Some Irish Economic Links

1. Karl Whelan's Irish Times article is one of the most important pieces to come out about the Irish Economic situation since christmas. It is compulsory reading for anybody interested in a potential solution to the current mess in Ireland.

2. The CSO unemployment release for Quarter 4 2010 makes for very grim reading and, at least, will quell people looking for false hope in minor ticks in the Live Register. This is the major issue dominating the real Irish economy at present.

3. John McHale irisheconomy piece arguing about the costs of default. In classes on the ultimatum game, I have been using support for default as an example. A lot of the debate about default in Ireland has been driven by a perception that the European negotiators acted unfairly, rather than the repayments are unsustainable. The latter may be true but I wonder how much the momentum for default would have progressed had the EU team not imposed an interest rate that almost all independent commentators have argued is too severe. I have yet to read a convincing explanation for their reasoning in this matter. The IMF logic seemed much more understandable. In general separating out concerns for fairness from economic self-interest is always hard because if something feels unfair, it is often because it hurts us.

4. A belated link to Henry Farrell's review of Fintan O'Toole's Ship of Fools (via Mostly Economics blog) It is a fascinating question as to what we learn about international capitalism from looking at Ireland. Ireland is certainly not mentioned as much on neo-liberal websites as it used to be, and our poster-child of capitalism image is not likely to return for a long-while. But we need more debate about which aspects of the system were particularly poisonous in Ireland.

5. Constantin Gurdgiev, Ciaran Nic an Bhaird, Brian Lucey and Lorcan Roche-Kelly paper on Irish economic meltdown

Links 15-03-11

1. Ferdinand's blog has been a consistent voice of reason in the Irish academic debate. I sincerely hope, despite his move abroad, he continues his solid opposition to the Employment Control Framework. His latest post on this is here

2. I was worried when Marginal Revolution took down their blog temporarily that they might be breaking the old maxim that if it aint broke dont fix it. Thankfully, the new blog looks very much like the old and looks mostly like it has had a lick of paint. This is the best blog on the internet in my opinion, certainly the most informative for people like me with somewhat obsessive interests in real-world applications of economics.

3. There was a lot of interest in the Economix blog coverage of the happiest person in America, as defined by a match to the statistical profile of the Gallup well-being data. They follow up with the unhappiest person in America.

4. One of the most interesting aspects of the IFS conference I was involved in last week was to see in person the work of Bruce Meyer on consumption and income as measures of welfare. I will post separately on this but his IDEAS page is a very good resource for people interested in quantifying the effects of policy and business cycle fluctuations on people's welfare.

5. Peter Ubel from the Fuqua School in Duke provides a link to a recent podcast of an interview he conducted discussing his ideas on the health system in the United States.

6. Matthew Kahn's blog is really worth reading. His thoughts lately on the best way to invest the recent large donations to USC and UCLA are particularly interesting. He is basically arguing that investing in top faculty is a better strategy than investing in fancy buildings. This is an argument that is worth having in Ireland also as we are still investing in a university capital programme at a time when we are losing some of our best professors.

Links 08/03/2011

1. Time Magazine Top 25 Finance Blogs (via Marginal Revolution)

2. Gerard O'Neill on aging and the economy in Ireland

3. I am surprised how much I enjoyed reading the debate on Andrew Gelman's blog about whether we should use the word "assumptions" or "conditions" when talking about things like normality.

4. Ferdinand takes on the issue of commercialisation and international students. In short, no problem generating revenue but if that becomes the raison d'etre for encouraging international students to Ireland then we are moving to a bad place.

5. Ronan Lyons applies his usual sound analysis and love of cheesy music to the programme for government. I now have "can't touch this" lodged squarely in the center of my consciousness clouding out everything else. Thanks Ronan.

6. Cian O'Callaghan describes the second "Honest to Blog" session. In my experience, people who blog (including myself) love talking about blogging. I will have to contribute my two cent at some stage.

Ok, time to stop. Its hammer time.

Links 1/03/2011

1. Choice overload is an important concept in the recent literature on consumer decision making. A review from last year in the Journal of Consumer Research is worth reading on this.

