Matt Nolan

Value and Doctor Who

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Today is Doctor Who’s 50th anniversary.  Seeing that I wanted to do an “economics of Dr Who” post … but how do I do that?  All the Time Lords are dead, and the other people involved are either human or weird aliens that are in conflict in some way.  There isn’t really much of an economy to discuss here.

However, there is one point.  The idea of “value” for an individual when material scarcity has ebbed away.  The TARDIS can make whatever things the Doctor wants, so he is hardly in material need – or even suffering from a material want he can’t satisfy.  In that case, what is going on?  Well this video gives us a hint.

http://www.youtube.com/watch?v=UeJ4Ak2xCkw&t=1m25s

He can go anywhere in time and space, create any material goods he wants, and as a result at his current age he is fully satiated – he gets no real additional satisfaction from any of it.  As a result, he finds other people who find wonder in it and lives through them – his relationships with others become an important part of how he finds value, and defines his purpose and character.

If material scarcity heads away, the things individuals find value in will change.  In such an environment policies that “target” things without a recognition of this change – no matter how well intended – will be poor policies.

 

Matt Nolan

Some ‘inequality’ is good and other unpopular statements

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We have an attitude as individuals to define things as “inherently good” or “inherently bad”.  And when this comes to policy indicators this is dangerous.

Shamubeel has already discussed this when thinking about the broad idea of equality, and so has Sen – although those posts were just us quoting him!  However, a lot of recent discussions have been specifically on a more narrow measure, that of measures of static income inequality [think Gini coefficient, inter-quartile range, 80-20 income range, etc].  We are being told these are inherent bads which must be squashed!  But does this make sense?  Or is some inequality in these measures really a good thing?

Note:  I read this post after writing my post.  It is very good.

Bah, inequality is bad – it’s obvious

Yes, yes, the most common response I get – but you’re here now, so lets have a think about what we are doing. Read more

Matt Nolan

Politics aside: National, coalition partners, and the environment

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I know nothing about politics, and try not to blog about it – in fact, I hope to not post on it again.  So please don’t be too mean to me 🙂

But I also like to write blog posts, and find the entire idea of getting the Conservative Party into parliament as a coalition partner for National to be weird.  Especially after this “Ask Colin Craig” event on NBR.

Now sure, there could be room in parliament for a socially conservative/religious party, that is all well and good.  And given the current make-up of the National party it would likely lean towards National – but with the Conservative Party’s willingness to be economically interventionist, they also have more in common with where Labour and the NZ Greens are going.

With ACT burnt up, the Conservative party, and calls for a new version of ACT seem to be the only ideas flying around about future coalition partners for National.

But why can’t we have an economically centrist Green party?

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jamesz

A cash payment is not a ‘nudge’

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There’s controversy in the UK over trials of a £200 payment to mothers for breastfeeding their children. Bizarrely, the payment is being described as a ‘nudge’ when it is nothing of the sort. A nudge is a change in the framing of a choice that doesn’t change the choice itself. Interventions that make one option far cheaper than the other through a cash payment are not nudges. The breastfeeding payment is a pure incentive scheme and has nothing to do with behavioural research. Read more

Infometrics

Are the LVR restrictions riskier than meets the eye?

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This time, David Grimmond discusses the loan-to-value speed limits that the RBNZ introduced from October 1 (Infometrics link).

David covers a range of concerns about LVR’s in his piece, however he is also concerned about whether having a central bank use such policies is appropriate and whether it is really a reasonable part of their mandate:

First rather than addressing the tax-related root cause to an excessive demand for home ownership it is trying to curb demand by introducing a new set of regulations. If you cannot change the tax rules then there may be some merit in a LVR scheme, but the result will invariably be worse than an approach that directly addresses the tax design issue.

The second issue relates to one of the political mandate for the LVR regulations.

Tax laws are determined by government and parliamentary votes.

If it is the political will to have a tax system that favours home ownership, what is the political mandate for a non-elected body like the Reserve Bank to introduce regulations to “protect” people from taking advantage of these tax rules?

Ultimately the Bank is imposing highly selective regulations that are limiting free choice and redistributing wealth across society.  These are the type of actions that normally require a political mandate, and it is not obvious that the Bank possesses this mandate.

Unlike the elected government, we do not have the recourse to vote out the Reserve Bank Governor at the next election if we are not happy with the Bank’s performance.

A very important point, and one a lot of economists out there (including the economists at the RBNZ) are puzzling over.

Matt Nolan

In defence of economists

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I see that the Listener (ht Agnitio) has picked up on this piece on psychology today (ht Andrew F), which claims that an education in economics inherently changes our behaviour making economists worse citizens.

At first brush I would like to note that we have a psychology lecturer suggesting that this implies more people should study psychology – it might be the economist in me talking but this sounds a bit like these recommendations are a touch self-interested themselves 😉

But this would be a digression.  While I don’t disagree that economists do need to be humble about the conditional nature of their knowledge (a point that holds equally for other social, and physical, sciences mind you!) I stick by my general conclusion that:

Saying “we shouldn’t look at trade-offs because then we lose our sense of community” sounds strangely like “we shouldn’t study the natural world or we will lose our sense of faith” don’t you think

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