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Showing posts from June, 2010

Nagging versus nudging

My Counteradvertising post from last week is not an isolated example.

Andrew Lansley, the health secretary, has suggested that:
"If we are constantly lecturing people and trying to tell them what to do, we will actually find that we undermine and are counterproductive in the results that we achieve"The newsworthiness of this story is, of course, not because the media wants a debate about which are the most effective cognitive incentives in the public health arena. It's because Lansley is going up against popular cheeky-cockney-chef Jamie Oliver.

Putting that aside - and I've no idea if Lansley is correct on this individual issue - he does have a valid point. Telling people what to do is, in many situations, ineffective or counterproductive.

Anecdote alert: a Polish friend claimed over dinner today that Britain has, by far, the highest number of nagging public health warnings of any country: posters, TV ads, product packaging. This may or may not be accurate, but it ri…

The revealed attitude of the Fed

Here's a little something on fiscal stimulus. It contains a suggestion I've seen from Tyler Cowen and Scott Sumner, among others:

...while the zero bound does not bind, the Fed might nonetheless be reluctant to engage in the appropriate amount of monetary expansion, and that a fiscal boost is therefore required. A potential response to this is that if the Fed has chosen the unemployment rate with which it is satisfied, it will simply offset any fiscal measures to push unemployment below that level.That's only true if the Fed is assumed to be a simple (rational?) agent acting with just one lever: controlling the money supply in order to choose a balance between inflation and unemployment. However, it's very plausible that the Fed is not happy about the current unemployment rate, and recognises that it could and perhaps should increase inflation (or NGDP) to fight it. But it is also worried about its long-term credibility (as Ben Bernanke indicates in his answer to Brad D…

Blogging, sticky wages, relationships

In case you were worried, I have not been intimidated by Kartik Athreya's "Economics is Hard" into closing down my blog.

I've just been so busy doing stuff and going to things that I haven't had time to write any of it up.

Soon, though. Tomorrow, I hope.

Meanwhile, a couple of thoughts here and in the next posting:

There's an interesting discussion on nominal wage stickiness between Scott Sumner and Bryan Caplan. Scott, as usual, has some good insights into the question: are sticky wages the primary cause of recessions? To save you reading it all, the answer is yes.

This debate exposes a question of economic modelling which I've considered recently. Is the individual transaction the best level to model economic exchange? As a rational agent with no mental processing costs, it is more economically efficient to treat each single exchange as a new decision and re-optimise your choices. But it's not very realistic.

Agents who require time to make a decisi…

The economics zeitgeist, 27 June 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. Apparently people are losing interest in BP but tax has risen up the list a bit.
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 …

Counteradvertising

An intriguing situation with an advertising campaign in which the government promotes breastfeeding of babies.

The "Breast is Best" campaign, aside from biasing sales in Kentucky Fried Chicken, is intended to encourage new mothers to breastfeed their babies instead of using bottles. Breastfeeding generally is thought to improve the health of the baby and, possibly, also of the mother.

However, the campaign appears to have the surprising side-effect of reducing the number of breastfeeding mothers. Apparently, highlighting the fact that people need to be encouraged to breastfeed creates an unintended norm...leading many people to (not consciously, I believe) think that bottle feeding is the default option.

Therefore, a pro-breastfeeding organisation has asked the government to stop the campaign.

I'm sure the new coalition, with its new budget constraints on the COI (Central Office of Information - the civil service advertising department) will be happy to oblige.

But adver…

Ouch.

Sad news of a plane crash in Cameroon. There were eleven passengers on board and the search party has not yet confirmed whether there are any survivors. But here's a slightly awkward quote from the information minister:
"For the moment, between nine and 10 corpses have been retrieved," Information Minister Issa Tchiroma Bakary told a news conference in Yaounde on Monday.Think about that for a moment.

Ewww.

The economics zeitgeist, 20 June 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. "BP" and "oil" are still up there.
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 …

How is the UK doing - in detail

I have posted a couple of detailed comments in response to Scott Sumner's recent items, and as most of my readers probably don't read his blog, I'm cross-posting them here.

For background, read this comparison of the performance of the UK and Sweden, and the comment thread; then the following response by Scott.

