Is the "high price" of everything from coffee in restaurants to popcorn in movie theaters due to monopoly power?

A new paper by Richard Gil and Wesley Hartmann provides an explanation for the "high price" of popcorn in movie theaters:

Prices for goods such as blades for razors, ink for printers and concessions at movies are often set well above cost. This paper empirically analyzes concession sales data from a chain of Spanish theaters to demonstrate that high prices on concessions reflect a profitable price discrimination strategy often referred to as metering price discrimination. Concessions are found to be purchased in greater amounts by customers that place greater value on attending the theater. In other words, the intensity of demand for admission is metered by concession sales. This implies that while some consumers' surplus may be reduced by the high concession prices, surplus of other consumers on the margin of attending may increase from theaters' decisions to shift their margins away from movies and toward concessions.

First as a side note, most theaters, at least in the US, do not prevent people from bringing in concessions with them to the theater (I don't know about Spain), and that is at least inconsistent with the monopoly type story. It is also interesting to note that these claims about above marginal cost pricing are made for many similar product such as wine in restaurants or coffee or the differences between lunch and dinner prices, and it is hard to believe that monopoly power actually explains the "high prices" in all these cases. Russell Roberts and I provided a cost based explanation for all the phenomenon back in 1991 here. I guess that my biggest question is what else would one expect relating the log(concession revenue) with log(attendance) and Box Office revenue per attendee. Concession revenue goes up with attendance (though at a lower rate than attendance revenue -- congestion) and it goes up with box office revenue per attendee (presumably picking up the fact that higher revenue per attendee means fewer old people and very young people). What is the problem here and why is price discrimination the only answer here? By the way, when they run a regression that includes information on the number of screens and seats per screen (Table 2, specification 2), those two variables really explain all the variation in popcorn prices (something akin to the hypothesis that Russell and I advanced). I am also not clear why logs are used for concession revenue and attendance, but not box office revenue per attendee.

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Another Review of Freedomnomics

Brian Shelly has a review of Freedomnomics here:

However, I read Freedomnomics by Economist Dr. John Lott. This book was a pretty easy read and I found some of the information jaw dropping. His specialty is crime and punishment and Chapter 4, which focuses on that, just blew me away. It really showed how conventional wisdom is flat out wrong when you look at the data on crime. . . .



Another Review of Freedomnomics

This review by Nathan was somewhat mixed:

I read it because I read Freakonomics, which, like other political (and semi-political) books, I found to be about "half-right," which is to say that a critical reading reduces it to the level of fiction; Freakonomics is opinion mixed in with statistics.

Freedomnomics proved to be exactly what I expected, which is to say, exactly the same but with different opinions. Where Freakonomics contests that Abortion decreased crime, Freedomnomics contests the opposite. Where Freakonomics says you shouldn't trust your Real Estate agent, Freedomnomics suggests otherwise.

I enjoy reading these kinds of books because I do read them through a critical lens, and I enjoy the facts that come out of them. Usually, a critical reading of these books allows the reader to examine the statistics and draw his own conclusions, often completely different than the opinions presented by the author(s).

For example, I learned from Freedomnomics that the "lemon effect" on new automobiles presented in Freakonomics is not true. This makes sense - the idea had long since made very little sense to me, as cars usually have warrantees that transfer with ownership transfers. Though Freedomnomics presented some opinions that seemed unfounded, the facts concerning automobiles (in the form of Kelly Blue Book prices) were also present, and these are indisputable . . .



Supreme Court Takes on Another Death Penalty Case

WASHINGTON (Reuters) - The Supreme Court said on Friday it would decide whether the death penalty can be imposed for the crime of raping a child, expanding its review of how capital punishment is carried out in the United States.

The nation's highest court agreed to hear an appeal by a Louisiana man who is the only person in the United States on death row for a crime other than murder. He is arguing the death penalty for child rape violates the constitutional ban on cruel and unusual punishment. . . .

There is an interesting economics point here that I wrote about in Freedomnomics. I think that the evidence strongly shows a deterrence effect from the death penalty, but the argument could be quite different for other crimes. If you already face the death penalty for rape, you might want to kill the victim to avoid witnesses. After all, what more can they do to you if you already face the death penalty? The reason that isn't clear is because committing what is considered an even worse crime will increase the probability of arrest and also increase the probability of being given the death penalty. The fact that this child rapist is the only person on death row thus makes it more likely that the possibility of the death penalty for raping a child did not appreciably increase the likelihood that he would have killed his victim.

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Another (very long) review of Freedomnomics

Economist WIlliam Sjostrom has a very nice review of my book up on his website. It was very nice of him to take this much time to review it.

The short version: my doubts are small. Read it, read it, read it, and, oh yeah, read it.



Czechs upset at having to pay less than $2 for a doctor's visit

The Czech healthcare system undergoes a minor revolution on 1 January as patients are asked to pay a small fee each time they visit their doctor.

The move is part of a widespread reform of the health sector unveiled by the centre-right government.

It is far from popular - a number of leading figures are calling on Czechs not to pay up.

Czechs enjoyed free healthcare during four decades of communist rule and in the past 17 years of capitalism.

But from 1 January, Czech patients will be asked to pay 30 crowns (£0.83; 1.1 euros) for each visit to the doctor, and 60 crowns for each day spent in hospital. . . . .

If $1.50 dissuades someone from going to the doctor, you have to wonder how badly they had to go to the doctor. It is pretty obvious that they shouldn't be wasting the doctor's time if they don't value the service at $1.50 or so. Clearly, this $1.50 is much too low.

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Another Review of Freedomnomics


Another mention of Freedomnomics


More comments on Freedomnomics

I'm just getting started on this book. So far, it is--thankfully!--a much more interesting read than Dr. Lott's More Guns, Less Crime, which is a marvelous repository of information and should be on the shelf of everyone interested in the second amendment, self-defense, crime, and liberty, but is nevertheless, for the most part, a drearily boring exposition of reams of statistical data that only the most determined reader will slog through to confirm a thesis which is intuitively obvious to most of us: a ubiquitously armed citizenry suffers less crime.

Well, I didn't mean to slam More Guns, Less Crime. Like I said, it should be on shelves everywhere. I'm just sayin' Freedomnomics looks to be a considerably more entertaining read, though no less informative.

