jamesz

Growth and happiness

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The Standard was at Joe Stiglitz’ talk in Wellington last week and was particularly interested an audience member’s question about growth. The question is whether economists focus too much on growth, to the detriment of human happiness. It’s an interesting and worthy question, but not one that hasn’t been considered by economists. There are two important issues around GDP: first, whether it’s a good measure of growth and, secondly, whether growth is particularly important. Read more

Matt Nolan

Social devolution or individual freedom?

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Here I am going to discuss an issue that is way over my head – but is extremely important for the practical application of economic concepts. I am going to discuss how changes in economic policies can influence social structure.

I decided that I would attempt to write about this after reading this post. In the post the daily dissident laments the collapse of community and the movement in consumerism and its impact on individuals.

The first argument against this view is the idea of individual freedom – individuals have the right to make their own choices, and the frame of communal society alienates that right. However, it is possible to look at the idea of community while providing individuals with rights.

The most basic way to frame this problem initially is as a prisoners dilemma. Read more

jamesz

iTunes: friendly or foxy?

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It seems Apple’s thinking about giving iPod owners free access to the iTunes download service! Are they just good souls or is there a more sinister, profit-seeking motive behind their announcement (tongue firmly in cheek)? The first thought of every economist when they see something like this is to scream “price discrimination”. It looks like a classic case of a two-part tariff where the marginal cost of providing the tunes to a customer is zero; which it probably is, since Apple will likely pay a lump sum to the record companies rather than a per track sum. However, this is only half the story here. Read more

Matt Nolan

March 08: Fed cuts rates to 2.25

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Another month, another 75 basis point rate cut by the Fed. This is (close to) what the market expected, so I can’t imagine that it would have much impact on anything. However, the statement was interesting.

Does anyone else find it interesting that the Fed cut rates by 75 basis points but still wrote a whole paragraph (1/3 of the meaty bit) on the risk of accelerating inflation compared to last time when they said:

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

The most interesting bit was:

Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

If the CPI measure ticks up, will this be the end of rate cuts?

Matt Nolan

Economic uncertainty – time to get scared?

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Today I noticed two very different stories about the outlook for the New Zealand economy. From Bernard Hickey (h.t. Kiwiblog) we have a dramatised version of what ANZ and BNZ are saying about economic conditions. From Berl we have a more moderate story which is closer in form to all the other analysts (such as RBNZ, Westpac, and Infometrics 😉 ).

Now don’t get me wrong – everyone is expecting a slowdown in economic growth. However, the question currently is, are we going to have a technical recession or not?

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jamesz

‘Right’ by any other name

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Many critics of economics accuse it of being an amoral pursuit. Conversely, many economists praise the amoral nature of their discipline. It is easy to think that there must be more to this argument than whether economics is morally ‘good’ or not. After all, that seems like an awfully circular and pointless argument. One might ask what characteristics people value that they feel economics lacks. How do people weigh up the characteristics that they throw in a basket termed ‘morals’? Robin Hanson suggests that perhaps, ironically, economists have many of the tools to help them weigh such factors:

Economic analysis tries to infer what people want, largely from actions, and then tries to suggest policies to get people more of what they want… Critics, however, say economic analysis is untrustworthy because it is incomplete, since wants are only one of many moral considerations. But this complaint seems to me backwards… After all, morality is only one of the many ends we pursue. Yes we want to be moral, but we also want other things, and we each choose as if we often care about those other things more than morality.

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