Archive:
Social science

Economists have lost the trust of politicians

It’s always good to read/see/hear Stephanie Flanders. Here she asks why politicians no longer have a favourite economist, in the way that Margaret Thatcher liked Milton Friedman and John F Kennedy admired John Kenneth Galbraith.

In one sense, this feels like a concern I have been reading about for a decade or two. But it also feels like an extension of the more recent phenomenon of refusing to listen to experts.

Nevertheless, there are some real questions for economics to answer. Why does it not have the influence today that it enjoyed in previous decades?

We’re also hearing mainstream economists talk more loudly about the possibility of shifting the balance back toward labor with wealth taxes and reduced taxes on earned income. That’s a big shift for a profession that seemed to think until recently that reducing the tax on capital was always and everywhere a good thing. It will be interesting to see how long it takes for an elected politician to decide that any of this advice is worth listening to.

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Sin taxes are less efficient than they look

Very interesting piece on the pros and cons of sin taxes (taxes on things like tobacco, alcohol).

Implied, but not quite explicitly mentioned here, is the fact that because such items tend to have low price elasticity of demand (in other words, price rises don’t change consumption habits all that much) — because they are usually addictive. As such, they are excellent revenue generators for governments.

This is an issue that’s well worth being on top of, as such taxes increasingly cover new things — like sugar and plastic bags.

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Study shows immigrants are twice as likely to become entrepreneurs

Economic studies are one way to measure the impact of immigration.

Personally, I like to measure it another way. I like to look at my son — the great-grandson of a Mexican immigrant — while he plays cricket with his friends, nearly all of whom are second-generation Indian immigrants.

When I watch my son play cricket with his friends, I come to the same conclusion the economists at Wharton do:

Our new immigrant friends are enriching our lives and making our economy better…

It’s time to say this sort of thing more loudly. There are clear and well-understood economic benefits of immigration. But people who dislike immigration don’t do so for economic reasons (even if they kid on that they do).

We should be clearer about the ways in which immigration and diversity enrich our lives as a whole. And just how sad and pathetic our lives would be if people didn’t move around and mix with others.

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Britain’s open borders policy

Whilst cycling the other day, I crossed the Leicestershire-Rutland border. And I was shocked to see…nothing. No border controls, no passport checks, no customs officials. Here in Rutland we have an open borders policy.

Chris Dillow makes the point that most of the debate around immigration and borders does not relate to economics.

This is part of the reason why it’s futile to try to argue with Brexiteers or Scottish independence fanatics around the economics of creating new borders. When it comes down to it, they just don’t care.

Economicky arguments for migration controls are just distractions and, I suspect, often dishonest ones.

Feelings around immigration boil down to feelings about the other.

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The endowment effect: Why you can’t let go of your possessions

Insights from behavioural science on why people overvalue possessions they already own.

Psychologists have also concluded that this overvaluation may stem from our sense of ownership itself. We value something more simply because it is ours. If we own a car, laptop, or watch of a certain model, we would similarly overvalue that same object owned by someone else because we own one ourselves.

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How much would I have to pay you to quit Facebook?

Many people may feel like they are addicted to Facebook. But it’s amazing to see just how little people actually value it.

Economists have been carrying out experiments to see how much people would have to be paid to do without certain types of websites. By this measure, social media appears to be the very bottom of the pile — worth almost 60 times less than search.

Their rough-and-ready conclusion is that the typical person would have to be paid about $17,500 a year to do without internet search engines, $8,500 to abandon email and $3,500 to quit using digital maps. Video streaming through sites such as Netflix and YouTube is worth over $1,150 a year; ecommerce $850, and social media just over $300.

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The amazing psychology of Japanese train stations

How Japan uses behavioural science (nudge theory) to keep its railways flowing efficiently.

Tokyo is home to the world’s busiest train stations, with the capital’s rail operators handling a combined 13 billion passenger trips annually. Ridership of that volume requires a deft blend of engineering, planning, and psychology. Beneath the bustle, unobtrusive features are designed to unconsciously manipulate passenger behavior, via light, sound, and other means. Japan’s boundless creativity in this realm reflects the deep consideration given to public transportation in the country.

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Bertrand Russell’s chicken (and why it was not an economist)

How introspection can lead to greater understanding — and how it may not.

The chicken that is fed by the farmer each morning may well have a theory that it will always be fed each morning – it becomes a ‘law’. And it works every day, until the day the chicken is instead slaughtered.

…Economics is at a disadvantage compared to the physical sciences because we cannot do so many types of experiments (although we are doing more and more), but we have another source of evidence: introspection… why is the farmer doing this? What is in it for him? If I was the farmer, why would I do this? And of course trying to answer that question might have led them to the unfortunate truth.

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AI don’t kill people, people do

Reflections on whether technological advances will ‘take our jobs’.

…[I]n Western societies, technical advancement has allowed many of us to extricate ourselves from physical, dangerous and demeaning forms of work, and to create careers that are fulfilling beyond renumeration: creatively, intellectually, socially… “job satisfaction”.

Historically, technological advances haven’t meant humans losing jobs. But it has meant we have taken on increasingly complex and interesting jobs. Perhaps the future will bring us further job satisfaction.

That’s not a bad place to be at all. A reminder that we should be grateful for the luxury we have in being able to pursue a good career in the first place, rather than slaving away to make ends meet.

See also: Why you shouldn’t follow your passion

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Wealth inequality is even worse in reputation economies

Wealth inequality is even worse in reputation economies Cory Doctorow on how reputation economies (like the rating system satirised in the Black Mirror episode Nosedive) have a series of undesirable effects. ...reputation is useless as a hedge against the real nightmare of a setup like Ebay: the long con. It doesn’t cost much, nor does…

Read full article — Wealth inequality is even worse in reputation economies

Nick Clegg meets Richard Thaler: ‘All it would take to stop Brexit is a couple of dozen brave Tories’

Nick Clegg meets Richard Thaler: ‘All it would take to stop Brexit is a couple of dozen brave Tories’ The Guardian set Nick Clegg up for a Skype interview with Richard Thaler, who has recently been awarded the Nobel economics prize. Thaler was a big influence on the Conservative–Liberal Democrat coalition and it is clear…

Read full article — Nick Clegg meets Richard Thaler: ‘All it would take to stop Brexit is a couple of dozen brave Tories’