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.
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.
Very interesting analysis of how people perceive what probability is meant by phrases such as “likely” or “real possibility”. It turns out there is a lot of scope for misinterpretation.
However I would quibble with the following:
You are trying to assess the probability that the [product launch] doesn’t happen. The way to frame your bet might be: “If the product fails to launch, I receive $1 million, but if it does launch, I get nothing.”
Now imagine a jar full of 25 green marbles and 75 blue marbles. You close your eyes and select a marble. If it’s green, you receive $1 million, and if it’s blue, you get nothing. You know you have a one in four chance (25%) to get a green marble and win the money.
Now, which would you prefer to bet on: the launch failure or the draw from the jar?
An interesting thought experiment, but not quite true. People prefer to receive an amount of money sooner rather than later. So you’d still rather place the bet on the jar, even if you thought the probability of product failure was 25% — because you wouldn’t receive the money until the unspecified future date.
Thanks to my colleague Lauren Tormey for the tip.
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.
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.
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.
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.
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.
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.
Anyone who pays for more than half of their stuff in self checkout is a total moron.
I have long wondered how much stealing goes on at self-checkouts. It turns out, quite a lot — but presumably not enough to make many retailers think twice about having them. What’s interesting is that many self-checkout thieves are apparently otherwise generally law-abiding.
Computers can certainly continue the process of specialisation, parcelling out jobs into repetitive chunks, but fundamentally they are general purpose devices, and by running software such as Microsoft Office they are turning many of us into generalists.
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
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 it take much work, to build up sleeper identities on Ebay, fake storefronts that sell unremarkable goods at reasonable prices, earning A+++ GREAT SELLER tickmarks, even for years, until one day, that account lists a bunch of high-value items on the service, pockets the buyers’ funds, and walks off.
Reputation works badly and fails badly – it’s a lose-lose situation all around.
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 from this interview that Thaler and Clegg admire each other somewhat.
At times the interview may come across to some as typical smug metropolitan centrist dadism, with the pair shaking their heads at how stupid everyone else is being. But when you read Nick Clegg’s anecdote about speaking to a voter in Chesterfield, you understand why he feels that way.
I remember speaking to a guy leaning on the fence outside his house and saying: “Any chance you’ll vote for the Liberal Democrats?” And he said: “No way.” And I said: “Why not?” And he said: “Because of all these asylum seekers.” And I knew for a fact that not a single asylum seeker had been dispersed to Chesterfield. So I said to him: “Oh, have you seen these asylum seekers in the supermarket or the GP’s surgery?” And he said something to me that has remained with me ever since. He said: “No, I haven’t seen any of them, but I know they’re everywhere.”