Liam Delaney

Blog Change and New Twitter Account

2012-01-31T12:11:00.001-08:00

The new url for the behavioural economics blog is

http://www.economicspsychologypolicy.blogspot.com/

There is also a twitter feed for the Stirling Economics and Psychology research group

https://twitter.com/StirlingEconPsy

Some readings on the irish economy

2012-01-19T10:38:00.000-08:00

On Friday Jan 27th a conference a number of us organised will take place in Croke Park that will have sessions on several aspects of the Irish economy. Details are available on this link. There has been an enormous amount of interest with over 300 RSVPs so far and many queries etc., Below is an incomplete list of articles from various sources that I think are important for understanding what is happening in the Irish economy at present. Will add to it as and when I get the chance.

Cormac O'Grada's brilliant non-technical summary of the five major economic crises faced by the Irish state since its formation gives the historical context.

Morgan Kelly's UCD working paper on the Irish credit bubble is a very clear discussion of the collapse. His famous paper predicting the collapse of the Irish housing market is available here For a sense of the details of how Anglo Irish bank's loan book expanded so much during the 2003-2007 period and the subsequent unravelling, see two books by Tom Lyons/Brian Carey and Simon Carswell

Patrick Honohan's ESR paper on the the Irish banking crisis, written before he took over as Governor of the Central Bank, is the definitive account of what happened and I believe will be cited in 100 years time when people seek to understand what went on.

Karl Whelan's recent Business and Finance article on the promissory notes arrangement between Ireland and the ECB is required reading to understand what will be a major part of the future debate about the Irish economy. Pretty much all of Karl's irisheconomy blogposts are important for understanding what has been happening over the last three years.

Frank Barry's recent Bloomberg article makes the case that the euro project contains substantial design flaws that are damaging the prospects of recovery in Ireland.

Lorenzo Bini Smaghi's famous (at least in Ireland) FT article makes the case that Irish taxpayers should shoulder the bank debt as a fair consequence of having their own national bank regulator.

Kevin O'Rourke's irisheconomy posts also give a lot of details and food for thought on the problems with austerity and the poor evidence on expansionary fiscal contractions.

Colm McCarthy's recent article on the potential of the bailout process in Ireland recently is also important reading. The key point from many commentators is that, while the Irish are sticking to the programme, the nature of the programme has piled so much banking debt onto the sovereign that it has made the programme self-defeating.

Stephen Kinsella's recent article in Cambridge Journal of Economics on austerity in Ireland critiques the policy

The Target 2 debate has been a big part of the recent debate about Ireland in europe. See the article by Tornell and Westermann arguing that Germany's banks are propping up the periphery banks and Karl Whelan's refutation of this.

SGPE and ISNE Conferences

2012-01-15T17:29:00.000-08:00

One of my roles as Director of the PhD component of the Scottish Graduate Programme in Economics is to put together the annual conference for the programme that has taken place for last few years in Crieff. This year was my first time organising and the programme had 150 people involved including the SGPE Masters students, SGPE doctoral students from the eight universities involved and faculty from the eight universities (Edinburgh, Glasgow, Stirling, Herriot-Watt, St Andrews, Dundee, Aberdeen, Strathclyde). Nearly 50 PhD students spoke, each with a faculty discussant from a university other than their own. There was also two keynote sessions given by Andy Snell of Edinburgh and Ian Walker of Leicester. I was really impressed by the model and the benefits it provides in giving a forum for students and faculty from different universities to interact. I have been involved in the Irish Society of New Economists for 10 years and still support it where I can. The ISNE has turned into a mega-event and the Cork organisers look like they are keeping up the extraordinary standards of last few years. I think its worth having a chat about what the two different models could gain from one another. I will be at the August event in Ireland and will be in the middle of organising next year's SGPE event at that stage.

External Funding Possibilities to Work in Stirling Economics and Psychology Group

2012-01-14T16:28:00.000-08:00

Below are some external funding opportunities that people thinking of working with our emerging research group in Stirling might consider. Clearly, some of the below deadlines are too soon for this year but most of these are recurring calls. Potential PhD students, academic colleagues in other universities, potential postdocs and so on may find below useful. Specific PhD studentships for the group will be announced soon, and we will launch a website in September 2012.

1. 12th January 2012: Marie Curie ITN: Initial Training Networks (ITN) offer early-stage researchers the opportunity to improve their research skills, join established research teams and enhance their career prospects.Usually, at least three participants join together to propose a coherent programme for an ITN. The participants can be universities, research centres or companies (large or small). Any research field in the humanities or science may qualify for ITN funding – provided that there is an element of mobility across national borders.

http://ec.europa.eu/research/participants/portal/page/people?callIdentifier=FP7-PEOPLE-2012-ITN

2. 7th February: ESRC Knowledge Exchange Opportunities
This scheme provides researchers with an opportunity to engage with organisations in the private, public and civil society sector(s) on a social science issue. The Knowledge Exchange Opportunities Scheme now covers activities at all stages of the research process; from setting up networks to help inform the first stages of research; to the development of activities designed to apply previous research to policy and practice issues (previously covered by the ESRC Follow on Fund Scheme). Please note this is a collaborative scheme and, as such, all applications must include at least 25% co-funding from partner(s) in the user community (depending on the sector involved). For further details, including how to apply, please visit:

http://www.esrc.ac.uk/funding-and-guidance/collaboration/knowledge-exchange/opportunities/index.aspx

3. 14th February 2012: RSE/Scottish Government Personal Research Fellowships.

These postdoctoral Research Fellowships aim to provide outstanding researchers, who should have the potential to become leaders in their chosen field, with the opportunity to build an independent research career. Applicants will have completed between 2 and 6 years of relevant postdoc academic research and can currently reside anywhere in the world working in any of the physical, computational, engineering, biological, medical, natural and social disciplines (although the research project proposed must align to one or more of the Scottish Government’s National Outcomes - see

http://www.scotland.gov.uk/About/scotPerforms/outcome).

Applicants must show that they have an outstanding capacity for innovative research with a strong publication record relevant to their proposed field of study. The fellowships are tenable for up to 5 years in a Scottish institution (ideally from 1st Oct 2012) and will include an opportunity for the fellow to work anywhere abroad for up to a year during the fellowship to help establish research collaborations. Funds will cover up to 4.5 years of fellow salary costs, associated overheads, and up to £6K per year research support costs. The host institution must commit to covering the final 6 months of the fellows salary. Further information about the scheme along with the application form can be found at

http://www.royalsoced.org.uk/995_FormsandGuidance.html

4. 21st March 2012: Leverhulme Research Project Grant.

The aim of these awards is to provide financial support for innovative and original research projects of high quality and potential, the choice of theme and the design of the research lying entirely with the applicant (the Principal Investigator). The grants provide support for the salaries of research staff engaged on the project, plus associated costs directly related to the research proposed.

Proposals are favoured which:

* reflect the personal vision of the applicant;
* demonstrate compelling competence in the research design;
* surmount traditional disciplinary academic boundaries;
* involve a degree of challenge and evidence of the applicant’s ability to assess risk.

Value and Duration

The great majority of awards involve a spend of up to £250,000 over a duration of two to three years. If compelling evidence is provided, awards may be made for sums between £250,000 and £500,000 for research over a period of up to five years. The assessment procedures for these large grants are especially stringent, and can involve site visits and discussions with applicants.

Topics

Applications for research on any topic within the entire array of academic disciplines are eligible for support. However, an exception is made for areas of research supported by specialist funding agencies and, in particular, for medicine. In such cases, applicants should consider an application to these alternative funding bodies as being more appropriate. Specific attention is paid to the reasons given by applicants in justifying their choice of the Trust as the most appropriate agency for the support of their project.

http://www.leverhulme.ac.uk/funding/RPG/RPG.cfm

5. April 2012: Secondary Data Analysis (ESRC)

http://www.esrc.ac.uk/news-and-events/news/delivering-priorities-funding/secondary-data-analysis.aspx

The UK has a unique and internationally renowned collection of datasets which will form the foundation of the Initiative (see file attached). This data infrastructure provides a huge opportunity to address some of the most pressing challenges facing society today and into the future. For example, our portfolio of longitudinal studies has already revealed how fundamental and complex causal relationships influence individual life trajectories in a whole variety of ways. They have supported research across a wide terrain, including areas such as obesity, educational attainment, crime, social mobility and welfare and emotional wellbeing. These studies have also provided a strong evidence base to support a battery of government anti-poverty strategies, health campaigns, schooling policies, social welfare reform and other interventions.

The Secondary Data Analysis Initiative will build upon and extend the impact of longitudinal studies and a wide variety of other data resources. Given the richness of data available across the UK’s social and economic data infrastructure, the Initiative will not be thematically driven and proposals are welcome in any area which can generate policy and practitioner impact. Nevertheless there are significant opportunities for proposals to address key issues in our strategic priorities - http://www.esrc.ac.uk/strategic-priorities

Priorities:
· Economic Performance and Sustainable Growth
· Influencing Behaviour and Informing Interventions
· A Vibrant and Fair Society

The Initiative will also aim to penetrate a range of disciplines which move well beyond traditional users of these data, in, for example economics, and some areas of sociology and geography. The expectation is that use will deepen in these disciplines but also will also extend to researchers from wider backgrounds.

6. 19th April 2012. Marie Curie Industry-Academia Partnerships and Pathways.

This action seeks to open and foster dynamic pathways between public research organisations and private commercial enterprises, in particular SMEs, including traditional manufacturing industries, based on longer term co-operation programmes with a high potential for increasing knowledge-sharing and mutual understanding of the different cultural settings and skill requirements of both sectors. Participants under this action are on the one hand, one or more universities/research centres and on the other, one or more enterprises, in particular SMEs, that propose a project based on a joint cooperation programme. Within this scheme, the industrial partners must be organisations operating on a commercial basis, i.e. companies gaining the majority of their revenue through competitive means with exposure to commercial markets, and will include incubators, start-ups and spin-offs, venture capital companies, etc. The different participants should be from at least two different Member or Associated countries, of which at least one must be from a Member State. The participants recruit and/or host eligible researchers and contribute directly to the implementation of longer-term cooperation programmes established between them in line with the objectives of this action.

http://ec.europa.eu/research/participants/portal/page/people?callIdentifier=FP7-PEOPLE-2012-IAPP

7. 30th April 2012: Leverhulme Research Leadership Awards

The Research Leadership Award scheme provides funds to build a research group under the direction of the grant holder, who must be at least 2 years into their first university post (but not sufficiently long in post for the trajectory of their research contribution to have become established). Awards will be for a sum of between £800,000 and £1 million over a period of up to 5 years and funds can be used to employ a research group of research assistants and research students (but cannot be used to cover applicant salary or overheads). Applications for research in any subject area within the Trust’s normal remit will be eligible for support. See http://www.leverhulme.ac.uk/funding/RLA/RLA.cfm) for more details of the scheme.

8. September 2012: Marie Curie Career Integration Grant
Marie Curie Career Integration Grants are intended to improve considerably the prospects for the permanent integration of researchers who are offered a stable research post in Europe after a mobility period in a country different from the country where the researcher has been active during the past years (i.e. the researcher has to be mobile but can come from anywhere in the world – moving within Europe or coming from outside Europe). The duration of these grants is up to 4 years.

http://ec.europa.eu/research/participants/portal/page/people?callIdentifier=FP7-PEOPLE-2012-CIG

9. International Outgoing Fellowships for Career Development

The specific objectives of the Marie Curie International Outgoing Fellowships for CareerDevelopment can be described as follows:

"This action aims to reinforce the international dimension of the career of European researchers by giving them the opportunity to be trained and acquire new knowledge in a high-level organisation active in research, established in an Other Third Country. Subsequently, these researchers will return with the acquired knowledge and experience to an organisation in a Member State or Associated country" (2011 "People" Work Programme)

Experienced researchers applying to this action need to identify and develop a research training project that will provide the means to advance significantly in their career. A fundamental concept underlying this action is that of advanced training and life-long learning. In essence, the fellowship should enable the experienced researcher to progress in the development of his/her career and should not represent a temporary solution. The fellowship is expected to be part of a structured, long-term professional development plan that is coherent with past achievements and clearly defines the future aims of the researcher.

http://ec.europa.eu/research/fp7/understanding/marie-curieinbrief/europe-world_en.html

10. Intra-European Fellowships for career development (IEF)
This action provides financial support for advanced training and trans-national mobility, for a period of 12 to 24 months (full-time equivalent), for individual projects presented by experienced researchers active in Member States or associated countries in liaison with a host organisation from another Member State or associated country. Overall, projects are expected to add significantly to the career development of the best and most promising researchers active in Europe, in order to enhance and maximise their contribution to the knowledge-based economy and society. http://ec.europa.eu/research/fp7/understanding/marie-curieinbrief/research-development_en.html

11. Economic and Social Research Council studentships for Scotland
(MSc+PhD or PhD only)

The SGPE is one of the research training pathways that forms part of the ESRC Scottish Doctoral Training Centre. ESRC 1+3 (MSc+PhD) and +3 (PhD only) studentships in Economics are available at the 8 SGPE universities: Aberdeen, Dundee, Edinburgh, Glasgow, Heriot-Watt, Stirling, Strathclyde and St. Andrews. They are intended solely for students either starting a PhD or intending to start a PhD following their MSc. Students wishing to apply for an SGPE "1+3" or a "+3" award must submit a written and credible research proposal for their PhD. Further information on eligibility and details can be found on the DTC and the ESRC Websites.

Applicants interested in PhD study only (+3) should have applied to and have received an offer from their preferred SGPE university by the 3rd of May, 2011.

Applicants interested in MSc+PhD study (1+3) should have applied to and have received an offer from SGPE MSc Programme taught at the the University of Edinburgh by the 3rd of May, 2011. 1+3 applicants should NOT apply for a PhD (in addition to the MSc) at their preferred Unviversity at this stage, but they MUST contact the relevant PhD Coordinator (see instructions below.)

