Subsidising mini-skirts

Shamubeel asked yesterday why the Government is asked to fix every perceived problem. As inspiration for his forthcoming post I present the latest initiative from a city councillor in Essex:

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.

Looking for stock advice? Buy a cat…

Via @NBR I came across this awesome article on the Guardian about a cat named Orlando that was pitted up against some investment professionals and students in a stock picking challenge. How did the cat pick stocks?

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….

Incentivised employment schemes

Via Danyl on Twitter (from Dimpost) we have been offered the job of justifying specific incentive schemes for people currently out of employment.  The brief went as follows:

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.

Economics envy?

Apparently some historians want their discipline to become a predictive science. Because that worked out so well for economics back in the 60s.

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. Read more

Best article on the Treasury website?

Fortuitously stumbled across this while looking for something else. Arthur Grimes investigates the Arbee:

In his “Life Among the Econ” Axel Leijonhufvud took an ethnographic approach to describing the Econ tribe and, especially, two of its components: the Macro and the Micro. My purpose is to delve further into the life of the Macro, specifically examining the Arbee sub-tribe. The task of our research is to examine the nature of the Arbee reaction to claims by other tribes and sub-tribes that the Arbee rituals have caused The Imbalance in The Economy. Specifically, their highly formalised OC Ritual (OCR) has been blamed for creating The Imbalance … It is the rituals of the Arbee that many claim to be the cause of The Imbalance in The Economy. If only the Arbee were to conduct their ritual in a different manner, the prices, expenditure and living standards would all right themselves.

The OC Ritual is a highly stylised dance. The first move involves no actions by the priests, just observation of other dancers. The priests observe the effect on all prices that result from the bigfella man’s resource directives. The high priest has a contract with the bigfella man that price rises must be kept to within a certain sacred range.

Hilarious, yet serious, it’s worthwhile reading the whole thing. See Leijonhufvud for the background.

It’s the stupid, stupid

I get it: economists aren’t cool. It’s fashionable to complain about them without understanding the first thing about the discipline. Ordinarily that sort of thing is easy to ignore. But sometimes, though very rarely, it produces that special sort of stupid that you can’t help but cherish! Today is one of those beautiful days and we can thank Ross Gittins for providing it.

His lengthy rant, which I don’t recommend ploughing through, accuses economists of being idiots for not solving all the world’s problems before they happened. So far, so dull. The good part comes when he tells us his solution to all the stupid economists:

She was Elinor Ostrom, a professor of political science at Indiana University, who devoted much of her career to combing the world looking for examples where people had developed ways of regulating their use of common resources without resort to either private property rights or government intervention.

For her pains, Ostrom, who died last month, was awarded the Nobel prize in economics in 2009, the first woman so honoured.

Whoah, hold up there, the solution to all the dumb economists is… more economics?! Yes, apparently what we need are more Nobel prize-winning economists, drawing on their cross-disciplinary expertise to make the world a better place. Not the solution I was expecting but I can’t say I disagree!

HT: Bernard Hickey.