Journal of Brief Ideas

My first contribution to the Journal of brief ideas was just published.

The idea: Does it take longer to choose among more alternatives?
From an optimization-view of human decision making it makes sense that choosing among more alternatives would take longer, simply because there are more alternatives to evaluate before deciding. If humans use simple rules of thumb or use satificing rather than maximizing strategies, it is far fram clear that choosing among more options will take longer.

To examine the question empirically, one could add a real life choice situation towards the end of a survey, for example by having the respondents choose among several options for e.g. charity donations. By randomizing the number of options displayed, data on time to choose among N alternatives for N ranging from 2 to around 25 (or even higher) can be easily collected.

10 classical papers in institutional economics

I am currently experimenting with generative AI in order to understand better how and when to use it. I have discovered that it works well for tasks such as "summarize explanations of the rise of right-wing populist parties" and "provide full references to ten classical papers in institutional economics".
The output after the latter instruction was the following list:

Coase, R. H. (1937). "The Nature of the Firm." Economica, Vol. 4, No. 16, pp. 386-405.

Granovetter, M. (1985). "Economic Action and Social Structure: The Problem of Embeddedness." American Journal of Sociology, Vol. 91, No. 3, pp. 481-510.

North, D. C. (1991). "Institutions and Economic Theory." The American Economist, Vol. 35, No. 2, pp. 3-6.

Williamson, O. E. (1985). "The Economic Institutions of Capitalism." Firms, Markets, and Hierarchies: The Transaction Cost Economics Reader, pp. 15-45.

Ostrom, E. (1990). "Rules, Games, and Common-Pool Resources." Annual Review of Political Science, Vol. 2, pp. 41-78.

Davis, L. E., & North, D. C. (1971). "Institutional Change and American Economic Growth." Cambridge University Press.

Coase, R. H. (1960). "The Problem of Social Cost." The Journal of Law and Economics, Vol. 3, pp. 1-44.

Barzel, Y. (1989). "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies." The Journal of Political Economy, Vol. 97, No. 5, pp. 1155-1189.

Olson, M. (1965). "The Logic of Collective Action: Public Goods and the Theory of Groups." Harvard University Press.

Stiglitz, J. E. (1988). "The Economic Role of the State." Oxford Review of Economic Policy, Vol. 4, No. 1, pp. 21-42.

Rational choice strikes back?

Behavioral Economists in Trouble

Dan Ariely and Francesca Gino (and most likely many others) are in trouble, the kind of trouble that involves data manipulation (by the looks of it) and paper retractions. Data Colada has all the details, but the story was also told by an Israeli investigative TV show, transcribed and translated here.

Episodes of Data Manipulation

From a standard rational choice perspective, episodes like these are only to be expected, given that:
  • Opportunities exist (e.g. adding or dropping observations in the raw data file from an anonymous websurvey or experimental platform)
  • The stakes (fame, fortune and/or positions at attractive universities) are high
  • The probability of getting caught is low (or has been, at least)
These facts add to an already significant pile of spectacular results in behavioral economics and social psychology that do not replicate. Sometimes the results were genuinely shaky (e.g. power posing), and sometimes the findings were simply made up, as in the case of Diederik Stapel (wikipedia, NY-Times). See further:

The Standard in Behavioral Economics and Social Psychology

The standard in behavioral economics and social psychology has long been that good papers are empirical articles that show that humans behave strangely and irrationally in ways that rational choice theory and neoclassical economics cannot account for. Mainstream economics' mathematical models were frequently criticized as having little to do with reality. The irony is that behavioral economists respond to incentives in a predictable rational manner – and some of their papers fail to describe the real world.

Perhaps we are witnessing the retaliation of neoclassical economics?

Update aug 17:

Gino is suing Data Colada. This is not the scientific exchange we wanted. Donate to their legal defense here.


