BBC Radio 4 Analysis - Does a falling currency help or harm the economy? It's an urgent question for the UK, as the pound fell sharply in value against other major currencies after the referendum on Britain’s membership of the European Union in June 2016. Market commentators put this down to foreign investors becoming intensely gloomy about the prospects for the UK economy after Brexit. Others have welcomed the drop, saying it will benefit British exporters. But is it really such a simple, binary question? Paul Johnson, director of the Institute for Fiscal Studies investigates.
Roonomics
Sunday, March 3, 2019
Friday, January 4, 2019
24. Behavioural Economics in Action - Halpern on Government Nudges
Placing more nutritious food on a more visible shelf, informing lagging taxpayers that their neighbours have already paid up, or asking job seekers what they plan to do next week (instead of what they did – or didn’t – do last week) – these are all well-known examples of behavioral spurs known as ‘nudges.’ Much of the reason such examples are known is because they emanate from the work of the Behavioural Insights Team – the so-called nudge unit. The United Kingdom’s government set up the unit in 2010 (two years after Cass R. Sunstein and Richard H. Thaler’s Nudge was published) to address “everyday” policy challenges where human behaviour was a key component.
Experimental psychologist David Halpern, the unit’s chief executive, has led the team since its inception and through its limited privatization in 2014. In this Social Science Bites podcast, Halpern offers interviewer David Edmonds a quick primer on nudging, examples of nudges that worked (and one that didn’t), how nudging differs between the UK and the United States, and the interface of applied nudging and academic behavioural science.
“We tend to use mental shortcuts,” Halpern explains, “to figure out what’s going on. Now, most of the time those mental shortcuts get us to where we want to go, it looks like, but they are subject to systematic error.” This can matter, he continues, because humans don’t always act in their best long-term interests, even as many policies are built on the assumption that they will.
Enter the nudge, “A gentle instrument that is not a financial incentive or a legal mandate or a requirement – a much gentler prompt or intervention.” Looking at the tax-payment nudge, he notes, “It doesn’t infringe on your basic human rights; it just reminds you that other people are more virtuous than you thought they were.” And as a result, more people pay up than would if they received a more-traditional scolding letter.
While the prompt may be low-key, the applications – and results -- often are not.
“These are actually big social policy issues,” says Halpern. “My own view is you try and create almost collective mechanisms to set up. You can inject into that process an understanding of behavioural science and how people make decisions, and then we can collectively choose rather than just a few clever folks out in Whitehall or in Washington.”
He spends some time discussing the difference in nudging between those two hubs. What he terms the “North American view” the focus is on “choice enhancing, while in the UK “we take a slightly broader perspective, which is trying to introduce a more realistic model of human behaviour.” This is further demonstrated by the enactment process on each side of the Atlantic. In the U.S. version of the Nudge Unit, the Social and Behavioral Sciences Team, executive orders were used to enact nudging policies that had worked in experiments. In the UK, “We went down the route of “God, we don’t actually know if this stuff works, so why don’t we run – wherever we could – randomized controlled trials.”
“Our work,” Halpern concludes, “is very hard-edged empirical. In fact, history may judge that the most important thing the Behavioural Insights Team brought was actually a very, very strong form of empiricism.”
Before leading the Nudge Unit, Halpern was the founding director of the Institute for Government and between 2001 and 2007 was the chief analyst at the Prime Minister’s Strategy Unit. In 2013, he was appointed as the national adviser to What Works Network, which focuses on improving the use of evidence in government decision making.
Describing himself as a “recovering academic” (although he does have a visiting professorship at King's College London), before entering government, Halpern held tenure at Cambridge and taught at Oxford and Harvard. A fellow of the Academy of Social Sciences since 2016, Halpern has written or co-authored four books, including 2005’s Social Capital and 2010’s The Hidden Wealth of Nations.
Roonomics
Experimental psychologist David Halpern, the unit’s chief executive, has led the team since its inception and through its limited privatization in 2014. In this Social Science Bites podcast, Halpern offers interviewer David Edmonds a quick primer on nudging, examples of nudges that worked (and one that didn’t), how nudging differs between the UK and the United States, and the interface of applied nudging and academic behavioural science.
“We tend to use mental shortcuts,” Halpern explains, “to figure out what’s going on. Now, most of the time those mental shortcuts get us to where we want to go, it looks like, but they are subject to systematic error.” This can matter, he continues, because humans don’t always act in their best long-term interests, even as many policies are built on the assumption that they will.
Enter the nudge, “A gentle instrument that is not a financial incentive or a legal mandate or a requirement – a much gentler prompt or intervention.” Looking at the tax-payment nudge, he notes, “It doesn’t infringe on your basic human rights; it just reminds you that other people are more virtuous than you thought they were.” And as a result, more people pay up than would if they received a more-traditional scolding letter.
While the prompt may be low-key, the applications – and results -- often are not.
“These are actually big social policy issues,” says Halpern. “My own view is you try and create almost collective mechanisms to set up. You can inject into that process an understanding of behavioural science and how people make decisions, and then we can collectively choose rather than just a few clever folks out in Whitehall or in Washington.”
He spends some time discussing the difference in nudging between those two hubs. What he terms the “North American view” the focus is on “choice enhancing, while in the UK “we take a slightly broader perspective, which is trying to introduce a more realistic model of human behaviour.” This is further demonstrated by the enactment process on each side of the Atlantic. In the U.S. version of the Nudge Unit, the Social and Behavioral Sciences Team, executive orders were used to enact nudging policies that had worked in experiments. In the UK, “We went down the route of “God, we don’t actually know if this stuff works, so why don’t we run – wherever we could – randomized controlled trials.”
