The Onion has no future(s)

No, not This Onion.

‘‘For as long as we fail to treat speculators the way they deserve—with a bullet in the ead—we will not get anywhere at all.’’
Vladimir Lenin
‘‘For my part, I wish every one of them [speculators] had his devilish head shot off.’’
Abraham Lincoln

Who knew the two notable leaders shared opinions on anything? Both are cited in a wonderful paper from David S Jacks. Here’s the nub of it:

The fundamental result of this paper is that futures markets are systematically associated with lower levels of commodity price volatility. The means for arriving at this result is a series of quasi-experiments with futures markets provided by history, namely their establishment as well as prohibition through time.

One of the excellent discoveries: onion futures trading was banned in the US with effect from 1959. Here was the result:
This was brought to my attention by my colleagues Javier Blas and Joanna Chung. Tomorrow’s FT Magazine will contain my own thoughts on speculators, which are broadly in agreement. Alas, I didn’t know about Jacks’s work when I wrote the column.

Tim Harford’s blog

This blog is no longer updated but it remains open as an archive.

Tim, also known as the Undercover Economist, writes about the economics of everyday life.