Matt Nolan

Ignoring costs and misrepresentation – People’s attitude to economists

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One thing that gets to me is the fact that people from both sides of the political spectrum love to avoid costs. As economists pride themselves in discussing the opportunity cost associated with any given policy or action, we end up being attacked by both sides (Update:  Including psychologists it seems.  Dang I thought they were the one social science that understood us 🙁 )

However, the way both sides attack economists is different, equally irritating but different.

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jamesz

Household chores: are men really slackers?

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In houses all around the world women are cleaning and doing chores right now while their husbands sit in front of the TV. Depending upon which you are it’s either a pretty sweet arrangement, or a manifestation of the oppressive patriarchal regime into which you were born (or something more moderate and boring sounding in between, I guess). Now Bryan Caplan has stirred up a hornets’ nest with a post supporting the couch jockeys:

Look at the typical bachelor’s apartment. Even when a man pays the full cost of cleanliness and receives the full benefit, he doesn’t do much. Why not? Because the typical man doesn’t care very much about cleanliness. When the bachelor gets married, he almost certainly starts doing more housework than he did when he was single. How can you call that shirking?

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jamesz

The future of the music industry

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The Economist laments the death of the music industry as we know it:

the results from 2007 confirm what EMI’s focus group showed: that the record industry’s main product, the CD, which in 2006 accounted for over 80% of total global sales, is rapidly fading away. In America, according to Nielsen SoundScan, the volume of physical albums sold dropped by 19% in 2007 from the year before… More worryingly for the industry, the growth of digital downloads appears to be slowing.

So perhaps it’s time for the industry to develop a new business model, but what are its options? Read more

Matt Nolan

January 08 OCR review: OCR on hold at 8.25%

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As everyone expected the OCR is unchanged at 8.25%.  The statement was decidedly neutral, stating that everything is happening inline with their December forecasts, however uncertainty has increased.  As they did not state whether it is downside or upside risk they are concerned about (we cannot just presume it is downside risk), any change in their hawkish stance in December relies on our belief of the risk preference of the Bank.

If the RBNZ is risk averse, then they are less likely to lift rates in the future, if they are risk neutral they are just as likely to lift rates in the future.

It is important to note that they said they will be monitoring commodity prices – this implies that the ANZ commodity price index will be especially important over the coming months.

Matt Nolan

Government stimulus: Will Cullen be able to save the day?

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There has been a lot of discussion around the internet about whether and what type of fiscal stimulus is appropriate in the US. That is not the issue I am going to discuss here. This is a New Zealand blog, and as a result, I’m more interested in the claim that Michael Cullen will be able to intervene in the economy to save us from any impending doom.

I’m not entirely convinced that Dr Cullen will be able to save us in the case of an imminent economic collapse, and here is why:

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Matt Nolan

Ten things people will say economists said

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Over at the Big Picture they are discussing how silly the decoupling thesis is (the idea that that world economic growth now functions separately from US economic growth). Near the end they mention ten things that seemingly intelligent people have said, that have turned out to be complete rubbish, namely:

  1. The Yield Curve no longer matters
  2. Earnings at an unusually high % of GDP are sustainable
  3. The Business Cycle has been defeated
  4. Ignore sentiment readings, the population is just upset about Iraq
  5. Real Income gains are irrelevant
  6. Mean reversion no longer applies
  7. Supply side tax cuts pay for themselves
  8. Dow Theory is a quaint antiquity
  9. The (so-called) Fed Model “proves” equities are significantly undervalued
  10. Despite commodity prices, there is no Inflation.

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