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Archive: Economics

Professor Eric Maskin lecture in St Andrews

18 March 2011 09:55

Categories: Current affairs, Economics, Politics, University, Work

There was great excitement at work yesterday when I updated the University of St Andrews homepage to advertise some exciting news related to economics, which was my chosen subject in a previous guise.

A public lecture is being given by Professor Eric Maskin on the subject of how Members of Parliament should be elected. Very interesting in the context of the AV referendum coming up in May.

Pop fact: Nobel Prize winner Eric Maskin lives in the same house that has in the past been occupied by two other Nobel laureates, one of whom was Albert Einstein. He has also been known to dress up as Einstein.

When I was a student at the University of Edinburgh a few years ago, I saw him give a lecture on the same subject. I would highly recommend going along if you have an interest in economics, public choice theory or voting systems.

The lecture is open to the public and is taking place next Tuesday, 22 March at 17.15.

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Another attempt to start reading more

28 July 2010 23:59

Categories: Books, Economics, Personal, University

This week, I have decided to make another attempt at reading more books. I read stuff all the time, but almost all of it is on the web. A few hundred words at a time. Lots of breadth but not much depth.

I have never done much in the way of reading books. Fiction is not for me, so novels are more-or-less out of the question. However, I do enjoy reading non-fiction books. But I somehow never get the time to read them.

Time is the scarcest resource imaginable, and I have a tendency to build these backlogs. Not too long ago I wrote about the huge number of podcasts that are stuck in my backlog (I am just about getting that under control). I also have a small pile of CDs that I bought several months ago and still haven’t listened to, and a slightly smaller pile of DVDs from before Christmas that I still haven’t watched.

The unread books shelf But books are the big daddy of my backlog. I have special shelf just for unread books! Currently, 15 books sit there. Some of them I must have got almost a decade ago.

I think they are perhaps the wrong books. How tempted am I to ever reopen the ten-year-old book about US radio stations that I started but didn’t finish? How about the two political books that I started but never finished? Or the two books about economics that I started but got bored of?

In the summer of 2006, between my second and third years at university, I went on a big drive to read economics books. I had begun to realise that I was struggling at economics, and decided to spend the summer reading less academic, more accessible economics book in an attempt to soak up some of the subject and hopefully become a better economist in third year.

I happened to read a blog post by Greg Mankiw called Summer reading list, which seemed to fit the bill perfectly. After a bit of research, I selected five books from the list and ordered them. Sadly, it took me a year to read one of them. I finished another of them last year. I started one of them this year but gave up, and two others sit on the shelf virtually unopened. (I finished Freakonomics very quickly, but I think I bought that afterwards.)

My lack of talent in economics became clearer in third year, when I performed abysmally. My motivation plummeted. I later bought the Penguin History of Economics, which was on the reading list for the History of Economic Thought course that I took. This, also, has been started but not finished.

For a while, my main plan was to get through these economics books, and the other books in my backlog, before buying any others. But having not done any reading for several months, I had to recognise that this wasn’t a good plan.

Before I completed my degree, I had already more-or-less made the decision not to pursue economics further. I was lucky enough to somehow get a 2:1, but mostly due to the politics courses and my dissertation. It was clear to me that I just wasn’t cut out for economics, even though I planned to maintain an interest in it.

But there was no point in pretending I was going to start reading these books. So I have decided to buy more books on different subjects and start reading them. Last week I acquired seven new books — six that I had bought, and one surprise gift. It’s a mixture of stuff — some about writing and editing, a humour book, some motorsport books that I will probably blast through, and… an economics book.

Well, I figured that since I liked Freakonomics so much, I would probably actually read Superfreakonomics. Wish me luck. I will keep my LibraryThing thing updated.

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Scarce resources of the social media age

20 June 2010 12:28

Categories: *, Economics, Internet, Music, Technology

There is something about the way that economists think that makes them different. Sometimes this makes them downright brilliant. Other times it makes them complete outcasts.

I often enthuse about the paradox of voting — the phenomenon whereby economists struggle to explain why people vote. But when I talk about it to anyone else, the idea is normally met with a combination of confusion and mirth.

I escaped early though. Realising early on that I didn’t really have a talent for economics, I switched tracks soon after completing my degree. I still retain an interest in the subject though, and it definitely still affects the way I think.

The core problem that economics is concerned with is the allocation of scarce resources. Poor John Stuart Mill was traumatised by the problem. When trying to take his mind off the dismal issue, he turned to music. But he only found himself worrying about the scarcity of different musical notes. This insight in turn led him to conclude that, one day in the future, every possible combination of notes will be exhausted and there will be no new melodies.

