Matt Nolan

Google takes on time-inconsistency

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In its eternal quest to “not be evil” Google has decided to take on one of the banes of man – himself, and his time-inconsistency.

It is doing this by introducing a new service to gmail.  You can set up this service to significantly increase the transaction cost associated with sending an email when you are drunk!

In the “drunk” state you may think it is a good idea to email your ex girlfriend/boyfriend and say strange things – however, prior to being drunk you may decide that any benefit associated with emailing someone in your drunk state is more than canceled out by the embarrassing phone call the next day.

This feature allows you to increase the cost to writing the email in your drunk state – allowing you to “pre-commit” to not sending embarrassing emails.

With classy features like this you can tell that a genius like Hal Varian is working for them 😉

Matt Nolan

Conceptions of economics: Comment from Dr Doyle

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A few weeks ago a fellow named Jeffrey Doyle posted a “history of economic thought” type comment/post on the blog, which can be found here.

Beyond this he also added one additional criticism of “neo-classical economics” – the focus on “monetary flows” instead of energy.  Of course, as a criticism of economic science this is a misnomer – economic science is the study of scarcity, and “monetary flows” are merely a convientent way of representing this scarcity.  Using energy as a representation should – if the models are sufficiently specified – provide the same results.  Now, in when applying models there may be substantial differences, given what is implicitly assumed to be useful or not in different models – while this argument is important for application it is not something I can argue about, as I do not have the scarce intellectual talent to go around and apply a new set of assumptions to an underlying framework of scarcity.

However, my impression is that Dr Doyle is not criticising the individualistic methodological process in economics – he is attacking the “economic unit” used when we study scarcity, something that is constantly occurring and is a healthy part of any discipline.

Will Taylor

Credit Crunch jokes

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It’s good to know investment bankers still have a sense of humor. I just these jokes in an email from some friends in finance. From the Wall Street Journal apparently.

Given that a major NZ investment bank has just had a large culling of its staff I guess they need something to lighten the mood around the office!

Enjoy!

Agnitio

Gallows humor. Wall Street might have lost tons of money, but that doesn’t mean traders have lost their ability to laugh. Some faves making the rounds:

— What’s the definition of optimism? An investment banker who irons five shirts on a Sunday evening.

— What is the capital of Iceland? About $3.50

— I tried to get cash from an ATM today, but it said “insufficient funds.” I don’t know if that meant them or me.

— What’s the difference between an investment banker and a large pizza? The pizza can still feed a family of four.

— What does a hedge-fund manager with no fund to manage say? Would you like fries with that sir?

— The credit crunch is getting bad, isn’t it? I mean, I let my brother borrow 10 bucks a couple weeks back. It turns out I’m now America’s fourth-biggest lender.

Matt Nolan

Starbucks and Macroeconomic activity

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Over at 100 word blog, Richard notices an interesting phenomenon – namely that areas with more Starbucks are being more heavily hit by the credit crisis.  Now this isn’t good for NZ – as we have over 40!

Looking at this only provides us a correlation – not causation, as the Starbucks are not causing the credit crisis.  However, there may be a factor related to the number of Starbucks which is infact a causal factor for the intensity of the credit crisis.

Mentioned on 100 word blog is:

  1. It is an indication of “risk-taking industries” who use Starbucks (the “wanker” effect),
  2. It illustrates a greater national preference for current consumption ahead of future consumption (investment),
  3. It indicates more highly integrated capital markets.

I agree with all three – but especially the second one.  What do you guys think?

Will Taylor

LEANZ Seminar in Wellington: The New Zealand – China Free Trade Agreement

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The Law and Economics Association of New Zealand (LEANZ) is hosting an interesting seminar in Wellingotn next Monday on the free trade deal with China. It is being presented by some people in MFAT who were involved the behind the scenes economic and legal analysis of the deal. I (Agnitio) went to this seminar in Auckland and enjoyed it.

Seminar and RSPV details below

Read more

Matt Nolan

September quarter QES and LCI – what happened?

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I do not know what happened, as I am writing this post several days before the results came out.

So what did happen?

Key statistics for me are:

  • Hours worked:  How much did they decline?  This is the “labour input” in its entirety – if domestic activity is declining this will tell us.
  • Retail/construction/wholesale/business and property services employment:  These sections of the labour market should be getting hammered – are they?
  • Hours x average hourly pay:  How is nominal household income growing?  If this slows sharply then we should start to be concerned
  • Adjusted labour cost index:  This is an indication of true, fundamental, inflationary pressure – I suspect that quarterly growth will be over 1% (given that September is typically strong for wage claims), however market expectations are lower.  A result under 0.5% for the quarter is weak – and suggests that slowing economic activity is taking down inflationary pressures.

Give me a run down so I can read it in a couple of weeks 😉