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Podcast from Appearance on Air America last Thursday

Thom Hartmann had me on his show again last week. This was not the liveliest show that I was on last week to discuss my piece on women's suffrage. You can listen to the podcast here.

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Some of the media for Thursday.

I will be in a call-in program on CSPAN1 to discuss Freedomnomics tomorrow (Thursday) morning at 10:40 AM EST. I will be on after Ron Paul and before Pat Buchanan. As long as you have a computer you can watch a live stream of the event here.

At noon, I will be on Air America's Thom Hartmann's Show. The telephone calls on that show the last time that I was on were pretty wild. Overall, it was one of the livelier radio shows that I have been on. It seems safe to predict that there will be a lot of fireworks.

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Some Feedback on My Op-ed on Women's Suffrage


New Op-ed: Women's suffrage over time

Freedomnomics Recommended as "Great Gift" for Holidays

Craig Newmark recommends Freedomnomics for Christmas presents.

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C-SPAN 2 tonight at 7 PM EST

I will be on CSPAN2 tonight for 46 minutes to discuss Freedomnomics.

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Recommended Books for Christmas Gifts

Mike Adams, a criminology professor and columnist, sent out his annual list of books give and not to give as Christmas gifts:

"Freak-o-nomics," by Steven Levitt and Stephen Dupner.

This book has raised quite a stink with its assertion that legalizing abortion in the 1970s greatly reduced crime on the 1990s. The book also makes claims about the effects of right-to-carry laws on crime rates, which are contrary to what I have been saying in speeches on college campuses including Ohio University and, more recently, Bucknell University. Nonetheless, I always encourage my readers to seek contrary opinions.

"Freedom-nomics" by John R. Lott, Jr.

In this enjoyable book, Lott offers an intriguing argument about the true effects the 1973 "Roe" decision has had on crime. This argument alone makes the book well worth the purchase price. But Lott alsooffers a strong rebuttal to the assertion that right-to-carry laws have not reduced crime. Levitt and Dupner suggest that Lott may have fabricated data and that there has been a widespread inability of others to replicate his results. But, why then, are there more refereed studies (fifteen) showing that CCWs reduce homicide rates than refereed studies (ten) showing no effect? And why are there no (exactly zero) refereed studies showing the CCWs are increasing homicide rates? Was that not the principal argument against right-to-carry laws in the first place?

Lott also makes a strong case for the deterrent effect of the death penalty, which is causing this lifelong abolitionist to reconsider his position.



The American Hunter Reviews Freedomnomics

This is from the December 2007 issue:

When John R. Lott, author of More Guns, Less Crime, sent me a copy of Freedomnomics, I was ready for my preconceptions to be busted; after all, this is the guy who, after years of research, proved that gun control doesn't lower crime rates -- actuall all it does is disarm law-abiding citizens. Freedomnomics starts with a hat tip to Adam Smith's The Wealth of Nations, then clearly shows what the free market has done for America and the free world. The book includes chapter titled "Crime and Punishment" that covers our Second Amendment freedoms. Lott delves into crime statistics to find out if things like the 1994 Assault Weapons Ban worked. When the ban expired in 2004 Sarah Brady predicted that it would effectively "arm our kids with Uzis and AK-47s." Instead, Lott's research shows the nationwide murder rate fell by 3 percent in 2004. This book busts anti-free market myths and will give you control and many other issues pertinent to America today.

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New Op-ed: Why do we care if people tip a waitress?


Relatives running for office a consequence of campaign finance laws?

The United States, however, considers itself to be a more mature democracy. Grover Norquist, one of America’s most influential Republican activists, aims to turn the question of dynasty into a campaign issue.

“It will be ridiculous to have Mr President and Madam President in the White House,” he said. “We’re the United States of America. How can we say to President Mubarak [of Egypt], ‘You can’t hand off the presidency to your son, it’s got to be your wife’ or, ‘Hey Syria and North Korea, you’ve got to knock this stuff off and be like us’.”

Norquist has commissioned lawyers to draw up a constitutional amendment that would ban family members from succeeding one another to elected and appointed office. If passed, it would not apply to the Clintons as a Bush was elected in between them. But Norquist believes that it will alert voters to the perils of dynasty. “Americans don’t like to go back,” he said. . . . .

The notion of relatives holding the same office doesn't bother me by itself, but I think that the problem is related to campaign finance regulations. Just as campaign finance regulations benefit incumbents, they also benefit someone such as Hillary Clinton or George W. Bush because of the publicity that they get from their spouse or father are in office (though this particularly applies to Hillary) as well as the benefits that they have from having the well known name. In my book, Freedomnomics, I discuss how it is that the children of politicians are so likely to follow their parents into politics compared to children in other professions. Here is just a brief part of that discussion:

Because a politician’s reputation can’t be transferred outside his family, a politician’s child who doesn’t go into politics simply loses the benefits of this reputation. It’s not like inheriting a family business, where a son or daughter could sell it off and use the proceeds toward some other line of business. Since going into politics is the only way a politician’s child can exploit his parent’s political reputation, it should come as no surprise that politicians’ children follow their parent’s careers at higher rates than most other professions: about 30 percent of politician’s children follow their parent’s profession, second only to the children of farmers. By contrast, about 15 percent of sons of fathers from all self-employed licensed occupations follow that path themselves.

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Talk on Saturday to the Fund for American Studies

I will be speaking on Freedomnomics to the Fund for American Studies this Saturday. The talk will be at that Loews Annapolis Hotel in Annapolis, MD at 1 PM.

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Lemuel Calhoon's Review of Freedomnomics


Another Review of Freedomnomics

That is why I salute John Lott's Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't (Regnery, 2007), a voice of reason in a swamp of interventionist megalomania that threatens to push the land of the free down the road of the late Roman Empire.

Freedomnomics, translating economics into regular English, shows that bureaucratic and judicial attempts to correct the market restore feudalism and hurt the poor. Corporate scandals that lower a firm's reputation create disincentives to cheat and thus become part of a self-correcting market mechanism. Lott also discerns the true link between legalized abortion and crime: In opposition to the best-selling book Freakonomics, he shows that easy access to abortion leads to change in attitudes to premarital sex, more out-of-wedlock children, family breakdown, and thus to more crime. . . . .