He needn’t have worried. As we all know in these vuvuzela-aware times, millions will happily make do with one solitary hooting B♭.

A thought about scarcity suddenly struck me today. It is widely thought that this generation will be vilified, but most assume that it will be because we’ve used up all the oil or something.

But what about those all-important usernames on that we depend upon as our identities on the internet? Everyone who has tried to sign up for a half-decent email address knows that it can be a complete pain finding a unique username that isn’t idiotic.

That is how I ended up with an idiotic moniker like ‘doctorvee’. Even this mad username was already taken up on YouTube and Skype when I tried to sign up to those sites. Moreover, some other chappie has decided to call himself ‘Mr DeeJay Doctor V€€’, thereby putting paid to my chance of buying doctorvee.com, should I ever have felt the urge to do so.

The problem is bad enough today. Maybe we can keep on signing up to Twitter with vaguely comprehensible usernames for a few years more. But what about 10, 50, 100 years in the future? Surely by then everything will be used up.

Or perhaps, like Mill and his music, it is just the paranoia that comes with the territory when you think like an economist.

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The value of GDP

10 September 2009 13:32

Categories: Books, Current affairs, Economics, Politics, Work

There was an interesting blog post over at the Telegraph by Geoffrey Lean over the weekend. He asked if GDP is “past its sell by date”, noting that “the EU is due to publish a paper which will conclude that GDP is too limited a measurement.”

I agree with the view that GDP doesn’t tell you the whole picture. I have written before about the obsession that the media and others have with what this or that will “cost the economy”. These stories normally come along with some kind of figure of the effect some trend or other will have on GDP.

GDP is quite a useful measurement in a lot of ways. As a barometer of how things are ticking along, it isn’t bad. When GDP rises steadily things are ticking along quite nicely. When it decreases people generally feel it. In truth, no-one needed to wait for the GDP figures to come round to work out that things were bad. But GDP does give us a vaguely useful way to quantify how things are going.

However, it omits a lot of useful information that might help us to measure our quality of life. Perhaps most strikingly of all, it takes very little account of leisure — surely the best part of life.

You can be fairly certain that the economy is producing more between 8am and 8pm than it is between 8pm and 8am. The economy goes into recession every night! But in which part of the day is your quality of life higher? The part where you’re slaving away in a stuffy office, or the part where you’re relaxing with a cold beer?

Enjoying yourself and relaxing, whether it’s having your nightly kip or spending an afternoon in the park, often means removing yourself from economic activity. This in turn leads to a reduction in GDP. That is “the cost to the economy”. This is despite the fact that sleeping and having a stroll in the park are both very valuable activities.

I am currently reading The Armchair Economist by Steven E. Landsburg (I’m only 15 years late to the party). This book points out that GDP is also unable to account for the value of housework. If you pay someone to do your dishes, the value is counted in GDP figures. If you do them yourself, GDP is unaffected. But in both cases you have a rack of clean dishes of equal value.

Geoffrey Lean also points out that GDP fails to take the environment into consideration. An economist would say you need to internalise the externalities. But the question is how? (Pigovian taxes are a nice idea.) Some extreme environmentalists go further and advocate zero growth, an idea rightly lambasted by Adopted Domain.

I guess it all depends on what you want an indicator to tell you. GDP has become the one everyone talks about as a proxy for our standard of living, but clearly has deficiencies in that it leaves out important elements that contribute to our standard of living.

Unemployment figures are a possible alternative. On one level, it can be said that unemployment is the main thing that worries people. Despite the often-made point that unemployment is a lagging indicator, for many it is the bottom line.

But this has many of the same problems as using GDP. We look forward to our weekends, our holidays, and ultimately our retirement. Not working is actually a good thing. Few people want to work. They only want the money they earn from working. That brings us right back to GDP.

In recent years there has been a bit of hype about happiness economics (which I have previously written about). This field likes to measure Gross National Happiness. But this too is fraught with difficulties, not least the fact that it relies on shaky survey data based on people’s varying interpretations of what “happiness” is.

Perhaps you could stop paying attention to aggregate statistics in general. On one level, what really concerns me is my own personal well-being. How much I earn, how much disposable income I have, whether I have a job and how happy I am all concern me greatly. I am less concerned about other people’s well-being.

But that’s not quite right either. Even though I, like most people, am primarily worried about myself, I do care about the general well-being of other people.

It looks like we have to make do with GDP as the main measure to be concerned with. However, it does seem that it is creaking a bit with old age. No doubt there will be plenty of criticisms of GDP to come in the future, particularly from environmentalists.

