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Showing posts from May, 2010

The economics zeitgeist, 30 May 2010

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This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.

The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Google GDP

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There's no specific point to this picture - feel free to draw your own conclusions.

It comes from a neat feature from Google, which I suspect has been around for a while if I'd looked for it earlier. Here's the link if you want to play.

HIPerbolic discounting

Latest in my series of bad puns on the word "hyperbolic".

HIPs are being scrapped by the new government. This will provide relief to millions of annoyed estate agents ad house sellers everywhere. But why?

HIPs should be a gift from the economics profession which is joyfully accepted by buyers, sellers and agents. The reason? Because houses are a classic "market for lemons".

A simple explanation of what this means and what the consequences are: The seller of a house knows much more about it than the buyer. Therefore, if the seller thinks it is worth £200,000, a buyer should apply a discount to take account of the risk that something is wrong. Let's say they apply a 10% discount and offer £180,000. After the discount, some sellers who do not have anything wrong with their house will prefer to stay rather than sell for less than it's worth. Other sellers, who do have a skeleton in the cupboard, will keep their house on the market. The average quality of the ava…

Do we ever make ANY difference at all?

This fascinating analysis from Tino Sanandaji (via Marginal Revolution) reveals an unexpected (to me) fact about the Japanese "lost decade(s)".

Japan's growth from 1990 to 2007, adjusting for changes in demographic composition of the population, was exactly the same as the US and Europe's!

So for all the attention on the US technology boom, European integration, Japan's property bust and vast stimulus programmes - none of it mattered. Growth per working-age individual seems to proceed at a steady 1.6% per annum regardless of the different policy regimes, tax rates, interest rates etc etc etc.

This sheds interesting light on the claim of Adam Posen (Bank of England monetary policy committee member) that Britain faces a Japan-style decade. So does the surprising fact that the UK was the leader among all rich countries in total factor productivity growth from 1990 to 2007!

So is all of economic growth explained by some common underlying factor, unrelated to economic…

Economic flexibility or urban blight?

Having questioned the flexibility of the British economy in my last post, I came across an article which made me wonder the same about America:
...the city took a marked turn for the worse. We passed vacant lots surrounded by listing barbed-wire fences, the shells of abandoned mini-malls and the cement outlines of what might once have been petrol stations, now being reclaimed by bushes and grass. There were lots of these ‘urban fields’, where buildings had been torn down and nothing built in their place, and it was curiously unsettling to see how easily sizable chunks of a city could be erased and swallowed up once humans left....the neighbourhood reached its nadir – no small feat – with boarded-up houses, a couple of burned-out shops being used as squats, a low, forbidding bar called ‘Club Rolex’ and, saddest of all, the brick skeleton of what had been George Rogers Clark Junior High School. It stood like the shell of a dissolved monastery behind a high wire fence in an asphalt yar…

How's the UK economy doing?

Some news has been creeping in which gives us a picture of the British economy that's gradually becoming clearer. First, from the ONS via David Smith:
Business investment for the first quarter of 2010 is estimated to be 6.0 per cent higher than the previous quarter.From the same source, some news on public borrowing:
...in December, the Treasury preducted public sector net borrowing for 2009-10 of £178 billion on the definition it uses. The latest figures from the Office for National Statistics show a downward revision to the outturn, taking it to £156 billion...At one time people were predicting figures as high as £220 billion.Recent growth estimates are decent (though not outstanding) too:
Gross Domestic Product (GDP) increased 0.2 per cent in the first quarter of 2010, compared with an increase of 0.4 per cent in the previous quarter.There was a concern prior to the release that growth might be negative, due to heavy snow in January and February. So growth of 0.2%, though hardly v…

The economics zeitgeist, 23 May 2010

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.

The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Dublin up

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I'll be on the panel next Friday afternoon at Behavioural economics, policy and business at the Geary Institute in University College Dublin. I'm not sure whether they still have room in the audience, but if you're interested in coming please contact me or Emma Barron.

The Geary Institute has a very good behavioural economics blog which you'll see in the right-hand column of this site. I'd recommend you subscribe to it if you haven't already (there is, naturally, a focus on Ireland-specific issues, some of which are distinct from the behavioural research they also cover).

Also on the panel are Pete Lunn, author of Basic Instincts: Human Nature and the New Economics and Gerard O'Neill of Amarach Research, an interesting market research agency (see for example this recent blog post about pricing), and Liam Delaney and Colm Harmon whose work you can see on the Geary blog.

Hope to see some readers (and pick up some new ones) there.

Easterly's too weak

When economists say they don't know much, I'm always sympathetic. But when they say we will never know anything, that's going too far.

William Easterly presented an idea at the LSE tonight: "We don't know how to solve global poverty - and that's a good thing" (thanks to Andrea James for alerting me to this).

Part of his logic is impeccable. He argues that democracy, freedom and self-determination are normative goods - and thus, even if we could solve development problems by imposing top-down, autocratic solutions, we should not. Later, he shows some tentative evidence that authoritarianism doesn't even provide economic benefits - at least there's no convincing evidence for it, and there's some to suggest the opposite.

So far so good - it's nice to have an argument against the position that countries need (at least temporarily) an autocratic system to kick-start economic growth. The four examples that are often used to support this argument…

The economics zeitgeist, 16 May 2010

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.
The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Not forecasting the coalition

I recently re-read a remarkably prescient article from February claiming the Liberal Democrats would not enter a coalition with the Tories.

It gets exactly right the entire set of conditions the Lib Dems would demand for a coalition. The only error - thinking that the Tories would say no.

