Even if you're not a football fan or even a Man City fan, City have potentially given you a boon today - see http://www.youtube.com/watch?v=ikm52r7RlKc&feature=youtu.be.
City are making available incredibly detailed data on all football matches from last season - could make for an ideal extended essay when you reach your third year!
Sign up here: http://www.mcfc.co.uk/Home/The%20Club/MCFC%20Analytics
This blog accompanies the econ101ab Principles of Economics course given at the University of Birmingham. The lecturers for both parts of the course (101a, microeconomics and 101b, macroeconomics) will occasionally post here on matters related to lecture material. We hope to show the relevance of the concepts we are teaching at each stage of the course for helping understand how the world works...
Friday, August 17, 2012
Thursday, August 16, 2012
Results Day!
Today is the big day for many prospective econ101b students for 2012-13, so wishing you all the very best as you get your results today and digest them! Hope to see many of you in the lecture halls of the University of Birmingham next academic year!
Monday, August 13, 2012
The Olympics
Well, I must admit I got caught up in the euphoria - I spent many moments when I ought to have been being more productive checking the latest medals for Team GB, and refreshing on the tickets website, and as an economist that leads me to think a little about the economic impact of the 30th Olympiad that have just finished here in the UK, in London to be most precise.
Can we ever measure it? Can we say that the net economic benefit was x million pounds? The BBC have tried today to enter into the debate, pointing out not just the basics (e.g. we built stadia which created jobs), but also the subtleties - how many tourists were put off coming to the UK because of the Olympics? How many Brits holidayed abroad to avoid the games? How much productivity was lost as Brits checked up on the BBC website how many golds we'd won? Did we do it more than the French, the Americans, the Irish, etc?
Then, how do we measure the "feel-good factor" which undeniably was created by the games? It was wonderful to walk through London and Hyde Park last week and experience the vibrant atmosphere, but what, if any, was the actual benefit of that? As happier people will we become more productive, have better ideas and be creative in the workplace?
Of course, a response can be that this doesn't really matter - why should we always be so bothered about the economic benefit of something like this? Of course, the bottom line is that we have all had to pay for it, one way or another, through either the tax system or in other ways, such as funds that might otherwise have been spent on local services in the regions rather than London and the games. So given we all had to pay for it, we ought to be thinking about whether it was good value or not.
Most likely, on paper, the games won't turn a profit - but that's mainly because things like the feel-good factor can't be measured. There's little doubt that while economists remain, in general, negative on the impact of such large events, the general Joe Bloggs remains unabashedly positive, and many would dearly love the next Olympics to be in London too...
Can we ever measure it? Can we say that the net economic benefit was x million pounds? The BBC have tried today to enter into the debate, pointing out not just the basics (e.g. we built stadia which created jobs), but also the subtleties - how many tourists were put off coming to the UK because of the Olympics? How many Brits holidayed abroad to avoid the games? How much productivity was lost as Brits checked up on the BBC website how many golds we'd won? Did we do it more than the French, the Americans, the Irish, etc?
Then, how do we measure the "feel-good factor" which undeniably was created by the games? It was wonderful to walk through London and Hyde Park last week and experience the vibrant atmosphere, but what, if any, was the actual benefit of that? As happier people will we become more productive, have better ideas and be creative in the workplace?
Of course, a response can be that this doesn't really matter - why should we always be so bothered about the economic benefit of something like this? Of course, the bottom line is that we have all had to pay for it, one way or another, through either the tax system or in other ways, such as funds that might otherwise have been spent on local services in the regions rather than London and the games. So given we all had to pay for it, we ought to be thinking about whether it was good value or not.
Most likely, on paper, the games won't turn a profit - but that's mainly because things like the feel-good factor can't be measured. There's little doubt that while economists remain, in general, negative on the impact of such large events, the general Joe Bloggs remains unabashedly positive, and many would dearly love the next Olympics to be in London too...
Wednesday, July 25, 2012
GDP figures
Today saw the announcement of the first round of GDP figures, the Office for National Statistics' first attempt at working out what happened in 2012Q2, or April, May and June of this year. They base these numbers on something like a quarter of the total amount of data available for that period, and hence sometimes these numbers can be a little inaccurate.
The announcement today was that GDP fell by 0.7% in April, May and June of 2012, contributing further to the recession that began in the last three months of 2011. Overall, according to these figures, GDP is now lower than it was when the Coalition came to power. There's plenty to be sceptical about in the figures though, as David Smith points out. There's more reflection at the FT also, and following the link about hysteresis takes you to the IMF's recent prognosis on the UK - the prospects are not particularly promising.