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Video of Puget Sound Federalist Society Talk on Freedomnomics

A video of my recent talk at the Puget Sound Federalist Society that was done by TV Washington can be seen here. This should give people a good idea of the book. It airs live on TV Washington on Tuesday, October 30th @ 10:15pm (with repeats on Wednesday, Oct. 31st @ 6:15am and 2:15pm, all times PDT).

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MP3 of Interview with Kirby Wilbur on Seattle's KVI

Kirby WIlbur was nice enough to have me on his radio show on Friday. A MP3 of an interview can be found here. Go to a little past the half way point in the mp3.

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Talks this coming week

This will be a busy week:

Appalachian Law School in Grundy, Va. at noon on Tuesday October 23rd (For past discussions that I have had on the tragic attack in 2002 at the law school see here) -- Gun Control
Puget Sound Federalist Society (Seattle, Washington) at 6:30 PM on Wednesday, October 24th -- Freedomnomics
University of Washington Economics Department at 2 PM on Thursday, October 25th -- Measuring Media Bias (Something discussed in Freedomnomics)
Women of Washington at 7 PM in Seattle on Thursday, October 25th -- Freedomnomics
Free Enterprise Conference 2007 at the Westin in Bellevue on Friday night at 9:16 PM-- Freedomnomics

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Another set of talks

Today I had a fun debate on the DC gun ban case at Marquette University Law School in Milwaukee. Richard Withers provided a useful defence of the case for the ban. There might have been a hundred plus people there. Tomorrow I give talks at Hamline University and University of Minnesota. Both of these last two talks will be on my new book, Freedomnomics.

Discussions on the debate today are provided here and here.

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More benefits from Ann Coulter mentioning my book


Market Failure: Supposedly not enough diversity

This brings us back to Nike's new shoe. Foot Locker is full of options that fit me and most other Americans. But American Indians make up just 1.5 percent of the U.S. population, and with feet on average three sizes wider, they need different-sized shoes. If we had all voted in a national election on whether the Ministry of Shoes should make wide or typical-width shoes, we surely would have chosen the latter. That's why Friedman condemned government allocation. And yet the market made the same choice. If Nike's announcement looks like a solution to this problem of ignored minority preference, it really isn't. The company took too many years to bring the shoe on line, and according to the Associated Press, the new sneaker "represents less of a financial opportunity than a goodwill and branding effort." . . . .

1) Just because Nike wasn't producing these shoes, I would have liked some evidence that shoes weren't already being produced for this segment of the market. I looked up some shoes on the internet and it seemed that this market niche was well covered see here, here, and here. You get sizes from EEEEEE to XW, and I haven't even heard of some of these sizes since they are so wide. I see no evidence that the basic claim in this article is correct.

2) "That's why Friedman condemned government allocation. And yet the market made the same choice." If the size of the particular group is so small or if those in the group aren't willing to pay that much for the shoes, you might not get a product specifically designed for each small group, but it is a long way to implying that the market doesn't produce a lot more diversity of products than the government.

3) "The company took too many years to bring the shoe on line . . . ." There is a cost and benefit from producing this diversity of products. I would guess that the benefits now exceed the costs. Possibly the cost of making products for such small niches has gone down. The article mentions that these wider feet might be a result of "diabetes and related conditions" and possibly more people generally are suffering from this problem. (It isn't clear from the piece what percentage of the 1.5 percent of the population who are Indians have these wide feet, but presumably it is less than 1.5 percent.) Bottom line: what evidence is provided here that it took "too many years" to provide these shoes. That is, "too many years" in the sense that the costs of doing this were less than the benefits (total costs including the costs of figuring out that such a market existed) and yet it was not provided.

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Newt Gingrich's Potential Presidential Run is Victim of McCain-Feingold Campaign Finance Regulations

Here is a discussion of how the Federal campaign finance laws have prevented Newt Gingrich from running for President. So much for campaign finance laws encouraging competition. My book Freedomnomics made similar points regarding the impact of campaign finance regulations.

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Todd Zywicki posts nice review of Freedomnomics on Volokh.com

Todd Zywicki writes a very nice review of my book at volokh.com.

Glenn Reynolds was nice enough to post a link to Todd's review on Instapundit.

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Big Radio Interview Tomorrow on Freedomnomics: Mark Levin at 7:30 PM

I will be on Mark Levin's great radio show at 7:30 PM EDT on Friday.

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Economics and American Government Classes at Riverdale High School

The teacher is holding a copy of Freedomnomics.

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Another Review of Freedomnomics


More Talks today

At noon I will be speaking at Lewis & Clark Law School.
At 4 PM I will be speaking at Willamette Law School.

Both talks will be about information in Freedomnomics.

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The Unintended Consequences of the Organ Donation Regulations

If people could buy organs from donors, there would be more organs available and the value of each organ would go down. With more organs available, there would be a lot less pressure to harvest any possible organs that were available, and I assume fewer cases such as this:

After a long fight with a degenerative disease, Ruben Navarro appeared close to death. So the hospital caring for him alerted the local transplant network, which rushed a team to the medical center to try to salvage the 25-year-old's organs.

But as Navarro hung on, tension mounted in the operating room of Sierra Vista Regional Medical Center in San Luis Obispo, Calif. With time slipping away, one of the transplant surgeons ordered repeated doses of the narcotic morphine and the sedative Ativan, jokingly calling the drugs "candy," according to police reports. Navarro eventually died, but too late for his organs to be useful.

Horrified nurses complained, prompting multiple investigations. In July, prosecutors charged Hootan Roozrokh with trying to hasten Navarro's death, marking the first time a surgeon has faced criminal charges in a transplant case.

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Art DeVany's nice mention of Freedomnomics

Another Review of Freedomnomics


Ann Coulter is promoting Freedomnomics at Xavier University

Ann Coulter is shown here promoting Freedomnomics in a talk at Xavier University.

Thanks very much to Zeke for sending me this link.

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So does this count as a political donation by the NY Times?

If Tapper's numbers are correct, MoveOn.org paid just 38.89% of a full-cost, nationwide ad, or a 61.11% discount off of a full-rate ad. While I'm fairly certain that nobody pays "sticker" prices, 61% off seems a rather sweet deal.

If this was to a political campaign, would this count towards donation limits? I assume that campaigns take out ads, but does the NY Times charge everyone the same amount for ads.

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Reputations for safety matter

Mattel Inc. CEO Robert Eckert pledged Wednesday to work to improve toy safety, and insisted that the company acted responsibly in recalling millions of Chinese-made toys because they contained lead paint or small magnets.