Applicants who wish to be considered for an ESRC award must first register their interest. To do this they need to send two emails; one to the SGPE PhD Director, Liam Delaney at Liam.Delaney@stir.ac.uk (cc'ing sgpe.admissions@ed.ac.uk) and the other to the PhD coordinator at the department at the at which they are interested in pursuing their PhD (see below). These emails must be sent by Friday the 8th of April 2011. The coordinators are the relevant Dapartments are:

Aberdeen: Ioannis Theodossiou
Dundee: Hassan Molana
Edinburgh: Ed Hopkins
Glasgow: Kostas Angelopoulos
Heriot-Watt: David Cobham
St. Andrews: Paola Manzini
Stirling: Ian Lange
Strathclyde: Julia Darby

Applicants who register their interest will receive detailed instructions by email on how to apply.

In brief, these instructions will ask students to (1) identify a research topic, the SGPE University where they intend to pursue their PhD, and a specific supervisor within the SGPE, (2) provide details of their relevant degree and degree courses and (3) write a short research proposal, and (4) provide a letter of support from the relevant University department where PhD study is planned. The deadline for receipt of full applications is 4pm, 3 May 2011.

Successful applicants will hear back by Friday the 20th of May.

Irish Debate Session on Unemployment Video

2011-11-04T15:05:00.001-07:00

My Irish Debate session today on Irish unemployment is below. I am keeping notes and so on about the session on this link

SIRE and SGPE

2011-10-12T13:14:00.000-07:00

My job title is SIRE Professor of Economics at Stirling. The SIRE refers to the Scottish Institute for Research in Economics. Their recently revamped website is available here. SIRE was founded five years ago to build Economics research in Scotland and has been involved in bringing together academics from the eight different participating Economics departments in Scotland. It has funded a number of things like research programmes, seminars, workshops, masterclasses and the hiring of new faculty, including me.

The SGPE is linked to but predates SIRE and was founded in 1989. SGPE stands for Scottish Graduate Programme in Economics. Its website is linked here. SGPE consists of a Scottish-wide masters programme in Economics that is centred in Edinburgh and to which faculty members across the eight institutions contribute. I am currently the Director of the PhD component of SGPE, one of my roles being to coordinate an annual event where all members of the SGPE programme present and get feedback on their work.

Contact details for these programmes are available on the websites above. ESRC funding is available for UK residents and, to a more limited extent, to non-UK residents.

Stirling Post - Some brief info for students interested in working with me

2011-10-09T06:26:00.000-07:00

As said below, I am currently Professor of Economics in Stirling University. I am also Director of the SGPE PhD programme, the Scottish PhD in Economics.

I welcome contact from students or potential students who want to work with me on research. There are a range of funding opportunities for PhD in Scotland, particularly through the ESRC-funded Scottish Graduate School of Social Science.

I am particularly interested in talking to potential PhD students who want to work at the intersection of Economics and Psychology. I currently am working on a number of projects relating to intertemporal choice (i..e how people make decisions regarding the future) and well-being. In particular, I am working with colleagues in different universities on the relationship between unemployment, well-being and decision-making. This is a big and expansive topic and I would be happy to talk to students about getting involved. I have secured some funding for this work and will advertise formal opportunities in the near future.

I am still a research fellow and visiting professor at University College Dublin. Along with my colleague Colm Harmon, I am still working on a number of projects there. Students interested in behavioural economics may be able to work with me and/or Colm on these projects from Dublin.

Dublin Microeconomics Blog

2011-09-17T13:30:00.000-07:00

The Geary blog closed in April.

I have been talking to people who were interested in that blog about the best way to proceed. Both Kevin Denny and I have kept personal blogs running, Kevin posting more frequently on his than I on mine. Also, a number of us have twitter accounts. But both Kevin and myself felt that a community-blog with a similar scope to the previous one would be worth pursuing. I am working on developing a behavioural economics blog with a European policy focus and I will put something up on that soon. But I think it would be good to get a blog similar to the old one back in action.

From my point of view, having moved universities I thought it would be tricky to keep a blog going that had a UCD institutional affiliation, even if an informal one. Having said that, it would seem a waste to just get rid of the old posts and the link structures on the sidebars. So, having taken all this into consideration, it seems the best solution is simply to revamp the previous blog, keeping the previous posts and links but changing the url and title.

We will post on this link from now on. I will improve the design over the next couple of weeks but if you are very worried about design then this probably isn't the forum for you! The content will be very similar to the previous blog - a mix of behavioural economics, microeconomics, statistics and so on. Cross-posting from other blogs is fine.

Suggestions via the comments or through email very welcome.

Unemployment

2011-09-08T07:38:00.000-07:00

Via Justin Wolfers (@justinwolfers on twitter) the photo below from the FDR memorial is fitting for the current time (full post here)

Pat Liddy Liberties Tour

2011-08-11T12:49:00.001-07:00

We took a third tour with Pat Liddy, this time around the Liberties area, a deeply historic area of Dublin. I use this post just to keep a basic record. The usual caveat about me being from "down the country", as well as having a poor sense of direction apply so please let me know if I get anything wrong.

The walk began at the gates of Christchurch Cathedral, where we discussed a little about its history. We crossed the road to the Tailors' Guild building, now the An Taisce offices. We then walked up to the small remainder of Dublin's city wall. We discussed the nature of the wall, and some historic aspects around this. We then passed to Dean Swift square and over into Francis Street. One of the main things around here was the Iveagh Market building, a fabulous building that, for some reason, lay dormant even through the boom years.We then went through Francis Street, now home to a cluster of antique shops and the birthplace of the Legion of Mary back in the 1920s.

We passed St. Nicolas Church, once the home of the Archbishop of Dublin and, apparently, baptismal site of a fourteen pound baby called Colm Harmon back in the early seventies. The nearby entrance of the old Coombe Maternity Hospital (which operated from 1826 to 1967) was a highlight for me, and I want to learn a lot more about this. A lot of the discussion around this area centered on the role of the tax and governance structures in creating a prosperous area in the Liberties in the 17th and 18th centuries, and the long-run economic consequences of the fall-out when legislation removed their competitive position. The area is particularly steeped in French Huegenot tradition, and was a prime center of commerce and innovation during their heyday. In some sense, they reminded me a lot of what Paul Romer calls a charter city, but with more obvious colonial overtones.

The final part of the tour comprised Swift Hall, the Deanery of St. Patrick's and a general discussion of Swift himself. This was followed by Marshall's library, Kevin Street and then finally St. Patrick's cathedral. The day got me thinking a lot about long-run economic change in Ireland, particularly when looking at all the empty office blocks we saw along the way. There are many optimistic and pessimistic feelings that the Liberties area evokes. One positive feeling it evokes is how much progress Ireland has made over the centuries and the possibility that vision and optimism can win out over problems that must have seemed insurmountable to many. The role of the old-style philanthropists in funding large cultural and health projects is something that should give some of the modern wealthy pause to reflect on in terms of what they want to leave to posterity.

We hope to do this again in December. I spoke with Pat afterwards. A tour of the city-center with particular reference to the financial history of the city is something a lot of us would really like to do. Neither Pat nor I claim to be financial historians but I think between a group of us, we could put together some good material and immerse in general understanding of the history of the city. The purpose of these tours is to give a chance to think about long-run issues while being in the environment. Anyone with ideas, let me know.

House of Lords Select Committee Behavioural Change Report

2011-07-19T05:24:00.000-07:00

The report on Behaviour Change by the House of Lords Select Committee was issued today. The report essentially addresses whether the use of behavioural change policies of the type that have become associated in the English press with the book "Nudge" are sufficient to solve societal problems such as climate change, obesity etc., The report compilers interviewed a substantial body of experts in areas such as health psychology, public policy, philosophy etc., The basic conclusion of the report is that mandatory policies are often needed to promote widespread behavioural change and that even these policies may take a long time to be effective, in other words no quick fix. I am left somewhat nonplussed by the report. We have talked time and time again about the idea that "Nudge" is a way that Thaler and Sunstein have made accessible a much more complex set of ideas, many of which they created. The fact that the popularisation has progressed a life of its own makes it, perhaps, understandable that people would look at it rather than the core ideas but it obscures the really important set of ideas emerging in behavioural economics, very few of which are spoken about in the document. I think the confusion as to what behavioural economics is trying to do and what people working on interventions in health psychology are trying to do has become unhealthy, and this wider idea of "behavioural change" policy is really far more close to traditional ideas in health psychology than to the ideas that have come through behavioural economics. I find it hard to recognise the really exciting work taking place in areas such as soft-mandatory pensions, tax salience, financial simplification etc., in the descriptions of the behavioural change agendas outlined in this report. The straw man they set up is one of a very paternalistic discipline seeking to modify people's behaviour in many ways to help them lead better lives. This is partly correct, but the really great ideas I see in behavioural economics are ones that recognise that people have a sense of their own identity and preference but that the current way in which markets and policies are set up are too complex and unwieldy to allow this to be expressed. In some sense, many features of behavioural economics applied to policy are attempting to be a countervailing force to the psychological distortions that have arisen from tax codes, regulations, privacy laws etc,. that have become too complex. The integration of psychology and economics is giving us new ways of thinking about issues such as pension design, tax design, education and health systems that potentially massively improve the design and evaluation of policy and also focus our minds clearly on the philosophical questions involved in intervention in markets, particularly with reference to individual freedom. To see this vast, complex and intellectually interesting debate brought continuously back to a debate about whether traditional health psychology interventions "work" or whether mandatory policies are needed is frustrating.

How Auto-Enrolment can lead to Undersaving

2011-07-11T03:27:00.001-07:00

The WSJ report an analysis conducted for them by the Employee Benefit Research Institute that a subset of auto-enrolled employees are potentially saving less than if left to their own devices. As said by Brigitte Madrian in the article, the potential for this to happen is known in the literature, as employees may simply stick at the default so if the default is set too low, this can potentially lower savings among people who would have gotten round to it anyway but at higher contribution levels. In both the Irish and UK policies, default contributions are 4 per cent from employees and in the Irish case 2 per cent from employers and 2 per cent from tax; and 3 per cent from employers and 1 per cent tax in the UK case, within salary bands. There is a real danger that these numbers will come to be viewed as advice on how much people should save and that the effect pointed out by the WSJ will hold. It is important that national auto-enrolment provisions be coupled with attempts to encourage active saving behaviour, with the most interesting option being encouraging employees to commit to increasing contributions in line with future salary increases.

Summer Presentations

2011-07-09T07:41:00.000-07:00

I will use this page to keep an informal record of the sessions we are planning from early July to late August and will eventually port this to the main calendar. These will be informal sessions and I really welcome suggestions. They will generally take place in the Geary Institute from 11am to 1pm, but there will also be some sessions outside of the Institute. The formats will range from meetings to journal clubs, book clubs, seminars, project overviews and so on. We will have several bright interns in the Institute, as well as faculty, PhD students, external people etc., who are interested in behavioural economics and related areas.

Tuesday July 5th 11am: "Overview of Behavioural Economics". Liam Delaney (UCD).

Wednesday July 6th 11am. "Micro-Level Determinants of Publications, Patents, and Commercial Expectations: Evidence from a Survey of Post-Doctoral Researchers". Martin Ryan (Postgraduate Student UCD).

Thursday July 7th 11am: "Book and Journal Club on Perceptual Illusions and Behavioural Economics". Jason Somerville and Owen McLaughlin (Geary Interns).

Monday July 11th: "Variously Directed Cognition Model". David Comerford (UCD and Duke)

Tuesday July 12th 11am:"Journal Club" Sarah Gibney (PhD Student UCD). Dykstra, P. A. (2009). "Older adult loneliness: myths and realities." European Journal of Ageing 6(2): 91-100. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2693783/

Wednesday 13th July 11am: "Discussion of Brookings Institute Book Policy and Choice: Public Finance Through the Lens of Behavioural Economics".

Thursday 14th July 11am. "Diurnal Patterns of Affect in Major Depression". Eimear Crowe, St. Vincent's and UCD School of Medicine.

Friday July 15th 11am: "Introduction to STATA".

Monday July 18th 11am: "Representations of Self-Control". Nicola O'Connell (Postgraduate student Cambridge).

Tuesday 19th July 2pm: "Aging and Well-Being". Michael Daly (Lecturer in Psychology, University of Manchester).

Wednesday July 20th 2pm: "Behavioural Economics and Well-Being". Nicolas Scharioth. (Researcher, Gallup).

Thursday July 21st 11am: "Journal Club" Martin Ryan (UCD PhD Student).

Monday July 25th 11am: "Early Life Conditions and Adult Health". Mark McGovern (Postgraduate Student UCD).

Tuesday July 26th 11am: "TBA".

Wednesday July 27th 11am: "Earnings Expectations and Information". Clare Delargy and Perke Jacobs.

Friday July 29th 11am: "Journal Club". Louise McEntee (Geary Institute).

Friday July 29th 2pm: "Cash by Any Other Name? Evidence on Labelling from the UK Winter Fuel Payment". Cormac O'Dea (IFS Researcher).

Wednesday August 3rd 11am: "Journal Club" James Fulham (UCD PhD Student).

Thursday August 4th 11am: "Exporting Poor Health: The Irish in England". Liam Delaney (UCD)

AUGUST 7th: Walking Tour of Liberties with Pat Liddy.

Monday August 8th 11am: "Journal Club". Maeve Daly (UCD PhD Student). The Meaning of Awaiting Bariatric Surgery Due to Morbid Obesity http://www.benthamscience.com/open/tonursj/articles/V005/1TONURSJ.pdf

Tuesday August 9th 11am: "Discussion of Poor Economics". Clare Delargy (Geary Institute researcher).

