There were a bunch of excellent comments on yesterday’s food post. I thought I could answer them by adding a bit of clarity here.
After reading both the Stuff article and the initial article on Gareth Morgan’s blog and the follow up, I am convinced both Gareth and Geoff Simmons (GG) have inadvertently become extreme social constructivists – but may not realise it yet.
Now I hate it when people just whip out rhetoric like “social constructivist” and don’t explain it – so what do I mean, how have they gone this way, and what do we know about this type of framework so we can analyse it?
As the world starts to move from focusing on growth to wellbeing a group of neuroscientists decided to test people’s brains to check whether ‘happiness’ occurred as predicted. The BBC reports that they found
“We can look at past decisions and outcomes and predict exactly how happy you will say you are at any point in time,” said lead author Dr Robb Rutledge from University College London.
The experiment tested decisions under uncertainty, which is a well-researched topic in economics. The best model we have at the moment derives from Kahneman and Tversky’s development of prospect theory. Read more
…assuming that decision processes are reducible to one-size-fits-all sets of axioms has not and will not produce a descriptively adequate account of human behaviour under risk and uncertainty.
Researchers find that people’s risk preferences are not stable. How risk averse is an individual? That depends on the situation.
The money quote:
They found that the biggest impact of a minimum price policy was on “harmful” drinkers in the lowest income quintile (7.6% reduction in alcohol), whereas the impact on harmful drinkers in the highest income quintile was modest (1%). Consumption fell by 1.6% among “responsible” drinkers in the lowest income quintile. That is, the impact is concentrated among low-income harmful drinkers.
Moreover, this Lancet paper found that “Individuals in the lowest socioeconomic group (living in routine or manual worker households and comprising 41·7% of the sample population) would accrue 81·8% of reductions in premature deaths and 87·1% of gains in terms of quality-adjusted life-years.” In the public health field, we seldom see policy packages that have such a notable impact on reducing health inequalities. [** Further comment at end].
The gains come from putting a minimum price of alcohol that prices the poor out from consumption. Consumption that has a benefit – something that is ignored constantly.
I am not around. Over the next three weeks, there are a series of really rubbish auto-posts are coming up about “factor shares” – I normally write posts in advance, but it is unlikely I am going to add anything or move posts around to include new ones. During that time I’ll be reading and reviewing Capital and writing a summary document on income inequality measurement (both things I promise to share) – these are both sizable tasks I want to do, hence why I won’t be around too much.
However, this also means I can’t post on things I find cool. So I’ll just give you some links
- Greg Mankiw mentions the harm principle and economics. “First do no harm” is a good principle for us to hold when considering policy, I agree.
- Details do matter though, via Mark Thoma and also a piece by John Aziz. My view of this in general would be that the “harm” comes from a “change” in policy from an “initial position” – how do we define this initial position such that something counts as change? If we define it solely as “now” then we are simply conservative, if we define it as some “ideal type” that we believe is “natural for the social system”, we are trading in ideologies. Applying the harm principle starts to get tricky! [Note: In the comments to the recent Hand posts (here, here) there has been further discussion of this]
- Tim Harford, Chris Dillow, and Noah Smith all discuss behavioural economics – plenty of interesting points in there if people want to think about choice, its relation to trade-offs, and its relation to policy.
- From Mark Thoma again, the misuse of theoretical models. Given my interest in methodology I’m certainly interested in reading this (what they establish as the ‘should’ how they find what ‘is’ in modeling) – I’m sure you all feel the same way
- And because I have to put up something about inequality here is Lane Kenworthy. The US example is an interesting one, but I would almost think that lower growth in the low and middle parts of the income distribution is itself defined as higher inequality – it is almost tautological to say one caused the other. The magnitude of the gap over there tells us that it is an issue worth looking into though!