Seeking to tamp down public outrage over a rash of recalls, Eckert acknowledged his El Segundo, Calif.-based company made mistakes by not closely overseeing subcontractors in China whose toys didn't meet U.S. safety standards. But he steadfastly disputed reports that Mattel was feuding with federal regulators over warning requirements and as a result didn't disclose quickly enough dangers of excessive lead paint and small magnets in toys that prompted an Aug. 14 recall of 19 million products worldwide.

"We are by no means perfect," Eckert said in prepared testimony to a Senate Appropriations subcommittee. "But we have tackled difficult issues before and demonstrated an ability to make change for the better, not only within our own company but for the broader industry." . . . .

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Minnesota Legislative Reference Library Provides Some Balance on Economic Debate


Why a free-market wage is a "fair wage"


New Book Reviews of Freedomnomics

1) The Heartland Institute has a nice review of my book here (click on review).

2) A review of the book in National Review by Jim Manzi concludes that: "Yet this limitation is only one of arggument, not one of ultimate purpose. Lott's overall point -- that freedom unleashes, for the most part, beneficial human ingenuity, and not the corrupt carnival of Levitt's imagination -- is both true and important. Freedomnomics is well worth reading as an engaging apologetic for the market economy." If I have time, I will write some notes on this review.

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Realtors Discuss Freakonomics and Freedomnomics

Many of you no doubt read the book Freakonomics by Steven Levitt and Stephen Dubner. I read it the other year. It was a bestseller and caused quite a buzz and a stir when it was first published. The book is an interesting and entertaining read that discusses some controversial idea, among them that legalized abortion helped reduce violent crime in the 1990s . . .

This weekend I read the book Freedomnomics, subtitled "A Rebuttal to Freakonomics and More"

Author and Economist John Lott, Jr. provides some convincing arguments against the evidence and conclusions of the book Freakonomics.

Regarding the topic of real estate agents, Lott surmises that Levitt & Dubner habitually fail to realize "that market forces exist that punish dishonest behavior."

Lott doubts that real estate agents are really ripping off their own clients and states that a listing agent has very little to gain from encouraging buyers to deliberately depress bids on homes. . . . .

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Freedomnomics on C-SPAN Again on Monday at 5 PM EDT


Is it a crime (or at least wrong) to sell lock-picks?: iPhone unlocked

No one ever doubted that the iPhone would be unlocked. It was only a matter of time before someone figured out how to crack the armor that heretofore has kept iPhone users from popping in a SIM card other than the iPhone-specific one that AT&T Wireless supplies with every new iPhone.

It seems that the team of someones at iPhoneSimFree.com are the first to successfully pull off this feat. The group says it has unlocked the phone, and will be releasing its software for sale starting next week.

Unlocking the iPhone dramatically widens the phone's appeal. . . . .

Unlocking the iPhone is on net bad for consumers. Those who already have an iPhone or who are going to get one are possibly better off. The question though is whether this theft will alter AT&T's investments in future capabilities for its network and service. If it does, the consumers will not have quality of service that they would have had and that will work to reduce the iPhone's appeal. One presumes that since Apple wants to maximize iPhone's attractiveness relative to its costs, this cheating will move them away from the right mix of quality. The bigger problem is that this type of cheating reduces the incentives to invent and invest in devices such as iPhone to begin with.

UPDATE: This is about what I expected. This seems like pretty strong evidence that Apple for one doesn't think that it is better off by the unlocking of the iPhone.

The man informed McLaughlin that if he posted the unlock code, he could be sued for copyright infringement and for dissemination of Apple’s intellectual property. . . . .

UPDATE2: AT&T is now in the act.

Until an assessment is made of the potential of legal action, Uniquephones is unable to release the unlocking software for sale. The company spokesperson also said that the company would also be evaluating what to eventually do with the software should they be legally denied the right to sell it. A substantial delay caused by any legal action would render the unlocking software a less valuable commodity as well as creating unforeseen security issues for the company.

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Women Voting: Second of two part interview about Freedomnomics

The second part of the interview with Fred Lucas at CNSnews.com is available here.



First of two part interview about Freedomnomics

The first part of the interview with Fred Lucas at CNSnews.com is available here.



Another Endorsement for Freedomnomics


Another Review of Freedomnomics

“Why the Free Market Works and Other Half-Baked Theories Don’t,” reads the subtitle on the dust jacket.
So what? And what does that have to do with gun rights?

Like the saying goes, it’s not about guns, it’s about freedom. And Freedomnomics, by economist and author John Lott, Jr., does much to illustrate the relationship between free markets and liberty.

Sure, he builds on the groundbreaking work that established his name as a world-renowned commentator in More Guns, Less Crime and The Bias Against Guns. But some of his conclusions go against what is intuitively accepted as common knowledge.

For instance, many believe legalized abortion has reduced violent crime by removing the most unwanted and therefore potentially crime-prone from the population. Lott has the numbers to show an increase in “the murder rate, on average, by about 7 percent.”

Likewise, affirmative action programs for police forces have the effect of lowering their effectiveness by lowering standards. “Ironically,” Lott writes, the people this hurts the most are those who live in “places already plagued by terrible crime.”

This is controversial stuff to some, hardly politically correct. But Lott proceeds unfazed, taking on capital punishment and demonstrating “the death penalty helps deter violent crime and save lives,” and when “there were no executions … between 1968 and 1976 … murder rates
skyrocketed.” . . .

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New Op-ed: Does Government Weather Forecasting Endanger Lives?

. . . . With all the blame still going around about Hurricane Katrina’s devastation, one fact has missed getting much attention: private weather forecasting companies predicted the threat to New Orleans well before the National Weather Service. In fact, AccuWeather issued a forecast that the hurricane would hit New Orleans 12 hours earlier than the government service.

This is hardly something new. Private companies with a lot at stake would often rather pay for private forecasts than rely on the “free” forecasts from the government. Hugh Connett, the president of Bridgeline, a gas pipeline company in Louisiana, claims that the government’s hurricane forecasts are too imprecise. He says that private companies such as AccuWeather do it better, because they give more accurate predictions and provide hour-by-hour forecasts of a storm’s path. . . .

UPDATE: For those interested, links for the sources have been imbedded in the article. Simply click on the link above.

