New Economist

If you can understand this blog you must be a genius

I had always assumed that the New Economist was a fairly readable weblog. An online readability test suggests otherwise, gving it a 'genius' rating. (Hat tip: Christine Chen at FP's Passport blog)

So how do other popular econoblogs compare? Many are almost as unreadable as mine: try Dani Rodrick (college postgrad), Greg Mankiw (college undergrad), the Economist's Free Exchange (college postgrad) and George Borjas (college postgrad) for starters.

But many econobloggers' writing is more accessible. Alex and Tyler at Marginal Revolution, Mark Thoma, Brad DeLong, Brad Setser, Andrew Leigh, Dean Baker, Angry Bear, Newmark's Door, Tim Harford's FT blog and Megan McArdle's blog at The Atlantic were all assessed as having a high school reading level, while William Polley's blog was at junior high school readability.

And the only other blogs writing at genius-level I could find? John Quiggin and the Becker-Posner blog. I'm honoured to be in such company, though I have neither a beard nor a Nobel prize.

But maybe I'm just too obscure and high-falutin? Should I de-fog my posts? Feedback welcome.

Data fun for all the family

OK, I confess - I'm a  data junky. So I am very thankful to Jim Gibbon (via Eszter Hargittai of Crooked Timber) for posting about Gapminder. It provides the best visualisation of data I have ever seen. Here is Jim's post:

I’ve been blown away this morning by a new tool for displaying world development data called Gapminder.  If you want a spicy way to show off statistical data, it’s hard to imagine a more compelling software program.  There is a great video demonstration of Gapminder being used in what is possibly one of the best presentations I have ever seen (I laughed, I cried, my jaw dropped).  You can play around with the program online, but make sure to watch the video to get a sense of its capabilities.  (Note: No statistical knowledge required, appropriate for all audiences!)

The Gapminder Foundation was founded by Ola Rosling, Anna Rosling Rönnlund and Hans Rosling in Stockholm. It shows what a small non-profit can do.  You can checkout the Gapminder tool online - and there is also a related tool with even more options on the website: Trendalyzer. It's capabilities are awesome. The website also has plenty of downloads and presentations.

Bah humbug!

Tim Harford thinks we should Burn the Christmas Card list:

Christmas cards are given and received in a parody of a market - one that involves interpersonal exchange but no prices. That matters because it means our cards are sent out into an informational void. Is it appropriate to send a card to one’s teacher? To one’s boss? To close colleagues? Distant ones? We can look at the cards we receive and try to extrapolate, but this only goes so far. A student does not know what cards a teacher receives because she is not a teacher; but she knows she doesn’t want to be the only student who didn’t bother.

..“Exchange” is not the right word here. “Vendetta” is more accurate. The whole result is so clumsy that a Nobel laureate in economics, Thomas Schelling, once described these symptoms in detail before advocating bankruptcy proceedings in which all Christmas card lists should be burned. Why does the “market” for Christmas cards work so badly? Simply because there is no reason that it should work well. We are only surprised because most markets do work well.

Dickens was right

The novels of Charles Dickens are replete with dodgy characters. So what has changed in 150 years? Not that much. Norwich Union report that the cost of fraud to the nation rose to nearly £16bn last year, or £650 per household. The BBC story gives an example of the inventive nature of these latter day rogues:

The link between fraud and organised crime is revealed by the example of a drugs gang in a big English city. The criminals have contrived hundreds of car accidents in which they lured members of the public to crash into the gang's cars.

"The scale of this operation is enormous," Chris Hill said. "This gang had induced more than 400 accidents in the course of a year.

Meanwhile The Register reports the UK 'full of fraudsters', with nearly half of people quizzed in a survey admitting to forgery and one in ten to low level identity fraud.

A quarter of 1,000 Britons polled in a survey by document and identity verification firm TSSI confessed to exaggerating their educational qualifications to gain employment. One in ten of those quizzed by TSSI admitted they had misused ID or access control systems by impersonating someone else or had assisted someone else to do so, while a third (32 per cent) admitted conning their way past security personnel. One in five (21 per cent) owned up to having used fake identity cards.

