Re: poly: On Simple Models (Was: Why interest rates may stay low)

From: Robin Hanson <>
Date: Tue Mar 03 1998 - 13:41:05 PST

Perry writes:
>> If you found it plausible that investments become more and more
>> attractive with time (over some range), by offering higher and higher
>> returns, then you should find it plausible that the returns would be
>> higher if investments were postponed due to property rights.
>You wouldn't always expect that -- indeed, you often would not expect
>that. For instance, if I am investing in a radio broadcast license (we
>will ignore whether such licensing is desirable right now), the cost
>of the license these days is generally nicely proportional to the
>expectations on the part of bidders of their likely return on

You've completely lost me here. Care to rephrase?

>Pretending that we can exactly measure the rates of return in 1890 or
>1650 also seemed a bit odd. You were claiming that rates of return
>haven't changed -- I challenged people to find a way to actually
>measure that. ...
>If, on the other hand, you start discussing "historical rates of
>return" etc., I start having an alarm go off.

This is from a rather different discussion, of the suppy side of
investments rather than the demand side you and I've been discussing.

There is a literature where people estimate these sorts of returns,
and I conveyed the results I recall. I'm not up on it enough to
give you much more detail how they got their estimates; you'll
have to go read that stuff yourself to find that out. I do know
enough about those researchers, however, to grant them the benefit
of the doubt.

Robin Hanson
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614
Received on Tue Mar 3 21:46:48 1998

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