Wednesday August 10th 11am: "Discussion of Hsee, C. K., Yang, Y., Li, N. & Shen, L. ."Wealth, warmth and wellbeing: Whether happiness is relative or absolute depends on whether it is about money, acquisition, or consumption." Journal of Marketing Research. Perke Jakobs (Geary Institute).

Monday August 15th 11am: "Internal Presentation of Results from SHARELIFE Ireland

Tuesday August 16th 11am: "Journal Club". Caitriona Logue (UCD PhD Student).

18th and 19th August: Irish Society of New Economists Annual Conference

Monday August 22nd 11am: "The Mental Health Costs of Corruption: Evidence from SubSaharan Africa". Rob Gillanders. (PhD Student UCD).

Tuesday August 23rd 11am: "Journal Club". Mark McGovern (PhD Student UCD): Cohen, S., Doyle, W. J., Turner, R. B., Alper, C. M., & Skoner, D. P. (2003). Sociability and susceptibility to the common cold. Psychological Science, 14, 389-395 http://www.psy.cmu.edu/~scohen/sociability%20printfriendly.pdf

Wednesday August 24th 11am: "Journal Club". Aine NiChoisdealbha (Geary Institute).

Friday August 26th 11am: "Pension Participation and Autoenrolment in Ireland. Terence Hynes (Geary Institute).

Summer Presentations

2011-07-04T08:17:00.000-07:00

These start this week. The first is Tuesday morning at 11am. These are informal presentations and a chance for interns, phd students and other researchers to talk through ideas. Martin Ryan is presenting Wednesday at 11am on researcher productivity and Jason Somerville and Owen McLaughlin are presenting on pension choices.

Behavioural Economics and Irish Policy: Insights from International Experience

Liam Delaney,

Abstract:
The last 10 years has seen a dramatic increase in the policy interest surrounding behavioural economics. The appointment of Cass Sunstein to a chief regulatory post in the US, the influence of Richard Thaler on the Obama and Cameron policy platforms and developments such as the UK Cabinet Office Behavioural Insights Team and a number of high-level conference by DGSanco all signal a growing interest in this field. This paper reviews the potential implications of this literature for Irish public policy. We examine the rationale behind these policies from a theoretical, philosophical and empirical perspective. In 2014, Ireland aims to move toward a national autoenrolment system for pensions, a move arising from the behavioural literature. Soft-paternalist policies in areas such as health insurance, energy policy, education, innovation, consumer policy and so on potentially offer a new approach to key policy questions. This approach has promise and the potential to draw from detailed experimental results arising from other jurisdictions but it is extremely important to understand the foundations of behavioural approaches to policy and understand principles guiding good design and evaluation. By outlining these principles and providing examples of international best practice, this paper aims to provide a good foundation to progress this debate in Irish public policy.

Behavioural Economics Reading List

2011-07-03T23:28:00.000-07:00

Have added three works by Roger Farmer:

Ainslie, G. (2001). Breakdown of Will. Cambridge: Cambridge University Press.

Akerlof, G. A. and Kranton, R.E. (2010). Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being. Princeton, NJ: Princeton University Press.

Akerlof, G.A. & Shiller, R.J. (2009). Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism. Princeton ; Oxford : Princeton University Press.

Ariely, D. (2008). Predictably Irrational: the Hidden Forces that Shape our Decisions. London: HarperCollins Pub. (Details much of Ariely’s experimental work.)

Bardsley, N., Cubitt, R., Loomes, G., Moffatt, P., Starmer, C., and Sugden, R. (2009). Experimental Economics: Rethinking the Rules. Princeton: Princeton University Press.

Binmore, K. (2009). Rational Decisions. Princeton; Oxford: Princeton University Press.

Brafman, O., & Brafman, R. (2008) Sway: The Irresistible Pull of Irrational Behaviour. New York: Doubleday.

Camerer, C.F., Loewenstein, G., and Rabin, M. (2004). Advances in Behavioral Economics. Princeton, NJ: Princeton University Press. (Still the best for me in the relatively recent field)

Camerer, C. F. (2003). Behavioral GameTheory: Experiments in Strategic Interaction. New York: Russell Sage Foundation.

Diamond, P. and Vartiainen, H. (Eds). (2007). Behavioral Economics and its Applications. Princeton: Princeton University Press.

Elster, J. (2007). Explaining Social Behavior: More Nuts and Bolts for the Social Sciences. Cambridge: Cambridge University Press.

Elster, J. (1985). Ulysses and the Sirens: Studies in Rationality and Irrationality. Cambridge: Cambridge University Press.

Farmer, R., (1998). The Macroeconomics of Self-Fulfilling Prophecies, MIT Press, Boston MA, 2nd edition 1998.

Farmer, R., (2010). Expectations Employment and Prices, Oxford University Press, Oxford, March 2010.

Farmer, R., (2010). How the Economy Works: Confidence, Crashes and Self-Fulfilling Prophecies, Oxford University Press, Oxford, April 2010.

Forbes, W. (2009). Behavioural Finance. Chichester: John Wiley. (This is a real cracker of a text-book)

Frey, B., & Stutzer, A. (2007). Economics and Psychology: A Promising New Cross-Disciplinary Field. Cambridge, Mass: MIT Press.

Friedman, D. (2008). Morals and Markets: an Evolutionary Account of the Modern World. Palgrave Macmillan, New York.

Gilovich, T., Griffin, D., and Kahneman, D (Eds.) (2002). Heuristics and Biases: The Psychology of Intuitive Judgement. Cambridge: Cambridge University Press.

Gintis, H., Bowles, S., Boyd, R., and Fehr, E. (2005). Moral Sentiments and Material Interests: the Foundations of Cooperation in Economic Life. Cambridge, Mass.; London: MIT Press.

Gintis, H. (2009). The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences. Princeton: Princeton University Press.

Guala, F. (2005). The Methodology of Experimental Economics. Cambridge: Cambridge University Press.

Kagel, J., and Roth, A. (1995). The Handbook of Experimental Economics. Princeton: Princeton University Press.

Kahneman, D., Slovic, P., & Tversky, A. (Eds). (1982). Judgement Under Uncertainty: Heuristics and Biases. Cambridge: Cambridge University Press. (A classic)

Kahneman, D and Tversky, A. (Eds). (2000). Choices, Values, and Frames. Cambridge University Press and Russell Sage Foundation.

Lichtenstein, S. and Slovic, P. (2006). The Construction of Preference. Cambridge: Cambridge University Press.

Loewenstein, G. (2007). Exotic Preferences: Behavioral Economics and Human Motivation. Oxford: Oxford University Press.

Lunn, P. (2008). Basic Instincts: Human Nature and the New Economics. London: Marshall Cavendish.

Montier, J. (2002). Behavioural Finance: Insights into Irrational Minds and Markets. Chichester: John Wiley.

Newall, A. and Simon, H. (1972). Human Problem Solving. Englewood Cliffs; Hemel Hempstead: Prentice-Hall.

Shiller, R. (2000). Irrational Exuberence. Princeton, NJ: Princeton University Press.

Thaler, R.H., and Sunstein, C.R. (2008). Nudge: Improving Decisions about Health, Wealth, and Happiness. New Haven, Conn: Yale University Press.

Thaler, R.H. (1991). Quasi Rational Economics. New York: Russell Sage Foundation.

Wilkinson, N. (2007). An Introduction to Behaviorial Economics. Basingstoke: Palgrave Macmillan.

Zak, P. (2008). Moral Markets : the Critical Role of Values in the Economy. Princeton; Oxford: Princeton University Press.

O'Grada "Five Crises"

2011-07-01T16:40:00.000-07:00

Cormac O'Grada's Whitaker lecture reviewing the five Irish economic crises since independence is a wonderful read. The first crisis he talks about is that brought about by the economic war following cancelling of land payments to Britain by the DeValera government. The second is the period known as the Emergency, which occured during WWII. The third is the period of economic stagnation in the 1950s. The fourth he identifies as the period of mass emigration and economic stagnation in the 1980s. These four crises did much to cement the idea that Ireland was an economic failure and the remarkable period of growth that followed unfortunately did not prevent the fifth crisis occuring in recent years. O'Grada outlines the basic features of each of these crises, demonstrating the unique factors involved. It a sweeping account of 20th century economic history, condensing a huge amount of research into a very readable document.

Employment Control Framework

2011-06-22T09:48:00.000-07:00

(crossspost at irisheconomy.ie)

The ECF for the higher education sector has been revised. Many elements from the last version have been changed. The last draft introduced a range of measures including: the need for specific pre-approval of all individual posts (exchequer funded or not) from a small central government committee; specific quotas for each university regardless of how successful or not they actually were in attaining research income; and decisions made on the suitability of academic hires on the basis of their alignment to government strategy documents.

The new version is a vastly improved document. All of the above elements have been removed. There are sector-wide quotas, in keeping with the need to reduce costs, but allocation with respect of research posts to each university will depend, as you would expect, on how much of the research funding the university actually wins in the competitions administered by SFI, HRB etc., Furthermore, the specific pre-approval process has been shelved as has the frankly puzzling attempt to impose quotas on posts secured from non-exchequer funds. The latter should surely be welcomed by everyone.

The main reason for a revised employment control framework was to deal with pension liabilities arising from contract research staff. In this regard, the new draft forces a fully-funded proviso on to all new grant applications, with grant applicants (exchequer or non-exchequer) now being required to cost 20 per cent of employee salaries into grant applications for pension purposes, starting with new applications. This is a blunt way of dealing with this issue, and there should be further debate on this. In general, the treatment of contract researchers as if they were civil servants in terms of contracts and pensions is one of the defining issues in Irish research at present. It continuously creates confusion on all sides. Attracting bright researchers to Ireland is a legitimate goal of government policy supported by much research on how to create thriving cities. Placing such contractual and bureaucratic impedients to this is counterproductive and groups that represent contract researchers have been among the most vocal in pointing this out.

Hopefully, the new document signals a more productive debate about higher education in Ireland and an improvement in the relations between the universities and the state, which seemed to have degenerated substantially at the beginning of this year. Universities do contribute to both economic growth and to the development and maintenance of healthy democracies in ways that go beyond the current linear big-tech innovation models being employed by government. Attracting top researchers into Ireland on a much larger scale funded by a much more diverse range of sources is one avenue that the country still has open as an attainable policy goal even at a time of dwindling resources and, in fact, reductions in property prices and the general cost of living may make Ireland a more attractive place for European-funded researchers as these grants have retained their nominal value.

Move to Stirling University

2011-06-21T17:12:00.000-07:00

On September 1st, I take up the position of SIRE Professor of Economics at Stirling University.

The first thing to say is that my reasons for moving are purely positive. I am still relatively young and this position represented a great chance to move my career ahead. I have had a great time in UCD over the last six years and have a very good working relationship with all my colleagues there.

The second thing to say is that this will have very little effect on any ongoing projects I am involved in through the Geary Institute. I will retain an affiliation to the Institute. Stirling is a short flight away, and I will be back in Dublin regularly. So, anyone currently working with me on any projects through Geary will either already know about this or, if not, it really isn't a big deal vis a vis existing projects. The same goes for any PhD students I have been working with, and I have already worked through new arrangements on this with them.

In terms of my courses at UCD, my main course was behavioural economics and public policy. I think people who did that course will attest that I put a lot into it and it was very exciting in terms of the interactions it generated in class. It is a really interesting subject and I think the three iterations of the course I gave reflected that. It became a very popular option. For those of you who are thinking of doing the course, the good news is that it is being continued and will be taken by Professor David Madden. Professor Madden is, in my opinion, one of the best, if not the best, economics lecturers in UCD so, if anything, this course will be enhanced in future years. My MA Econometrics course will be taken by Dr. Kevin Denny. Dr. Denny, again, has more experience in this area than he would probably care to count up and anyone thinking of doing the MA will find this a good course, and the lecturer someone with lots of experience and publications in this area. It is still being discussed as to how my MPH Health Economics course will be taught and this will be communicated to students shortly after registration.

UCD graduate students who are interested in microeconometric and behavioural economics should still feel free to get in contact with me if I can be of help. I have regularly co-supervised students along with other staff, particularly Colm Harmon, and if a student was thinking of, for example, an education economics topic with some behavioural aspects then it would still be possible for me to help out.

Many people get in touch in relation to potential projects at the Geary Institute or with general queries about our work. Anyone who wishes to contact me about anything in this regard should continue to do. We are currently in the process of drafting project proposals for a number of studies that will be housed in the Institute and are in the early phases of some potential collaborations with Stirling and other universities in the UK. It is still very much a goal of mine to develop strong behavioural economics applications through the Institute and we will be working on this as before.

I will blog about some plans for Scotland at a later stage. At this stage, anyone in Stirling or nearby who is interested in areas like behavioural economics, microeconometrics, economic psychology etc., and wants to get in touch, it would be good to hear from people. I hope to make an active contribution to seminar activity, working with doctoral students etc., I have also placed a version of the Behavioural Economics and Public Policy course on the Stirling final year undergraduate options for 2012. Being in the UK system also opens up the possibility of applying for social science funding through organisations like the ESRC, and also allows for the development of EU proposals as in Ireland. I will post in a more structured way about this in the near future.

Behavioural Economics at Centre d'Analyse Strategique

2011-06-18T20:58:00.000-07:00

Thanks to the same reader mentioned earlier for pointing to the work of Olivier Ouillet and colleagues at the Centre d'Analyse Strategique on behavioural economics and public policy. One recent report that will be of interest to readers is linked here and looks at the development of libertarian paternalist policies to promote pro-environmental behaviour. Another recent report looks at the contribution of behavioural economics and social neuroscience to promoting public health. Combined with recent documents coming from the Cabinet Office in the UK and DG Sanco in Brussels, this is further indication of growing interest in this field among European policy analysts.