"Identity fraud is now a major risk to consumers, yet our study shows that low level identity abuse and fraud is commonplace to the extent that it is almost becoming socially acceptable," said Danny Chapchal, TSSI's executive chairman.

Nearly half (45 per cent) of Brits polled in the survey admitted to some kind of forgery. ID cards were by far the most popular item, with 18 per cent admitting to forging these. Other items included doctors notes (five per cent); fake letters on company letterhead (four per cent); reference letters (four per cent); travel tickets (two per cent); concert tickets (one per cent); and tickets for sporting events (one per cent).

Just over one in ten people (12 per cent) owned up to impersonating someone else over email. Seven per cent confessed to assuming another person’s identity through forging their signature on letters or cheques. Meanwhile one in seven (14 per cent) confessed to spying on people entering PINs, pass codes and passwords.

A nation of swindlers, con artists, fraudsters and charlatans? You bet. Dickens was right.

The Register points out, as I should, that TSSI's Dishonest Britain report (which can be downloaded here) is self interested. 

TSSI has a vested interest here, of course, in talking up the scope of the very dishonesty among the general public its technology is designed to addresses. Nonetheless we can't help but be impressed by the ability of its researchers to elicit admissions from random punters in train stations that might (were they not anonymous) result in an extended stay at Her Majesty's pleasure.

Consensus forecasting? Can one trust the 'wisdom of crowds'...

The aggregation of information in groups can result in better decisions than could have been made by any single member of the group. So argues James Surowiecki in 2004 bestseller The Wisdom of Crowds, drawing in part on the early work of Sir Francis Galton. Surowiecki's work has inspired three Oxford University graduates to apply its premise to financial markets. A Sunday Telegraph story, How to profit from the noise of the rabble, informs us:

Stephan Bisse, 40, a former City trader at Goldman Sachs who completed an MBA at the university's Saïd Business School last year, has set up ConsensusView.com, helped by two young computer science graduates from Worcester College, Ed Smith and Sam Brightman.

Each day members of the public are invited to vote on whether they think any one of a series of share prices, indexes, currencies and financial futures contracts will rise or fall that day. Voters do not specify an actual forecast; they simply predict a rise or fall, and have to do so between 4.30am in the UK and the opening of the market they are voting on. There is the lure of a $1,000 (£550) prize for the best forecaster each month. The Oxford three hope to test the theory that crowds have wisdom, and if it holds water, create a business out of it.

The website is up and running, but has yet to reach critical mass. As the Telegraph story observes:

The key to all these efforts, however, will be the site's ability to attract voters and, ultimately, to forecast accurately the direction of markets. At the moment, two weeks after its launch, just 52 people are voting on it, but with a larger number the theory that a consensus view will tend to be right will be tested more comprehensively.

As of Sunday evening there were 212 registered users so far, so clearly the newsaper story has boosted the numbers. I encourage readers of this blog to sign up to ConsensusView.com; it's an experiment worth encouraging.

Freakonomics live!

Your can now hear Steven Levitt, a professor of economics at Chicago University and author of Freakonomics, speaking recently at the Commonwealth Club in San Francisco. Last Sunday the Australian Broadcasting Corporation's weekly radio programme Background Briefing broadcast his rather entertaining public lecture.

Nothing if not thorough, the ABC web page features the transcript, an MP3 download, and streaming audio via Windows Media, Real Media and Podcast! Note that the streaming audio is only available for the next three weeks or so, so get it while you can.

Things I wish I'd known at 20

The ever insightful Chris Dillow over at Stumbling and Mumbling has some sage observations about Things I wish I'd known at 20. He lists seven. These are my two favourites:

1. Don't care so much about what others' think about you. This, though, is easier said than done. There are powerful evolutionary reasons why we naturally want to conform to group norms and to win their respect and affection - because this is the only way to survive in hunter-gatherer societies. It takes years to learn to overcome this norm.

3. People regret what they haven't done more than they regret what they have done. If in doubt, do it. Don't be scared.

Go read the whole thing...

Unusual facts about leading economists 1: Piero Sraffa

Many people would be aware of the long journey over many decades that Piero Sraffa spent labouring over his masterwork The Production of Commodities by Means of Commodities, a neo-Ricardian refutation of neoclassical economics. Many also would be aware of his socialists leanings, and friendship with Italian comunist leader and intellectual Antonio Gramsci.