The IMF, contrary to its previous pronouncements on the UK economy, is now recommending continued loose monetary policy and fiscal policy - calling on the Coalition to abandon its austerity drive. Of course, the government is never going to admit it's changing to Plan B, but recent announcements regarding public spending, as Jonathan Portes points out, are a tacit acknowledgement of this. The deficit remains eye-wateringly large, while interest rates are only low because of a lack of growth prospects rather than any confidence in the government's economic policy (despite the government's insistence to the contrary), hence little has changed since 2010 when there was no alternative to austerity...
The announcement today was that GDP fell by 0.7% in April, May and June of 2012, contributing further to the recession that began in the last three months of 2011. Overall, according to these figures, GDP is now lower than it was when the Coalition came to power. There's plenty to be sceptical about in the figures though, as David Smith points out. There's more reflection at the FT also, and following the link about hysteresis takes you to the IMF's recent prognosis on the UK - the prospects are not particularly promising.
The IMF, contrary to its previous pronouncements on the UK economy, is now recommending continued loose monetary policy and fiscal policy - calling on the Coalition to abandon its austerity drive. Of course, the government is never going to admit it's changing to Plan B, but recent announcements regarding public spending, as Jonathan Portes points out, are a tacit acknowledgement of this. The deficit remains eye-wateringly large, while interest rates are only low because of a lack of growth prospects rather than any confidence in the government's economic policy (despite the government's insistence to the contrary), hence little has changed since 2010 when there was no alternative to austerity...
Monday, July 23, 2012
What would Keynes do?
The philosopher John Gray has written an article on the BBC News website entitled A Point of View: What would Keynes do? It's well worth a read to get some feel for who Keynes was, and how he thought.
Gray makes an important distinction in his article, notably that what Keynes might propose if faced with today's economic environment is different to what is generally described in the press as "Keynesian economics", i.e. tax and spend policies.
The other important thing about this article is the following - it's written not by an economist but a philosopher. What is always important is not to be parochial when studying economics - others can, of course contribute and we shouldn't be so arrogant as to think we can't learn from those in other fields. However, unlike any other science, almost everyone thinks they know something about economics, and often what they think they know is fused with their political beliefs, meaning that it will be very hard, if not impossible, to reason in such a situation. It's a good practice ground to try though - helps you to think about what you know about the economy if you're forced to think quickly on your feet in a discussion with a friend who shares different political beliefs to you...
And, of course, it's great if you can challenge your own political beliefs using what you've learnt in economics. Try not to simply take the bits of economics that suit your political beliefs but instead let your beliefs be shaped as much as possible by what you learn as an economics student...
Gray makes an important distinction in his article, notably that what Keynes might propose if faced with today's economic environment is different to what is generally described in the press as "Keynesian economics", i.e. tax and spend policies.
The other important thing about this article is the following - it's written not by an economist but a philosopher. What is always important is not to be parochial when studying economics - others can, of course contribute and we shouldn't be so arrogant as to think we can't learn from those in other fields. However, unlike any other science, almost everyone thinks they know something about economics, and often what they think they know is fused with their political beliefs, meaning that it will be very hard, if not impossible, to reason in such a situation. It's a good practice ground to try though - helps you to think about what you know about the economy if you're forced to think quickly on your feet in a discussion with a friend who shares different political beliefs to you...
And, of course, it's great if you can challenge your own political beliefs using what you've learnt in economics. Try not to simply take the bits of economics that suit your political beliefs but instead let your beliefs be shaped as much as possible by what you learn as an economics student...
Friday, July 6, 2012
LIBOR and Fixing Rates
I doubt this story has passed anyone by; Barclays bank decided to attempt to manipulate a market through lying about the price it was paying. According to this article summarising the whole thing by Sloman, they may have succeeded. If it did, it would then have ended up giving a better impression about how "safe" the bank was at the height of the crisis, thus most likely avoiding as much of a share price fall, and as high rates to pay to borrow money from other banks (that's what the interbank market is for).
There's a lot that will come out in time about this, but the whole episode neatly fits within a module I teach each year in Birmingham called Contemporary Issues in the UK Economy. We have a section on the financial crisis, and naturally by the time I get round to teaching it next (February 2013), I will certainly be talking about this crisis, and the likely proposed response to it.
