If a man is not a socialist by the time he is 20, he has no heart. If he is not a conservative by the time he is 40, he has no brain.

My 5-year old just warned me that if I don't behave myself the consequence will be “No economics for a week.” I'm cleaning up my act.

— Justin Wolfers (@JustinWolfers) March 3, 2015

The always brilliant SMBC has come up with a different take on this in his comic:

In both cases I think our problem stems from poorly defining the choice set – but that is sort of the point, it is an indication of how we can inadvertently misuse the EMH if we haven’t fully considered the types of expectations, the amount of competition involved, the existence of change from a steady state, and the general ideas of history dependent or emergent phenomenon.

Look, I didn’t say anything I said would be funny – but the comic is humorous ok!

In some cases, non-pecuniary values are important.

H/T: agnitio

A council is considering urging taxi firms to provide cheaper cab fares for women who wear revealing clothes.
Brentwood Borough Council is considering the bizarre move in a bid to stop women wearing short skirts or low-cut tops becoming a target for sex attackers.
The council is considering discounted taxi prices so that ‘provocatively dressed’ women can be driven back home and have less of a problem getting a ride.

I have a feeling that he hasn’t really thought through the incentives it would provide.

While the professionals used their decades of investment knowledge and traditional stock-picking methods, the cat selected stocks by throwing his favourite toy mouse on a grid of numbers allocated to different companies.

And the results? Orlando the cat unsurprisingly (to anyone who has studied finance and whose job isn’t giving investment advice) earned more money than the professionals.

At least the kids didn’t beat the pros, that would be embarrassing if they did….

Whoever comes up with a policy-based excuse for the MSD Minister to shove beneficiaries’ heads down a toilet on live TV will be a rich man

In the interests of better public policy, helping those less fortunate, and becoming rich men – TVHE is taking it upon ourselves to discuss the benefits of this obviously positive scheme, the “pro-active employment incentive scheme“.

Now on the face of it, public humiliation seems like a terrible thing to do to someone.  However, it is important not to let moral considerations get in the way of an objective analysis of the facts – which will then allow us to weigh up the costs and benefits of the scheme more appopriately.

We have to realise that, when a scheme is put in place we can’t just look at some perceived “cost” that people who are currently beneficiaries would bear!  Undeniably, people would change behaviour given the possibility of having their heads shoved down a toilet, and our modeling suggests that the change in behaviour would make people better off then they are in the situation without this credible threat.

So, in the interests of clear and transparent accounting, here are bullets of the expected benefits of this scheme:

1. A significant increase in beneficiaries moving into work:  This increases economic output, and increases the welfare of the individual by improving their human capital – which they are currently not taking into account when looking for work.
2. An increase in labour productivity among the current workforce:  Knowing that Kentucky unemployment comes with an additional cost, employees will spend less time on facebook and more time enjoying the process of creating output.
3. A drop in labour force participation:  If you can’t find work, leave the labour market or get dunked in a toilet – in this situation some people will leave the labour market.  On the face of it this may seem like a bad thing, however we know that New Zealander’s work “too much” – if we have some people leaving the labour market altogether, this may well lower the average number of hours people are working!
4. Consumption benefit to the viewing public:  Even if no-one ends up getting dunked, the idea of it will excite the public, satisfying a well know urge for public spectacles.

Of course there are costs, these are:

1. The direct cost of being dunked and embarrased.  Our modeling suggests this is an insignificant issue.
2. The cost of free-to-air TV:  Having to pay TV stations is a cost, however this issue is outside the scope of the study, and merely suggests setting a price somewhere.
3. The cost of the minimum wage:  A minimum wage will ensure that some people who do not want to be dunked can’t find work!  As a result, this cost can be removed by removing the minimum wage.

As we can see, there are 4 bullet points in favour, and 3 against – two of which are pretty much irrelevant.  Compelling evidence in favour of a “pro-active employment incentive scheme” such toilet dunking and public wedgies.

Note:  None of this is serious.

What is needed is a systematic application of the scientific method to history: verbal theories should be translated into mathematical models, precise predictions derived, and then rigorously tested on empirical material. In short, history needs to become an analytical, predictive science (see Arise cliodynamics).

It seems the history of the social sciences rhymes as well as any other. Turchin does attempt to address some of the obvious concerns in his Nature article:

The most compelling argument against the possibility of scientific history goes like this. Human societies are extremely complex. They consist of many different kinds of individuals and groups that interact in complex ways. People have free will and are therefore unpredictable. …If this argument were correct, there would be no empirical regularities.

I have a feeling he’s going to identify the historical equivalent of the Philips curve at some point. Then other historians can win prizes by porting across the Lucas critique. Finally, history-McCloskey will crop up and suggest a return to the interpretive methods of the past.

HT: Evolving Economics