2. Many consumers believe 36 months is longer than three years - press release based on study in Journal of Consumer Research

3. A really important paper in PNAS showing that childhood self-control predicts future health, controlling for a very wide range of potential confounds

4. Journal of Health Economics paper by Ikeda et al showing that obesity is linked to hyperbolic discounting

5. Meltzer and Jena Journal of Health Economics paper on wages and the intensity of exercise

Weekend Links

1. Becker and Posner Blog on Medical Screening and Overdiagnosis

2. VOX article by Patacchini and Zenou on peer effects in education

3. A plenum (a new word for me - roughly means "all" I think) of German economists offer suggestions on the European Debt Crisis

4. Via Mankiw, a conference for undergraduate economists at Georgetown.

5. (Via a link on Stumbling and Mumbling), Tim Harford offers some interesting thoughts on financial literacy education and regulation as forms of improving consumer outcomes.

Links 16-02-11

1. NBER Paper - Rethinking America's Illegal Drugs Policy

2. NBER Paper - A Survey of the Economic Effects of Migration

3. IZA Paper on Selection Effects (or lack of) in lab experiments

Is There Selection Bias in Laboratory Experiments? The Case of Social and Risk Preferences
by Blair L. Cleave, Nikos Nikiforakis, Robert Slonim
(February 2011)

Abstract:
Laboratory experiments are frequently used to examine the nature of individual preferences and inform economic theory. However, it is unknown whether the preferences of volunteer participants are representative of the population from which the participants are drawn or whether they differ due to selection bias. We examine whether the social and risk preferences of participants in a laboratory experiment represent the preferences of the population from which they are recruited. To answer this question, we measured the preferences of 1,173 students in a classroom experiment. Separately, we invited all students to participate in a laboratory experiment. We find that the social and risk preferences of students who attend the laboratory experiment do not differ significantly from the preferences of the population from which they were recruited. Moreover, participation decisions based on social and risk preferences do not differ significantly across most subgroups, with the exception that female participants are on average less risk averse than female non-participants, and male participants are more risk averse than male non-participants.

4. Cabinet office paper on financing early interventions

5. There is actually a heading on the Cabinet Office website called "The Big Society". Includes a subheading on the "Big Society Bank".

6. Stephen Kinsella's webinar on reducing unemployment

7. Frank Barry's suggestion for helping to reduce unemployment

Links 1/2/2011

1. Via irisheconomy.ie Andrei Shliefer's lecture on the transformation of finance

2. The paper, linked here before, by Berd and Gigerenzer arguing that behavioural economics is not empirically-driven enough and is essentially neo-classical economics with some twists. Has been getting some attention on the net, following coverage in the FT.

3. Ed Glaeser on the excellent Economix blog talking about the moral heart of economics. The post bio says that Glaeser has a forthcoming book on "The Triumph of the City". The pre-order description from Amazon looks like it will be worth a read. A lot of Glaeser's papers are available on his IDEAS page here.

A pioneering urban economist offers fascinating, even inspiring proof that the city is humanity's greatest invention and our best hope for the future.

America is an urban nation. More than two thirds of us live on the 3 percent of land that contains our cities. Yet cities get a bad rap: they're dirty, poor, unhealthy, crime ridden, expensive, environmentally unfriendly... Or are they? As Edward Glaeser proves in this myth-shattering book, cities are actually the healthiest, greenest, and richest (in cultural and economic terms) places to live. New Yorkers, for instance, live longer than other Americans; heart disease and cancer rates are lower in Gotham than in the nation as a whole. More than half of America's income is earned in twenty-two metropolitan areas. And city dwellers use, on average, 40 percent less energy than suburbanites. Glaeser travels through history and around the globe to reveal the hidden workings of cities and how they bring out the best in humankind. Even the worst cities-Kinshasa, Kolkata, Lagos- confer surprising benefits on the people who flock to them, including better health and more jobs than the rural areas that surround them. Glaeser visits Bangalore and Silicon Valley, whose strangely similar histories prove how essential education is to urban success and how new technology actually encourages people to gather together physically. He discovers why Detroit is dying while other old industrial cities-Chicago, Boston, New York-thrive. He investigates why a new house costs 350 percent more in Los Angeles than in Houston, even though building costs are only 25 percent higher in L.A. He pinpoints the single factor that most influences urban growth-January temperatures-and explains how certain chilly cities manage to defy that link. He explains how West Coast environmentalists have harmed the environment, and how struggling cities from Youngstown to New Orleans can "shrink to greatness." And he exposes the dangerous anti-urban political bias that is harming both cities and the entire country. Using intrepid reportage, keen analysis, and eloquent argument, Glaeser makes an impassioned case for the city's import and splendor. He reminds us forcefully why we should nurture our cities or suffer consequences that will hurt us all, no matter where we live.

