Tuesday, 1 June 2010

Geary panel talk on behavioural economics

The panel discussion at the Geary Institute was excellent.

It was introduced by Liam Delaney who gave a 15-minute overview of behavioural economics, focused particularly around policy and commitment devices. As a good Dubliner, he used Ulysses as his example, tying himself to the mast to sail past the Sirens without losing himself to temptation. Liam pointed out that Ulysses tied his own body to the mast, without relying on the Greek government of the time to stop him getting into trouble. Nobody pointed out that in modern times, the need for self-discipline seems to be the other way around.

This was followed by a few minutes each from Colm Harmon, Gerard O'Neill, Pete Lunn and me. Colm's focus is on policy and he suggested using the experimental techniques of behavioural economics to provide more accurate and interesting data. Gerard has a commercial view, as to some extent does Pete - though Pete's work is at ESRI, the Irish economic research institute, and he has a broader remit. I tried out an anchoring experiment, which worked pretty well, including the auction of a bottle of wine. At the end of the lecture I tried to collect on the €35 highest bid, which did not work quite so well. Never mind - it was good to show people how susceptible they are to manipulation. People with a birthday in the second half of the month will pay 26% more for a bottle of wine than those in the first half of the month. Who knew? Well, Dan Ariely I guess.

I think the debate has been recorded so I'll try to get a copy and link to it here. But some of the key questions were about whether it's a good thing to use behavioural economics to increase consumption, whether the public sector (the health department in particular) needs to protect itself against clever psychological techniques used by pharmaceutical companies, and what behavioural economics has to say about the financial crisis.

Everyone I spoke to was very open and most had interesting things to say. Afterwards Liam and some colleagues took me out for a generous tour around some of Dublin's best pubs, at which point the story gets a little hazy. But I remember some excellent stories about Jim Heckman and the cream (if that's the word) of the Irish business and political establishment. Looking forward to my next trip back, or a return visit to London by anyone from the conference who'd like some hospitality in return.

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