Gambling, Investment, and Bankruptcy: Add Adultry, and It Sounds Like a New Show on HBO....
Journal of Gambling Business and Economics, June 2007, Pages 121-127
There are many anecdotes likening the stockmarket to betting, often voiced from the perspective of an inexperienced investor or gambler to whom the risks seem much the same in either marketplace. A fundamental aspect of the stockmarket that separates it from all forms of gambling is that a naive investor who carries a well diversified portfolio, and holds it long enough, is bound to win (based on historical evidence at least). In gambling markets, an unsophisticated player is bound to lose, the more so the longer he plays. For well informed or otherwise sophisticated traders, the racetrack and stockmarket are effectively analogous, in that both present opportunities to take money off less well informed players, albeit not so much that they lose interest. The stockmarket does not offer the recreational attractions of the racetrack, and must therefore return profits to most or all investors, at least in the long run, if they are to stay in the game.
The Size of the Economy and the Distribution of Income in the Roman Empire
Stanford Working Paper, November 2008
Different ways of estimating the Gross Domestic Product of the Roman Empire in the second century CE produce convergent results that point to total output and consumption equivalent to 50 million tons of wheat or close to 20 billion sesterces per year. It is estimated that elites (around 1.5 per cent of the imperial population) controlled approximately one-fifth of total income while middling households (perhaps 10 percent of the population) consumed another fifth. These findings shed new light on the scale of economic inequality and the distribution of demand in the Roman world.
Great Fortunes of the Gilded Age
NBER Working Paper, December 2008
This paper explores the origins of the great fortunes of the Gilded Age. It relies mainly on two lists of millionaires published in 1892 and 1902, similar to the Forbes magazine list of the 400 richest Americans. Manufacturing, as might be expected, was the most important source of Gilded Age fortunes. Many of the millionaires, moreover, won their fortunes by exploiting the latest technology: Alfred D. Chandler's "continuous-flow production." A more surprising finding is that wholesale and retail trade, real estate, and finance together produced more millionaires than
manufacturing. Real estate and finance, moreover, were by far the most important secondary and tertiary sources of Gilded Age fortunes: entrepreneurs started in many sectors, but then expanded their fortunes mainly through investments in real estate and financial assets. Inheritance was also important, especially in older regions.
Bankruptcy Law and Entrepreneurship
John Armour & Douglas Cumming
American Law and Economics Review, Fall 2008, Pages 303-350
Recent initiatives in a number of countries have sought to promote entrepreneurship through relaxing the legal consequences of personal bankruptcy. Whilst there is an intuitive link, relatively little attention has been paid to the question empirically, particularly in the international context. We investigate the relationship between bankruptcy laws and entrepreneurship using data on self-employment over 16 years (1990-2005) and fifteen countries in Europe and North America. We compile new indices reflecting how "forgiving" personal bankruptcy laws are. These measures vary over time and across the countries studied. We show that bankruptcy law has a statistically and economically significant effect on self-employment rates when controlling for GDP growth, MSCI stock returns, and a variety of other legal and economic factors.
(Nod to KL)