UPDATE 2: Please note that a correction was made in the piece. The portion of a sentence in the second paragraph stating that there were 5 hurricanes predicted to hit the US has been cut.

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CSPAN 2 Showing Talk on Freedomnomics

CSPAN 2 Booknotes TV will show a presentation on my book on Saturday, August 18th at 7 PM EDT.

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Extensive interview with Bill Steigerwald at the Pittsburgh Tribune-Review

Another Review of Freedomnomics

An Australian weighs in on Freedomnomics with a lengthy, thoughtful review. I particularly appreciated his conclusion:




Regulating Prescription Drug Prices Will Cost Lives


Reputations matter, even for China

In my talk at the Cato Institute today the claim that reputations don't seem to be important in disciplining China was very briefly raised. Anyway, talk about timing, here was a story that I just happened upon:

Whittle Shortline Railroad , a company in Louisiana, Mo., that makes wooden trains and trucks, posted a banner on its Web site several weeks ago: “100 percent kid-safe,” it read, “with lead-free paints.” Mike Whitworth, the company’s owner, said the recent recalls of Chinese-made toys found to contain lead in their paint has been good for his business. Very good. . . . .

Some evidence that it matters to consumers:

OTTAWA - Fears of shoddy and dangerous toys pouring into Canada from China are prompting parents across the country to seek safer alternatives following a large-scale recall announced by Mattel this week. But many are finding it's a nearly impossible task because the majority of the world's toys come from China.

"It's really difficult to find anything," said Keely Dennis, mother of a one-year-old boy in Vancouver. "It's really hard to find toys that aren't made in China that are age-appropriate, and are just cool, that your kid will play with."

For the second time in two weeks, the toy giant began recalling millions of Chinese-made toys over concerns that small parts could pose choking hazards and that excessive amounts of lead may be present. This is the latest in a string of problems that are raising doubts over the safety and quality of Chinese products, including toothpaste and pet food. . . . .

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Video from C-SPAN performance can be seen here

This weekend C-SPAN's BookTV aired a presentation at the Heritage Foundation on my new book Freedomnomics. You can view the film here (real media required).

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The liberal imbalance in Academia

Seventy-six percent of the education industry's total federal contributions for '08 has gone to Democrats, on par with the industry's partisanship in the last two election cycles. Perhaps more surprising than the industry’s party split is its sheer size: Education was the eighth-largest industry in terms of all federal campaign contributions in 2004 and the 13th largest in 2006, meaning that in the last two election cycles, college employees contributed more to politicians than the oil and gas industry, which ranked 16th in both cycles. For 2008, CRP ranks the education industry as No. 14, still ahead of big-givers such as oil and gas, general contractors, the computer and Internet industry, electric utilities and the pharmaceutical industry.

My new book, Freedomnomics, tries to explain why academia is as heavily liberal as it is and, more importantly, how the tenure process works to keep it that way.

Thanks to Butch Browning for sending me the link to this study.

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Freedomnomics on C-SPAN this Weekend

This Sunday, August 12, at 11:00 AM EDT; Sunday, August 12, at midnight EDT; and Saturday, August 18, at 7:00 PM EDT C-SPAN 2's Booknotes will have a presentation on my new book. The discussion each time will last an hour.

My appearance on CSPAN 2's Booknotes seems to have engendered some reaction:

On the positive side you can find this: "I almost forgot to mention that John will discuss his terrific book, Freedomnomics, on C-SPAN at 11:00 am EDT. The interview repeats at midnight and the booktv site has the full schedule for subsequent replays.

Go see it, the book is wonderfully ingenious, clearly written, and the balance of evidence and analysis makes John one of the formidable economists in the public policy arena."

On the negative side you can find this: "John Lott is scary. He's on CSPAN2 right now, giving talk on his book. What's scary about the guy is that he has no concept of the idea that human beings might be less than rational in the way they go about making life decisions. He really thinks everybody is hyper-rational. And, he's the chief economist for the US Sentencing Committee." I did put in a reply to his post on his website. It will be interesting to see if he has any response. Update: Well, there wasn't a substantive response, just some name calling.



Talk at the Cato Institute this coming Tuesday

From the Washington Post Literary Guide
TUESDAY, August 14, 2007

Noon. Economist John R. Lott Jr. discusses his new book, Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't, in conversation with Jared Bernstein of the Economic Policy Institute and Michael New from the University of Alabama, at the Cato Institute, 1000 Massachusetts Ave. NW. Call 202-789-5229 or e-mail events@cato.org to RSVP.

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The Abortion Debate Gets Heated

I guess that it would have been helpful if Ms. Marjorie Signer had actually explained why my research showing that the liberalization of abortion rules increased crime contained "many unfounded, fallacious, racist, and confused assumptions."

"Lott offers so many unfounded, fallacious, racist, and confused assumptions that his overall opinions are useless," said Marjorie Signer, spokeswoman for the Religious Coalition for Reproductive Rights, in a statement sent to Cybercast News Service.

"To speculate that abortion is responsible for various and sundry social trends is irresponsible and misses critical points," she said.

"Abortion has always been an option that women at all socioeconomic levels have considered, and many abortions are performed for medical reasons. Trying to correlate abortion with social trends smacks of pseudo-science and shows little understanding of women's lives and decisions," Signer added. . . . .

John Donohue also refused to comment on the actual research, but was reduced to saying this: "I am a social scientist, however, so Lott's behavior has in my mind, put him outside the bounds of scientific discourse." That will certainly settle the debate, though I can understand why Donohue is reluctant to actually discuss the facts on this issue. Since John Whitley co-authored this paper with me, does Donohue's statement tar Whitley also?

Donohue also doesn't comment on recent issues regarding his co-author Levitt.

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Another Review of Freedomnomics


Another Review of Freedomnomics

This cliché of government intervention might not be the effective long-term solution for the economy that many trust it to be. John R. Lott, Jr., PhD, author of the newly-published book Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don’t, believes that government intervention into a free market can adversely affect the economy. Lott further maintains that many so-called “market failures” actually become profit opportunities for those people who work to solve the problems.

Dr. Lott was at the Heritage Foundation last Wednesday to discuss his book and explain his thesis supporting a free economy despite its shortcomings. Lott drew upon multiple examples from his book to prove that the free market works most effectively with as little government intervention as possible, and is actually able to solve its own market failures over time, contrary to popular opinion. Also, Lott expounded upon the long-term domino effects that touch society when the government exercises sufficient power. . . . .

