Levitt’s Poker Paper: It’s a Game of Skill
Steve Levitt has a new working paper: “The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker,” with University of Chicago colleague Thomas J. Miles.
Using data from the 2010 World Series of Poker, Levitt and Miles found that high-skilled players earned an average return on investment of over 30 percent, whereas all other players averaged a 15 percent loss. This finding has serious implications on the legality of online poker, as that debate is heavily dependent on whether the game is based on skill or luck. Read More »
Why Is Failure a Sign of a Healthy Economy? A Guest Post by Tim Harford
I’ve known Tim Harford for a while; to me, he’s one of the best writers who also happens to be an economist (although in recent years he’s spent more time as a writer than a practicing economist, which may explain everything). Disclosure: Harford profiled Steve Levitt back when Freakonomics came out, and he’s had the two of us on his BBC radio show More or Less.
He writes a Financial Times column (on Saturdays) called “Undercover Economist,” and that was the title of his first book, published in 2005 (and just updated). His latest book, out this week, is called Adapt: Why Success Always Starts with Failure. It examines the incremental, adaptive ways by which success is achieved across a number of fields. Here’s a taste, in the form of a guest post. It’s very good, and to my mind, here’s the best passage:
Read More »[W]here’s the churn in education policy or healthcare policy or policing? These are difficult problems. Why would we expect them to be solved the first time? They are surely no simpler than the business problems which seem so prone to experiment and error.
The Economic Benefits of Trust
On the airport bus in Helsinki, a Finnish woman asked my wife, “What is the biggest difference between Europe and the U.S.?” There are lots of possible answers, but the most striking to me is the tremendous diminution of mutual trust in the U.S. over the past few decades. Why does this matter economically? Because a number of economists have shown recently that income levels and real growth depend upon trust—trust greases the wheels of exchange. Read More »
The “Daughter Test” of Government Prohibitions (And Why I’m so Angry About the U.S. Internet Poker Crackdown)
I was outraged a few weeks back when the U.S. government cracked down on internet poker. It took me a while to figure out why.
One of the most important roles of government is establishing a set of rules under which society will operate. Governments determine property rights and coordinate the provision of public goods. Some frowned upon activities are deemed illegal (e.g. homicide); other favored activities are encouraged through subsidies (e.g. home ownership, education). Read More »
and 
. If you haven’t seen it yet, the movie features Steven Levitt and Stephen Dubner, and was made by a dream team of documentary directors. Paste Magazine named it one of the 