DG Sanco Consumer Empowerment

2011-06-17T19:48:00.000-07:00

Thanks to a particularly informative reader for pointing again to the work of DGSanco on Consumer Empowerment. Their website on this is linked here . The basic problem of how consumers actually make choices and the extent to which they struggle more than the standard model would suggest motivates this work. Their recent Eurobarometer survey (summary here) shows substantial deficits in terms of financial literacy and efficacy in terms of confidence in engaging with markets among EU citizens. Less than half the people surveyed correctly answered a set of basic financial literacy questions, and this masks substantial variations across countries.

In terms of numerical skills, consumers struggle with simple calculations: only 45% could answer three consumer related questions correctly. In terms of financial skills, two out of ten people interviewed were not able to choose the cheapest option when buying a flat screen TV. Only 58% could correctly read an ingredients label and 18% could not identify the best-before date. Only 2% of consumers recognised five common public information logos. 33% of consumers thought that the CE mark meant "made in Europe", and only 25% correctly knew it meant that the product 'complies with EU legislation'. Many could not name a consumer organisation in their country.

The extent to which the development of price comparison websites will redress some of this is a key area of discussion among both policymakers and academics at present. More generally this is an interesting area of research and policy across the EU.

Government Strategy for financial inclusion

2011-06-17T19:16:00.000-07:00

A recently released report initiates a government consultation on the issue of financial inclusion. The report mostly addresses the issue of the approximately 17 per cent or so of adults in Ireland who do not have a current account. Ireland has one of the lowest rates of current account ownership next to Greece and Italy. There are many reasons why not having a current account might increase transaction costs and the strategy is partly motivated by this. However, a strong motivation is also to reduce overall cash transactions in the economy. The solution proposed is to set up simple accounts called Basic Payment Accounts for people currently without a current account. These accounts facilitate the processing of basic direct debits electronically and are conceived of as first steps toward the person then setting up a bank account. There will be some element of soft-selling these accounts in terms of promotion and so on but there are also indications that the policy will progress in parallel with moving welfare payments online. There are a lot of interesting aspects to this policy from a behavioural perspective. The extent to which take-up will be swift may in part be mitigated by the fact that the accounts will, for the most part, be conducted through the main banks at a time when trust in them is at an all-time low. The effect of the move to electronic payments of social welfare on a near-mandatory basis will be interesting to observe and there are clear issues for older people who have not engaged with this type of technology. One would imagine and expect that some form of sensible phasing in can be facilitated. Certainly my generation will not expect anything other than to receive any government payments electronically, but it's a different issue for those born in the 30s and 40s. The language of "financial inclusion" and "access to a bank account" is also a little jarring and seems unnecessarily euphemistic. In general though this is an interesting policy and one of a suite of policies including pensions autoenrollment and mandatory health insurance that have the potential to yield a lot of benefits to the Irish economy if implemented with care.

4th Ireland Economics and Psychology Event

2011-06-14T18:47:00.000-07:00

The next Economics and Psychology Event will take place in the Geary Institute on November 25th. Previous keynote speakers include John O'Doherty, Arie Kapteyn and David Laibson. Please send submissions to Liam.Delaney@ucd.ie

The purpose of this event is to provide a platform for people working in Irish universities to discuss research at the frontier of the links between economics, psychology and neuroscience. This year we will also have special sessions on public policy and speakers will have the option to submit papers to a special edition of the Economic and Social Review. Abstracts are due on August 31st. Those considering submitting a paper to the special issue should be ready to submit a first draft by November 25th and be ready to submit for full peer-review by early February 2012.

Cabinet Office Consumer Empowerment

2011-06-14T13:44:00.000-07:00

The behavioral insights team located in the UK cabinet office was set up last year to provide a platform for integrating ideas from behavioral economics and cognate areas into UK policy. Their original report MINDSPACE (link here) talks about the role behavioural ideas could play in public policy and regulation. They also released a short document late last year on the potential applications of behavioural ideas to health policy (link here). The group is a broad effort, including behavioural economics but also heavy influence from health psychology. It has been widely covered in the media in England, and has to an extent drawn fire from people either afraid of the encroachment of a nanny state or those who believe that soft mandatory policies are not effective enough. Most of the criticism has been pretty vague and, given the people involved, it is certainly worth waiting to see how this works.

A recent document that they were involved in enitled "Better Choices, Better Deals: Consumers Powering Growth" is really worth reading. There have been a few papers recently discussing the idea that the traditional asymmetry of information between consumers and firms whereby consumers possess more information about themselves than firms is giving way in some industries to an asymmetry whereby firms gather so much information about consumers that they know more about the consumers preferences than the consumer. Richard Thaler and Cass Sunstein spoke about this idea in Nudge and recommended policies that forced firms to give people information on the data they held on people in a manner that was comprehensible to them. A variant of this is being discussed in the UK document. A resource website called MyData is being set up to act as portal for companies to upload information they hold on people in a format they can access. The idea is that consumers can then use this data through smart phones and other devices to enable to make more informed decisions based on the pattern of their own preferences. This is a very interesting document. It states that twenty companies have signed up so far in a pilot exercise.

Suggestions for Multiple Contributor Behavioural Economics Blog

2011-06-03T18:21:00.001-07:00

A lot of people emailed about the Geary blog and my general response has been that this current blog is a holding position until I can think of the best format for a new multiple contributor blog. I have been talking to people in the last few days about setting up a multiple contributor behavioural economics similar to the Geary blog but with a wider range of contributors and with a more EU-wide focus. The Geary blog was a mix of academic economics and on the policy side was skewed toward Irish issues (though there were regular posts on non-Irish policy issues). I think a blog with a similar academic content but with a more EU-wide focus would fill a gap. I would really welcome emails from people with suggestions on this, including people who have ideas for contributors. The intersection between developments in behavioural economics and public policy is really interesting and there is a lot of things happening across Europe in this space that would make an interesting theme for a blog. Let me know if you have thoughts.

Nudging 1970s Irish Style: That's the Safe Cross Code

2011-06-03T16:58:00.000-07:00

A bit of nostalgia for readers who grew up in the 1970s pulled from the Youtube vaults. Many people can still sing this if prompted. Gets a bit trippy in the middle though I think!

Automatic for the Irish People: Upcoming Soft-Mandatory Pension Changes

2011-06-03T07:41:00.000-07:00

The pension framework which came out last year in Ireland has autoenrolment of the entire private sector as a key policy. (FT coverage here). I put some initial thoughts on the late lamented Geary blog when it came out at first. We are getting closer to implementation and, while details are still patchy, it is important to continue to debate this, particularly if there is going to some form of targeted pilot phase.

The first thing to say is that this is the first serious attempt to address pension undercoverage among low-to-middle income private sector workers in many years. This was a problem that ideally would have been addressed during the sunny days of the Celtic Tiger and addressing it then may have had the positive side-effect of taking at least some of the heat from the property bubble. However, pension rates among many industries are still well below fifty percent (see QNHS modules on pension cover) meaning that a significant proportion of the private sector are relying on either their property, bank deposits or the state pension to cover them in retirement.

The auto-enrolment provision is still not fully laid out in its detail. But the pensions framework document gives the basic features:

- Autoenrollment of everyone in private sector with employer matching and government matching in the form of tax relief. Starting in 2014 (clarification: everyone in private sector not already in a scheme receiving employer contributions).

- 8 per cent total contributions within a defined income band (not specified but sounds roughly between 15k and 50k).

- 4 per cent employee, 2 per cent employer, 2 per cent tax break

- People can switch their existing PRSAs into the funds but wont get matched for this

It is important to start debating this policy. The government have put out a call for consultancy and advice relating to all aspects of the pensions framwork (link here), so hopefully this will generate international as well as national interest.

Looking at the international literature on soft-mandatory pensions (the recent US work by people like Thaler, Laibson, Choi, Madrian and colleagues in particular), a number of issues are worth considering in the Irish context.

- Possibility that there will be a big switch from existing PRSAs and large opt-out from people not currently saving. Would have the effect of being a transfer to savers with little effect on overall savings rates. This general issue of substitution from existing savings is an important one.

- Potential for various soft types of discouragement of employers, as well as some potential for fraud if contributions are collected but the employee has not been enrolled. As far as I can see, this is partly offset by using the PRSI collection mechanism and highlighting contributions on the employees pay-slips but it is clearly an issue. A related issue is the potential increase in employment costs. Offsetting this is the fact that the employer contribution is actually quite low (2 per cent within the income bands), and there is at least some hinting that this might be lowered or the band narrowed.

- Anchoring effect whereby enrolling people into default funds that are very low-risk at low rates of contribution may actually reduce the savings of people who would have saved anyway. They should be careful about this. Total contributions will be 8 per cent within an income band so depending on how wide the band is, this could be a small pension and it looks like employers contribution rates might be revised downwards if labour demand is still very sluggish in 2014.

- In general, the sufficiency of these pensions needs to be debated more in terms of how much they will actually provide the worker in retirement. Relatedly, the document is not clear on how the person will actually receive their pension on retirement. This is important to have very clear in order for participants to be able to clearly visualise the benefits of being enrolled in the scheme.

- One of the really key issues will be communicating the options to the workers. This is really a can of worms. I think just handing everyone a binder with several brochures in it will be practically a waste of time and would effectively amount to them choosing either the default option or opting out. Depending on how complex the presentation, it could substantially increase opt-out rates.

Choice Blindness

2011-06-01T14:57:00.001-07:00

Two students of mine this year have been working on a project based on the Choice Blindness work of Johansson and colleagues. A nice BBC video illustrating the basic idea of choice blindness in simple consumption products (in this case jam) is below:

Pat Liddy Tour: Liberties August 7th

2011-05-24T10:25:00.001-07:00

One of the best things the researchers working in the Insitute have done outside of work has been two tours of Dublin with the well-known Dublin specialist Pat Liddy. The first one took in the side streets around St. Patrick's Cathedral, and ended up in Henrietta Street, site of some of the last remaining old tenement buildings in Dublin (photo here). The second took in the North Inner City Docklands and a description of this is here. The purpose of these sessions is partly to get a better feel for the city but also to promote a sense of the spatial and temporal dimensions in which a lot of our research is situated. The next session will take place on August 7th at 2pm. It will be a tour of the Liberties area of Dublin. Very much welcome some discussion about interesting aspects of this, topics for discussion etc., Will post in more detail later.

Barack O'Bama

2011-05-23T18:13:00.000-07:00

The image of the visit for me below (from RTE Website).

Weekend Links 22nd May 2011

2011-05-22T08:44:00.000-07:00

1. Dan Ariely discusses the fascinating recent research by Danzinger et al on how time-of-day effects the parole decisions of Israeli judges

2. The now-closed AidWatch blog had a really interesting piece on the prevalence of shaky social science in medicine

3. IFS event on labelling and benefits

4. Esther Duflo's reading habits

5. LSE/UK Department of Health Report on Economics of Mental Health Promotion

6. World Bank data mapping tool

7. Old adds that could not be published today

8. Panel Data Analysis Course Using STATA at CASS Business School

Irish Debate Session on Behavioural Economics

2011-05-15T11:43:00.000-07:00

Below is a link to the one hour online session we held last Friday at 2pm. Seemed to work as a format. Will have a good think about potential future sessions. Suggestions welcome.

IrishDebate.Com Preliminary Thoughts

2011-05-12T09:53:00.000-07:00

My main motivation in coming on the Debate forum is to get a discussion going on the role Economics can play in attaining a real and sustained recovery in the Irish economy broadly defined. Below is a summary not intended to be a fully worked essay but I will elaborate on each of these points. The online discussion will be at 2pm tomorrow on the following weblink: (http://webinar.onlinemeetingrooms.com/?page=guest&conid=debateEconomics)

Economics has become a spectator sport in Ireland since the crisis, and is largely driven by our fascination with the forecasting of macroeconomic variables. Depending on their success, we view the people who produce these forecasts either as brilliant shamen with special access to the mystical forces or evil wizards who misuse their powers to trick us. Macroeconomic forecasting has captured an enormous share of the public attention with regard Economics. There are elements of this new fascination that are useful, Morgan Kelly's interventions being a case in point. Macro-forecasts serve to highlight the big picture and give us a sense of the parameters involved in key negotiations about our financial future. It is right that they generate discussion and debate. However, an exclusive focus on them can lead to a hypnotic effect where we gaze on them as inevitable portends of our destiny rather than potentially useful simplifications of reality. They can cause us to lose focus on the fact that ultimately an economy is made up of the many individuals, firms and communities that interact together in complex and unpredictable ways. So my main task here will be to advance a view of Economics as seen by many of us that is broader than the view of Economics that seems to dominate in the media.

The dominant public perception of Economics in Ireland is: that it is concerned with the macro; that Economists are people who advise government planners and big banks; that the main methodology of Economics is statistical forecasting; that Economics is a completely separate discipline to others like psychology and philosophy; that Economists use only very abstract and unrealistic models of human behaviour. Whereas the frontier of Economics, as exemplified in the work of many of the leading figures of the current generation, is: micro-focused; widely distributed in society including firms, community groups and charities; concerned with specific problems as much as government plans; eclectic in methodology including a wide range of experimental and quasi-experimental tools; interdisciplinary; and with a strong emphasis on realistic assumptions about how people behave. It is ultimately this type of Economics that must start to take a hold on how we debate resource issues in the context of recovering from this deep Economic trough.

A key feature of recent developments in Economics that exemplifies much of this is the desire to experiment in order to provide empirical evidence. There is a vigorous debate on the role, for example, Randomised Controlled Trials (RCTs), can play in promoting economic progress. Among the leading proponents of this approach include people like Esther Duflo. They have changed Economics substantially and it is now completely normal to see PhD students in the top universities embedded in communities all over the world examining how various policies work when implemented directly. Hal Varian recently indicated that Google had performed over 5,000 experiments on its search technology over a year-long period. The potential of this type of work for improving public, community and charitable services is a key topic that many of the world's best economists are engaged in and needs to play a greater role in the Irish recovery debate.