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The penalties faced by white collar criminals

This article only mentions the prison term faced by Fingerhut. But of course he will have to provide full restitution and fines. He is retired so he doesn't have to look for a job again because if he did (as I have pointed out in Freedomnomics), he would have an almost impossible task. There is also a high probability that his wife will divorce him and take most of his assets.

In his day, Bert Fingerhut was a Wall Street player. A top-ranked securities analyst for eight straight years, making calls that moved markets, Mr. Fingerhut rose to director of research at Oppenheimer & Co. in 1980. Three years later, he retired to Aspen, Colo. He was 40 years old.

In the Rockies, Mr. Fingerhut became as passionate about conservation as he once was about stocks. He joined the boards of a string of environmental organizations. So devoted was he to the wilderness that he got married in Wyoming's Grand Teton National Park.

But he couldn't get Wall Street out of his system. In the 1990s he picked up a copy of Peter Lynch's "Beating the Street," in which the former star manager of the Fidelity Magellan Fund wrote of a "can't-lose proposition (almost)" called bank-conversion investing.

When mutual, depositor-owned banks convert to public companies, Mr. Lynch noted, they must let depositors buy stock at the initial-public-offering price. The new shares are often priced at a discount. So "the next time you pass a mutual savings bank or an S&L that's still cooperatively owned," Mr. Lynch suggested, "think about stopping in and establishing an account."

Mr. Fingerhut took the advice to heart, and then some. Starting in 1995, he opened accounts at more than 400 banks across the country, from Wellsburg, W.Va., to Covina, Calif. He eventually got in on public offerings at many of them, and flipped their shares for quick profits. Over a decade, he made $11 million from the strategy.

There was one problem: The way he did it, he was breaking the law.

In May, Mr. Fingerhut pleaded guilty to conspiring to defraud banks and their depositors by secretly using other people as fronts to open accounts for him, thus increasing the number of IPO shares he could buy. He forfeited all the money he earned from the strategy. On Friday, a federal judge in Newark, N.J., sentenced the onetime star stock analyst to two years in prison.
. . . .

Thanks to Jack Langer for sending this article to me.

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Heritage Talk Available Here

The talk that I gave at the Heritage Foundation can be found here. Hopefully it provides a quick understanding of economics is and how powerful of a tool it is. For those with Windows and Windows Media Player you can watch the presentation here.


Another Review of Freedomnomics

Phil Miller over at Market Power has a review of Freedomnomics:

John Lott has given us a book that gives an important perspective on the workings and intricacies of markets and what happens when private citizens are economically free.

John Palmer has more thoughts here and Stephen Karlson has his comments here.



Another Review of Freedomnomics

Another review of Freedomnomics can be found here. Thanks to John Palmer at the University of Western Ontario for reading the book.

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New Piece in National Review

Abortion and Crime — by John R. Lott Jr.
One has an effect on the other, but it may not be the effect you think.

Violent crime in the United States shot up like a rocket after 1960. From 1960 to 1991, reported violent crime increased by an incredible 372 percent. This disturbing trend was seen across the country, with robbery peaking in 1991 and rape and aggravated assault following in 1992. But then something unexpected happened: Between 1991 and 2000, rates of violent crime and property crime fell sharply, dropping by 33 percent and 30 percent, respectively. Murder rates were stable up to 1991, but then plunged by a steep 44 percent.

Several plausible explanations have been advanced for the drop during the 1990s. Some stress law-enforcement measures, such as higher arrest and conviction rates, longer prison sentences, “broken windows” police strategies, and the death penalty. Others emphasize right-to-carry laws for concealed handguns, a strong economy, or the waning of the crack-cocaine epidemic.

Of all the explanations, perhaps the most controversial is the one that attributes lower crime rates in the ’90s to Roe v. Wade, the Supreme Court’s 1973 decision to mandate legalized abortion. . . . .

This piece requires a subscription, though it is largely based on the discussion that I have on this issue in my book, Freedomnomics.

By the way, in the same issue Ramesh Ponnuru has a useful discussion on the gun control debate, though I believe that he is a little too optimistic.

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One of the many penalties some criminals face: Lost inheritance

PARTY princess Paris Hilton is $60 million out of pocket after her billionaire grandfather - appalled by her jail term for drink-driving offences - axed her inheritance.

Family patriarch Barron Hilton was already embarrassed by his granddaughter's wild behaviour - notably when her home sex video was leaked on the internet.

But the 79-year-old considered her 23-day sentence last month the last straw. . . . .

People who are disinherited because of criminal activity face an essentially almost impossible road in challenging that decision in court. If you thought that Paris' prison term was already harsh for the type of crime that she had committed, add $60 million to that penalty.

Thanks to Alex Robson for sending this story to me.

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More on Freedomnomics from a talk I gave at the Phoenix Chamber of Commerce

John Lott, professor of economics at the University of Maryland and author of Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don’t, says he believes the 19th Amendment in 1920 that gave women the right to vote led directly to the growth in the size of the U.S. government.

At an Arizona Chamber presentation Tuesday, Lott said the rate of increase in government (as measured by percent of GDP) in the decades following 1920 tracks perfectly with the increasing voter turnout among women during the same time period. He said women tend to favor more government programs than do men, and the change in attitudes toward the proper role of government correlates exactly with the increased involvement of women in the political process. Other of his conclusions/observations included:

• The legalization of abortion in 1973 resulted in an increase in the crime rate, especially in the murder rate. Lott’s reasoning here is that whereas before Roe v Wade, women would adopt out their children born out-of-wedlock, after 1973, the numbers of women carrying their babies to term increased. Among those who chose not to abort, many instead chose to raise their child alone in a single-parent household, which, he says, studies have shown are less nurturing than two-parent households. He said the lack of quality parenting leads directly to lower grades, higher dropout rates, more delinquency and ultimately increased crime and murder rates. . . . .

Here is a discussion of my research in German.

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Another Review of Freedomnomics

barbarindian writes that this is: "A must read for free market believers.."


John Palmer at the University of Western Ontario Begins Reviewing Freedomnomics


Another Review of Freedomnomics

A critical review of my book by Max Sawicky can be found here. I have put up a couple of responses on his blog. As I write in my comment on his blog, I didn't expect us to agree on everything, but I really do appreciate him taking the time to write the review.

