The equation for happiness

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

Politicians vs policy analysts

Jonathan Portes has an interesting post on the Department of Work and Pensions’ analysis of Mandatory Work Activity. Jonathan does a great job summarising the research and it’s fantastic to see good evaluation coming out of the Department. The political headline of the post is less positive: “DWP analysis shows mandatory work activity is largely ineffective. Government is therefore extending it…”. The implication is that, whatever the evaluation shows, the Government is committed to the policy.

Iain Duncan Smith’s welfare reforms have not been universally welcomed.

That sad state of affairs is not unusual: many studies have been unable to link bureaucrats’ cost-benefit analyses with any change in regulatory efficiency. Read more

The UK: agglomerating since forever

Agglomeration externalities are the hot thing in policy these days. For believers they’re one of the things that economists have missed by excluding geography in the past. To sceptics they’re just another excuse for the Government to justify picking winners and organising the country. I recently came across a couple of VoxEU articles that might point the way to a reasonably middle ground. Read more

Quote of the day: The debt burden, and the use of burden

I have just moved house, and while doing so I discovered a bunch of old books that my brother had loaned to me.  One of these was the Foundations of Economic Thought (1990) – a good title, so I figured I’d give it a bit of a read.

Within the book is a series of self-contained essays which mix economic history with economic ideas and methods – I am a big fan of this sort of thing.  I’ve just been reading the essay “the debt burden” by Brian Hillier and M. Teresa Lunati.  In this essay they discuss the issues I was trying to get across to a general audience in the series on tax, specifically in my last post.  In the final post I make the point that borrowing is really another form of broad “taxation”, but as when discussing different types of taxation we are asking where the burden lies.

However, the quote I’m going to pull isn’t directly about that.  It is about the use of the word burden.

Read more

The America’s Cup is not about the money

The America’s Cup might be returning to NZ and local newspapers are already weighing in on what it means for the economy:

As Team New Zealand moves close to match point there is already speculation that the next cup series will bring over half a billion dollars in financial gain to the country.

Don’t believe it, says Shane Vuletich of Covec, specialist in economic evaluation of tourism and major events, who warns numbers already being used are far too large.

Vuletich and TVHE’s straight-talking Shamubeel Eaqub—”the economic benefits of a cup regatta in 2017 would be based on ‘over-hyped studies that are proven to be absolute b…….. after the fact.'”—are absolutely right: major events don’t tend to be good financial investments. What surprises me is that this is worth reporting. Read more