The key reason that the authors think a coalition could not work?
Clegg is opposed to forming a coalition because aides and senior MPs argue it would be highly dangerous for the Liberal Democrats to become minority partners in a coalition government on the grounds that the majority party could manipulate the timing of the next election to suit it. The Lib Dems have long campaigned for fixed terms at Westminster to deprive the prime minister of the initiative on election timing.And so we ought to look quite carefully at the 55% threshold for dissolution of Parliament, and instead of assuming it's a Conservative attempt to entrench power, think about the Lib Dems' motivations. In politics, as in…

So who won? Resolving the democratic dilemma

Regular readers may be relieved to hear that I'll be back onto regular economics soon. If nothing else, even I will be bored of the election before long.

But I have a couple more political articles to come first.

The debate over forming a coalition to govern the UK seems to be mainly focused on the question of "who won?" Was it the Tories, because they are the largest single party with 36% of the vote (and 47% of the seats)? Was it a combination of Labour and Liberal Democrats, because together they represent over 50% of people? Or, similarly, the Conservatives and Liberal Democrats, who have about 59% between them? Should we reform the voting system so that the majority of votes always reflects a majority of parliamentary seats?

All this debate ignores a deeper point. This is not a football match. The electoral system is not intended as a talent contest to award a prize to whoever can perform better and impress more people. It's meant to provide a way for the prefer…

The economics zeitgeist, 9 May 2010

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.
The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Behavioural politics: the story so far

The election results are almost in, and Nick Clegg has just made a brilliant tactical intervention. Peter Mandelson must be jealous.

But more of that later. First, a look back at the days of the campaign. Click each of the links below to see what happened on that day.

You'll remember that I rated the three parties each day on their behavioural nous. But who came off best throughout the campaign? The ratings are listed against each day below, and at the end you can find out the totals (ratings are given in order Conservative, Labour, Liberal Democrat).

Day 1: 7, 7, 5
Day 2: 8, 5, 4
Day 3: 6, 7, 4
Day 4: 6, 6, 6
Day 5: 8, 7, 5
Day 6: 6, 8, 7
Day 7: 6, 7, 6
Day 8: 6, 6, 5
Day 9: 5, 6, 8
Day 10: 3, 5, 9
Day 11: 5, 6, 8
Day 12: 5, 6, 8
Day 13: 6, 6, 5
Day 14: 5, 6, 7
Day 15: 6, 5, 6
Day 16: 7, 4, 6
Day 17: 6, 4, 7
Day 18: 7, 5, 6
Day 19: 7, 5, 8
Day 20: 7, 6, 5
Day 21: 8, 5, 6
Day 22: 4, 5, 6
Day 23: 6, 3, 7
Day 24: 6, 7, 6
Day 25: 8, 6, 4
Day 26: 8, 5, 7
Day 27: 8, 6, 6
Day 28: 6, 9, 7
Day 29: 7, 6, 8
Day 30: 7, 7…

Behavioural politics, days 25-30 of 30

Friday once again was a day for the aftermath of Thursday night's debate.

Unforuntately right now, I have no time to discuss it as I'm very busy with the actual election. This is also why updates have been behind for the last week.

However, as a precommitment device to combat my own tendency to post hoc rationalisation, here are my summaries and ratings for the last six days of the campaign.

Day 25 (Friday): Cameron builds momentum on the back of "winning" the debate (see day 24 for explanation via confirmation bias). Social proof from other voters even more important than from head of M&S. Tory: 8/10, Labour: 6/10, Lib Dem: 4/10 (Clegg had most to lose as the unofficial king of debates).

Day 26 (Saturday): Newspaper endorsement day. The Guardian switched from Labour to Liberal Democrat - a tiny bit sensationalist I think, but their reasoning was understandable. Most others picked the Tories. Social proof again, and the momentum effect continuing to work for Came…

Behavioural politics, day 24 of 30

The leaders' debate tonight showed the immense power of the phenomenon of confirmation bias.

The debate was interesting but neutral in terms of campaign impact - in my judgement, the candidates performed about as well as each other. And yet watching it on twitter was very informative yet again, primarily because of the reactions when the post-debate polls were released.

Nearly all the polls showed Cameron as the "winner", with Clegg and Brown in second and third place or vice versa. A typical poll (see writeup here) gave:
Cameron 35; Clegg 33; Brown 26But when you look at the voting intentions of the people who answered, what do you get?
Conservative 35; Lib Dem 36; Labour 24Spot anything? The numbers are almost identical.

When there are no clear distinctions between the quality of the performances, people who already agree with David Cameron will think he's talking sense; Labour supporters will think Brown is the only one who isn't lying; and those who support Nic…

Behavioural politics, day 23 of 30

Oh, Gordon.

Today, in possibly the most embarrassing thing that could possibly have happened to a modern politician, Gordon Brown was caught on tape describing a voter as "a bigoted woman".

Most of you will know the details all too well by now, but those who don't can read them here and should watch Jon Stewart's take on it - if you can find a video clip that works in your country.

Although this was widely considered to have written off Labour's chances in the election, the focus on it has been so intense that Brown has not been harmed as much as expected. Attention is the currency of an election campaign, just as it is in the commercial world. And Gordon Brown has had more attention than he could possibly have bought.

The short-term polls bear out this surprising result - Labour has had no drop-off in support since this happened.

On the other hand, it creates such a strong narrative that it allows little room for any other story. That gives Labour in particular -…

The economics zeitgeist, 2 May 2010

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.
The words moving up and down the chart are listed here.
I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.
I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.
You can also see the Java version in the Wordle gallery.
If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.