4. Aghion et al QJE paper - Regulation and Distrust

We document that, in a cross section of countries, government regulation is strongly negatively correlated with measures of trust. In a simple model explaining this correlation, distrust creates public demand for regulation, whereas regulation in turn discourages formation of trust, leading to multiple equilibria. A key implication of the model is that individuals in low-trust countries want more government intervention even though they know the government is corrupt. We test this and other implications of the model using country- and individual-level data on trust and beliefs about the role of government, as well as on changes in beliefs during the transition from socialism. (c) 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

5. Jonathan Lipkin FT article on behavioural economics and auto-enrolment

Weekend Links

1. NBER Working Paper by Schulhofer-Wohl providing probit regression evidence that negative equity does not reduce worker mobility and may even increase it. This is for the US market so we should be careful not to generalise to Europe where bankruptcy and foreclosure laws and norms are very different.

2. My podcast on RABO website on financial decision making

3. John Bruton's open letter to EU Commission is worth reading (via Kevin O'Rourke on irisheconomy). One of the best contributions from the Irish perspective so far.

4. The comments on the irisheconomy.ie post about Denis Coniffe's passing give a sense of how highly he is regarded. A class act in every way.

5. My slides from last year on the mental health effects of the Irish recession.

6. Caplin et al neuroeconomic QJE paper on measuring beliefs and rewards.

7. Bushong et al AER paper on Pavlovian processes in consumer choice.

Links 03-1-11

1. Stephen Kinsella Guardian blog piece on Irish growth prospects

2. Becker-Posner blog on use of international test-score comparisons for evaluating school-systems

3. irisheconomy.ie welcomes Estonia to the eurozone

4. NBER Working Paper showing small effects of cash incentives for college performance.

When Opportunity Knocks, Who Answers? New Evidence on College Achievement Awards
Joshua Angrist, Philip Oreopoulos, Tyler Williams
We evaluate the effects of academic achievement awards for first and second-year college students on a Canadian commuter campus. The award scheme offered linear cash incentives for course grades above 70. Awards were paid every term. Program participants also had access to peer advising by upperclassmen. Program engagement appears to have been high but overall treatment effects were small. The intervention increased the number of courses graded above 70 and points earned above 70 for second-year students, but there was no significant effect on overall GPA. Results are somewhat stronger for a subsample that correctly described the program rules. We argue that these results fit in with an emerging picture of mostly modest effects for cash award programs of this type at the post-secondary level.

5. Janet Street-Porter on behavioural economics

6. Martin Hickman on the behavioural insights team. The most read article on the UK Independent site at time of accessing it.

New Year's Day Links

1. An interesting video of Slavo Zizjek being bombarded with images and asked to reply - much of the early part focuses on images of the financial crisis.

2. Memories from Millenium Eve in Dublin

3. Sean Flynn on 2010 in Irish Education

4. Treasury webpage on financial reform in the US - the Obama Financial Reform and Consumer Protection Act introduced a raft of new measures that are well worth keeping uptodate on. In their own words,

The Wall Street Reform and Consumer Protection Act of 2010 will:

End “Too Big to Fail” and taxpayer-funded bailouts, so that average Americans will no longer have to pay the price for greed and irresponsibility on Wall Street. Failing firms will be shut down in an orderly fashion, not bailed out with taxpayer dollars. It gives the federal government the authority to shut down and break apart large non-bank financial firms whose imminent failure might threaten the broader system. Any losses that cannot be covered through sales of the firm’s assets will be recouped from the largest financial institutions. This authority follows the simple principle that the financial industry – and not taxpayers – will bear the costs of a resolution. As a result, no firm will be insulated from the consequences of its actions, protected from failure or benefit from the perception that taxpayers will be there to break their fall.

