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Showing posts from April, 2011

The economics zeitgeist, 24 April 2011

Image
This week's word cloud from the economics blogs. I generate a new one every Sunday, so please subscribe using RSS or the 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.

AV, status quo bias and definitions

One of the arguments given against the Alternative Vote system is (as laid out in this good but rather long post) that "Under AV the person who comes second can win."

Gowers points out in the linked article that this is not true - all it means is that the person who would have come second under FPTP can win. Of course, the whole point of the referendum is that a different person could win under AV than under FPTP. The reverse argument is equally true: the person who would have come second under AV might win under FPTP.

But why does this argument have such appeal? Even AV defenders are trying to make a rational case for why it may be more democratic for "the person who came second" to win. Instead, one might expect them to challenge the premise.

The reason seems to be that the status quo bias is very strong here. People who might think they don't suffer from status quo bias (in that they have no particular desire to keep the existing voting system) may fall into…

The economics zeitgeist, 17 April 2011

Image
This week's word cloud from the economics blogs. I generate a new one every Sunday, so please subscribe using RSS or the 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.

Cameron's myths and the "influx of people"

David Cameron claims in a speech today that the 2.2 million total of net immigrants from 1997-2009 is "the largest influx of people Britain has ever had".

But I was unsure, so I thought I'd check the data. 15 minutes of searching and downloading some national statistics data proved him wrong.

In fact, in the same length of period from 1946 to 1958, a net total of 2.8 million people arrived in Britain - none of whom could speak English, or had any assets, none of whom knew or followed our cultural norms, and none of whom got a job or started a business for at least a decade after arriving. Indeed the total arrivals in this period were 9.4 million, with 6.6 million people departing.

And yet nobody at the time had any problem with them - we fed, educated and housed them, and indeed they were one of the major reasons for the creation of the NHS. Today, those who are still here (nearly all of them) make an overwhelming contribution to our economy, creating much of the economy…

Efficient taxes hypothesis

This article on pensions from the Economist made me wonder about something.

It used to be that people in the UK were compelled to buy an annuity on retirement with their pension savings. Well, almost compelled - if they took it out as cash, they'd have to pay tax on the lump sum.

So if I saved for ten years at 22% tax relief, and I then withdrew the sum, I'd have to pay 22% tax on the withdrawal.

Fair enough - the idea of pension tax relief is to encourage people to build up an income which would stop them having to draw on state benefits in retirement. If I can withdraw the cash, as if it were a standard savings plan, then the tax treatment should be the same as if I'd saved the money outside of a pension.

But could this be used to game the system?

What if today - with top tax rates at 50% - I think that the income tax rate is higher than its long-term average. Then I might save in a pension now, intending to withdraw later when tax is cut back to 40% or lower - so that I…

Start me up: StartupBritain, the Startup100 and Smarta

Startups have really been in the news for the last few weeks. We had the David Cameron-endorsed launch of StartupBritain, then Smarta launched (after a year or two in development) its Business Builder online package, the UK and US governments have both announced "Startup Visa" programmes, and tonight the prizes will be awarded to the winners of the Telegraph's Startup 100 competition.

Anyone would think there was something good about starting a new business. Governments love new businesses, because they feel like pure economic creation - new jobs, new investment, new products and services being offered in the economy, new tax revenues - and at no cost to anyone except the entrepreneur and their financial backers. Economists like them because they provide a positive externality - new ideas - which other people can benefit from as well as the entrepreneurs themselves. And customers like them because they offer new services which might not have been available before, and se…

The economics zeitgeist, 10 April 2011

Image
This week's word cloud from the economics blogs. I generate a new one every Sunday, so please subscribe using RSS or the 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.

The economics zeitgeist, 3 April 2011

Image
This week's word cloud from the economics blogs. I generate a new one every Sunday, so please subscribe using RSS or the 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.

New research: *.99 no longer optimal for prices

The blog has been quiet for a while. I can now tell you the reason for this: I've been working on an intensive research project for the last couple of months. The Inon Pricing Research Centre has partnered with three retailers and two major consumer goods manufacturers to carry out the first detailed experimental tests of consumer responses to goods at different numeric price points.

Everyone knows - or thinks they know - that prices such as £1.99, £5.99 or £9.99 are optimal price points for retail goods. Customers read the first digit first, and the last two are ignored - or at least, they have much less cognitive impact. In general, consumers were thought to put a subjective value estimate of about ten per cent less on an item priced at £3.99, than one at £4.00.

However, despite a wide literature on behavioural economics and marketing, and a number of papers on pricing (for example this paper from Marco Bertini at London Business School), this effect has not been properly tested…