The Marginal Revolution Podcast

In this episode, Alex and Tyler dive deep into the fascinating and often misunderstood world of insurance, exploring how this trillion-dollar industry underpins modern economies while shaping human behavior in surprising ways. From its ancient roots in maritime adventures to the revolutionary development of life insurance, they unravel the economic logic and social norms that made this market possible. Along the way, they grapple with enduring puzzles: Why do people insure against some risks but not others? Why did life insurance once seem repugnant, only to become a moral imperative? How has the industry's ability to manage moral hazard and agency problems evolved—or not? From mutual aid in Indian villages to the legacy of 17th-century tontines, the conversation illuminates the ways in which insurance reflects both the limits of human foresight and our relentless attempts to navigate an uncertain world.

Recorded March 14, 2024

Transcript and links: https://www.mercatus.org/marginal-revolution-podcast/economics-insurance

 Stay connected: Follow Alex on X: https://x.com/ATabarrok

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 See Alex and Tyler's recent posts on Marginal Revolution: https://marginalrevolution.com/

Chapters 

• 00:00 - The size and benefits of the insurance industry 
• 02:35 - Insurance as a transaction enabler
• 10:13 - Nicholas Barbon, Robin Hanson, and insurance bundling
• 18:22 - The effect of advances in mathematics on insurance
• 23:45 -Tradable insurance as an early prediction market 
• 32:54 - Risks we don't insure against
• 37:12 - Charles Ives and changing social attitudes around life insurance
• 41:33 - Will repugnance fade for paid organ donations as it did for life insurance?
• 45:31 - Have the agency problems behind insurance been fully solved?
• 54:44 Good books on insurance and takeaways

In this final installment of their series on the 1970s, Alex and Tyler turn to the social upheaval and crime wave that marked the decade as one of America’s most turbulent. They explore how rising crime rates transformed cities, fueled a national sense of fear, and led to far-reaching policy shifts, including mass incarceration and changes in urban policing. From the shocking statistics on homicide and stranger violence to the rise of serial killers and political bombings, they consider how the era’s unprecedented violence influenced American culture and policy. The conversation concludes with a caution against complacency, as they reflect on how fragile today’s low-crime environment may be—and what lessons from the past should guide us in preserving it.

Recorded July 17, 2024

Transcript, video, and links: https://www.mercatus.org/marginal-revolution-podcast/1970s-crime-wave

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Follow Alex on X: https://x.com/ATabarrok

Follow Tyler on X: https://x.com/tylercowen

See Alex and Tyler's recent posts on Marginal Revolution: https://marginalrevolution.com/ 

In this second installment of their three-part series on the 1970s, Alex and Tyler unravel the economic and geopolitical forces behind the oil shocks that upended global global markets, triggered economic crises, and forced a dramatic reshaping of U.S. energy policy. Along the way, they debate whether the shocks ultimately led to long-term benefits like the rise of alternative energy and the fracking revolution, or if they merely prolonged economic pain. The conversation ranges from OPEC’s newfound power and the Yom Kippur War’s role in reshaping oil markets to broader questions about how shocks like these influence policy in the long-term. They close by reflecting on how the policy failures of the 1970s paved the way for Milton Friedman’s rise to prominence, and why his ideas—born from an era of rampant inflation and misguided price controls—remain crucial for understanding today’s economic challenges.

Read a full transcript enhanced with helpful links, or watch on YouTube.

Recorded July 17th, 2024

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Alex and Tyler share their predictions for the upcoming Nobel Prize in economics, considering potential winners like Michael Woodford for monetary theory, Susan Athey for her bringing machine learning , and Ariel Pakes for industrial organization. They reflect on overlooked economists such as Robert Barro, Richard Posner, Gordon Tullock, Armen Alchian, and Anthony Downs, while also highlighting the importance of dataset creators, including John Haltiwanger, Steven Davis, and the creators of the Penn World Table. They also explore non-traditional picks like Vitalik Buterin for his contributions to crypto, while calling out some questionable past winners.

If you love speculating about who deserves a Nobel—or can’t resist reminding everyone the economics prize technically isn't one—this is your episode.

Read a full transcript enhanced with helpful links, or watch on YouTube.

Recorded Sep 19th, 2024

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Welcome The Marginal Revolution Podcast! In the Season 1 premiere, Alex and Tyler kick off a 3-part series on the 1970s by exploring the decade's defining economic challenge: rampant inflation. They debate the factors behind the inflationary surge, from Keynesian spending policies to the collapse of Bretton Woods to contentious Fed policies. They end by drawing parallels to modern times, questioning why inflation in the 2020s has been curbed with less economic pain. Prepare for a lively discussion and a dash of economist-bashing along the way!

Read a full transcript enhanced with helpful links, or watch the full video.

Recorded July 17th, 2024

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See Alex and Tyler's recent posts on Marginal Revolution