Put in place the strongest consumer financial protections in history, including the creation of a new dedicated Bureau. The CFPB, an independent entity within the Federal Reserve, will have one mission: to promote transparency and consumer choice, and to prevent abusive and deceptive practices. The CFPB substantially consolidates the authorities of seven different regulators. This consolidation – into one agency with a single focus – will benefit not only consumers, but responsible actors throughout the financial system.

Give financial regulators the tools they need to identify and curb reckless risk-taking, so that we can help prevent future crises and keep our financial system stable and strong. In the years leading up to the crisis, there was a clear failure to look beyond the safety of individual firms or markets to the health and stability of the entire system. The bill creates a Financial Stability Oversight Council, chaired by the Secretary of the Treasury, and composed of the heads of the financial regulatory agencies, and an Office of Financial Research within the Treasury Department – to support the Council through the collection and analysis of data concerning risk in the financial system.

Create a safer, more transparent derivatives market through comprehensive reform, to bring derivatives transactions out of the shadows and put them under strong supervision, with robust capital and margin for derivatives dealers, and robust clearing and trading requirements for standard contracts. Standardized derivatives will be centrally cleared and traded. Derivative clearing organizations will be subject to conservative risk management standards to strengthen the core infrastructure of these markets, as well as public reporting requirements to increase transparency and efficiency.

5. Lay summary of last year's Gallup well-being research

New Year's Eve Links

Final Links of 2010. The only concrete resolution I have is that this time next year I want to be going into the field with some surveys on this day.

1. Tyler Cowen post on Economics and Mental Health Care

2. Danny McCoy (IBEC) and Paul Sweeney (ICTU) on rebuilding the Irish Economy in todays' ITimes.

3. Dan O'Brien on the economic situation heading into 2011.

4. Alan Matthews post on Irish financial sector imbalances.

5. Via MR, a hypothesis as to why the East side of cities are poorer

6. Krugman on why Ireland is like Nevada

7. Freakonomics on a new website called www.GiveItBackforJobs.org that allows people to donate their Bush-era tax cuts to organisations promoting jobs growth

Links 30-12-10

A big hello to all the gym-owners and health book publishers in the world who will make a lot of money in the next week from a number of common behavioural biases. Seeing people around this time is like observing behavioural economic forces in their pure state. For me, each time around this year a mystical vision of my potential self descends on me and keeps me rapt for a few days. Sometimes it has led to me making decisions that were very positive but for the most part the allure wears out after a week. If anyone knows any good papers on New Year's resolutions bounce them on or post them. For now, here are some random links.

1. Economics Teaching Sessions at AEA Meeting in Denver (via Greg Mankiw)

2. Stumbling and Mumbling has some interesting thoughts on tail-risk and Northern Ireland's current trouble with water. Dublin has been hit with water shortages also due, it seems, to burst pipes leading to massive leaks of water. The preparedness of Ireland and the UK for the type of extreme (by standards this side of the world) weather conditions experienced in the last month is a very interesting case-study in cost-benefit analysis and behavioural economics.

3. The Guardian letter-writing page starts attacking the "nudge agenda".

4. New website of the Cornell Center for Behavioural Economics in Child Nutrition.

5. From Behavioural Economics to the Bedside - about a JAMA edition on physician reasoning in case you were wondering.

6. Hepburn et al - Behavioural Economics, Hyperbolic Discounting and Environmental Policy - from a recent special issue of Environmental and Resource Economics

7. Kirman and Teschi - The Role of Empathy in Economics

Empathy is a longstanding issue in economics, especially for welfare economics, but one which has faded from the scene in recent years. However, with the rise of neuroeconomics, there is now a renewed interest in this subject. Some economists have even gone so far as to suggest that neuroscientific experiments reveal heterogeneous empathy levels across individuals. If this were the case, this would be in line with economists' usual assumption of stable and given preferences and would greatly facilitate the study of prosocial behaviour with which empathy is often associated. After reviewing some neuroscientific psychological and neuroeconomic evidence on empathy, we will, however, criticize the notion of a given empathy distribution in the population by referring to recent experiments on a public goods game that suggest that, on the contrary, the degree of empathy that individuals exhibit is very much dependent on context and social interaction

Links 23-12-10

The snow continues to fall. James Joyce - The Dead - comes to mind.

