Mind the gap: Economics is catching up to the fact that we’re not always rational
Do Tube strikes make Londoners better off? At first sight, the question is simply absurd. The answer is surely “no”. But a paper in the Quarterly Journal of Economics comes to the opposite conclusion. Cambridge economist Shaun Larcom and his colleagues analysed the two-day strike of February 2014. They obtained detailed travel information on nearly […]
Comparison sites are forcing businesses and economists to rethink price theories
The competition and Markets Authority (CMA) published a report about Price comparison sites at the end of last month. They seem simple enough, but these straightforward sites raise interesting issues for economics. Overall, the CMA was pretty positive about the DCTs – digital comparison tools, to give them their Sunday best name. The conclusion was […]
Behavioural economics has had its Nobel moment, but take it with a pinch of salt
Behavioural economics has received the ultimate accolade. Richard Thaler of the University of Chicago Business School has been awarded the Nobel Prize in economics for his work in this area. Economics over the past 20 to 30 years has become far more empirical. Leading academic journals do still carry purely theoretical articles, but far less […]
Why can’t we confront climate change? Behavioural economics explains
The devastating storms in America have kept the issue of climate change firmly in the public mind. But so far, it has proved very difficult for politicians to persuade electorates to change consumption patterns in ways which many scientists would like to see. More expensive air travel, steeper energy bills – these are not very […]
Was Michael Gove right? Have we had enough of experts?
Experts are finding it harder to be heard. But is that because of how they communicate? And how solid is their much-vaunted evidence base anyway? Using evidence to assess the outcomes of policies is a vital part of good governance. Whether it is examining how a Budget will affect those on low incomes, or how […]
Forward guidance is just another delusion foisted on us by mainstream macro
The governor of the Bank of England, Mark Carney, was on good form last week when he appeared at the Treasury Committee of the House of Commons. Asked what “forward guidance” meant, he answered smoothly: “The thing about forward guidance is that it is guidance that is forward. Which is not to say it is meant to […]
Dump opinion polls for social media to understand people’s real preferences
So the pollsters got it wrong again. After the general election last year and then Brexit, it is perhaps not surprising. What is surprising is just how wrong they were. The real problem is the enormous confidence with which they pronounced that Clinton would win. The Princeton Election Consortium was probably top of the class, […]
What climate warrior Twisleton-Wykeham-Fiennes teaches us about punishment
Natalie Twisleton-Wykeham-Fiennes: don’t you just love her? One of the Black Lives Matter campaigners, our Nat caused chaos by occupying the runway at London City Airport, on the grounds that climate change is racist. She and eight others, including a former member of the Oxford University Croquet Club, were sentenced by the courts last week. […]
Sorry, Prime Minister: Legislation won’t end excess in the boardroom
A key platform of our new Prime Minister is to curb what she perceives to be boardroom excesses. “It is not anti-business to suggest that big business needs to change”, she said. One of her proposals is to allow employee and worker representatives to sit on company boards, a suggestion which has not gone down […]
How Stalin’s right-hand man could help the UK in EU exit negotiations
The topic of behavioural economics is very fashionable. But many economists remain rather sniffy about it, arguing that it often does not really add to what the discipline already knows. But one of its most distinctive and strongest results from a policy perspective is its emphasis on what is called the “architecture of choice”. Economists […]
Don’t give in to Twitter mob: Social media is just an echo chamber
Greater Manchester Police staged a simulated terror attack in the massive Trafford Park retail complex last week. As with many real life atrocities, the carnage began with the cry “Allahu Akbar!” Following a storm of protest on Twitter, the police felt forced to apologise. Almost at the same time, a frenzied chorus rose up demanding […]
Surviving the pensions crisis means encouraging work
The Queen’s 90th birthday has quite rightly dominated the media over the past week. Her Majesty continues to break all sorts of records, spending longer on the throne than Queen Victoria and being our oldest ever reigning monarch. But longevity should no longer give cause for surprise. The oldest participant in the London Marathon was 88, […]
From golf to GDP, why unlikely events confound forecasters
Life imitates art, as the sporting world has shown this week. The Grand National was won by a horse which had never previously won a steeplechase. The US golf Masters was won by Danny Willett, who nearly did not take part at all because of the birth of his son. With only nine of the […]
How technology is driving inequality
Inequality is one of the major political topics of our times. Rather like a Shakespearean tragedy, the current splits in the high command of the Conservative Party have many themes. But an important one, and the ostensible reason for Iain Duncan Smith’s resignation, is the treatment of the working poor, a concept which until fairly […]
Why we are much better off than the official statistics say
The oldest surviving map of Britain was created in Canterbury a thousand years ago. Our ancestors had a good idea of how to get around. The country is depicted in its familiar shape. Understanding of the world outside Western Europe remained sketchy for centuries. The phrase ‘here be dragons’ was allegedly used to conceal ignorance […]