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New Op-ed: Driving the Lemon Myth Off the Lot

Here is a new piece that I have up at Fox News:

If you have ever thought of buying a new car, you are undoubtedly familiar with the claim that as soon as you drive the new car off the showroom floor its price falls dramatically. Recent popular books have asserted that simply driving a new car off the lot reduces the price by 25 percent.

Many economists explain this drop as occurring because the people who are trying to resell their cars quickly are typically doing so to get rid of “lemons.” Even if your virtually new car isn’t a lemon, people who want to buy your car can’t be sure, so they aren’t willing to pay as much as your virtually new non-lemon car is really worth. It is the classic story of “market failure.”

Nice story—except it’s wrong. In fact, the widespread perception that a new car loses substantial value as soon as a buyer drives it off the lot is really just a myth, as we shall see.. . .

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Gary Galles reviews Freedomnomics


More on Freedomnomics

There are new mentions of my book, Freedomnomics here, here,here, and here.

Robin Hansen at GMU and Max Sawicky from the Economic Policy Institute will be providing comments for my talk at Heritage Foundation on August 1st at noon.



Another Review of Freedomnomics


Review of Freedomnomics by Michael New at National Review Online

On Laura Ingraham Today

For those interested, I will be on the Laura Ingraham's Show at 11:15 EDT to discuss Freedomnomics today.

I will be on Larry Elder's show tomorrow at 7PM EDT.

Both should be a lot of fun.



More on Freedomnomics

More mentions of my book here and here. Ann Coulter's review is still being picked up on blogs and in various newspapers.



Still More Reviews of Freedomnomics

Cao has a nice review of Freedomnomics over at her blog:

Freedomnomics explains a lot of things in an easy-to-understand conversational way. He surprises the reader with fascinating information. I’d never stopped to think, for example, that there is a relationship between the increasing number of out-of-wedlock births and abortion and increasing crime statistics.5 Did you know that? Or that there is a relationship between single parent and cohabitating unmarrieds and children who are not engaged in school, children who cut school, children who don’t perform well in school, etc. . . . .

David Henderson also has a nice review of Freedomnomics:

For the first years of its existence, radio seemed like an economic loser without government subsidy. No one could figure out how to make listeners pay, and, consequently, radio hosts and entertainers usually worked for free. In 1922, Herbert Hoover, then Secretary of Commerce, asserted, "Nor do I believe there is any practical method of payment from the listeners." But that same year, AT&T discovered that it could make money by selling ad time on radio. It sounds obvious now, but it wasn’t then. After that, radio thrived and is still thriving.

John Lott tells that story and many others – and tells them well – in his latest book, Freedomnomics. . . . .

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Book Signing at Heartland Institute


More Discussions of Freedomnomics

In a discussion about "Why Did Crime Fall in the 90's?" Mikeroeconomics writes that:

John R. Lott offered a rebuttal in his book, Freedomnomics, on why crime fell in the 90'2. Lott's explainations include the death penalty, better law enforcement, the right to bear arms. This book is a fast read and exceptionally well written. . . . .

While he hasn't yet read the book (though he says that he plans to listen to it on tape), Rogue Genius did listen to a radio interview and offers a less flattering review of my discussion on abortion:

I downloaded a podcast of Micheal Medved's program today. It said in the listing that he was interviewing the author of Freakonomics... Actually, it didn't. What it really said was the author of Freedomnomics. A guy well known in gun-nut circles, John Lot (who is now, suddenly, an economist). So, I got suckered. Anyway, I'd already downloaded it, so I listened.


Now, as you know, I'm not much impressed with what passes for intellectualism on the right. But if anyone - and I do mean ANYONE - can't 'out logic' the arguments presented in this podcast (and, presumably, the book) that person must turn in their social security card: they can no longer be considered human.

Rogue Genius and I have a bit of an exchange at the end of his posting.

Lemuel Calhoon and SayUncle promise reviews of my book soon. The Pittsburgh Tribune also ran Ann Coulter's review of my book.

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Interview about book at FrontPageMagazine

Bernard Chapin has a discussion with me about Freedomnomics here.

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Freedomnomics makes the 60 range on Amazon.com


Some more discussions of Freedomnomics

Some more discussions of Freedomnomics can be found here, here, and here.



Ann Coulter reviews my new book Freedomnomics

Allerca cats, firms capturing the benefits from innovation

My book Freedomnomics has a paragraph on the fact that patens may not always be enough to capture the return to innovations, but that companies have still figured out ways to capture the benefits. One case that I pointed to regarding Allerca cats, which were neutered so that those who bought the cat wouldn't be able to breed them for resale. A picture of one of the first cats can be seen here. By the way, it is a very cute cat.

UPDATE: Science Blogs has pictures of multiple cats up. They also note that Time magazine found that this was one of the best inventions of 2006.

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Dennis Prager's Interview of me on Freedomnomics

For those interested, Dennis Prager's interview with me can be found here. I have to say that I have been a regular listener of Dennis' since I was in graduate school at UCLA in the early 1980s.


Steve Sailer reviews Freedomnomics for the Washington Times

Steve Sailer is nice enough to have a review of my new book in today's Washington Times. Personally, I think that the review contrates too much on controversies outside the book and is a little to vague on its critiques of my book, but it is nice that he has written the review.

Mr. Lott is an even more fecund generator of plausible explanations than is Mr. Levitt. For instance, he suggests in "Freedomnomics":

* The big mark-up on restaurant drinks stems from customers tending to lingerlonger over beverages than food, tying up valuable tables.

* The introduction of secret ballots lowered voter turnout. Why? They reducedvote-buying and thus voting. Crooked political operators could no longer be surethey got the votes they paid for.

Mr. Lott offers so many fascinating theories that the "Freedomnomics'" ideas-per-page ratio is more daunting than that of the frothy "Freakonomics," which Mr. Levitt's writing partner, journalist Stephen J. Dubner, optimized to not tax tired travelers' oxygen-deprived brains at 35,000 feet. . . .



New Op-ed on the Connection between Minimum Wage Laws and Illegal Immigration


Apparence on Dennis Prager Show on Monday

Dennis Prager is nice enough to have me on his show for a full hour on Monday from 2 to 3 PM EDT. You can find his stations to listen to here.