Another development that is characterising Economics is the fact that the view of Economists as being the guys who figure out the parameters so that the government can pull the economic levers is changing. Bill Easterly and others talk of "planner" versus "searcher" theories of economic progress. The traditional view of Economics, exemplified par excellence by the planning document process in Ireland, is that their main function is to assist planners with the development of large-scale planning documents. A particular application of the problems planning documents like this give rise to is the ongoing control freakery characteristing higher education. Document after document outline "targets" that the university system must meet, specifying target enrolment rates, "production" of PhD students and even trying to determine precisely the nature and subject matter of the outputs produced by universities. This flies in the face of any evidence of how good universities function. Academics are driven by intrinsic desire to discover as much as they are by salary. In general, the work of Edward Glaeser, as summarised in his recent tour de force Triumph of Cities, tells us that to promote economic progress such attempts at government micromanagement are counter-productive. Attract the brightest people possible and get the hell out of their way, with evaluation focusing on the outcomes of universities and not imposing complex structures on their processes. There are a range of papers showing how autonomy enhances productivity of universities and I challenge the people driving current policy to provide any evidence that such targetted and controlled approaches as are currently being pursued find any support in the peer-reviewed literature. It is clear that the government is not the only entity at fault here. Good universities have a duty to make sure their funding sources are diversified enough to protect them from interference and the development of alumni and private donor funding is an urgent priority if universities are to maintain a role in driving real innovation in Ireland.

The desire to promote a planner view of things leads also to a view of Economics as being a sterile servant of government, there to help in the production and analysis of planning documents rather than to guide the process of seeking specific solutions to societal problems. A more "searcher" view of Economics sees Economists engaged in a much wider range of activities in society, from helping to conceptualise and plan community interventions to evaluating charitable strategies and evaluating specific government policies. With regard to this, people who think that economists have too much power in Irish society really have little knowledge as to how policy is made in Ireland. There are very few Economists at all with any influence over how programmes in Health, Social Welfare and Education are made. The lack of basic economic evaluation of major health and education programmes is shocking and often such evidence acts merely as post-hoc justification of decisions already made, "policy-based evidence" as a well-known colleague calls it. Without people embedded in these departments who have more than generic civil servant skills but actually understand how to design and analyse policies at a credible level, then we will also be missing a crucial node in the network of an economy that targets its resources well.

Another feature of recent developments in Economics, one that is particularly close to my own teaching and research, has been a continuing willingness to explore further how people actually make decisions and find well-being, rather than relying on a small number of unrealistic assumptions. Modern economics has taken a massive direction change toward what I will loosely call behavioural economics. Behavioural economics is, in general, less concerned with macroeconomic forecasting and more concerned with understanding how people behave and what gives them value and promotes their well-being. Economists now routinely make policy recommendations based on evidence of "inertia" in how people make complex financial decisions. The 2014 change to our pension system in Ireland is one example of a major policy change coming down the tracks in Ireland based on this type of thinking. This change will affect almost all workers in the private sector who currently do not have a pension. In the UK and US, people working in these areas are having increasing influence with Richard Thaler being a key advisor to both Obama and Cameron. The findings from behavioural economics raise profound questions about the role of government in society. When should government intervene? Are people always the best judge of their own welfare? What do we do in cases where individual irrationality can cause widespread societal instability?

A case-in-point is the housing market in Ireland. The collapse of this market that has left our economy in ruins arises from the twin blades of poor regulation of banks and an Irish fascination with property that came to see houses as far more than a place to live in but rather an investment with quasi-magical properties. The exclusive focus on property led an entire generation to ignore any other options for creating and storing wealth. This focus held for consumers with average incomes right up to the wealthy elite and banks that destroyed themselves gambling on property prices. It is a key question now whether our society should reject the value-system that created the property bubble and actively encourage a view of wealth that encourages diversification and a view of housing that constantly reminds people that houses are places to live and a poor investment in terms of spreading risk.

Related to the issue of decision-making is the issue of how people's well-being is affected by policy. If you had mentioned psychological well-being in the context of Economics in Doheny and Nesbitt's pub in the late 1980s my guess is that the barman would have been instructed not to give you any more pints. However, measuring and understanding well-being has become a large part of modern economics, with the recent Sarkozy commission report chaired by Sen and Stiglitz being the most prominent manifestation of this to date. We see all the time vague reports of country rankings of well-being and I think the public are right to become weary of them. Knowing where your country ranks in some distribution is not important unless you understand the measure and why it is important. My view is that the economics of mental health and well-being is one of the key areas where Economics can make a contribution to the development of Ireland. The work of a number of serious Economists is highlighting how public policy can be directed to promote good mental health across the lifespan and the huge consequences of neglecting childhood mental health. We have yet to fashion a language in Ireland that connects the Economic debate to the mental toll that different Economic configurations exact on the people living in them. When we do this, we will come close to realising the potential of this work.

By the end of the discussion, I hope I will have put across the point of view that the last 20 years of Economics has changed the discipline fundamentally yet very little of this has entered into the Irish economic debate. If we are to give Ireland the best chance to develop a well-functioning 21st century Economy, we need to connect with these new developments and begin the process across society of examining how these ideas fit and where they might improve things.

Some readings by top Economists aimed at non-specialists:

Ed Glaeser, Triumph of the City

Banerjee and Duflo, Poor Economics

Thaler and Sunstein, Nudge

Akerlof and Shiller, Animal Spirits

IrishDebate.com Session: Irish Policy Reform and Behavioural Economics

2011-05-10T22:39:00.000-07:00

This Friday at 2pm I will give a session on IrishDebate.com on Irish Policy Reform and Behavioural Economics. The session will examine the main threads in the literature from behavioural economics and what they imply for the development of the Irish economy. I have posted on this topic extensively and my posts on Irisheconomy.ie (here, here, and here). To join in the discussion, just go to the following link and sign in at 2pm on Friday.

(http://webinar.onlinemeetingrooms.com/?page=guest&conid=debateEconomics)

The session will examine the following topics:

What role do behavioural economic ideas have in developing a recovered Irish economy?

To what extent should we take seriously the new literature on well-being and economics? What does it imply for Irish policy?

What kind of evidence and expertise should the government put together to create and analyse meaningful public policies?

Should the state be more or less paternalistic in areas such as pensions and health insurance?

The Irish pension system will move to an automatic enrolment system in 2014. This effects almost every private sector work currently without a pension. Where does the idea come from and what are the potential benefits and costs of such a system?

Consent Mechanisms for Deceased Organ Donation: Third Post

2011-05-07T14:21:00.001-07:00

The role of consent mechanisms for post-mortem organ donation has been a popular topic for discussion in behavioural economics. I have used the example myself many times in lectures and it featured heavily in the debates around books like Nudge. And I think the basic intuition for using this example holds well. In general, countries that require people to sign up to a consent register have far fewer people that do so compared to the amount of people who stay in the register when the consent obligation is reversed. There are many intermediatory factors but the argument that inertia is an important one holds well when you look at the evidence (e.g. widely cited Science paper by Johnson and Goldstein). However, there are clearly many other operating factors in how policy-makers choose consent mechanism. As I have looked at this more, I have been coming to the conclusion that organ donation consent mechanisms illustrate well inertia as a force in human behaviour but also illustrate well the complex set of cultural, legal and institutional forces that set the context in which behavioural policies are framed, and the ethical and philosophical considerations involved in changing population defaults in key areas.

In the Irish case, there has been an ongoing debate about whether to shift to a presumed consent framework. It is clear that there is widespread institutional apathy to presumed consent mechanisms in the Irish system. Of 30 institutional submissions to the 2009 consultation on this issue, only 1 of them pushed for a presumed consent mechanism (summarised here - Department of Health and Children Report on Public Consultation on Consent Mechanisms ). 23 of the institutional submissions argued against this mechanism. The range of institutional submissions came from pro-life interests, specific disease advocacy groups, hospitals and transplant advocacy groups.

The objections are interesting to read. A large strand of the objections relate to the idea that having a presumed consent system would damage trust in the system and potentially lead to lower rates of donation. This has been repeated many times by opponents of presumed consent, relying mostly on anecdotal evidence and I don’t see any compelling international evidence that this would happen though can’t rule out some Irish-specific factors that practitioners have knowledge of. A more fundamental strand from the objections is that presumed consent would be unethical as it violates the general medical principle of informed consent. My first reaction to this is that, while presumed consent might be tricky from this point of view it’s harder to think that mandated choice would be problematic from this point of view. Most of the submissions are also against mandated choice for similar medical ethics issues, particularly if the choice setting was a place where people might feel intimidated to consent. A mechanism that many of the submissions talked about would be something similar to mandated choice, whereby the hospital staff would be mandated to ask the relatives and to record their choice. Reading the submissions and the Minister’s speeches, it sounds like this might evolve as an “Irish solution to an Irish problem”.

Though should such a solution emerge it raises one key aspect of this debate that got a lot of comments when I asked for views on twitter, namely that the current system does not allow for any real individual choice other than through the family. This may have something to do with the cultural and constitutional signficance of the family in Ireland but it is clearly problematic from an individual rights perspective. Basically, there does not seem to be any way in Ireland for an individual to ensure that their organs are donated after death without their family’s consent. Recent statements from the Minister have enshrined this even further and it is unlikely to change. This is clearly an important issue from a purely practical point of view, but also raises pretty profound questions as to ownership of one's body.

We are only scratching the surface so far as to the issues involved. Recent proposals in Sweden to pay the funeral costs of people who donate their organs raise another argument that needs to be had here and elsewhere as to whether financial incentives might free up these valuable and life-saving resources. And we haven’t even spoken about live donations yet!

Resources for Organ Donation

2011-05-05T16:46:00.000-07:00

I am using this post to collect some useful links. Please send on any suggestions.

Irish Resources:

Hegarty et al - National Audit of Organ Donor Potential

Irish Council of Bioethics explanation of donation and transplantation system

Citizen Information Website section on Organ Donation

Times Online 2008 article on presumed consent legislation in Ireland

Irish Medical News Piece June 2011 on implications of EU legislation

Department of Health and Children Report on Public Consultation on Consent Mechanisms

Short BMJ note from February 2011 on decline in donations in Ireland

European Resources:

Eurobarometer Module on Organ Donation (2006 fieldwork)

Key facts and figures on organ donation and transplantation in the EU

RAND Report on Improving Donation and Transplantation in the EU

Cronin and Douglas paper - "Directed and Conditional Deceased Donor Organ Donations: Laws and Misceptions"

Gevers et al (2004) paper - Consent Systems for Post-Mortem Organ Donation in Europe

Trade in Organs:

Econtalk podcast with Richard Epstein from 2006 - good reading list below the podcast

Useful wiki article on organ trade

Classic Al Roth paper: Repugnance as a constraint on markets

Stephen Kinsella - Quick Win Economics

2011-05-05T14:54:00.000-07:00

The level of economic literacy in Dublin in the last couple of years has become amazing to behold. It really is not unusual to get into a heated discussion with a taxi-driver or random friend or family member about whether subordinated bondholders in banks should be made to take haircuts, or whether the institutional arrangements linking the ECB to the national central banks created instability in the system. A lot of people have had their financial lives completely turned over and in such situations it is very natural that they try to figure out who is to blame and/or try to understand how economic systems work. I think there is an old saying (if not I would like to start one) that you know there is trouble in a country when people are talking about the intricacies of bond markets. However, it has has one positive effect of stimulating a large interest in economics and there is an increasing demand to get explanations of economic constructs in Ireland and I am sure many other countries going through tough economic times.

So with this in mind, Stephen Kinsella's book "Quick-Win Economics" is a short punchy introduction to the main concepts in Economics, packaged as the answer to 100 questions people regularly ask. Stephen is in a good position to write this book. He has taught some of the main Economics courses in UL over the last few years and has been a frequent contributor in the media debate around the Irish economy, including blogging for the Guardian.

There are four main categories of questions; Essentials; Practical Economics; Macroeconomics; Microeconomics. The book covers the basics such as definition of economics, costs, factors of production, consumer decision making moving through markets, market failure, bounded rationality, market structures, game theory and through to sections on basic micro and basic concepts in macro. Toward the end, the book gives short answers to bigger questions like unemployment and housing demand.

The book is basically a condensed principles course for the non-economist. I think it would certainly make for a good train or plane ride for people looking to tool up with the basic language of economics. I like the fact that a website will collect other questions people have and it could be a nice series. It is getting to the stage in Ireland where many people want to know things like what a central bank actually is, or what "sovereign debt" is, simply so they can keep up with basic conversations going on around them. Hopefully this book will do the trick for people.

Organ Donations in Ireland: Second Brief Post

2011-05-05T06:37:00.000-07:00

I posted briefly before on organ donation in Ireland. I again issue the strong disclaimer that I have not conducted serious research in this area and I am posting on this to generate some discussion. I hope to use this as a case study in my classes and I may develop it into a research project if I feel there is a contribution.

Organ donations receive attention in the behavioural economics literature as they are an example of an important area where defaults and inertia seem to matter. Two highly-cited papers on this topic, in particular, have found that countries where consent is assumed have higher rates of donation (Goldstein Science paper; Abadie and Gay Journal of Health Economics paper). In the Irish case, the main point is that consent is not assumed. Consent has to be sought from the next of kin of the deceased, who in turn are responsible for making sure the wishes of the deceased person are upheld. The Irish Council of Bioethics give an explanation of the Irish system here. A number of recent articles in the Irish Times have reports from prominent medics warning about the consequences of a low rate of organ donation (e.g. here; here; here; here).