Beware of the alternatives people advocate though. They will probably all be biased one way or another. Any proposed new measurements will probably be put forward by some interest group trying to manipulate the terms of the debate in its favour. Were that scenario to arise, I would rate myself 3 out of 10 happy.

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How charging for online content might work

14 August 2009 13:50

Categories: *, Blogging, Current affairs, Economics, Internet, Media, Newspapers, Scotland, Technology

Charged debate

A series of posts

  1. Are newspapers ready to charge for online content?
  2. How charging for online content might work

In my previous article, I argued that the problems that are hitting journalism are more to do with the quality of the content than with the fact that it’s difficult to charge for content these days. “Why pay to read Telegraph Digg-bait when you can read BBC churnalism for free?”, I asked.

I am sure plenty of journalists realise this if they stop to think about the situation. The fact that so many professionals blame bloggers for the industry’s ills says it all. Despite journalists’ qualifications, experience and resources, their entire business is supposedly being dismantled by a bunch of hobbyists who spend the odd hour of their spare time opining on the internet.

A few weeks ago I met a journalist at a party and I engaged him in a conversation about the future of his industry. He told me he hates bloggers (whoops! — I kept schtoom). But he told me that in his view the biggest problem was people scooping him on web forums! If the professionals see online discussion forums as not only competing with them but doing better than them, that surely must make them wonder if the product they are asking people to buy simply is not good enough.

Anyone who thinks that bloggers and the mainstream media are competing is wrong. If they are competing, the media simply isn’t doing its job properly. Let us face facts. For the most part, bloggers don’t have the contacts, the resources or the expertise to do, for instance, a big investigative story.

If the media is worried about amateur bloggers, it is a pretty bad reflection on the professionals. Perhaps to distinguish itself, the media should be focussing on those aspects of content production that bloggers cannot do.

The supply of mediocre content is too high. Too much of the same sort of content is as readily available to news junkies as sea water is to beach-goers. In effect, for the past decade or so newspapers have been driving up to the beach with a tankful of sea water, then pumping their water into the sea. Later they started stretching out their hands like beggars wondering, “why won’t these beach-goers pay us for all this seawater we’re providing them?!”

So what is the answer? In my view, less is more. What newspapers need to do is offer something distinctive and different. They should specialise more and differentiate their content from everyone else’s. They need to offer less, but better, content.

Newspapers should forget about reporting all the same hard news as every other outlet is. It is a crowded marketplace so there is no money to be made there. Instead, they should work on more exclusives, investigative reporting, analysis and features.

Actually, there is a problem with that idea, which is that it won’t save all newspapers as we know them at all. It points to a future where many daily newspapers may wither. But weeklies, monthlies and specialist publications are more likely to thrive. It wouldn’t stop the press from having a difficult period of job losses and paper closures. But it would mean those who could get it right would be able to charge for content quite comfortably.

Evidence suggests that this shift may already be happening. Speaking personally, there is not one daily newspaper that I would be happy to pay for. But up until recently I was perfectly happy to pay for the weekly Economist (and in truth, I only stopped because I didn’t have the time to read it). As for specialist publications, I still like to read the monthly F1 Racing if I get the chance.

It may be the same for other people too. Recent evidence seems to suggest that many specialist publications are doing well at the moment, even amid all the turmoil in the press and the worst recession in living memory. According to Malcolm Coles, 216,000 people are perfectly happy to pay £7.75 per month for an online subscription to Which?.

Yesterday I also read about two major news websites relaunching — with less emphasis on news. On the new LA Times website, Hamilton Nolan at Gawker wrote:

Scroll down from the top of page at the new LAT site and you find: Health, Food, Education, Technology, Sports, Blogs, Columns, Opinion, Photos & Video, Summer Hot List, and “Your Scene, Your Comments.” Did you miss the, say, ‘International news’ section? It is way up at the top in tiny tiny type. Below the top fifth or so of the page, there is no “hard news” at all.

As for the new Newsday website… well, just take a look.

Someone still has to do the worthy news stories though. Maybe that can be better left to agencies or major broadcasters. But maybe a simple reduction in the number of newspapers would suffice. Iain Hepburn recently estimated that as many as 17 major media outlets are all aiming at the same audience in Scotland. We make do without 17 major supermarket chains — five or six different ones satisfy most consumers. So do we need more than five or six major news outlets?

A merger here, a takeover there and even the odd shutdown or two might be a good thing. Fewer outlets can have a higher market share, more resources, more of the best journalists — and they’ll produce a better product as a result. Five or six excellent news sources would be much better than 17 so-so ones, which is more or less what we’ve got at the moment. Surely that is what’s needed to make news a viable business going forward.

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