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Medved Show Today

I should have put down that I did Bill Bennett's show yesterday. But today at 4 PM EDT I have Medved's show again. It is extremely nice of him to have me on for a second hour within a month. I have something like eight radio shows today.

Note all times EDT:

Kirby Wilbur
Friday 6/29/2007 at 11am ET for 10 to 12 minutes

Friday June 29, 1:00-1:30pm ET
1820 Eastlake Avenue East
Seattle, WA 98102
Contact: Tina (producer) 206.726.7000

Host: Chuck Bates
Friday 6/29/2007 at 2:00pm ET for 30 minutes (maybe 1 hour - please see below)
Contact: Chuck Bates: (800) 325-0919 Ext. 212
Notes: Our flagship program is News & Views heard daily in approx: 70 markets nationwide from 1-3pm EST on AM & FM stations.


Another note on Freedomnomics


At least three reviews on Amazon.com for Freedomnomics are by Economics Professors -- All are very positive (Thank you!)

2 of 2 people found the following review helpful:
More than just three cheers for the free market., June 28, 2007
By Douglas W. Allen - See all my reviews

I'm a professor of economics, and I'm very familiar with the work of John Lott. I bought this book because I enjoy reading arm-chair econ books ... just can't get enough econ! Normally I'm disappointed because the examples and applications are usually stolen and reworked material that's been around for years. Not so with Lott's book.

The great thing about the book is not just the refreshing topics, but Lott's gifted approach to understanding them. Take, for example, the growth of government. Many bright minds have worked to explain why did governments grow so fast after WWI? Dozens of theories have been spun, none very successful. Not only does Lott have an ingenious answer (women's suffrage), but he also has an ingenious test and exploits the fact that some states voluntarily granted the right, while other states had it forced on them. It is Lott's ability to come up with clever and convincing tests and evidence that separates him from others.

I don't like the title of the book, and I don't like the sub-line "a rebuttal to Freakonomics." The book is much more than this, and I'm sure the publisher had more to do with the cover than the author. If the cover turns you off, I'd open the book and read a few pages.

The book is well written and accessible to anyone interested in social behavior. A very good read and highly recommended.

9 of 12 people found the following review helpful:
Toward Understanding How Markets Work, June 16, 2007
By Edgar K. Browning (Texas) - See all my reviews

As a professor of economics, I am aware of how difficult it is to communicate the "simple" principles of economics. The approaoch that seems to work best involves the use of lots of examples, especially ones that engage and challenge students. John Lott's new book is filled with such examples. While it can be recommended to anyone with an interest in how the economy works, it should be especially valuable to teachers and students of economics. (I am going to assign the section "Women's Suffrage and the Growth of Government" in my public finance class in the fall.)

37 of 42 people found the following review helpful:
Excellent defense of free markets, May 17, 2007
By James D. Miller (South Deerfield, MA USA) - See all my reviews

Excellent book showing the power of free markets and the harm that manifests when governments interfere in markets. Many economists claim that free markets work great in theory but there are many types of market failures that require government intervention. Lott points out how markets themselves can overcome these so called market failures and how government attempts to correct these failures often makes the situation much worse.

Lott takes on very politically incorrect topics that the mainstream media would never touch such as how affirmative action influences police effectiveness and how giving women the right to vote has influenced the size of the government.

The book is very readable and is clearly intended for a general audience. I would strongly recommend it to people who enjoy the writings of columnists such as Walter Williams and Thomas Sowell.

I have also gotten nice emails from Ralph Winter at UBC and a young professor at Univ of Wisconsin as well as many others.

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More Reviews of Freedomnomics


New Op-ed Tech Central Station: On the new Energy Bill Going Through Congress

Here is a link to my new op-ed:

With gas prices around $3 a gallon, the Senate last week passed new energy legislation. It will ultimately go to conference with the House to work out differences between the Senate and House bills. But any bill that gets agreed upon seems certain to increase the swings in gas prices and leave the average American worse off.

Senator Charles Schumer (D-NY) claims that oil companies are colluding to drive up the price, "they wink at each other and do the same thing." Likewise, Senator Hillary Clinton (D-NY) blames the companies for taking advantage of Hurricane Katrina to raise prices: "You have a hurricane, and all of a sudden you see prices going up like that. That has... everything to do with people trying to make money off the backs of this tragedy."

With such reactions, it is not too surprising that a new Bloomberg/Los Angeles Times poll shows that 38 percent of Americans view the U.S. oil industry's "gouging, greed, profits" as the main reason for higher gas prices. The second reason is "the Bush Administration" at 21 percent. . . . .

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Dennis Prager on the importance of reputations

My new book discusses the reputational penalty that people face in even being charged with a crime and I gave the Duke case as an example. Dennis Prager also looks at this issue:

The rape of a name can be as vicious a crime and as destructive an act as the rape of a body. Sometimes the rape of a body is worse, sometimes the rape of a name is worse. But they are both rapes. And morally likening the two is in no way meant to lessen the horror of rape; it is meant only to heighten awareness of the horror of intentionally destroying the name of an innocent person.

These words are written in the aftermath of the destruction of three young men's names by a lying woman whose name is still hidden by The New York Times and other major newspapers whose commitment to truth is not as strong as their commitment to political correctness. . . . .

The point that I would make is that for the vast majority of those convicted of crime the reputational penalty is the most important penalty that they face.



Some more reviews of Freedomnomics

Margaret at State of Nature:

This morning's radio program King Banaian and I interviewed economist John Lott, author of More Guns Less Crime and the new Freedomnomics . . . . Everything is a market failure, if you leave the market to its own devices, the market will surely screw us all.

Lott shows with many simple examples how that's just not so.

Giltner Review notes that
Perhaps the most startling claim that Lott makes is that women’s suffrage caused a dramatic increase in the size of government, because the “gender gap” reflects a genuine difference in how men and women—-especially single or divorced women—-see the appropriate role of government with respect to income security and education. He points to how state government expenditures changed in states as the percentage of women voting increased—and how the varying years in which different states granted women the vote confirms that this was not a coincidence.

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I will be appearing Tom Hartman's show at 1:06 PM EDT. I am letting people know about this primarily because it should be pretty fun. I have never been on Air America before.

UPDATE: It has been lively and fun. Tom is holding me over for a second segment.

One listener writes:

"I am truly shocked that you believe that unbridled capitalism is a good idea. . . . ." Bob Hirst

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