What should be noted most importantly though is that is shows the limited information available to regulators. Surely the regulation that was already heading through parliament should have been sufficient to "prevent a repeat of the crisis ever happening again"? It won't take you an economics degree to be sceptical about that commonly expressed sentiment, but hopefully it will help you to be constructive about it.
Of course, what's being talked about is the regulation heading through parliament being amended - amended already, before it's even got through? Then we'll amend it again next time something emerges - the point is that government doesn't have all the necessary information to prevent everything happening, and hence will like this always be fighting the next war. They may legislate against some manner in which the rate was "fixed" - banks will continue to have an incentive to do this, and will just find other ways to do that.
Probably the most important point though is the general direction of response - our response has been "let's regulate more!", because the problem was "there wasn't enough regulation!". Yet nobody ever explains why the regulation pre-crisis wasn't enough, and why adding more to the mix will somehow solve the problem.
What would be a much simpler response, and probably more effective, would be to empower us as customers in a more fundamental way - offer us more choice. Allow more competition in the banking sector. Change competition policy such that we don't encourage market consolidation until there are dominant players like Barclays and RBS who can abuse their position and get away with it because there isn't any realistic alternative. Why is it that the only way a new bank could emerge from the crisis was by Virgin buying the carcass of an old one?
If we could vote with our feet (and it may require some regulation to enforce that to be allowed since we share a lot of information with our bank that other banks haven't got to make us better more suitable offers), then we'd walk away from banks like Barclays who do things like they've been found to be doing. Then the incentive for Barclays not to do illegal, immoral things is that they will suffer on the bottom line - the most important thing for them.
There's a lot that will come out in time about this, but the whole episode neatly fits within a module I teach each year in Birmingham called Contemporary Issues in the UK Economy. We have a section on the financial crisis, and naturally by the time I get round to teaching it next (February 2013), I will certainly be talking about this crisis, and the likely proposed response to it.
What should be noted most importantly though is that is shows the limited information available to regulators. Surely the regulation that was already heading through parliament should have been sufficient to "prevent a repeat of the crisis ever happening again"? It won't take you an economics degree to be sceptical about that commonly expressed sentiment, but hopefully it will help you to be constructive about it.
Of course, what's being talked about is the regulation heading through parliament being amended - amended already, before it's even got through? Then we'll amend it again next time something emerges - the point is that government doesn't have all the necessary information to prevent everything happening, and hence will like this always be fighting the next war. They may legislate against some manner in which the rate was "fixed" - banks will continue to have an incentive to do this, and will just find other ways to do that.
Probably the most important point though is the general direction of response - our response has been "let's regulate more!", because the problem was "there wasn't enough regulation!". Yet nobody ever explains why the regulation pre-crisis wasn't enough, and why adding more to the mix will somehow solve the problem.
What would be a much simpler response, and probably more effective, would be to empower us as customers in a more fundamental way - offer us more choice. Allow more competition in the banking sector. Change competition policy such that we don't encourage market consolidation until there are dominant players like Barclays and RBS who can abuse their position and get away with it because there isn't any realistic alternative. Why is it that the only way a new bank could emerge from the crisis was by Virgin buying the carcass of an old one?
If we could vote with our feet (and it may require some regulation to enforce that to be allowed since we share a lot of information with our bank that other banks haven't got to make us better more suitable offers), then we'd walk away from banks like Barclays who do things like they've been found to be doing. Then the incentive for Barclays not to do illegal, immoral things is that they will suffer on the bottom line - the most important thing for them.
Wednesday, July 4, 2012
Ideology or economics?
I blogged yesterday about a post on Liberal Conspiracy (LC) which I decried for being too ideologically motivated rather than motivated by scientific investigation. As I said, I file LC under politics in my Google Reader. However, I do file Marginal Revolution (MR) under economics - along with a number of other blogs written by economists of a libertarian persuasion - however, I'm wondering whether I should reconsider.
There's a constant, ongoing debate between libertarian economists, and non-libertarians of various stripes; the latest instalment is summarised in the post that has motivated this post by Tyler Cowen at MR. It appears a few non-libertarians have challenged libertarians on a point I consistently think about libertarians - they are a little loose in how strictly they apply the need for liberty amongst all members of society, ignoring the cases where the price mechanism will not operate to yield liberty to all but will in fact restrict liberties to many.
While I don't agree with everything the critics (at Crooked Timber, another interesting if politically slanted blog) have to say, I find Cowen's response striking. He basically says two things:
1) Show me some data.