But how many people realise it was Sraffa himself who provided Gramsci, imprisoned by the fascists, with the pens and paper with which he would write his famous Quaderni dal Carcere (Prison Notebooks)? Or that, according to his Wikipedia entry:

He became rich after a long-term investment on Japanese government bonds, made the day after the nuclear bombing on Hiroshima and Nagasaki; a popular story tells that he'd received a huge amount of money which for more than a decade he'd refused to invest, waiting for a "safe" opportunity. He correctly reasoned that Japan wouldn't remain a poor country for long.

If anyone knows of similar unusual facts about leading economists, please email them to me.

Another economic idiot

Oh dear. Charles Clover at The Daily Telegraph does not understand that when supply increases, prices usually fall - and so wins Tim Worstall's Economic Idiot Award IV. Here's the offending text:

The amount of farmland on the market has increased for the first time in three years, but the price of land is falling, the Royal Institution of Chartered Surveyors said yesterday.

Tim comments: "Masonic handshakes and lashings of ginger beer all round I think."

GNP = Gross National Happiness?

Rather than leading lives of quiet (albeit humid) desperation in London we should:

engage in a hands-on problem solving approach to provide practical guidance to governments, businesses, and non-government organizations that want to take concrete steps towards creating good and sustainable human societies.

How? By joining The search for happiness in Antigonish! Scott Deveau of the Globe and Mail reports that big things are happening in this small Canadian town:

Nearly 500 people from around the globe have descended on a small Nova Scotia town this week to try to find the key to world happiness.

Environmentalists, journalists, government officials, entrepreneurs, social activists, youth, business and labour leaders from 33 different countries have come to Antigonish, N.S., to attend the second International Conference on Gross National Happiness, which started Monday.

The delegates have become fascinated by the development model set by a small Himalayan country, which has put economic prosperity behind its general happiness and are bringing input on how their own countries have tried to do the same.

The concept of Gross National Happiness was developed 30 years ago by the King of Bhutan. "It is based on the belief that the ultimate pursuit of every human being is happiness. If that it is true, then it becomes the responsibility of the state to create the opportunity for happiness for its people," said Lyonpo Jigmi Thinley, Bhutan's present Home Minister and former prime minister, who is in Nova Scotia attending the conference.

...He argues that global interest in Bhutan was motivated by a general dissatisfaction with how the world has developed. "Despite all the wonders, there still a general discontent," Mr. Thinely said.

I have long been interested in the study of subjective well-being (aka 'happiness'), but even this muesli chomping, Birkenstock wearing, Guardian reading tree-hugger finds it a little hard to take seriously a conference that begins with Tai Chi, Yoga, and Chi Qong at 6.30am, and that has a strict scent-free policy:

Please note that some delegates are highly sensitive to scented products and chemicals, and become ill from exposure to them. Therefore please do not wear or bring scented products or regular bug spray to the conference. Unscented soap, shampoo, and other products, and natural bug spray will be available at the conference. Thank you for your consideration.

For those interested in this field there is more serious fare around, such as last weeks' Capabilities and Happiness conference in Milan.

Alternatively, you could just listen to Ron Colman, of GPI Atlantic, who is in Antigonish so you don't have to. According to the Globe and Mail report:

"We can measure the conditions of well being," Mr. Colman said Monday. "If people are healthy, if they're able to walk the streets at night, or breath the air, they are more likely to be happy."

I quite agree. Being able to breathe sure beats asphyxiation any day.

As for the large Bhutanese contingent, maybe they can explain to the other delegates why a hereditary monarchy is superior to parliamentary democracy. Or why 100,000 of their own people remain stuck in UNHCR refugee camps in eastern Nepal. Happy? I'm sure they're ecstatic.

UPDATE: Phil Miller at Market Power comments:

I say let people decide for themselves what makes them happy.  Let them decide what books to read, what jobs to do, how many kids to have, whether to drive a car, etc.  There are too many variables to account for.  There is no way that a grand design can optimize society's happiness.

But I guess if it makes them happy....