Matt Nolan

Religion and institutions

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I see the Pope made some comments about capitalism and social justice, and a bunch of economists were unhappy with this (Mankiw, Sumner) – or were unhappy with the way economists viewed the Pope’s comments.  Note:  This piece is a good discussion.

My view is easily summarized.  Meh.  I grew up in a Catholic family, going to church every week and doing all the classes – and if there was anything I learnt from reading all the “social justice literature” it was that Catholicism as an institution likes to frame things as battles between “right” and “wrong” rather than actually trying to understand the subtle undertones of what is actually happening.  The Pope seems like a nice guy, who is well intentioned, but he relies on “common sense” views of rising injustice – rather than looking at the facts.  While this makes Catholics feel good about themselves, it is a lazy way to talk about justice and fairness – which implies that there is some truth to what he says (we should talk about these matters) but it also propagates dangerous falsehoods.

Note:  If anyone is wondering, I’m not being bitter here.  Growing up my church was filled with good people who were incredibly supportive, who gave me good life advice, and who were always kind – I have nothing but good feelings about any of this.  But the general attitude that exists in society as a whole, that there are obvious good and evil things, is dangerously naive.

Yes, many Catholics have different value judgments than wider society – with far more redistribution desired (I will of course admit to being in this direction on a personal level).  And this is cool!  But I just don’t see this as a reason to employ empty rhetoric to persuade others to introduce policies that favour your value judgments, which is what they are doing.

Of course, this brings us to the actual subject of this post – religion is an institution, an institution that fills a certain role within society and the lives of an individual.  When we think about ideas of ‘social capital’, religion offers us a lens on the type of community/social institutions we are talking about when thinking about this issue.  This is a common idea, and with the use of a little game theory we can even state that Jesus was an early applied economist.

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Matt Nolan

Global income inequality

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Via Overcoming Bias I spotted this paper on global income inequality, 1970-2009.  Robin points out to be careful, as this doesn’t capture non-financial inequality, and it doesn’t look at the “lifecycle” of individuals – just snapshots of income dispersion at a point in time.  Of course, these missing bits are due to data limitations, the authors would have known this full well.

It shows the global static income inequality has fallen, especially over the last decade.  Lovely.  However, we only get a small part of the story by looking at that graph – the paper also decomposed changes in the global Gini coefficient into ‘between’, ‘within’, and ‘overlapping’ components.  In fact, this decomposition was really the main purpose of the paper!

So let us talk about these things, talk about what happened with them, and see where that leaves us 🙂

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Matt Nolan

‘Fake food’ and ’empty calories’: An assault on value?

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On Thursday I was in the supermarket after a long day of reading – with a long night of reading ahead.   Next to me was a deal, dark chocolate Tim Tam’s, two packets for $5.  They are great with coffee and so I reached to grab them – however, then the barrage of health related stories I’ve seen at the moment came into my head.

These are empty calories, fake food, there is no nutritional value, they are not good for me.  I could do with losing a couple of kgs, and my weak willpower ensures that future me will find it just that little harder to get to the size I want to be!

Then I thought, blah blah blah.  Information is great, but looking solely at the cost of “empty calories” without thinking of the subjective benefit I get is as dumb as Boris Johnson presuming that maximising the GDPs is all we want.  Yes there is a time inconsistency issue, but as I am aware of it, and surprisingly active at trying to deal with it, I am pretty comfortable that I can make my own choices …

In my view economists, and other forms of social informers, have a role to provide information and help describe trade-offs for the public.  But lets not get on people’s back because they enjoy action that has a corresponding cost to themselves.  Analysts that go too far in telling other people how to act have moved past acting in the public interest, and are starting to act more in terms of ego or an inflated sense of confidence about their own understanding [to be clear this comment is NOT pointed at anyone, it is a hypothetical – accusing anyone in NZ of this would be strawmaning them].

In this case I purchased the Tim Tams and had a few with a coffee.  I spent the rest of the afternoon reading about economics and many utils were gained.  I have no doubt that other people, with different preferences, would not have gained the utils in this case – but that is completely irrelevant, these are my preferences, which are revealed by my action.  Not your preferences.

 

 

Matt Nolan

Also, careful justifying inequality

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You have seen me say that some inequality is “good”, and you have seen Shamubeel say that inequality is “natural”.  It was with this in mind that Shaz told me to post about this comment from Boris Johnson.

Despite calling for more to be done to help talented people from poor backgrounds to advance — including state-funded places at private schools — Mr Johnson said some people would always find it easier to get ahead than others.

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He said: “I don’t believe that economic equality is possible; indeed, some measure of inequality is essential for the spirit of envy and keeping up with the Joneses and so on that it is a valuable spur to economic activity.”

I fear that people think the value judgments espoused by Johnson are similar to the ones economists hold when discussing inequality – this is not the case.

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Matt Nolan

The equity-efficiency trade-off and simplifying assumptions

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Given my admission that I am now going to talk more about inequality, it is important for me to show a bit more analytical respect to the concept of the ‘equity-efficiency trade-off’.  This is a term that is often used in economics, and that we often use here, but which on the blog I have only explicitly dug into once before – back in 2008.

The reason I often prefer not digging myself into the equity-efficiency trade-off concept too much is that I fear I won’t dig myself out, and if I do I doubt much would come from it.  It is an overarching concept that exists in economics, one that we have to be sure we consider whenever we ask a specific question.  However, without reference to a question there isn’t terribly much to say.

When it comes to the equity-efficiency trade-off associated with policy and social organisation, it is clear that we cannot clearly separate individual concepts associated with fairness – ideas of inequality and poverty will be inextricably linked, one of the key reasons why I dislike to push by the Spirit Level to solely place focus on inequality.

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Matt Nolan

From a listener: Statistics NZ talk on wellbeing

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As you saw from Shamubeel’s post this morning, there was a discussion on well-being and statistics to celebrate the International Year of Statistics – an event that Shamubeel spoke at.  Donal summarised the event here.

It was good times and all, well-being is important, as is measurement.  All the speeches were good, with Phillip Walker drilling home the importance of measuring wellbeing, Mai Chen adding that we need to be more intelligent about how we consider social capital and culture (as well as measuring it), Shamubeel pushed everyone to think past aggregates and consider data in relation to the choices of individuals, and Campbell Roberts indicated that the reporting of statistics, and the narrative, are incredibly important.  Another key point that Roberts stated was that statistics offers a lens on reality and in this way they are useful – very much so.

However, we have a summary from Donal and Shamubeel’s post on his speech.  Given I was in the audience trying to eat all the food Shamubeel told me I should post something – so I thought I would point out that there were a couple of areas where I felt a touch nervous.  This isn’t to criticise anyone – it was a great day with a lot of good points raised.  However, I just felt I should add some detail on a couple of points I felt were left to the side during the day – perhaps because they were too obvious, or seen as inconsequential at the time.

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