Quarterly Journal of Austrian Economics
Toward a Clarification of the Block-Demsetz Debate on Psychic Income and Externalities
Volume 10, No. 3 (2007)
In this paper I clarify the long-running debate between Block and Demsetz over the potential impact of psychic income on the Coase Theorem. Each of the protagonists appear to have erred on how to integrate psychic income into an analysis of the Coase Theorem. Block’s psychic income case, when properly interpreted, goes beyond the standard transaction costs qualification and represents a conceptually distinct limitation of the “Coase Theorem.” Review of Econspinning: Economists are familiar with the cliché “lies, damned lies and statistics,” which puts statistics at the top of the pyramid of lies. ESPN sports radio personality Colin Cowherd, on the other hand, insists, “People lie, the numbers don’t.” Since people create the numbers the line between liars and bad numbers may be less than bright and clear, but Gene Epstein—economics columnist for Barron’s magazine and author of Econospinning—essentially sides with Cowherd. Epstein finds little fault with government’s economic numbers and plenty of fault with the reporters and pundits who use those numbers.
Cite This Article
Brooks, Michael. "Toward a Clarification of the Block-debate on Psychic Income and Externalities." The Quarterly Journal of Austrian Economics 10, No. 3 (2007): 223–233.