"The time had come for him to set out on his journey westward. Yes, the newspapers were right: snow was general all over Ireland. It was falling on every part of the dark central plain, on the treeless hills, falling softly upon the Bog of Allen and, farther westward, softly falling into the dark mutinous Shannon waves. It was falling, too, upon every part of the lonely churchyard on the hill where Michael Furey lay buried. It lay thickly drifted on the crooked crosses and headstones, on the spears of the little gate, on the barren thorns. His soul swooned slowly as he heard the snow falling faintly through the universe and faintly falling, like the descent of their last end, upon all the living and the dead."

1. Top Scientific Breakthroughs of 2010 (vie MR blog)

2. Via Philip Lane, the recent IMF Conference Call on Ireland. The terms of the IMF agreement look reasonable to my non-macroeconomic eye. The deal with the EU looks like it simply compounds every flaw in the system that allowed crazy non-Irish banks to lend money to crazy Irish banks for the purposes of property speculation, and bundles up the losses into a bill for the Irish taxpayer. This is definitely one for every person with an interest in the future of the country to quietly reflect upon once the Christmas celebrations are over and there is some quiet time before the New Year. Karl Whelan's B+F article is not a bad place to start. In a recent post, Karl waxes unusually aggressively about the nature of this agreement.

If, as it appears, the Europeans (rather than the IMF) were pushing for faster fiscal adjustment, more intense conditionality, no defaults on senior bonds and a high borrowing rate, rather than have no hand to play at all, the Irish side could still have adopted the Dirty Harry strategy: Go ahead punk, make my day.

3. NBER paper claiming that workplace smoking bans cause fires but that policies that increase the price of smoking decrease fires.

4. NBER paper on the economic value of teacher quality by Hanushek - Kevin may have already covered this. Teachers that I know rarely enthusiastically endorse education economics as a useful contribution, as a lot of the literature overturns some sacred cows such as class sizes. However, there is now much credible evidence showing that good teachers produce a sizeable economic and social externality. We should have a much bigger discussion in Ireland as to how to reward and enable good teachers, including figuring out how the good ones themselves want to be rewarded and treated. Good, energetic, intrinsically motivated teachers are definitely on my list of things to be grateful and thankful for this Christmas.

5. NBER Working Paper on Financial Literacy and Retirement Plans

The Role of Financial Literacy in Determining Retirement Plans

Robert Clark, Melinda Sandler Morrill, Steven G. Allen

Workers nearing retirement face many important, and often irreversible, choices. We collected detailed demographic and financial literacy data on over 1,500 workers nearing retirement at three large companies to assess how individuals are planning for retirement. Many respondents display limited knowledge and understanding of public and company-provided retirement benefits. Controlling for basic demographics and wealth, we find that misconceptions about eligibility ages and plan generosity influence workers’ expected age of retirement. Although retirement-related decisions will affect workers’ wellbeing for the remainder of their lifetimes, many do not possess enough basic financial knowledge to confidently make optimal choices.

6. Edgar Morgenroth links to John Bruton's piece on the recent IMF-EU deal. Edgar is a German-born economist who has lived in Ireland for several years so is in a better position than most to evaluate the deal without national blinkers. To a lot of the outside press, Ireland got a bailout and many of the journalists themselves had bailed out of the city even before the announcement. However, very little about this feels like a bailout. Irish economists have not been sentimental patriots during this mess and the most common criticism levied at them has been unpatriotically talking down the country. When people like Edgar, Karl Whelan, Kevin O'Rourke etc., all start saying that we are getting a really bad deal, it is well worth listening to them.