"Last year, a total of 58 deceased donors provided organs for 151 transplant operations, compared with 243 operations the previous year.

38 liver transplants were performed in 2010 compared with 64 in 2009. Three heart transplants were performed in 2010 compared with 11 in 2009.

Potential donor referrals dropped from 154 in 2009 to 120 last year, suggesting hospital staff are under such pressure they no longer have time to devote to the difficult process of discussing organ donation with distressed relatives."

One thing that has confused me a lot in this debate is the role of the organ donor cards. The more one looks at this, it is difficult to see what role they play in a system where relatives consent is so important. This is an important issue. I have looked at this for the last few months on and off as a non-expert but a reasonably bright and motivated one, and it is still not clear to me the best thing I should do if I wanted my organs to be donated in the unlikely and tragic (for all three of my blog readers) event that anything happens to me. Having looked at it, I am gradually coming to the conclusion that carrying an organ donor card would not hurt but the real thing I would need to do is actively tell my next of kin that this is something I really wanted to do and make it clear to them that I want them to take this up with the ICU staff should the situation arise. Having such a conversation is clearly difficult, particularly given that many donor situations will involve unforseen deaths. In this case, the card may act as a signal to the ICU staff to approach the relatives.

However, judging from the interviews with medical staff in the Irish Times articles, they seem to be less worried about the consent issue and far more worried about the actual "conversion" of potentially willing donors into actual donors. Factors cited in the article include the reluctance of ICU staff to bring the issue up at a vulnerable time for families and a general lack of a coordinating framework in which the staff operate with regard to organ donations. It does raise the question as to whether the strong public focus around getting people to carry organ donor cards is misplaced and whether it would be better to focus on creating a culture where relatives actively act on the wishes of their loved ones, and doctors are motivated to make the approach. I would really welcome counter-arguments to this.

There is an ongoing literature on medical staff decision-making that I will summarise in a later post that may be relevant here.

Links 5-5-2011

2011-05-04T21:33:00.000-07:00

Welcome to the latest installment of Liam's links! Suggestions welcome for future editions.

1. Bill Easterly has a good review of More than Good Intentions and Poor Economics in the Wall Street Journal

2. NYT Economics - "Why rich people still don't realize their rich"

3. Investor.gov - investment advice site from securities and exchange commission. Interesting!

4. Ed Glaeser on what rankings show about cities

5. New Yorker article on the experience of time, the brain and decision

6. Simolean Sense still the best curator of behavioural economics material on the web. Keep up the good work Miguel!!

7. Tim Harford makes a somewhat half-hearted but interesting defence of the weak version of the EMH

8. Portugal's draft MOU with the EU

9. Ireland's revised MOU with IMF and EU. Thoroughly depressing reading.

10. My irisheconomy.ie post on IBEC's job strategy. Small number of interesting comments.

11. Second Global-Irish forum announced

Policy and Choice: Public Finance through the lens of behavioral economics

2011-05-02T13:09:00.000-07:00

An important publication released by Brookings Institute today as a free online book. Authors are William Kongdon, Jeffrey Kling and Sendhil Mullainathan. This is really useful. Extremely readable and covering a broad range of topics. Will be beneficial to a wide group of readers and a really great book to further the discussion between academics and policy-makers.

Non-Economics Courses for Economists

2011-05-01T14:00:00.000-07:00

Thinking mostly about very motivated undergraduates as I type this. The structure of undergraduate programmes in Ireland shoud increasingly permit students to take an Economics track while also taking courses from other disciplines. Indeed, TCD now has a PPES option and Queen's in Belfast has had a PPE option for some time. One question is what courses would be particularly good for an economist to take. I floated this on twitter (where a reasonable proportion of my small following are other academics) and one suggestion I got was Constitutional Law, which is something I hadn't considered before. A number of people pushed for more political science options and this is clearly something to think about. Based on my own career to date, I think a course that would really be beneficial to economists would be a foundation course in the philosophy of causality. So much of what empirical economics is about nowadays comes down to debates about how to establish "causality" but the concept itself is covered generally very lightly in undergraduate econometrics courses (though I am sure there are exceptions). Increasingly, economics students think about courses in health and development and its clear that "applications" courses always have a role but it would be interesting to talk more about how foundational courses that teach tools of thinking and reasoning might develop as the options available to students develop. There is a large constraint on this, in that graduate schools heavily lean toward mathematical training in selection but also in terms of their demands, so a student heavily armed with philosophy and a wide disciplinary mindset may find it tough to progress through the discipline if this came at the cost of not taking sufficient formal mathematics.

Behavioural Economics and Humanities

2011-05-01T13:41:00.000-07:00

A crosspost from the Geary blog from a few months ago. I have been talking a bit about this issue through email and on twitter.

I had an interesting email from a student constructively criticising me for dismissing the value of studying English literature for understanding behavioural economics. The context is a class where some of the students have joint majors - the value of studying political science, law and philosophy for studying behavioural economics is very obvious and I spoke a bit about the overlap between behavioural economics and these fields. Some of the students have English as their other major and I waved this away without going into potential overlaps. As pointed out by the student to me afterwards, there may be a lot of crossovers that are worth thinking about. He himself pointed to the training that literature students receive in deconstructing arguments and, in particular, linking text back to wider systems of power and social control. The email stimulated me to think further about the crossover between behavioural economics and literature, and below are a few random connections.

- Jon Elster is one of the most widely cited and influential authors in behavioural economics. He is a philosopher and social scientist who, among other things, wrote the epic work on time discounting "Ulysses and the Sirens". Elster has often argued for greater linkage between social sciences and humanities. His works frequently draw from deep literary metaphors and he often uses social science theory as a hermeneutic tool to uncover the meaning of texts and paintings.

- The importance of narrative is increasingly being talked about in economics. In particular, George Akerlof has been arguing that narratives have a causal role in the maintenance of group economic inequality and business cycles. His recent book Identity Economics, co-authored with Rachel Kranton, outlines their ideas in this area.

- Deirdre McCloskey has argued for decades that economics is a rhethorical science, by which she means that economic persuasion relies as much on stories and arguments as it does on statistical evidence. As far as I am aware, nobody has yet attempted to deconstruct the type of metaphors and narratives arising from behavioural economics. As it becomes the mainstream, it will be interesting to see how this will happen. The dominant neoclassical account of human decision making led to the "homo economicus" metaphor and has been critiqued thousands of times. We can think of a few instances where the new less than perfect vision of people has been critiqued e.g. Gigerenzer famously argued that the heuristics and biases literature created a distorted and unfavourable account of human decision making. Rubinstein has viciously attacked what he perceives as the arbitrariness and frivolity of a lot of behavioural economics, particularly neuroeconomics.

- The student mentioned continental philosophers such as Foucalt and Derrida in his email. Continental philosophy tends not to get a great time on this blog (I can picture Kevin rubbing his hands and choosing his weapon as I type). In the comments, Rob has been arguing in various guises that policy applications of behavioural economics are Orwellian ideology in disguise. There is not much in economics textbooks to help us understand the connection between theory, empirics and power structures/ideology etc., Particularly when we get into thorny issues such as social justice and individual freedom then relying solely on statistical evidence hits sharp limits.

- A number of people have looked at how paradigms are formed in economics. Mark Blaug, in particular, stands out as someone who has grappled with big questions underlying the philosophy of science aspects of economics. His book "The Methodology of Economics" is long overdue a spin at our book club. The entry by Daniel Hausman in the Stanford Encyclopedia of Economics deals with many of the philosophical problems at the heart of economics.

- Heterodox Economics is an umbrella terms for a wide range of approaches to economics that exist mostly outside of mainstream Economics departments and journals. This is a very broad church incorporating Marxist and feminist economists, eco-economists and a wide range of other schools of thought. A student-led group developed a movement know as post-autistic economics that heavily criticise mathematical formalism in economics and the atomistic depiction of the individual decision maker. Their journal Real World Economics review publishes many articles that draw from postmodernism and related areas.

- In my own current work, I am struggling with how to integrate qualitative research methodologies into studying well-being and economic decision making. For example, we are currently drafting a paper based on focus group interviews with about 100 people who have been made redundant. There is so much information in these interviews that is interesting and valuable yet it is very difficult for someone trained mostly in econometric methods to capture what is happening and even more difficult to write it up in a way that other economists will care about.

So I guess all of the above areas are points of contact that students from a literature background will have strong insights into.

Poor Economics: Banerjee and Duflo

2011-04-30T14:50:00.001-07:00

Started the following on www.irisheconomy.ie

One of the most important economics books aimed at wider audiences to emerge in the last few years is Poor Economics by Abhijit Banerjee and Esther Duflo. Banerjee and Duflo are two of the leading economists of their generation and are particularly associated with the use of randomised controlled trials in development economics. However, this book is broader in its scope and tackles a wide range of issues in the economics of poverty, development economics and the economics of the family. The book has ten chapters and two major sections, one dealing with individual behaviour among the poor and the second dealing with the role of institutions. Like the best popular economics works, each chapter deals with very big issues backed with the recent literature but presented in a punchy and readable fashion. It is a cracking read. The first section deals with nutrition, public health interventions, education interventions and fertility. The second section looks at insurance for the poor, microcredit, savings and entrepeneurship. Chapter 10 sets their argument in the overall context of development debates raging between people like Sachs and Easterly.

The book pushes strongly for the continued development of experimental approaches to economic development that attempt to find workable solutions that large-scale philantrophic and government funding initiatives could be aimed toward. It is important reading for anyone working in microeconometrics and development economics broadly defined and also would be great reading for anyone in Ireland working around the area of foreign aid policy. I open up this thread for anyone who wants to debate aspects of the book or the surrounding issues. From an irisheconomy perspective, it is worth thinking about how the ideas in the book might influence how the Irish government directs the overseas aid budget.

Second Keynes-Hayek Rap

2011-04-28T15:03:00.000-07:00

Good stuff!

Medema: The Hesitant Hand

2011-04-23T21:00:00.000-07:00

Blogging light at present. For the seemingly growing number (judging by emails) of you that use this and formerly the Geary blog for book recommendations, I recommend Steven Medema's Hesitant Hand very highly. A great history of the concept of self-interest in Economics. I posted briefly about it on the Geary blog.

Response to Comments on Summer Presentations

2011-04-20T18:42:00.001-07:00

Thanks to everyone who sent emails (including pointing out typos!) on the summer presentations. Some people who were here as interns before stressed the importance of doing a presentation. The basic sense is that it adds some tension to the process but it makes it more concrete and one person from last year, in particular, said that it helped a lot when preparing postgrad talks that he had gotten experience of this. So I think integrating some talks from people working in Geary as interns will be one feature of developing this. Also, thanks to some of the later stage postgrads who have offered to give a couple of sessions on introducing statistical software etc., I think this will be a nice feature also.

I guess from my own point of view I think of this as a great way of getting people together from economics, psychology and health disciplines and I hope we use the experience to learn as much as possible about how different disciplines think about similar problems. We are now well represented particularly from economics and psychology and to some extent from public health and epidemiology.

Ok, this is very much a work in progress and I welcome very much the emails and comments that people are sending. Very helpful.

Most Important Irish Books

2011-04-19T02:03:00.000-07:00

For those of you who are twitter users, the RIA twitter account have started a nice hashtag #mostimportantirishbooks

With my economics nerd hat on, I couldn't resist adding Edgeworth's "Mathematical Psychics" though I can't see it making the top five if RTE gets Miriam to do a countdown. The late and much missed Denis Conniffe gave a masterful lecture at the IEA last year explaining to an enthralled audience, including myself, the role that Edgeworth played in the development of modern economics and his very Irish roots in County Longford.

Anyone with ideas as to Ireland's most important books and access to a twitter account should go and make their feelings heard.

Crosspost: Glaeser: Triumph of the City

2011-04-18T20:35:00.000-07:00

(Post originally from Geary blog: This book is a belter and I really recommend it).

Got a copy of Edward Glaeser's Triumph of the City. As usual, this is not a full review. Just some notes. This is a really cracking read - one of the best popularisations of Economics ideas I have read. It is in the best tradition of popular Economics works, condensing a huge body of research into tightly packed chapters, each of which says something counterintuitive, interesting and important. I think this is genuinely a must-read for anyone working on spatial policy, urban renewal etc,. but also more generally for people working on education policy and as a general interest read.

The book has nine chapters, and also an introductory and concluding essay. The overall theme of the book is that the dense environments of cities allow ideas to spread more rapidly, and that cities in general promote human progress in pretty much every domain of life. For cities to thrive, their planners must focus on building human capital through the education system and also through making the city attractive for people with high skills and business ideas to live and work.

Chapter 1 "What do they make in Bangalore?" explores the connecting role of big cities in the process of innovation. Chapter 2 "Why do Cities Decline?" explores the decline of Big Cities, focusing particularly on Detroit. Chapter 3 "What's good about slums?" explores the advantages cities hold for poor people and the role slums play in providing pathways out of destitution. Chapter 4 "How were the tenements tamed?" examines the progress made in reducing mortality and poor health in cities. Chapter 5 "Is London a Luxury Resort?" examines the role of consumer culture in making big cities attractive places to live. Chapter 6 "What's so great about skyscrapers?" offers ideas for improving planning regulations in cities. Chapter 7 "Why has Sprawl Spread?" explores the reasons for and consequences of urban sprawl. Chapter 8 "Is there anything greener than blacktop?" explores the environmental advantages of high-density living. Chapter 9 "How do cities succeed?", in particular, focuses on the development of human capital and attracting people with high skills. The concluding essay "Flat World Tall City" recapitulates the main themes that cities are good for prosperity, that cities must build and attract human capital, that dense cities are more environmentally friendly than urban sprawl and low-density living and that helping troubled cities is an inefficient policy compared with helping troubled people.