“Our work,” Halpern concludes, “is very hard-edged empirical. In fact, history may judge that the most important thing the Behavioural Insights Team brought was actually a very, very strong form of empiricism.”
Before leading the Nudge Unit, Halpern was the founding director of the Institute for Government and between 2001 and 2007 was the chief analyst at the Prime Minister’s Strategy Unit. In 2013, he was appointed as the national adviser to What Works Network, which focuses on improving the use of evidence in government decision making.
Describing himself as a “recovering academic” (although he does have a visiting professorship at King's College London), before entering government, Halpern held tenure at Cambridge and taught at Oxford and Harvard. A fellow of the Academy of Social Sciences since 2016, Halpern has written or co-authored four books, including 2005’s Social Capital and 2010’s The Hidden Wealth of Nations.
Roonomics
Tuesday, October 16, 2018
23. Prof. Stephanie Kelton on MMT and the myth of budget deficits
Stephanie Kelton is a leading American economist and a Professor of Public Policy and Economics at Stony Brook University. Kelton was Chief Economist on the U.S. Senate Budget Committee and Economic Advisor to the Bernie 2016 presidential campaign. She's best known for being a pioneer of Modern Monetary Theory (MMT).
22. Keynes v Hayek - LSE Lecture (Nicholas Wapshott)
Speaker(s): Nicholas Wapshott | Eighty years ago at the LSE, Friedrich Hayek launched an assault upon the new economic thinking of John Maynard Keynes. The clash was so bitter and vituperative that it scandalized the cloistered world of academia. Eighty years on, the differences between the two men have still not been finally resolved and their conflicting approaches to the economy continue to define the profound chasm between politicians of left and right. Nicholas Wapshott is a columnist for Reuters and regular contributor to Newsweek and The Daily Beast. He is the author of Keynes Hayek: The Clash That Defined Modern Economics and Ronald Reagan and Margaret Thatcher: A Political Marriage. He is a former senior editor for The Times and the New York Sun and editorial consultant to Oprah Winfrey.
21. Keynes v Hayek - LSE Debate
Speaker(s): Professor George Selgin, Professor Lord Skidelsky, Duncan Weldon, Dr Jamie Whyte | How do we get out of the financial mess we're in? Two of the great economic thinkers of the 20th century had sharply contrasting views: John Maynard Keynes believed that governments could create sustainable employment and growth. His contemporary and rival Friedrich Hayek believed that investments have to be based on real savings rather than fiscal stimulus or artificially low interest rates. BBC Radio 4 will be recording a debate between modern day followers of Keynes and Hayek. George Selgin is Professor of Economics at The Terry College of Business, University of Georgia. Selgin is one of the founders of the Modern Free Banking School, which draws its inspiration from the writings of Hayek on the denationalization of money and choice in currency. He has written extensively on free banking, the private supply of money and deflation. George Selgin is the author of The Theory of Free Banking: Money Supply under Competitive Note Issue (1988), Less Than Zero: The Case for a Falling Price Level in a Growing Economy (1997), and Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage (2008). Robert Skidelsky is Emeritus Professor of Political Economy at the University of Warwick. His three-volume biography of the economist John Maynard Keynes (1983, 1992, 2000) received numerous prizes, including the Lionel Gelber Prize for International Relations and the Council on Foreign Relations Prize for International Relations. He is the author of The World After Communism (1995) (American edition called The Road from Serfdom). He was made a life peer in 1991, and was elected Fellow of the British Academy in 1994. His latest book is Keynes: The Return of the Master. Duncan Weldon is a former Bank of England economist and currently works as an economics adviser to an international trade union federation. He has a long standing interest in and admiration for Keynes but also a respect for Hayek. He blogs at Duncan's Economic Blog. Jamie Whyte was born in New Zealand and educated at the University of Auckland and then the University of Cambridge in England, where he gained a Ph.D. in philosophy. Jamie remained at Cambridge for a further three years, as a fellow of Corpus Christi College and a lecturer in the Philosophy Faculty. During this time he published a number of academic articles on the nature of truth, belief and desire, and won the Analysis Essay Competition for the best article by a philosopher under the age of 30. Jamie then joined Oliver Wyman & Company, a London-based strategy consulting firm specialising in the financial services industry, for which he still works, as the Head of Research and Publications. Jamie has published two books: Crimes Against Logic (McGraw Hill, Chicago, 2004) and A Load of Blair (Corvo, London, 2005). Jamie is a regular contributor of opinion articles to The Times (of London), the Financial Times and Standpoint magazine. In 2006 he won the Bastiat Prize for journalism.He is on the advisory board of The Cobden Centre. The debate will be chaired by Paul Mason, economics editor of BBC 2's Newsnight and author of Meltdown: The End of the Age of Greed.
Sunday, October 7, 2018
20. Making Money (Fran Boait on money creation) - BBC Radio 4
David Grossman asks how and when money is created in the modern economy, how that influences asset prices and financial stability and hears about a radical Swiss idea for monetary reform. Joining the debate are Positive Money director Fran Boait and Professor Sir Charles Bean, former chief economist and deputy governor for monetary policy at The Bank of England.
19. How Money Works (Ben Dyson) - BBC Radio 4
Ben Dyson, founder and director of Positive Money, tells how his disillusionment with mainstream economics led him to campaign for a proper understanding of how money works as the first step in fixing a failed banking system.
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