Best quality in the comments!

If you have time, try reading not only this post from Mark Thoma at Economist's View, but all the comments below it. It's rare for a blog to have so many comments and of such consistent high quality. They genuinely add a major contribution to the discussion, and hardly any of them are sniping at each other.

Comments

Post a Comment

Popular posts from this blog

The economics of Arsenal

Robert Peston highlights a nice, rather knotty, little economics problem for Arsenal Football Club . This conundrum highlights a number of areas of economic theory: Generalised agency problem . The interests of the different stakeholders in the club all, potentially, conflict with each other. The fans want maximum money spent on good players so they have a chance of winning something for the first time in years. The management of the club want (I guess) stability and a profitable business, which probably means accepting a lower probability of sporting success. The different shareholders want different outcomes: Usmanov may want an equity issue because, with more cash available than the other shareholders, it would probably allow him to increase his stake. Other shareholders want to preserve their stake relative to him, so they are less keen on the increase in investment. The players and manager presumably want to be successful on the pitch, well-paid and - in Wenger's case - to hav...
Read more

Book review: Alchemy, by Rory Sutherland

Rory Sutherland's new book Alchemy: The Surprising Power of Ideas that Don't Make Sense  continues his 10-year campaign against the traditional, logical pursuit of business advantage, through a scientific lens that includes several cognitive economics themes. As ever, a curated series of amusing anecdotes about people or companies who took an unusual angle on marketing or product invention, fuel a philosophical wander. That philosophy could be summarised as: if it makes sense, someone's already tried it. So try something that doesn't . The ideas that underpin the book are broadly based on behavioural economics and cognitive science, with bits of evolutionary theory, statistics and old-fashioned advertising intuition thrown in. At first it doesn't look like a behavioural science book as such: the theoretical backbone takes a while to show. Rory's style is discursive: an after-dinner-talk of anecdotes, dismantling of conventional wisdom, ever-so-slightly outr...
Read more

The dilemma of advice

Some colleagues at Irrational Agency and I have recently been working on a framework around advice, and a key dilemma: Those who know less about finance, are more in need of advice But those who know less about finance, are less likely to realise they need advice In some ways this is another form of Dunning-Kruger syndrome. But there's an interesting additional twist. Because advice is an information good , you can't make an informed decision about it before receiving it, because you don't know what the advice will be. And once you've received it, you may think you don't need it, because now you possess all the knowledge that the advice gave you! So an element of trust is required to make the decision to buy advice, as well as an element of self-knowledge. Neither of these things are in abundant supply in the finance industry. An outline of our analysis follows: The context : more and better quality investment is needed. Consumers need to make better financial retur...
Read more