The visible hand in economics

Author Archive

Ed Prescott has written some pretty brainy stuff in his time. I’m particularly a fan of his work on dynamic inconsistency in economics with Finn Kydland. But, here we see why you should not make heroes of people. Read the rest of this entry »

The Commerce Commission appears to have found an unusual source of anti-competitive behaviour: schools forcing parents to use a monopoly supplier of school uniforms. Apparently schools often accept payments from clothing manufacturers in exchange for exclusive rights to sell the school’s uniform. Then the manufacturers extract large rents from their monopoly position by charging high prices to parents.

The Commerce Commission is concerned about the monopoly position that the manufacturers have but, recognising the convenience of a single contractor, recommends that the schools use a tender process to ensure value for the parents. Read the rest of this entry »

My favourite article of NewScientist’s series is Herman Daly’s. The father of modern ecological economics lashes out at the way economists ignore the source of inputs to production and the capacity of the waste sinks that we have. As he puts it, we should imagine the economy as a system within the world’s ecosystem. Read the rest of this entry »

I’ve been looking at air fares for overseas travel recently and somethign stood out. When you stop over in a city it costs a whole lot more to stop over for a few days than it does to just transfer flights and pass through. I would have thought that getting to your final destination faster was something people would pay for. Yet, the longer you’re happy to take over your trip, the more you end up paying! Read the rest of this entry »

So we are going to have to cut our consumption and it’s not going to make us better off. How come NewScientist’s authors seem to agree that we won’t necessarily be unhappier? Where evidence is given it tends to be in terms of happiness measures. Kate Soper (London Metropolitan University) points out that wealth doesn’t correlate with happiness over USD15,000 of income, while Andrew Simms (New Economics Foundation) makes much of the fact that people with vastly different living standards report the same level of happiness. The difficulty is that happiness isn’t the kind of measure that works for cross-country comparisons. Read the rest of this entry »

An important question raised by the writers in NewScientist’s feature is whether we will be less happy living sustainably. This is the part of the series I felt was weakest. The general consensus amongst them is that we will actually be happier if we live sustainably because we will live healthier lifestyles. David Suzuki claims that ‘we would go out and walk around because there would be shops, musicians and people out on the street that we’d want to meet’. Kate Soper thinks we’d ‘…enjoy healthier modes of transport such as walking, cycling and boating’.

The authors appear to be projecting their own lifestyle preferences onto others here. It is this element of the environmental rhetoric that bothers me most: the idea that we would all be happier people if only we were more like them because they know what’s best for us better than we do. Read the rest of this entry »

A recent article on VoxEU discusses the link between poverty and violence in Africa. It’s a tricky topic because there are good arguments to be made for causation in both directions and the direction of causation matters hugely for aid policy. Read the rest of this entry »


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