Unemployment among Recent Graduates

2011-04-18T10:41:00.001-07:00

Am interested in talking to recent college graduates in Ireland who have had difficulties finding a job. Feel free to email if you don't mind doing so, or comment here if you want. I am basically interested in understanding the current labour market situation for recent graduates from their own perspective.

There are clearly more options available to people who have graduated from college than people who have not. Graduates tend to be more internationally mobile than non-graduates. Also, graduates have the option of taking on postgraduate study. Irish college graduates also tend to have lower levels of debt than in the UK or US. All of this takes place in the context of budgets that are a lot tighter than previously but in general, my point is to recognise that graduates have more to play with than nongraduates and this is clearly seen in the relative unemployment rates.

As we always were careful to do on the Geary blog, it is important to be honest when data is simply not available. At present, the CSO figures allow us to distinguish between graduate and non-graduate unemployment, but do not give us detailed information about the experience of recent graduates. I think recent graduates are interesting to analyse separately to people who have graduated earlier as there may be different options open to them and also different costs to being unemployed early in their life. When we think about graduate unemployment, it seems to me that the potential costs for the person can be broken down into:

Lower Income/Consumption; this is obviously an important one. Not having a job means relying either on parents or on state support, and for the most part this is not going to be a large amount of money.

Signalling: A real potential cost of graduate unemployment is the signal it sends to the labour market. I am not aware of convincing evidence that taking a gap year has any major effects on life-long career trajectories. But there is a concern that unemployment durations can send a negative signal of productivity to the labour market. Having such a high rate of unemployment is preventing a lot of graduates from demonstrating talents as they would be able to do in a normal labour market.

Psychological costs: I posted many times on the Geary blog about the psychological costs of unemployment in terms of losing time structure, fuelling feelings of low-worth and so on. I think there is increasing evidence that these feelings can be self-perpetuating and that they interact with the nature of the job search and social benefits system. It is a real potential worry that a substantial group of recent graduates will experience scarring effects of unemployment that will knock their confidence for years to come.

It seems to be that for most graduates, revision downwards of previous earnings expectations is clearly something that is happening and has to happen. But the psychological, signalling and scarring costs of unemployment are surely more avoidable even in an economy as tanked as the one in Ireland. If there is a way of ensuring that recent graduates do not get economically damaged more than is neccesary then one good place to look hard is in finding concrete ways of demonstrating productivity and skill beyond formal postgraduate training. Internship programmes have moved along in fits and starts, including a matching programme provided by IBEC and the FAS programme. There is a big issue here for the third level institutions in Ireland to figure out how their courses and extra-curricular programmes can adapt to make sure that graduates are fully ready for the harsher labour market they are going in to.

Links 16-04-2011

2011-04-16T17:04:00.001-07:00

Thanks for suggestions from people about ways to go with blogging etc., This is working fine for now but I really do miss having a more community forum as it is boring just to have one's own posts up. The nice thing about running a blog with multiple contributors is the interesting surprises that often pop up when you open the blog.

1. Kevin Denny's new blog is looking interesting.

2. His paper on homophobia also worth a read

3. My paper with Cathy Redmond and Colm Harmon on earnings expectations available as an IZA Working Paper

4. James Heckman and colleagues on identification problems in personality psychology

5. The Invisible Gorilla will be heading to this blog soon.

6. My post on irisheconomy.ie on behavioural economics

7. Duke research on the importance of autonomy for research success

Kevin Denny Blog

2011-04-14T04:43:00.000-07:00

Kevin has set up a blog and has done a lot better on the design side than me!

Organ Donations in Ireland

2011-04-13T07:56:00.000-07:00

I have not conducted serious research on organ donation in Ireland and I am posting here to point out some features of the system as I would like to use this as a case study in my lectures and would like to know more about this. The structure of consent mechanisms used in different countries has been discussed a lot in debates about behavioural economics, with countries where consent is assumed having higher rates of donation than those where people have to actively consent (e.g. widely cited Science paper by Johnson and Goldstein). In the Irish case, the main way of signalling that one wishes to donate organs is to carry an organ donor card. This requires taking the effort to find out where to get one and then filling it in. Should not make much of a difference but there is evidence that people are remarkably lazy when it comes to this type of mechanism. So to make it even easier, anyone with a drivers license can simply use this to indicate that they consent to having their organs donated. As pointed out to me on twitter by a colleague, there is a twist in this that even if you give consent through these mechanisms, your Next of Kin still have to consent in the event of your death. Full details are on the citizen's information website.

"If you want to donate your organs and make them available for transplantation after your death, the easiest way is by telling your family or next-of-kin that you wish to donate your organs after your death. Your family or next-of-kin can inform a doctor or another healthcare professional in a hospital if they are asked about your wishes regarding organ donation.

You can indicate your wishes by carrying an organ donor card or signing the organ donation option on the back of your driving licence. Organ donor cards are available from the Irish Donor Network (see below), through the Irish Kidney Association, and in doctors' surgeries and pharmacies.

Signing an organ donor card or a driving licence donation option indicates your willingness to have your organs used for transplant. It does not necessarily mean that they will be used. There are various medical criteria and other conditions that must be met. To ensure safe transplantation, the death must take place in a hospital. Your next-of-kin should know of your wish to be an organ donor, but they are not bound to abide by your wishes and their consent is always required.

In all cases, the medical team requests the next-of-kin to donate the organs of a deceased person. In practice, the consent of the next-of-kin is accepted as valid and a refusal by the next-of-kin is not contested."

This all seems very convoluted and its not clear how one can enforce one's wishes e.g. if I really want to donate my organs but my family is dead against it. Also, its not clear what role the cards play in this. If this description is right, it looks almost like your consent is not needed provided your next-of-kin consent. Anyone willing to give me a tutorial on how this works, please feel free to comment here or send me an email.

Behavioural Economics and Irish Public Policy

2011-04-11T19:14:00.000-07:00

posted the following on irisheconomy.ie

I have posted a few times (here and here) before on developments in the micro-side of behavioural economics. I think that a lot of policy developments will come out of this area in the next ten years and I have been trying to keep as informed as possible, and have been giving lectures on this in both UCD (to economics students) and TCD (to psychology students). It should go without saying that this area is too broad to give anything approaching a comprehensive summary and my goal here is to point to some areas that might be of interest.

In terms of the Irish policy environment, below are some things that are of particular interest:

1. The role of the financial regulator in ensuring confidence in the financial system and preventing self-fulfilling panics is becoming increasingly studied. Roger Farmer's recent book "How the Economy Works" fleshes out one model of this and there has, of course, been an increasing interest in the work of Hyman Minksy. The recent book "Animal Spirits" by Robert Shiller and George Akerlof provides an accessible account of one major stream of this literature.

2. Furthermore, the role of the financial regulator in ensuring basic financial competence among actors in the system is being increasingly studied. There was a debate when the crisis started that the financial regulator had focused too much on this area and too little on looking at what the banks were doing. This is totally bogus. The financial regulator should be able to focus on both at the same time. The famous "tracker mortgage" adds aside, there is a lot about consumer financial behaviour in Ireland that contributes to financial instability. The regulation of institutions must coincide with an attempt to look at the consumer side also as they are two blades of the same scissors. As well as basic questions such as whether people have sufficient numeracy to process contracts, an ongoing literature is examing questions such as why people do not diversify and why they prefer to hold stocks in the company they work in, and so on. Researchers at the Irish regulator have released recent papers on this area (e.g. McCarthy 2010)

3. The pension framework will see the entire private sector auto-enrolled in 2014. This is one of the most important policy developments in Ireland in the next few years if they are serious about it. As yet, details are patchy about the default option and how the offers will be presented to people. Depending on whether it actually gets rolled out as planned, this is a potentially groundbreaking policy move. In the Irish case, people will be reenrolled every two years if they opt-out, which puts this on the paternalist side of the libertarian-paternalist spectrum. However, it is a potentially very innovative solution to a major policy problem, taking advantage of the mobilising role of the state while respecting people's freedom to opt-out to some extent. However, it unleashes a lot of naive money into the system and this needs to be debated closely before the final decisions are made. There is now a large literature in the US examining the effect of defaults and presentation of options to people and the initial results are dramatic.

4. James Heckman and colleagues have been working on a large programme to integrate personality psychology and a theory of human development into economics. This is extremely important in terms of providing a theoretical and empirical basis for allocation of spending in health and education. Many of these papers are available on Heckman's IDEAS webpage. Colleagues in Geary are involved in a collaboration looking at early childhood development. Some of these ideas are presented in accesible form on this website.

5. The programme for government has indicated a merger of the jobs training and employment benefit services of the Department of Social Protection and FAS. This potentially is a massive development if they try to do it right. There is a growing literature examining the self-perpetuating nature of unemployment. A lot of official Ireland have got stuck in a "sure the market has to sort this out" or "migration broadens the mind" approach to unemployment policy. This is deeply flawed and causing a major social and economic crisis in affected areas. A lot of recent research has begun to examine more closely the mechanics of what happens during job search from a more psychological perspective. Some of this research is explained in accessible form in this Brookings Institute publication

6. The Commission on Taxation examined a number of ways to improve the tax system. I don't know anyone who disagrees with the view that the Irish tax system is too complex with too many loopholes that create distortions both for democracy and for business. There are many potentially improving and low-cost policies that can be made in this domain, particularly those involving simplifying tax communication and collection mechanisms (recent review here). However, it is interesting to note that a new literature is arguing that tax should not always be simplified as if it is too simple people do not process the trade-offs involved (e.g. Finkelstein)

7. An increasing literature has been examining the economic importance of ensuring good child mental health. This literature is helping us to understand better the interplay between poor child mental health and later economic outcomes. A recent PNAS paper by Goodman, Joyce and Smith gives a good indication of the type of research being conducted in this area. This is an extremely important area of research at the interface of psychology and economics.

8. More generally, the literature on well-being more generally has been developing. The Stiglitz-Sen commission is becoming a standard reference on this topic and it is pretty comprehensive. Understanding how we go from the empirical literature in this area into meaningful indicators is an important direction for this literature.

This is, as noted, far from comprehensive. A number of papers have been released on the importance of identity and narrative for economic outcomes and fluctuations, and I have posted before on Akerlof and Kranton's book on this. At European level, DG Sanco have been particularly active in this area, as summarised in a recent publication of theirs. A large literature is emerging examing psychological aspects of microfinance in development contexts and this is being flagged (including by the Economist last year) as being a major emerging area. The recent book "More than Good Intentions" summarises a lot of this work.

This literature partly emerged from the empirical and theoretical work of people like Kahneman and Tversky and its development by Richard Thaler and others. The integration of psychological realism into economic models has become a mainstream part of economics and is having implications for policy that are hard to keep up with. One of the big questions it already raises is the extent to which knowing about how people make decisions in areas like pensions and insurance influences the debate about whether to implement liberal or paternalistic policies in these domains. People like Thaler and Sunstein have used the phrase "Libertarian Paternalism" to get at the idea that it is possible to shape policy such to make it easier for people to make optimal choices from their own perspective (e.g. taking out a pension) without forcing them to do. The pension opt-outs are an example of this type of policy though in the Irish case, it is somewhat more forceful as you are opted back in every two years, a type of Catholic church style nudge.

Crosspost: Quiggin's Zombie Economics

2011-04-08T21:04:00.001-07:00

Zombie Economics came out last year and I flagged it then but haven't posted on it before now. One interesting feature of the book is that it is almost entirely a blog creation, spurred by comments on Quiggin's blog and motivated and encouraged by other bloggers. Quiggin made chapters available on Crooked Timber blog as he wrote them. All in all, an interesting model of writing a book.

The book is effectively five essays arguing against what Quiggin sees as being destructive economic ideas that have contributed to the global economic crisis. Chapter 1 argues that the idea of a "Great Moderation" of business cycles is absurd. Chapter 2 argues against the strong form of the efficient market hypothesis. Chapter 3 takes aim at Dynamic Stochastic General Equilibrium and real business cycle theories. Chapter 4 argues against the trickle-down theories that argue that reducing taxes for the very rich will ultimately help the poor by stimulating investment and consumption. Chapter 5 argues that attempts to privatize core government services in health and education have been a failure.

Overall, Quiggin pushes for a methodology of economics with far more emphasis on realism and empirical validation rather than theoretical rigour. He is staunchly Keynesian in his belief that the government should actively intervene to regulate business cycles and is also strong in the view that an explict focus on income and wealth distribution should be an important plank of policy. A great book full of big and bold ideas and one to be read and argued about.

David Baddiel: Bills of Mortality

2011-04-08T18:19:00.000-07:00

Thanks to Mark for sending this along. Essential and therapeutic watching for anyone who has worked with cause-of-mortality data:

Secrets of the Money Lab

2011-04-06T19:43:00.000-07:00

Readers interested in applying behavioural economics ideas in business should read "Secrets of the MoneyLab: How Understanding People will increase your profits". It is a very readable account of the use of behavioural economics in business applications by Kay-Yut Chen, head economist at Hewlett Packard Labs and journalist Marina Krakovsky. The book's eight chapters look at uncertainty and tailoring to people's risk preferences; reciprocity; rationality; reputation; trust; incentive compatability and prediction. The book advocates an experimental economics approach to business process design, giving a number of practical examples.

