Matt Nolan

Taxing: Choice and policy consistency

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Offsetting recently posted about a tweet by Gareth Morgan on eating and control, including a reply I popped up.  Essentially, Gareth’s tweet implied that the way individuals make choices indicates we have no choice over how much they eat.  I disagreed talking about precommitment – he stated I assumed perfect information, which is both a touch untrue and (surprisingly to many) irrelevant.

It did get me thinking though.  The two of us actually have almost exactly the same model of choice in our heads for this issue, and as a result any differences of view of on the appropriateness of policy that we might have are not due to differences in the underlying model. Read more

Matt Nolan

Discussion Tuesday

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From here this claim:

Economics, psychology, and neuroscience are converging today into a unified discipline of Neuroeconomics with the ultimate aim of providing a single, general theory of human decision making.

Once again, remember that these are points for discussion – I am not saying I agree or disagree with them.

Infometrics

Dynamic comparative advantage: Costs and benefits, the case of Cuba

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Political and economic systems are often fraught with emotional comparisons.  Few create more of an uproar than Cuba – with those on the far left seeing it as an ideal to aspire to, while libertarians view it as a fundamentally broken and immoral state.  However, no matter how we feel it is always useful to ask what the trade-offs are, and what “theories” these ideas are indicative of.  This is what Mieke Welvaert did on her recent post about Cuba trading doctors (Infometrics link here).

Cuba provides an interesting case study in how government policies can help individuals coordinate in their choice of job and educational attainment.  However, it also shows some of the costs of trying to generate a “dynamic comparative advantage”: the misallocation of human capital as people are pushed into specific areas, the restrictions to freedom required to solve the time inconsistency issue between government and the service providers, and ultimately the risk of being exposed to an industry ‘picked’ by a government.

In truth is does appear that one of the key issues, when looking at how the system works, is the freedom of choice of the individuals involved – understandably, people’s beliefs and judgement around this in ethical terms should drive their view on what is appropriate.

 

 

 

jamesz

We are besieged by slippery slopes!

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jamesz

Economic forecasters aren’t all that bad

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Economists get a lot of criticism for failing to polish their crystal balls thoroughly enough before reading the economy. So how good are people forecasting other complex systems? Physicist types. Real Scientists. Let’s ask a weather forecaster how accurate their forecasts are a couple of days out. Days, not months, quarters, or years.

…if our forecasts are about 60 percent accurate or higher, then we consider that to be a good estimate.

Well, that’s slightly better than flipping a coin.

jamesz

There is no One Model to Rule Them All

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I like the influence that physicists are having on economics. Moving towards agent-based modelling in some areas of the discipline is a great idea. But, in addition to lending their novel insights, some seem to enjoy piling on economics generally. Generally you have to take the good with the bad but Mark Buchanan’s latest article is so shockingly bad that I can’t help picking on it. Read more