2) Employees behave just as badly as employers so let's shine the light on them.
I find response (1) a little weak - it's the kind of response one says when one can't think of a good solid, analytical response. I mean, for sure, it would be great if we had empirical studies on all these things, yet it hasn't stopped economists debating for years and years and years. The appeal to empirical work is all the more ironic because many of the more staunch libertarians tend to ignore all economic data and attempts to use it as useless since the world is so complicated and it's hard to control for all possible causal factors involved.
There is probably a 1(b) here too - Tyler says essentially "are you sure workers want this, or is it just the bloggers that want it?". For me this has to count as the most stupid question ever. If you approach workers and say "would you like some more rights and representation?", I don't think that many will say "no thanks!".
But on to (2), this is the biggest point of contention for me. Apparently, two wrongs make a right, to use common parlance. But more importantly from the perspective of being an economist, the question is the following: Which way is the causality? For sure, workers will steal in the workplace if they can get away with it, and for sure, firms will try and shirk their responsibilities to their workers also, if they can get away with it.
But why doesn't Tyler consider the idea it might be that workers steal from work because they feel they get ripped off daily, paid way beneath what they are worth to the company, etc? Could it not be the case that a firm that makes all its workers feel like they are part of the company, valued, paid their worth, included in decision making etc., sees less workplace theft?
The causality could, of course, be entirely the other way - it could be that workers are just thieves, and hence firms respond by being nasty to their workers. I'd love to see an empirical study on this!
But why doesn't Tyler explore this? My sense is it's because of the libertarian leanings in him, rather than anything else. The economist should be asking this question, and an economist of Tyler's calibre could analyse these things infinitely better than I ever could, and hence should be asking this question instead of mouthing off in the way he does - invoking personal experience, another common trait of the libertarian.
So I'd file this post from Marginal Revolution, often a great economics blog, more under the "politics/ideology" section of my Google Reader, if I could.
There's a constant, ongoing debate between libertarian economists, and non-libertarians of various stripes; the latest instalment is summarised in the post that has motivated this post by Tyler Cowen at MR. It appears a few non-libertarians have challenged libertarians on a point I consistently think about libertarians - they are a little loose in how strictly they apply the need for liberty amongst all members of society, ignoring the cases where the price mechanism will not operate to yield liberty to all but will in fact restrict liberties to many.
While I don't agree with everything the critics (at Crooked Timber, another interesting if politically slanted blog) have to say, I find Cowen's response striking. He basically says two things:
1) Show me some data.
2) Employees behave just as badly as employers so let's shine the light on them.
I find response (1) a little weak - it's the kind of response one says when one can't think of a good solid, analytical response. I mean, for sure, it would be great if we had empirical studies on all these things, yet it hasn't stopped economists debating for years and years and years. The appeal to empirical work is all the more ironic because many of the more staunch libertarians tend to ignore all economic data and attempts to use it as useless since the world is so complicated and it's hard to control for all possible causal factors involved.
There is probably a 1(b) here too - Tyler says essentially "are you sure workers want this, or is it just the bloggers that want it?". For me this has to count as the most stupid question ever. If you approach workers and say "would you like some more rights and representation?", I don't think that many will say "no thanks!".
But on to (2), this is the biggest point of contention for me. Apparently, two wrongs make a right, to use common parlance. But more importantly from the perspective of being an economist, the question is the following: Which way is the causality? For sure, workers will steal in the workplace if they can get away with it, and for sure, firms will try and shirk their responsibilities to their workers also, if they can get away with it.
But why doesn't Tyler consider the idea it might be that workers steal from work because they feel they get ripped off daily, paid way beneath what they are worth to the company, etc? Could it not be the case that a firm that makes all its workers feel like they are part of the company, valued, paid their worth, included in decision making etc., sees less workplace theft?
The causality could, of course, be entirely the other way - it could be that workers are just thieves, and hence firms respond by being nasty to their workers. I'd love to see an empirical study on this!
But why doesn't Tyler explore this? My sense is it's because of the libertarian leanings in him, rather than anything else. The economist should be asking this question, and an economist of Tyler's calibre could analyse these things infinitely better than I ever could, and hence should be asking this question instead of mouthing off in the way he does - invoking personal experience, another common trait of the libertarian.
So I'd file this post from Marginal Revolution, often a great economics blog, more under the "politics/ideology" section of my Google Reader, if I could.
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