Links 21-12-2010

I haven't psychologically come to terms yet with the fact that we are approaching Christmas, so will continue with regular blog service for a few days. Very interesting time to be in Ireland. One of the most talked-about economic plunges in history and the most dramatic winter since at least before I was born, which means the country has largely ground to a halt again for a few days. If nothing else, the phrase "the luck of the Irish" means something a lot different than it used to mean. Though, considering the turbulent nature of Irish history, I'm not entirely sure how that phrase gained positive connotations.

1. Stanford's edu page on youtube has some really nice lectures. There are a number of lectures by Zimbardo. His lecture on evil and heroism is delivered in his usual absorbing style. Its really great to watch these lectures - most of the material is familiar to me but still absorbing. The phrase "Heroism is the antidote to evil" sounds trite but the depth of the argument is very profound, building on 40 years of research.

2. Killingsworth, M. A., & Gilbert, D. T. (2010). A wandering mind is an unhappy mind. Science, 330, 932.

3. Einstein for the Masses on the Yale channel. Funny and engaging lecture on relativity. Nice model for how to treat alumni.

4. Via Economix, "austerity" is the most searched-for word this year on the Webster online dictionary.

5. Nicholas Barberis's talk on Yale's channel on behavioural finance and the financial crisis is a nice overview of the cognitive and social psychology of financial crises. Nice set of notes here on applications of prospect theory in finance.

6. Richard Tol on ranking business schools in Ireland.

7. Via Philip Lane, the Central Bank has a new data series on the foreign claims on domestic Irish banks. Hopefully, this will stop the habit in some papers of including the foreign claims on international IFSC banks in calculations of Irish external debt. Things are bad enough!

8. Tyler Cowen on twitter asks "On what grounds can Fianna Fail possibly campaign for reelection? Marketing challenge". Ken McKenzie and I solved this recently. "Fianna Fail: The Government You Deserve".

Weekend Links

(i) NBER working paper from Dora Costa on scarring versus selection among Civil War POWs.

(ii) Shick and Steckel - Height as a proxy for cognitive and non-cognitive ability. Effectively suggests suggest taller people are richer and richer largely because they are brighter.

(iii) Poor fitness contagion from randomly assigned friends. NBER Working Paper.

(iv) IZA Working Paper - Subjective Well-Being, Income, Economic Development and Growth by Daniel W. Sacks, Betsey Stevenson, Justin Wolfers

(v) Guardian article from last month on the role the Behavioural Insights Team in the Cabinet Office will have in promoting health behaviour

(vi) A more recent Guardian article argues that Cameron is hijacking and corrupting a great set of ideas

(vii) Truth on the Market Symposium on Behavioural Economics, Law and Regulation. This is great. Essential reading if you are interested in the legal and regulatory aspects of behavioural economics.

(viii) "Spend More Today: Using Behavioural Economics to Improve Retirement Decisions" - Paper Linked Here - From Blake and Boardman at Cass Business School.

Today's Links

1. Karl Whelan on the Irish corporation tax

2. Ferdinand offers a fairly paternalistic approach to integrating new students into university.

3. Bargain and Keane (IZA 2010) -  

Tax-Benefit Revealed Redistributive Preferences Over Time: Ireland 1987-2005
by Olivier Bargain, Claire Keane
(September 2010)

Abstract:
By inverting Saez (2002)'s model of optimal income taxation, we characterize the redistributive preferences of the Irish government between 1987 and 2005. The (marginal) social welfare function revealed by this approach is consistently comparable over time and show great stability despite profound changes in market incomes and important fiscal reforms over the period. Results are robust to numerous checks regarding data, income concepts and elasticities. A comparison with the UK shows marked differences reflecting the narrow political spectrum in Ireland compared to radical changes in British politics over the past 30 years. Some "anomalies" in the revealed social welfare function suggests introducing transfers to the working poor.

4. NBER Paper - Salience Theory of Choice Under Risk Pedro Bordalo, Nicola Gennaioli, and Andrei Shleifer #16387

5. NBER Paper - The Effects of College Counseling on High-Achieving, Low-Income Students
Christopher Avery #16359