CALL FOR PAPERS “Urban rural differences in the Nordic welfare states”

Urban rural differences in the Nordic welfare states
An Arne Ryde Workshop at Elite Hotel Savoy in Malmö, Sweden, August 18-19
This workshop will bring together scholars that examine economic, political and cultural differences between urban and rural parts of the Nordic countries. A broad mix of paper submissions from a variety of disciplines (e.g. economics, economic history, political science, geography, sociology) is encouraged, including a multitude of methods and theoretical perspectives.
All papers related the broad topic of urban rural differences will be considered, but we particularly welcome paper contributions that

• use a longitudinal perspective and changes over time
• shed light on center-periphery tensions within municipalities
• study migration decisions
• examine urban/rural differences in culture, values and voting

The workshop takes place in Malmö at Elite Hotel Savoy close to the central station. For those who arrive on the 17th, there will be an informal gathering on the evening before the workshop. The program is scheduled to star at 10 am on the 18th, and is planned to end by lunch on the 19th. For presenters the Arne Ryde foundation covers food and hotel accommodation (one or two nights). Participants will make and pay their own travel arrangements.

Submit your proposal (full paper or abstracts are accepted) to
david.sandberg [at]
and to
gissur.erlingsson [at]
no later than May 1st.

Everything but the result...

This is a HORRIBLE abstract: It has the motivation, the question, the method, the data - and a claim about the findings being important. But not even a sentence on what the findings are.

Studies that focus on individual-level determinants of support for right-wing populist candidates and parties find little evidence that trade-induced economic hardship is important. By contrast, research that analyzes aggregate data often comes to the opposite conclusion: regions that are highly exposed to trade are more supportive of populist parties and candidates than other regions. To address these contradictory findings, we argue that import shocks engender a broad-based response at the regional level, beyond those whose economic interests are immediately and directly affected, and that this reaction is mediated through xenophobic beliefs about immigrants. Using individual-level data from the eighth wave of the European Social Survey (2016), regional import shock data for nine European countries and causal mediation analysis, we explore how imports affect support for right-wing populists in Europe. Our findings have important implications for understanding the relationship between individual- and contextual-level factors and support for the far right

Source: Hays, J, J Lim, och JJ Spoon. "The path from trade to right-wing populism in Europe". ELECTORAL STUDIES 60 (augusti 2019).

Do EU-grants cause or mitigate populism?

Here, in EER, is paper that is interesting in many ways. The authors:
Albanese, Giuseppe, Guglielmo Barone, och Guido de Blasio. "Populist Voting and Losers’ Discontent: Does Redistribution Matter?" European Economic Review 141 (01 januari 2022).
From the abstract:
We show that fiscal redistribution matters by comparing Italian municipalities equally hit by the economic shocks leading to populism but, at the same time, very differently exposed to the generosity of the EU structural funds, because of their locations on the two opposite sides of the geographical border that determines eligibility. Estimates resulting from a spatial regression discontinuity design show that in 2013 general election larger EU financing caused a drop in populism of about 9% of the mean of the dependent variable.
In many ways, the paper is a crystal clear paper with a credible identification strategy. Because transfers from EU structural funds are targeted to "Convergence Objective regions", there are strong discontinuities between municipalities:
and it seems that populist voting is more common in municipalities that do not recieve transfers:
[Parties coded as populist: Movimento Cinque Stelle (Five Stars Movement), Rivoluzione civile (Civil Revolution), Lega Nord (Northern League), Sinistra Ecologia Libert` a (Left Ecology Freedom), Fratelli d’Italia (Brothers of Italy), Partito Democratico (Democratic Party), Centro Democratico (Democratic Centre]

Using a regression discontinuity design, a clear result is identified:
As can be seen, average populist vote share falls from about 61 to 58 percent at the eligibility cutoff. Their conclusion:
We have shown that financial transfers injected by the EU regional policy toward Italian lagging areas have had the ability to reduce the anti-establishment component of populism.
That interpretation is indeed possible. But it seems to me that another interpretation is also possible:

Not receiving EU-grants when neighbouring municipalities (or when some parts of the country) receive grants causes resentment and fuels populism. If there were no structural funds granted to any municipality, how much populism would there be? We do not know.

Thus, despite being a crystal clear paper with a credible causal identification, we do not know if EU-grants cause or mitigate populism - because we do not know the counterfactual.

