If you think the annual American Economic Association (AEA) meetings are stuffy affairs of ivory-tower academics, think again. This year’s event was held in the Big Easy at the same time as the national football title game between LSU and Ohio State. It was a strange mixture of nerds and jocks. (Since I’m both a sports fan and an academic economist, I fit right in.) But the meetings proved that economics is hip.
The key figure was Chicago economist Steve Levitt, author of the bestseller Freakonomics, who (dressed without a coat and tie) explained to a standing-room-only crowd the economics of the sex trade in Chicago. The almost all male audience, leering at every word, was told that there were approximately 4,400 prostitutes in the Windy City, who turned 1.6 million tricks in a year. During the July Fourth festivities in Chicago, the quantity of hookers increased 60%, but prices only 30% because of an increase in out-of-towners and temporary workers. The laws of supply and demand are at work everywhere. Rumor has it that Levitt is coming out with a new book soon, and I think it should be called “Hookonomics.”
Regarding sports and economics, two people presented an amazing econometric paper showing, by reference to the number of fouls called on white and black players, that NBA referees show racial biases. They conclude that black referees are more prejudiced against white players than white referees against black players. Their study was recently highlighted on the front page of the New York Times.
Quite a few free-market economists showed up, including Florida State’s Jim Gwartney, whose new textbook, “Economics: Private and Public Choice,” offers two pages of economic freedom indexes from the Fraser Institute. Jim told me that his textbook, now co-authored with three other economists, is gaining in sales. Cato and others were there exhibit- ing their books; and Institute for Humane Studies (IHS) held a cocktail reception for friends and colleagues, including faculty members of George Mason University. The big news was the forthcoming second edition of the New Palgrave Dictionary of Economics, considered the source for what economists are up to. The first edition came out in 1987 and was criticized heavily for being dominated by heterodox Marxists. I was told by the new editors that their edition has scaled back the contributions of the Marxists dramatically, and increased the contributions of the Austrians, supply-siders, new classicists, and other free- market economists.
The AEA meetings still have an overabundance of sessions held by the Union of Radical Economists, appropriately labeled URPE. I attended one on Venezuela. The main speaker was a Chavez government official who handed out an invitation to a 125th anniversary conference on Marx in Havana; the subject is how to “contribute to the overthrow of capitalism.” Will Marxism ever die?
I wish that Austrian economists would hold their own sessions at the AEA meetings. That would be a great opportunity to expose the profession to the sound economics of Mises and Hayek. Austrian economics is growing in influence – Glenn Hubbard, the dean of Columbia Business School, gave the annual luncheon address on entrepreneurship, and mentioned Hayek and Schumpeter by name.