First, I tackle UK monetary policy:
As illustrated by the currency discussion, the figures in this debate is strongly influenced by the choice of starting point.For example, nominal GDP in the UK has been growing at an annual rate of 6% for the last nine months.http://www.telegraph.co.uk/finance/economics/7764916/Boost-for-UK-as-GDP-growth-revised-up.htmlAll of the problems in Scott's figures come from a single quarter, Q1 2009. In Q1 of 2009 we were still in recession, with a 3% fall in NGDP in that quarter alone. I believe the CPI was also negative in that quarter (though I can't find quarterly index figures for that, only annual changes).It was only in Mar…

The nature of economic truth

Re-reading an old David Beckworth post, I was reminded of that ancient question: is economics a science?

On the content of the post, I have no idea if the United States is an optimal currency area. Or the eurozone.

But a deeper question is: why ask the question?

If this kind of speculation was taking place in a discipline like physics, it would be ignored - if there is no way to test it, there's no point talking about it.

But "the US is an OCA" is not a testable proposition. Therefore, is there no value in proposing it? Well, economists don't seem to think so - these things are discussed endlessly, and some of them even get peer reviewed and published.

Economic "truth" (or economic arguments), even when not meeting the standard of science, can achieve two things.

The first is their value as engineering. Sometimes, with the physics proved to scientific standard, the task is to apply it in a practical design. Nobody can prove that this design is the best, but…

Sentance to ponder [sic]

Andrew Sentance (yes, sorry about that) writes in the Sunday Times about inflation and in particular, why it is stubbornly high in the UK compared to the rest of the world.

Taking out the VAT rise, strong oil price and fall in the pound, he notes that:
It appears that instead of pushing down significantly on cost and price increases, the impact of spare capacity on domestic inflation has been muted.Assuming this is correct - and we must remember that there is an economic recovery under way, so we'd expect some inflation - we are left with an important question. Why is there so little spare capacity in the UK?

It's important not just in order to keep inflation down. More deeply, it matters because real growth in the economy only happens when more productive capacity comes into use. If there is no spare capacity, we can't have growth until we invest in new production, and that takes time.

Sentance points out that:
Unemployment has risen to a lower level than...in the early 198…

The economics zeitgeist, 13 June 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. Noticeable this week and last: BP continues to surge. As does oil, though Gulf has fallen a little. And look at that strange little sequence around positions 661-666.
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 yo…

Six reasons why there are too many graduates

Talking of identity economics, I can now identify the author of almost every Worthwhile Canadian Initiative posting within the first couple of sentences. They are trying to confuse me by throwing two new authors into the mix, but I have figured out their wily ploy.

So in the first Frances Woolley post I have recognised, she has mentioned in passing a mysterious fact.
Squidward Tentacles, SpongeBob's co-worker, probably did better in school than SpongeBob did. He has intellectual pretensions, to play clarinet and to dance. But these aspirations only make him miserable in his job as a cashier at Krusty Krab.Canada, like many other countries, has expanded access to post-secondary education, but the demand for educated workers has not kept up to the supply. A study by Marc Frenette based on data from the 1980s and 1990s found over thirty percent of university graduates were over-qualified for their jobs.But the quantity demanded and supplied should be equal in equilibrium - at least ro…

Servants or masters? Neither

At the end of an otherwise decent article in the Guardian, George Irvin trips over one of the oldest cliches in the left-wing rhetorical manual:
Most important, we have not begun to question seriously whether placating the financial markets by means of such cuts is unavoidable. Perhaps it's time to start thinking the unthinkable: namely, that financial markets should be our servants, not our masters.This is a stupid distinction to draw, because markets are neither servant nor master of anybody. They are a place where people (or countries) can choose to go, and where we can each decide on our own participation within the structures available.

Greece (more precisely, the people who run its exchequer) can choose whether to borrow money on the international markets. If it wants to, it enters into a two-sided arrangement with consenting investors on terms that both are happy with.

If it then wants to default, it does have that option. Exercising that option will bring consequences.

So m…

The economics zeitgeist, 6 June 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.

When marketing emails go slightly wrong

From my email today, this is a charming attempt from an Indian software company to make themselves look relevant:

Dear Leigh, Hope you are well. It was a pleasure to travel to some very nice cities like Crawley, Brighton, Worthing, Southampton, Stoke-on-Trent, Birmingham, Stevenage, Bushy, Cambridge, Newcastle-upon-Tyne, Oxford, London and meet some very nice people.
British readers will spot several obvious flaws in this assertion. I will try to avoid offending readers around the country by suggesting which are the flaws.

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 broa…