Knowing and Making

Greg Mankiw wonders why he was kicked off a jury by one of the lawyers in a medical malpractice lawsuit. "Why does being a professor of economics at Harvard make one an undesirable juror in such a case?" he asks. I have another theory. Perhaps it was this quote from 2005 : Greg Mankiw, the administration's chief economist, noted in early December: "The president's economic agenda involves removing obstacles to growth. One such obstacle is the considerable burden placed on everyone by excessive lawsuits." Or this one from 2004 : The President's economic policies are precisely aimed at encouraging businesses to expand and create jobs in the United States. In addition to the tax cuts, he wants to reduce the burden of frivolous lawsuits, contain the growth of health costs... Lawyers have Google too, you know.

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...

I have added a link today to Mark Easton's excellent blog on the BBC. He looks in detail at social statistics and sociological research about the UK and the policy implications. The latest article is about knife crime and examines whether an apparent (to journalists) surge in stabbings is actually real, and the subtleties of what's happening in different parts of the country. David Cameron, among other politicians, is predictably using this as a campaign message in the Glasgow East by-election. When I grew up in Glasgow hardly a week would go by without someone promising to "chib" you although "coshing" was also popular and doesn't qualify as knife crime. In reality, though, I never saw or heard of anybody being stabbed in 15 years living there. Maybe I was just a bit too middle class, but I think perception is very different from reality in this area. Still it's intriguing to see that the Tories will "make it their mission to repair the broken...