Matt Nolan

New Zealand’s sexiest economist 2015: Nominations open

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It is hard to believe it has already been nearly a year since we have celebrated the work of New Zealand economists with a sexiest economist competition – and nearly two years since the competition kicked off.  However, it has been a year, so we’re doing this all over again.

Last year we introduced a nominations round.  Many people complained that their favourite economist wasn’t in the competition – which I’m guessing is a sign of regret that they didn’t get around to nominating them.

I want everyone to feel that they have had the chance to say “I think this economist does the sexiest economics, and is therefore my sexiest economist“.  As a result, this year I want all of you to take nominations very seriously.  On that note, here are the rules:

  1. The nomination must be for a public facing economist that is involved with New Zealand.  This is defined in more detail here.
  2. You can nominate more than one economist – but I’m still not allowing you to rank economists in the nomination round.
  3. You get an extra 1/4 of a nomination point for the person if you send me an economicsy looking picture of the economist.
  4. You get a FULL extra nomination point for writing a paragraph describing why your economist produces sexy economics.  I am very excited to see what people write.

Nominations will close at 5pm on Thursday the 12th of February (New Zealand time).  Voting will commence at 8am Friday the 13th of February (again, NZT).  This way you will be able to discuss who you are going to vote for with your partner during your Valentines Day dinner on Saturday.

You can nominate people in a number of ways:

Note:  I’m going to reiterate here to keep it classy – the purpose of the competition is to celebrate economists work, not to attack economists.  Let’s objectify the economics not the economists.  I will come down hard on any lewd or insulting comments, with the fire of a thousand economists who are being told that economics isn’t a science – you have been warned.

jamesz

Why doesn’t NZ need a fiscal rule?

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I’ve been pointed to a very useful review of NZ’s fiscal policy that explains how the country manages so well with neither a fiscal rule nor a fiscal council. The NZ government is required by law to maintain ‘prudent levels’ of public debt but, beyond that, it is left to individual governments to decide what that means. Accountability and scrutiny is achieved largely through transparency and “broad social consensus on fiscal responsibility” and, so far, that has largely worked. The weakness identified by the review is that the government pursues time-inconsistent policy and saves too little in booms to offset the expenditure in recessions. The UK, despite a series of fiscal rules, suffers from similar problems.

The review considers whether a numerical fiscal rule might help and makes the point that

..it might weaken the Government’s ‘ownership’ of the debt target, and its preparedness to save revenue windfalls…  It might create incentives for governments to comply with the rule through policies that would weaken other parts of the balance sheet.

In other words, once there is a rule then the game is compliance with the letter, not the spirit, and that can actually weaken fiscal governance. Read more

jamesz

School choice and paternalism

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There is a very interesting report out from the Social Market Foundation that investigates the characteristics parents value in a school. The core result is that less-wealthy families do not choose schools on the basis of academic achievement:

SMF_school_choice_2

This leads the SMF to express concern that school choice may not lift educational achievement because some parents do not consider it important. They then recommend Government intervention to promote the primacy of academic success. The line they’re treading between free choice and paternalism is a fine one. One the one hand, they want free school choice to improve the quality of schooling. On the other hand, they have a prescriptive view of what school quality means. Read more

jamesz

Performance pay for the public sector?

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In December last year The Work Foundation released a comprehensive review of performance-related pay in the public sector:

PRP schemes can be effective in improving outcomes across the three public services for which evidence is available (health, education and the civil service), although the central conclusion is that the outcomes from PRP are mixed, which much dependent upon organisational and occupational context and scheme design and implementation. Where positive effects have been found, effect sizes are sometimes small and may also be short-lived. As well as evidence gaps across much of the public services, the weight of evidence also varies, with the more robust evidence coming from education and health rather than the civil service. Cost-effectiveness data to assess the value for money of PRP interventions is also rare.

The implication is that performance-related pay isn’t a quick fix: it requires careful development to fit it to the context, and organisations might take a while to adapt to it and see benefits. Without more examples in the public sector it isn’t possible to say whether it will prove cost-effective.

jamesz

Behavioural economics in public policy

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Earlier this year Raj Chetty gave the keynote address at the annual AEA meeting. He discussed the role of behavioural economics for public policy, giving examples of successful nudges such as a change in defaults for retirement saving. Unusually, he took the goal of policy as given and spent his lecture talking about how behavioural economics can help achieve those goals. Read more

jamesz

Alesina on austerity: round 2

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Alberto Alesina has returned to the fray with a new paper that shows how tax rises are far more damaging than tax cuts. With a new dataset covering the recessionary years, this is the most up-to-date evidence on fiscal consolidation available. Importantly, they are unable to discern evidence that the ZLB caused the effects of fiscal policy to be greater. Of course, this isn’t the final word and it’s only one piece of evidence, but I’ll be reading it closely over the next few days.

Fiscal adjustments based upon cuts in spending appear to have been much less costly, in terms of output losses, than those based upon tax increases. The difference between the two types of adjustment is very large. Our results, however, are mute on the question whether the countries we have studied did the right thing implementing fiscal austerity at the time they did, that is 2009-13.