 61 (April 1998), and also Randall S. Kroszner and Thomas Stratmann, “Interest-Group Competition and the Organization of Congress: Theory and Evidence from Financial Services’ Political Action Committees,”
American Economic Review
, vol. 88 (December 1998): 1163-87.
Journal of Law and Economics
, vol. 61 (April 1998), and also Randall S. Kroszner and Thomas Stratmann, “Interest-Group Competition and the Organization of Congress: Theory and Evidence from Financial Services’ Political Action Committees,”
American Economic Review
, vol. 88 (December 1998): 1163-87.
Thomas Stratmann, “The Market for Congressional Votes: Is timing of Contributions everything,”
Journal of Law and Economics
, vol. 61 (April 1998). See also Randall S. Kroszner and Thomas Stratmann, “Interest-Group Competition and the Organization of Congress: Theory and Evidence from Financial Services’ Political Action Committees,”
American Economic Review
, vol. 88 (December 1998): 1163-1187.
Journal of Law and Economics
, vol. 61 (April 1998). See also Randall S. Kroszner and Thomas Stratmann, “Interest-Group Competition and the Organization of Congress: Theory and Evidence from Financial Services’ Political Action Committees,”
American Economic Review
, vol. 88 (December 1998): 1163-1187.
17
Anderson Cooper, “Louisiana Congressman Facing Bribery Investigation,”
Cnn.com
, May 22, 2006 (
http://transcripts.cnn.com/TRANSCRIPTS/0605/22/acd.01.html
); Associated Press, “Rep. Ney’s Plea Deal Tests Corruption as Election-Year Issue,”
Foxnews.com
, Friday, September 15, 2006. (
http://www.foxnews.com/story/0,2933,214146,00.html
); and Associated Press, “Ohio Rep. Bob Ney Admits Guilt in Corruption Probe,”
Foxnews.com
, Friday, September 15, 2006. (
http://www.foxnews.com/story/0,2933,213927,00.html
).
Anderson Cooper, “Louisiana Congressman Facing Bribery Investigation,”
Cnn.com
, May 22, 2006 (
http://transcripts.cnn.com/TRANSCRIPTS/0605/22/acd.01.html
); Associated Press, “Rep. Ney’s Plea Deal Tests Corruption as Election-Year Issue,”
Foxnews.com
, Friday, September 15, 2006. (
http://www.foxnews.com/story/0,2933,214146,00.html
); and Associated Press, “Ohio Rep. Bob Ney Admits Guilt in Corruption Probe,”
Foxnews.com
, Friday, September 15, 2006. (
http://www.foxnews.com/story/0,2933,213927,00.html
).
18
Stephen Bronars and John R. Lott, Jr., “Do Campaign Donations Alter How a Politician Votes?,”
Journal of Law and Economics
, vol. 40, no. 2, October 1997: 342-343.
Stephen Bronars and John R. Lott, Jr., “Do Campaign Donations Alter How a Politician Votes?,”
Journal of Law and Economics
, vol. 40, no. 2, October 1997: 342-343.
19
Bruce Bender and John R. Lott, Jr., “Legislator Voting and Shirking: A Critical Review of the Literature,”
Public Choice
, vol. 87, nos. 1 and 2, April 1996: 67-100. See also John R. Lott, Jr and Stephen Bronars., “Time Series Evidence on Shirking by Members of the U.S. House of Representatives,”
Public Choice
, invited conference volume, vol. 76, no. 1-2, June 1993: 125-149.
Bruce Bender and John R. Lott, Jr., “Legislator Voting and Shirking: A Critical Review of the Literature,”
Public Choice
, vol. 87, nos. 1 and 2, April 1996: 67-100. See also John R. Lott, Jr and Stephen Bronars., “Time Series Evidence on Shirking by Members of the U.S. House of Representatives,”
Public Choice
, invited conference volume, vol. 76, no. 1-2, June 1993: 125-149.
20
Press Release, “Biden Praises Passage of McCain-Feingold Legislation”, Sen. Joseph Biden’s website, April 2, 2001.
Http://biden.senate.gov/news-room/details.cfm?id=229522&&
.
