waterbot

Common misconception about income tax discouraging work

I once heard a political commentator say something like this: "we tax cigarettes to reduce smoking, and then we tax success and we're surprised this reduces success."

This at least roughly corresponds to a misconception I learned from the economist Gregory Clark. He said if you ask economics undergraduates (a group with an unusual affinity for economics!) what effect a higher tax rate will have on hours worked, they almost always make the same mistake: they reflexively assume the tax hike leads people to work less hours. 

They presumably make the too-hasty assumption that less income per hour automatically means less incentive to work. But the actual effect... (read more)

How much danger should we accept from prediction markets? 

Financial tools can be used for both good and evil. For example, a short-sellers might conduct some tests and find out a company has been selling arsenic tainted breakfast cereal. They could short the company and then write a report revealing this information. They make money, and at the same time save consumers (and they help traders accurately price the stock). 

But short-sellers can also use this financial tool for evil. They could short the cereal company and then just start bombing factories. Or, more commonly, they could release fake information on Twitter.

This would be less common if traders didn’t have easy access to the... (read 496 more words →)