A Series of Interesting Posts over at Marginal Revolution

Below are a series of links to posts from George Mason University economist Tyler Cowen at Marginal Revolution. The first two were posted yesterday and today respectively. The third is a link from the blog posts by Cowen providing "evidence" of the effectiveness of being a miser. All of these posts discuss a recent gift of $400 million to Harvard University by a wealthy donor.

Did the Wisconsin state system just abolish tenure?

A tweet in the form of a blog post, with an addendum, #Paulson, #Harvard

What I Like About Scrooge

It seems to me that author is confusing miserliness defined as "excessive desire to save money; extreme meanness" with asceticism, which is defined as "severe self-discipline and avoiding of all forms of indulgence, typically for religious reasons."

In any instance, the entire debate seems to hinge around the marginal benefit supplied by Harvard receiving an additional $400 million on top of its already huge endowment of $36 billion. I'd imagine the marginal benefit is quite small, which implies the opportunity cost of this donation is quite large as $400 million is capable of having dramatic impact when given to another organization whose marginal benefit would be quite higher.

Even excluding the moral weight a decision like this carries, we can look at the marginal propensity to consume (MPC) of various economic classes to decide this isn't the best use of $400 million from an economic standpoint. Harvard essentially serves the most elite of the economic world. The wealthy have a lower MPC than the poor and so a gift of this magnitude would have a larger economic effect on growth by ensuring it gets into the hands of the poor instead of the elite.