Press Release, “Biden Praises Passage of McCain-Feingold Legislation”, Sen. Joseph Biden’s website, April 2, 2001.
Http://biden.senate.gov/news-room/details.cfm?id=229522&&
.
21
In the Supreme Court decision in
Nixon v. Shrink Missouri Government PAC
, Justice David Souter cites the argument from the
Buckley v. Valeo
decision that contribution limits have “served the important governmental interests in preventing the corruption or appearance of corruption of the political process that might result if such contributions were not restrained.”
In the Supreme Court decision in
Nixon v. Shrink Missouri Government PAC
, Justice David Souter cites the argument from the
Buckley v. Valeo
decision that contribution limits have “served the important governmental interests in preventing the corruption or appearance of corruption of the political process that might result if such contributions were not restrained.”
22
See Justice Bryer’s concurrence in
Nixon v. Shrink Missouri Government PAC
(98-963) 528 U.S. 377 (2000) 161 F.3d 519.
See Justice Bryer’s concurrence in
Nixon v. Shrink Missouri Government PAC
(98-963) 528 U.S. 377 (2000) 161 F.3d 519.
23
John R. Lott, Jr., “The Effect of Nontransferable Property Rights on the Efficiency of Political Markets: Some Evidence,”
Journal of Public Economics
, vol. 32, no. 2, March 1987, 231-246. Jeffrey Milyo and Timothy Groseclose, “The Electoral Effects of Incumbent Wealth,”
Journal of Law and Economics
, 1999, 699-722. Jeffrey Milyo, “The Economics of Political Campaign Finance: FECA and the Puzzle of the Not Very Greedy Grandfathers,”
Public Choice
, December 1997, 245-70.
John R. Lott, Jr., “The Effect of Nontransferable Property Rights on the Efficiency of Political Markets: Some Evidence,”
Journal of Public Economics
, vol. 32, no. 2, March 1987, 231-246. Jeffrey Milyo and Timothy Groseclose, “The Electoral Effects of Incumbent Wealth,”
Journal of Law and Economics
, 1999, 699-722. Jeffrey Milyo, “The Economics of Political Campaign Finance: FECA and the Puzzle of the Not Very Greedy Grandfathers,”
Public Choice
, December 1997, 245-70.
24
Much of the discussion in this section is based on John R. Lott, Jr. “Campaign Finance Reform and Electoral Competition,”
Public Choice
, 2006.
Much of the discussion in this section is based on John R. Lott, Jr. “Campaign Finance Reform and Electoral Competition,”
Public Choice
, 2006.
25
Given that many state senate races will involve candidates who have held previous elected office, the arguments discussed here can apply even when there are no incumbents in a race. Similarly, the advantage possessed by incumbents will be mitigated to some extent when challengers have held other offices such as the state assembly or city council.
Given that many state senate races will involve candidates who have held previous elected office, the arguments discussed here can apply even when there are no incumbents in a race. Similarly, the advantage possessed by incumbents will be mitigated to some extent when challengers have held other offices such as the state assembly or city council.
26
This discussion is based on John R. Lott, Jr., “The Effect of Nontransferable Property Rights on the Efficiency of Political Markets: Some Evidence,”
Journal of Public Economics
, vol. 32, no. 2, March 1987: 231-246; John R. Lott, Jr., “Brand Names and Barriers to Entry in Political Markets,”
Public Choice
, vol. 51, no. 1, 1986: 87-92; and John R. Lott, Jr., “Explaining Challengers’ Campaign Expenditures: The Importance of Sunk Nontransferable Brand Name,”
Public Finance Quarterly
, vol. 17, no. 1, January 1989: 108-118.
This discussion is based on John R. Lott, Jr., “The Effect of Nontransferable Property Rights on the Efficiency of Political Markets: Some Evidence,”
Journal of Public Economics
, vol. 32, no. 2, March 1987: 231-246; John R. Lott, Jr., “Brand Names and Barriers to Entry in Political Markets,”
Public Choice
, vol. 51, no. 1, 1986: 87-92; and John R. Lott, Jr., “Explaining Challengers’ Campaign Expenditures: The Importance of Sunk Nontransferable Brand Name,”
Public Finance Quarterly
, vol. 17, no. 1, January 1989: 108-118.
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