Economists take sides on net neutrality

From: Blog

Just seven months ago, the esteemed members of the IGM Forum could not make up their minds about whether we should allow internet service providers to charge content companies for access to the ISP's customers. Back in those halcyon autumn days, nearly 60% of the panel's experts had no opinion, or were uncertain, while only 9% agreed that the changes were a good idea. 

Clearly, something is now different. This week the panelists were asked if the changes in distributional effect and efficiency mean that we should now let companies that send video or other content to consumers pay more to ISPs for using faster or higher-quality services. This time, 45% of the respondents agreed that this was a good idea. 

For those of us who follow the IGM Forum, it is always interesting to see how the experts come to their conclusions—which means when they change their minds about something as important as net neutrality, we tend to sit up and listen. For example, MIT's David Autor wrote this note with his "agree" vote: "Net neutrality is a fiction. Hire cloud services to mirror your servers worldwide to speed up content to your users. One user to consider: Healthcare.gov!" Darrell Duffie of Stanford agreed, remarking, "If all qualities sell at the same price, markets cannot allocate quality efficiently. Works for soap, wine and haircuts; why not the internet?" 

Of course, it is essential to point out that nearly 40% of the panel's participants still came up as uncertain, but only 4% chose not to vote—an average number for any poll. Of those who were uncertain, most are concerned that disassembling net neutrality will lead to higher costs for consumers. Abhijit Banerjee of MIT wrote, with his uncertain vote, "I worry it will crowd out the public goods that make the internet uniquely valuable unless bandwidth gets so cheap that it doesn't matter." Similarly, Princeton's Markus Brunnermeier commented with his no opinion vote, " This might lead to better allocation but also opens the room for price discrimination. The implications for the consumers are not obvious." 

So, what has changed? An April report by cloud-services giant Akamai Technologies noted that the average peak internet speed worldwide was up 38% compared with the fourth quarter of 2012. Plus, according to the MIT Technology Review, mobile traffic increased during the third quarter of 2013, and grew by 80% over that year. So with more people using the internet and with faster speeds transferring more data, perhaps these experts now feel that the time has come to treat the internet more like any other industry. 

—Robin Mordfin Cat: Policy, Sub: Economics,


Robert W. Fogel's once-controversial work has become mainstream

From: Blog

The life and work of Robert W. Fogel—the Nobel laureate who, until his death in June 2013, was Charles R. Walgreen Distinguished Service Professor of American Institutions at Chicago Booth—was recalled in reflections both personal and professional at several events in October.

They culminated in a one-day conference marking the 40th anniversary of Time on the Cross: The Economics of American Negro Slavery, the controversial data-driven book co-written by Fogel and Stanley Engerman that challenged the conventional wisdom that slavery was inefficient, unprofitable and on the wane at the time of the US Civil War. 

At the conference, Jonathan B. Pritchett of Tulane University noted that although today’s researchers have access to better datasets than some of those used in the original book, Fogel and Engerman’s framework continues to shape the study of economic history.

That was demonstrated in a series of papers presented at the conference, on subjects such as the history of distinctively African-American names, lynching and economic activity, antebellum slave prices, and the data on runaway slaves. 

Discussing the reaction to the book’s publication, Engerman, John Munro Professor of Economics at the University of Rochester, said he was booed for two minutes by 1,000 people at the University of California, Berkeley, where he was accused by one questioner of being “soft on slavery.”  

“We assumed everyone knew that slavery was evil,” Engerman said. “What were we supposed to do—put ‘We hate slavery’ at the bottom of every page?” However, he said he was pleased that textbooks now generally follow the book’s conclusions in discussing slavery.

Engerman demurred on the origins of the book’s provocative title. Finally, asked point-blank if he came up with it, he smiled playfully. “I wrote the subtitle,” he said.

The day before, at a memorial service held at the University of Chicago’s Rockerfeller Chapel, Steven Fogel delivered a more personal remembrance of his father, who, he said “was a typical absent-minded professor.” Once, he recalled, the Nobel laureate became frustrated with having mislaid his glasses. When it was pointed out to him that he was, in fact, wearing them, the economist responded: “Ah—I was wondering how I could see so well without them.”

Hal Weitzman