tag:blogger.com,1999:blog-2546602206734889307.post2389073209677602768..comments2024-03-29T12:16:15.785+00:00Comments on mainly macro: Abusing economic analysis: UK Treasury editionMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-2546602206734889307.post-10823246434234846222014-04-22T08:48:03.713+00:002014-04-22T08:48:03.713+00:00Its the reduction in fuel tax that is doing this, ...Its the reduction in fuel tax that is doing this, not the poll tax. Suppose you increased income taxes instead. Then you would still get the effect you mention, but in addition you might discourage people from working because they paid higher tax.Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-82215127962213292302014-04-22T08:42:10.887+00:002014-04-22T08:42:10.887+00:00I don't see how poll taxes are non-distortiona...I don't see how poll taxes are non-distortionary and not liable to alter behaviour.<br />If you replaced fuel duty with a flat rate levy on every citizen, surely this would encourage individuals to use their cars more and perhaps even buy a car when they currently didn't have one since they believe they 'need to get their monies worth'? What am I missing?<br />Dannyhttps://www.blogger.com/profile/09106739466558486588noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-21231953477305265412014-04-19T21:43:14.271+00:002014-04-19T21:43:14.271+00:00Does anyone know who peer reviewed it?Does anyone know who peer reviewed it?donniehttps://www.blogger.com/profile/13809052984282157093noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-87608219328428896692014-04-19T17:49:24.281+00:002014-04-19T17:49:24.281+00:00«the skill is in finding a celebrity and a set of ...«the skill is in finding a celebrity and a set of assumptions under which it can be proven,»<br /><br />One of my examples is Modigliani's equivalence theorem: I reckon that it should be more properly described as "Proof that someone clever can find a set of peculiar assumptions under which debt and equity funding are in some narrow sense equivalent".<br /><br />I think that for aspiring Economists on a path to success there are three levels of success in designing the assumptions that lead to conclusions desired by a sponsor:<br /><br />#1 Find assumptions that imply or are logically equivalent to the desired conclusion, but worded so that it is not obvious. Begging the question is however not that challenging, even if ski;fully done.<br /><br />#2 Find assumptions that are internally inconsistent, but don't look so without careful analysis. Requires higher skill than merely begging the question.<br /><br />#3 Find assumptions that are inconsistent *with the desired conclusion* but so subtly that it takes great skill to figure that out. This is the golden prize.<br /><br />Usually #2 and #3 require strong application of "ceteris paribus" lubricant, but that needs to be disguised, because some cynical spoilsports take the presence of "ceteris paribus" to be a sign of "artistic licence".<br />Blissexnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-53826298301814540732014-04-18T19:56:32.298+00:002014-04-18T19:56:32.298+00:00«As a stand alone exercise, I’m afraid the Treasur...«As a stand alone exercise, I’m afraid the Treasury study is worthless.»<br />«The tax distortion is an assumed input into the model not a conclusion from it.»<br /><br />Conversely it is very useful to its sponsors as you write and it is one of the standard techniques used by clever academics in general and their sponsors.<br /><br />The technique is simple: if the conclusion is a given, the skill is in finding a celebrity and a set of assumptions under which it can be proven, and then announce with great emphasis that the conclusion has been proven by the celebrity. It won't matter that the assumptions under which it can be proven may be exceptionally narrow, or absurd, as those are technicalities. What matters is that a celebrity can state as a true fact that the conclusion has been proven, and indeed it is a true fact, even if worthless.<br /><br />I see that this technique has been at the core of Economics for a very long time, because the central truthiness of Economics, that the distribution of income determined by the markets is unique and optimal and solely based on marginal productivity, can be proven only starting from extremely narrow assumptions that have been designed for that purpose (and are also contradictory among themselves).<br /><br />Thanks to Arrow, Debreu an many others crafting carefully the right assumptions, many Economics celebrities can state with honesty that it is a proven fact that the optimal distribution of income depends solely on personal productivity.<br /><br />I think that finding assumptions under which the conclusions desired by wealthy sponsors can be proven, and used as such by celebrity endorsers, is a very valuable skill, that can seriously enrich an academic.<br /><br />I also think that finding and corroborating generally applicable, relevant, reliable conclusions can be even harder work and lead to difficult, poorly paid careers.Blissexnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-6409930524639911552014-04-18T08:49:33.969+00:002014-04-18T08:49:33.969+00:00Paul Krugman blog September 12, 2013 'Insuranc...Paul Krugman blog September 12, 2013 'Insurance Company With An Army Blogging', "As we need to remember now and then, the federal government is basically an insurance company with an army."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-16195008401074450722014-04-17T18:33:09.261+00:002014-04-17T18:33:09.261+00:00Tim Harford writes
Economists may appear ethicall...Tim Harford writes<br /><br />Economists may appear ethically impoverished on the question of co-operating in the prisoner’s dilemma but they seem to have a far more favourable attitude to immigration from poorer countries. To an economist, foreigners are people too.<br /><br />Very patronising, particularly to the people who are really feeling the consequences of globalisation - not journalists or tenured professors.<br /><br />I think people on the left have a problem with unfettered globalisation - including labour flows. Why? Because it breaks down communities and leads to a game of the survival of the fittest. Who benefits from globalisation? Large multinational firms certainly. Large flows of labour lead to rising congestion, high rents, low wages. Liberalisation of trade can push up prices of vital home produced crops in poorer countries. Small poor countries do not have the resources to defend themselves in the WTO. The opening of markets encourages automation further dampening wages. However, globalisation is good, and necessary, it just must not be implemented too quickly. It is the pace of the change and the dislocation such rapid change can bring. That is what most people I think believe, it is not because of a dislike of foreigners.<br /><br />Economists are not necessarily terribly wise in these matters. They need to talk to historians and anthropologists.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-90657967586742644652014-04-17T13:39:26.597+00:002014-04-17T13:39:26.597+00:00Two further comments on the Treasury study.
1. T...Two further comments on the Treasury study. <br /><br />1. There are references to the Diamond-Mirrlees proposition that producer taxes are inefficient. But the fuel tax is a tax on final consumption as well as a tax on intermediate use, so Diamond-Mirrlees cannot justify the proposition that the fuel tax should be cut. <br /><br />2. As far as I can see without working through the details of the model, there's nothing in the nature of the dynamic CGE model that actually addresses tax inefficiency. The tax distortion is an assumed input into the model not a conclusion from it. Alasdair Smithhttps://www.blogger.com/profile/15541534530839133580noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-69258529952015889212014-04-17T12:22:25.107+00:002014-04-17T12:22:25.107+00:00Here is something to encourage you not to give up ...Here is something to encourage you not to give up hope:<br /><br />http://timharford.com/2014/04/economists-arent-all-bad/Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-44852892742350090692014-04-17T11:40:40.010+00:002014-04-17T11:40:40.010+00:00Second, it encourages those on the left who think ...Second, it encourages those on the left who think that mainstream economics is inherently biased. <br /><br />As a former mainstream economist in a government/institutional setting, I am coming more and more to that conclusion. Whether it's the resolute refusal to consider the distributive, as opposed to aggregate, impacts of economic actions or the use of micro-foundations to (implicitly) promote an individualistic, even atomised, view of societal economics, I am wondering if there is much hope.<br /><br />I am reminded of a series of articles in The Economist, I think in the 90's, which reported variousl studies showing that students of economics, especially graduate students, took systematically more self-oriented and less altruistic positions on a series of moral dilemmas. I denied any implications at the time, but now I can't help wondering.DavidShttps://www.blogger.com/profile/11679346381085854499noreply@blogger.com