Graphic non-fiction book on markets and economic freedom

Good news: If things work out as expected, my graphic non-fiction book on markets and economic freedom, released in Swedish last year, will be published in English (with the Swedish publisher Idealistas) later this year.

The book is an illustrated book that explains the benefits of markets and economic freedom. It is based on research but it is non-technical and accessible. The book is similar to Bryan Caplan´s Open borders, but my book is much broader: It deals with the market economy in general, and discusses several misperceptions about the market economy.

The basic message of the book is that the market economy is a tool that helps people work together to achieve their goals. Here is a sample:

I am now raising money for the final stage of the production. Thanks to th Institute for Humane Studies and the Hayek fund, I have a very good translation to work with. The english version will be paperback, rather than hardcover (I actually thinks that woks better for a graphic non-fiction book). Hopefully, you will soon be able to order it on Amazon.

Socialist countries according to Americans

Yougov measures (using sample and weighting to create something they claim to be representative) which countries Americans think are socialist. It may seem like an odd thing to measure, but the results are rather interesting:
Three thoughts:
  1. It is remarkable how the reputation of e.g. Sweden and Denmark lags compared to the actual development.
  2. Compared to democrats, Republicans seem to be much more correct in their ranking of countries .
  3. Democrats seem to confuse socialist countries with countries they like, which suggests they see socialism as something good - while the opposite seems to be the case for republicans.

New paper on how the benefits of economic freedom are distributed

A long time ago, I wanted to examine how (or if) increases in economic freedom correlate with changes in income inequality. As I immediately found out, my friend and colleague Niclas Berggren had already attacked the question in Public Choice back in 1999, although with mixed results based on the limited data that were available at the time.

Together with Therese Nilsson, I published some more robust patterns in European Journal of Political Economy in 2010:
Using the Standardized World Income Inequality Database, we examine if the KOF Index of Globalization and the Economic Freedom Index of the Fraser institute are related to within-country income inequality using panel data covering around 80 countries 1970–2005. Freedom to trade internationally is robustly related to inequality, [...] Reforms towards economic freedom seem to increase inequality mainly in rich countries, and social globalization is more important in less developed countries. Monetary reforms, legal reforms and political globalization do not increase inequality.
Still, the field as a whole was full of conflicting findings, as demonstrated for example by Bennet & Nikolaev in 2016:
we replicate the results from two significant studies using six alternative measures of income inequality for an updated dataset of up to 112 countries over the period 1970–2010. Notably, we use the latest release of the Standardized World Income Inequality Dataset, which allows us to account for the uncertainty of the estimated Gini coefficients. We find that the results of previous studies are sensitive to the choice of country sample, time period and/or inequality measure used.
A couple of years ago - in Ohio of all places - Christian Bjørnskov fiddled around with a new data source: The global consumption and income project, and we started a paper that just came out in Kyklos:
Bergh, Andreas, and Christian Bjørnskov. 2021. "Does Economic Freedom Boost Growth for Everyone?" Kyklos 74(2): 170–86. (April 13, 2021).
The paper essentially does three things
  • We summarize research on specific reforms that increase economic freedom and causally affect income or productivity
  • We note that these reforms have ambiguous implications for inequality as measured by the Gini-coefficient, because they could benefit high-income earners by increasing the returns to capital (at least in the short to medium run), and simultaneously benefit low-income earners by lowering barriers to entry and promoting competition more generally.
  • We estimate the association between economic freeom and income growth for each quintile of the income distribution, and show that economic freedom affects seems to affect all parts of the income distribution roughly equally. However, in democracies, the point estimate is indeed larger for the lowest and the highest quintile:
Potentially, this explains the mixed findings in studies using the Gini-coefficient.
From the paper:
To illustrate the size of our estimated associations, we note first that (as shown in Table 1) incomes grow on average between 8% and 9% over a five-year period in our sample. Based on the estimates in democracies, a one standard-deviation increase in institutional quality is associated with roughly 6 percentage units of higher income growth in quintiles one and five, and roughly 4 percentage units of higher growth in quintiles two, three, and four. While these differences are in line with the idea that economic freedom reforms benefit mainly the top and bottom of the income distribution, the differences between quintiles are far from statistically significant