Knowing and Making

Andrew Lansley (he's the health secretary, in case you haven't learned all the names yet) is playing an old political trick on TV this morning. He claims to have found £1 billion of "bureaucracy" to cut - money which will be redirected to the "front line". Of course everybody would support that...wouldn't they? But what if he decided to fire 30,000 essential support staff and shift their workload onto hard-pressed GPs? Doesn't that sound like a terrible idea? Of course it might be exactly the same thing. It's all in the framing. Frank Luntz wrote a revealing - and cynical - book, Words That Work , about how he and the politicians he advises control voter's emotional responses with the language they choose. "Bureaucracy" is a classic choice of word for conservatives; while those on the left might choose "public investment", "social spending", "public healthcare" or "efficiency improvements...

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,...

Most economists agree that some of the effect of fiscal (and monetary) expansion arises from expectations. There are arguments about how strong the effect is, but expectations of future policy almost certainly have some effect on current decisions on both investment and consumption. I believe that a hyperbolic discounting effect occurs here, and thus expectations of the next couple of years are disproportionately more powerful than expectations of the years following. This is one reason why the theory of Ricardian equivalence does not work. Mostly the supposed future tax increases are far enough in the future - and also uncertain enough - that they are almost completely discounted by most decision makers. So it's interesting to see the competition that Stephanie Flanders highlights between Gordon Brown, Andrew Lansley and the NHS Confederation. Lansley is at pains to stress that the Tories will cut spending, while Brown is keen to point out that Labour will not. Of course as Steph...