Matt Nolan

Do we need a recession?

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People are talking insistently about recession in New Zealand. Driving the recent spate of concerns is the deterioration in consumer confidence over the last three months. All three of the indicators we follow (Colmar Brunton, Roy Morgan, and Westpac McDermott-Miller) have shown a significant deterioration in consumer sentiment since the start of 2008.

Now a small part of this decline is seasonal – however even taking this into account, there has been a worsening in consumers current financial situation and a significant fall in consumer expectations of their financial situation over the next 12 months.

Both the Hive and Roy Morgan state that the Reserve Bank needs to look at cutting rates, in order to avoid a recession we don’t need. However this raises the question, do we need a recession?

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jamesz

Hard headed truths about pollution

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I read recently about the Vélib’ program that Paris is running and what a boon it is for the environment. Apparently Ken Livingstone is keen on making London more bicycle friendly, and cities like Copenhagen are already full of cyclists. The decrease in pollution as a result of the reduction in cars must be quite significant. What is it that prevents New Zealand cities from adopting similar, cyclist-friendly inner city roads?

Perhaps it’s not so much a supply issue as a demand issue. Perhaps fewer people want to commute by bicycle in NZ. A major factor in their decision not to use a bicycle might be the requirement that helmets are worn on the road. Read more

Matt Nolan

Prostitutes versus easy sex

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I don’t know why I was reading both the About Town blog and the Times, but I was and now I have to write about it.

Mrs Saunders raises an interesting question, namely:

If, as most people seem to be saying, New Zealand women are a bunch of sex predators who will do anything for a double vodka and almost anything for a mocha latte, how is it that prostitution is still a viable business?

This is a fair question, as she says:

After all, a double vodka costs $7.50 but full sex with a street walker costs $50 – $60 (cheaper in Papatoetoe and deals of 2 for $60 are available if you know where to look). And a mocha latte costs around $3.50 whereas the cheapest sex option, similar to the one on this vibrator panties guide, costs $20.

However, I think this is a question that we should be able to answer fairly easily with our economist hats on.

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jamesz

Charitable ignorance, part II

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A couple of weeks ago I asked why people might avoid finding out how worthy a charity is. People know that they’ll give to worthy charities and yet they shy away from finding out that a charity is worthy so that they avoid giving. Why might this be?

There aren’t many situations in which rational agents choose to avoid obtaining information costlessly. The times when they might are when it gains them a strategic advantage. However, you’re not playing a game against anyone else when you pass a collector on the street. The only person that you could be said to be playing against is another temporal self. Carillo and Mariotti’s paper on strategic ignorance explains how a person might choose to avoid information in order to gain an advantage over their future self. If you’re keen to get quasi-technical about it, read on. Read more

Matt Nolan

Housing and the value of individuality

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The government is introducing ways to reduce the compliance costs associated with building homes. By doing this, the government can increase the amount of house and land packages in perth or increase the supply of properties, lowering the price of houses, and thereby increasing housing affordability.

No doubt this will be an interesting policy to look over, however this is not what I am going to do right now. Instead I am interested in Professor Roy Fleetwood’s (of Victoria University’s Architecture and Design Faculty) dual claims that”the plan risked creating cardboard cut-out houses” and that “the Kiwi dream was to build your own home, but individuality was highly prized”.

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jamesz

Sony backs down on Fresh Start

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Apparently Sony has backed down on it’s proposed $50 charge for removing the junkware that usually comes preinstalled on computers. The new Fresh Start option when you buy your Vaio laptop allows you to choose to have a clean OS, without all the usual trial software and other adware, for an extra $50 over the usual price. If you look at Gizmodo’s comments you’ll see the predictable outrage of consumers over having to pay more to avoid something, rather than paying to gain something. However, to an economist, this looks like a simple case of price discrimination much as you see with business class flights on a plane. What’s the difference here? Read more