The general issue of the application of behavioural economics in business is something we have discussed at a number of events here. Almost all the examples used in the MoneyLab book are "win-win" type examples, where behavioural economics ideas are used to improve products in ways that the customer would probably prefer even if they were aware of how they were being affected e.g. simplifying interfaces, building trust in the company, establishing fairness norms etc., And I think it is fair to say that a lot of the business and policy applications of BE are like this. I think though it is worth thinking about cases where what we know about consumers can be used to get them to do things they wouldn't choose were they better informed. The best example I can think of is the use of default options where it is not perfectly clear how to opt-out. One message that might come from the literature is that such "tricks" are self-defeating in the sense that losing trust and reciprocity with consumers might be more costly in the long-run. And yet, it is obvious that many companies set interfaces up not to help us make the "right" decision but in the hope that we will purchase things that we probably wouldn't if we thought about it properly and that such companies are probably calculating that the gains from doing this outweigh reputational costs (I remember wondering once why "no travel insurance required" had suddenly entered into the list of countries on a popular airline website but I still booked the flight!). I think the literature on behavioural economics is becoming really helpful in pointing out how these work. One aspect that people like Cass Sunstein have been emphasising is that if we know how these effects operate, then it will become possible to establish, at the very least, social norms and sanctions for companies that try to make money from confusing people rather than providing them with a valuable product. Whether the literature goes further and points to a direct motivation for stopping companies from doing things like this through regulation is a question being debated fairly vigorously at present.

More than good intentions

2011-04-06T16:53:00.001-07:00

Dean Karlan has written some of the most highly-cited papers in the literature on randomised evaluation of development projects. His IDEAS page is here Along with his co-author Jacob Appel, he has written a book outlining the importance of rigorous design and evaluation of development projects. The website for the book is www.morethangoodintentions.org The book is an accesible and readable account of an extremely interesting literature applying randomised controlled trials in the context of development. Karlan has been particularly involved in behavioural trials that use both monetary incentives and various forms of reframing and commitment devices to influence behaviour. The book's strength is that it offers a very concise summary of a wide range of these types of trials in areas as diverse as promoting teacher attendance to encouraging efficient fertiliser use to sexual health interventions. Anyone working in the aid field should certainly read this book but I think it is also has a more general readership in terms of anyone involved in the design and evaluation of policies in any area, whether from the donor side, the evaluation side or the implementation side. We have covered on the Geary blog the ongoing debate about the use of IV and RCT designs in development studies and it is worth keeping the wider debate in mind when reading this book but, overall, it provides a great summary of one of the most active areas of modern economics.

Rodrik: Globalisation Paradox

2011-04-05T13:23:00.000-07:00

(Will crosspost a small number of posts including this one from the Geary blog)

Recently released book by Dani Rodrik - "The Globalization Paradox: Democracy and the Future of the Global Economy". Makes the case for a more robust form of globalisation where nation states play a larger role in acting as a taming force. The introduction begins with an unusually humble and frank account of how he had missed financial system vulnerabilities that were impending when writing his previous books. Continues with an argument that free trade fundamentalism is a product of social norm processes and cognitive limitations among economists. Provides a history of globalisation and argues that opening trade works best in the context of intelligent government institutions to manage it. He makes a case for developing a form of global capitalism where: markets are more deeply embedded in systems of governance, the nation state is a primary actor; there is heterogeneity in economic development models depending on the culture, endowments and preferences of nations; where countries have the right to protect their own institutions in cases where there is a clash with the imperatives of free trade; where countries do not have the right to impose institutions on others; where international institutions set rules of interaction between countries; and where democracies are given more rights under international institutions than non-democracies.

Recommended reading. Includes a chapter on potential downsides of financial innovation and capital inflows that will have resonance for people in Ireland. The narrative has not fully formed yet here but one is emerging of a country that progressed far with a model of state-managed opening up of trade and used this as a very progressive force but failed to develop a model for dealing with the large risks associated with capital inflows into domestic financial institutions. Furthermore the failure of the EU monetary project to develop a coordinated response to this has left us in a position where the Irish state is now being bailed out so that it, in turn, can bail out financial institutions that poured money into a construction bubble in a process Karl Whelan has called "No bondholder left behind". As excited as free market fundamentalists used to become when looking at Ireland, the experience of financial globalisation here should I hope lead them to cast a cold eye on us and have a read of Rodrik for ideas toward a more robust model.

From a behavioural perspective, the book has left me with some deep questions as to why it is people feel parts of nations rather than world citizens and the ethical and practical implications of this. Most people in Ireland feel themselves to be Irish, with some considering themselves European and some further considering themselves world citizens. If I had to choose, I actually feel affinity with the idea of being a "global Irish" (though aware that this concept is still nebulous to some extent) and increasingly see a merit in the idea of Ireland as a migrant country where there is a possibility of a constructive cross-national identity that is bridging and makes sense. My own identity aside, the idea of national identity as a legitimate constraint on policy is one aspect of Rodrik's book that is particularly thought-provoking and of interest to people working on psychological dimensions of economic activity.

Energy Pricing Policy and Arrears

2011-04-04T15:03:00.000-07:00

This is an introductory post to a topic I hope to progress on this blog. All of this is speculative and just to start a discussion. The Irish semi-state electricity provider is undergoing a period of deregulation and, as part of this, changed its pricing policy. It is covered in an article in Today's Times (thanks to Colm Harmon for pointer). They are basically making the price of electricity cheaper to compete with their rival. The basic essence of the reduction is described in the Times as:

New and existing ESB Electricity Ireland electricity customers who pay by direct debit, sign up for online billing and switch to its gas offering will see reductions of 17 per cent on the unity price of their electricity. They will also get discounts of up to 6 per cent on the regulated price of gas.

It is certainly interesting to think about the effects of restricting this to online customers and switchers will have on the composition of customers. Another aspect of their strategy is that the new cheaper rates will not apply to the 100,000 or so households who have fallen into arrears in the last 12 months. At surface value, this seems highly regressive and perhaps even inhumane to the extent that there are "can't pays" among this group as well as "won't pays". There are few social welfare options for arrears in Ireland, other than for carers and pensioners. Are we really saying that people who have fallen into arrears in the last 12 months but do not have prior history of arrears are "wont pays" to the extent that they are strategically withholding payment. Will this incentive even work if this is the case? At surface level, this seems to introduce potential for boomerang effects whereby people who were trying to clear arrears may now feel angry about being exploited. This raises the possibility that they will be motivated to clear the arrears more quickly and head off to the other provider (which may suit ESB). But it also raises the possibility that some of them will have an "F U" moment and just stop paying altogether. Surely some more subtle policy of allowing those genuinely trying to clear their arrears to be "rewarded" for doing so would at least create more tolerable incentives?

We have had an initial discussion of this on twitter and I would be really interested in hearing views as to the efficiency, behavioural aspects and equity of this pricing policy, particular with regard to the issue of arrears.

Closing Geary Behavioural Economics Blog

2011-04-04T07:29:00.000-07:00

The Geary Behavioural Economics blog closed today. I think it's fashionable to say something like "well I only spend 30 seconds a day blogging so it doesn't take much time". I think I might have even fooled myself into a variant of that but even blogs like ours with mostly relatively short posts take nontrivial amounts of time to moderate and develop. The trick about running a blog like that was not so much the posts but the process of always thinking about interesting stuff to post and reading a lot of books, keeping up with mailing lists, in a deeper sense than would be justified by purely personal interest or professional need. Many people expressed the view directly to me, but usually in a friendly fashion, that it was a mad waste of time for a young academic but I also got a lot of emails (far more than actual blog comments) from people who really appreciated it as a source of information. All in all, I am very happy that I kept it running for over four years and learned a lot from doing so and indeed formed connections with people I would not have formed otherwise. I think blogging has a valid role in the scientific process. For an academic, it is not a substitute for academic publications but, done with care, it can be a nice complement and a humane and personalised way of disseminating important developments to people who want to keep up with them.

Next Generation Ireland

2011-04-02T18:02:00.000-07:00

Just reading and enjoying Next Generation Ireland, a volume of ten chapters (not including intros, conclusion etc.,) edited by Ronan Lyons and Ed Burke. Below are some thoughts, not a full review.

The book includes contributions from Ronan Lyons and Ed Burke themselves who give an introductory essay. Ronan also provides a chapter on improving the public sector and a co-authored chapter with Stephen Kinsella on improving fiscal policy in terms of both levels and composition. Eoin O'Malley takes on the issue of political and governmental reform. Michael Courtney has a chapter on identity, migration and citizenship. Michael King offers a chapter on improving competitiveness. Joseph Curtin has a chapter on environmental issues. Aoibhin de Burca has a chapter on North-South and Ireland-UK relations. Neil Sands and Nicola White provide an essay on the global extent of Irish identity and the importance of thinking along these dimensions. I agree with them completely that this will be an important feature of Irish public policy in the next few years and they offer some promising comparisons to draw from. Co-editor Ed Burke's final chapter is on Irish foreign policy.

A few clouds hang over the aspirations in the book, including the massive uncertainty surrounding how Ireland is going to manage the current deleveraging process and what implications an unemployment rate nudging 15 per cent is going to have over the next twenty years. These are currently catastrophic blots on the Irish policy landscape that are worth thinking about in terms of how they will influence the themes in the book. The book's introductory injunctions not to dwell on past sins were the only part where I felt myself thinking that the editors had overstretched. Having said that, I accept that sometimes it is better to look a few years ahead and try to craft a vision for the future rather than exclusively focus on the problems of now but it is worth thinking about how we should do this. Telling people not to think about the past is a bit like telling them not to think about a white elephant.

Reading the book made me think further about who, along with these authors, is the next generation in Ireland in terms of setting agendas and providing leadership. Among academics, it will be tricky as there is absolutely no hiring in Irish universities and many of the good young academics I know really are being forced out not so much by salary restrictions but by a general sense that the university system and its relation to government is becoming farcical, something that suits people who want to do nothing but penalises energetic academics by trying to make them civil servants. From partly a personal view, and in line with the global Irish chapter, I hope a global sphere emerges of people with ideas who leave Ireland but find a meaningful way to connect back to it in a constructive sense.

In politics the emergence of people like Leo Varadhkar in FG and Pearse Doherty in SF at least signals that there are some new voices emerging. Doherty is interesting as no matter what your views are of Sinn Fein, this guy has been extremely articulate and provided the most lucid and economically informed political response to both the last budget and the banking developments of the last week. He potentially betokens someone who could bring SF into the mainstream in the South which, for good or ill, would represent a major change in the Irish political landscape.

The authors are definitely to be commended for putting this book together and in some sense putting it up to everyone else to say "well if you don't think our ideas are the next thing then tell me yours". It is a good range of authors and a good range of topics and deserves to be considered, debated and added to. I can't hide a sense that our evidence base in Ireland is so poor that I feel like we are waving in the dark without a change in this area and I think the Lyons and Kinsella chapter probably agrees with this spirit. The next generation needs to be tougher, more intelligent and more willing to speak out, and more willing to insist on actual evidence rather than assurances from people in authority.

The Life You Can Save

2011-04-02T11:07:00.000-07:00

Spent some of this morning with Peter Singer's "The Life You Can Save". A really interesting and provocative book posing the ethical question as to how much money people should give to others in need. He argues that those who can have a compelling moral obligation to tithe part of their income to organisations who are genuinely saving the lives of poor people. He argues that this obligation is as pressing as the obligation to rescue a child who is in danger of drowning if you are walking past.

He uses the vignette (due to Peter Unger) of the man who sees a child playing on a train track who is oblivious to an oncoming train. The man is too far away to catch the child's attention. However, he can flick a switch to get the train to divert down a sidetrack. Unfortunately his prized sports car is down this side-track. The man has cared for this car for a long time and was eventually going to sell it to partly fund his retirement. There is noone else around and presumably no cameras. Nobody is going to know if he doesn't flick the switch. He decides not to and the child presumably is obliterated by the ongoing train. Singer argues that not giving money to aid organisations that have demonstrated their effectiveness is equivalent to not throwing the switch. He spends some time arguing against common ideas about the ineffectiveness of philantrophy,arguing that is now possible without substantial effort to locate agencies that are saving lives. He then turns to the question of human nature and why it is that we do not give. He cites studies from Harbaugh and others showing that giving actually improves well-being and draws from the literature of Vohs and others arguing that money itself may distort the expression of people's preferences through priming them to think differently about issues than if they thought about them as pure resource allocation problems. He draws from behavioural economics to suggest that inertia may be a key force and argues for the use of more effective marketing and also the use of default options, whereby company employees would be opted into donations to effective aid organisations and given the option to opt-out.

This book certainly made me think fresh about an issue I have thought about since I was a small child. In some sense, it is most profound and compelling question of them all, as to our duty in a world where there is avoidable suffering.

DG Sanco and Behavioural Economics

2011-04-01T19:48:00.001-07:00

The European Health and Consumer Directorate, in particular its consumer division, has been taking an active interest in behavioural economics, as reflected in two large conferences it has held on this area in the last couple of years (link here and here). A recent paper by Emmanuele Ciriole, economist with the division, is available here. A recent report commissioned by Sanco on retail investment services is available here

Recent Books

2011-04-01T17:17:00.001-07:00

The following books have given me a lot of food for thought over the last few months

1. Dani Rodrik The Globalisation Paradox

2. Steven Medema The Hesitant Hand

3. Kat Yun-Chen and Marina Krakovsy - The Secrets of the Money Lab

4. Dean Karlan and Jacob Appel More than Good Intentions

5. Leonard Mlodinow - The Drunkward's Walk

6. Paco UnderHill - Why We Buy

7. Michel-Kerjen and Slovic: The Irrational Economist

8. Collins, Murdoch, Rutherford and Ruthven - Portfolios of the Poor

9. John Quiggin - Zombie Economics

10. Ed Glaeser - The Triumph of the Cities

New Blog

2011-04-01T16:33:00.000-07:00

I will be posting on this blog for the near future. I am mostly inept at technology and design but I really enjoy sharing links and discussing research with people and blogging has been a good way to do this for the last four years or so. I certainly welcome any suggestions from any reader on how to improve this blog as we go but I would warn you that it will be nothing fancy! The blog will basically address the same issues as I was blogging on at the Geary blog but will have a slightly more selfish focus on events and seminars I am involved in that wouldn't suit a shared blog.

Test Post

2011-04-01T16:22:00.000-07:00

Starting on the long and winding road.