Knowing and Making

This blog has two primary themes: behavioural economics the economics of knowledge I believe they are closely linked, because behaviour is derived from the knowledge that people have about the world (or more strictly their mental model of the world , which may not actually be accurate knowledge). Knowledge, in the economy, is influenced by many things. But at least one type of entity specialises in influencing it: the knowledge firm. Knowledge firms include professional services firms, consultancies, marketing and media companies. Their distinguishing characteristic is that their work is not about manipulating physical objects but influencing the minds of people. This is done by creating messages and communicating them. Therefore, knowledge firms are in the business of second-order influence of behaviour . Traditional firms offer products to which people respond based on their existing perceptions and preferences. Knowledge firms actively change the perceptions and preferences that peo...

Lots to write about today, but not much time. Here are the topics. See if you can spot the connection: The myth of hollowing-out. Frank Furedi (see Tuesday's post) gave an interesting talk but I still see this as the main flaw in his argument. I have started to work on some more concrete theory to help quantify the contribution the knowledge economy makes to consumer benefit. Government intervention/rescue of businesses. Jaguar in particular - definitely a firm on the "productive" side of Furedi's distinction - is a candidate for some kind of financial assistance. Can government choose the right businesses to rescue or set specific criteria for doing so? What should it get in return? Zero interest rates. At some point it isn't the price of money that stops people borrowing or lending; it's the challenge of paying it back. What else can the state do other than print money? Related topic: what should people do with their fiscal stimulus? More to the point, what ...