The GDP paradox (J Van den Bergh, Journal of Economic Psychology 2009, 30(2) 117–135)

Despite all theoretically and empirically motivated criticism of GDP as a social welfare and progress indicator, its role in economics, public policy, politics and society continues to be influential. To resolve this paradox, one has to recognize that many economists accept the criticism of the GDP indicator but deny its relevance. This paper evaluates the reasons for denial. This entails five steps: (1) a brief review is offered of the extensive literature showing that GDP per capita (growth) is far from a robust indicator of social welfare (progress); (2) the influence of GDP information on economic decisions by firms, consumers, investors and governments is examined; (3) behavioural explanations for a widespread belief in the relevance of GDP are discussed; (4) the customary arguments in favour of the GDP indicator are analysed; and (5) proposed alternatives to GDP are evaluated. The paper ends with outlining the implications of giving less attention to GDP information in policy and politics. It is argued that removal of the information failure which GDP represents, in monitoring economic progress and guiding public policy, will lead to decisions and developments being more in line with improving human well-being. Moreover, ignoring GDP information is consistent with a perfectly neutral stance regarding economic (GDP) growth. Indeed, an unconditional anti- or pro-growth imperative acts as an unnecessary constraint on our search for human progress.

But, truth be told, I never heard the accusation that economists are a particularly dishonest bunch. But I suppose it was only a matter of time before some rapscallions decided to investigate this empirically. It seems we are guilty as charged (or at least, our students are). I hope the authors of the paper below have tenure.

Do economists lie more? R López-Pérez & E Spiegelman

Recent experimental evidence suggests that some people dislike telling lies, and tell the truth even at a cost. We use experiments as well to study the socio-demographic covariates of such lie aversion, and find gender and religiosity to be without predictive value. However, subjects’ major is predictive: Business and Economics (B&E) subjects lie significantly more frequently than other majors. This is true even after controlling for subjects’ beliefs about the overall rate of deception, which predict behavior very well: Although B&E subjects expect most others to lie in our decision problem, the effect of major remains. An instrumental variables analysis suggests that the effect is not simply one of selection: It seems that studying B&E has a causal impact on behavior.

Measuring weight outcomes for obesity intervention strategies: The case of a sugar-sweetened beverage tax (Lin et al. Economics & Human Biology 2011 ,9, 329-341)

Taxing unhealthy foods has been proposed as a means to improve diet and health by
reducing calorie intake and raising funds to combat obesity, particularly sugar-sweetened
beverages (SSBs). A growing number of studies have examined the effects of such food
taxes, but few have estimated the weight-loss effects. Typically, a static model of 3500
calories for one pound of body weight is used, and the main objective of the study is to
demonstrate its bias. To accomplish the objective, we estimate income-segmented
beverage demand systems to examine the potential effects of a SSB tax. Elasticity
estimates and a hypothetical 20 percent effective tax rate (or about 0.5 cent per ounce) are applied to beverage intake data from a nationally representative survey, and we find an average daily reduction of 34–47 calories among adults and 40–51 calories among
children. The tax-induced energy reductions are translated into weight loss using both
static and dynamic calorie-to-weight models. Results demonstrate that the static model
significantly overestimates the weight loss from reduced energy intake by 63 percent in
year one, 346 percent in year five, and 764 percent in year 10, which leads to unrealistic
expectations for obesity intervention strategies. The tax is estimated to generate $5.8
billion a year in revenue and is found to be regressive, although it represents about 1
percent of household food and beverage spending.

So I decided to investigate using PISA data which has detailed data on parents occupation and other relevant data. The resulting paper has just been published in Regional and Sectoral Economic Studies.

Do teachers make better parents? The differential performance of teachers children at school

This paper investigates whether teenagers are educationally advantaged if their parents are educators, using data from the Program for International Student Assessment (PISA) for Great Britain and Ireland from 2000. Examining whether teachers’ children do better at tests of reading ability, the results show that children whose fathers teach at third level or whose mothers teach at second level do better. The paper also shows that teenagers are more likely to be helped with their schoolwork if their mothers are educators. The evidence tends to suggest that where teenagers benefit from a parent as a teacher it is through specific assistance from the mother and a more general effect from the father.

For example each and every aviation related story has to have  a weak pun “Ryanair: turbulence ahead”, “No smooth landing for Aer Lingus” “Dublin Airport: clear for take-off” and so on till you want to vomit. You have to wonder: is that what they teach them in journalism school?  This week, Eamonn Coghlan, a great runner in his day, announced he was joining Fine Gael. Cue endless headlines playing on his athletic past “Coghlan out of the blocks for a political run” for example. I was especially taken with that since a middle distance runner would never use blocks. Mind you, Eamonn wasn’t shy about introducing running metaphors into his own publicity.

I suppose society is to blame.

h/t Stephen K

As proof that economists are focused on the important things in life I draw your attention to a new book The Economics of Beer edited by Johan Swinnen & published by Oxford University Press.

Below is a graph from the book showing per capita beer consumption for various countries. Ireland comes second place in this particular league table behind the fun loving Czechs. It would be interesting to compare this with the consumption of wine and spirits. Presumably Russia’s low level of consumption is partly because they are knocking back the vodka in spades – or even in glasses.

These scholarships are funded by our Economic and Social Research Council (ESRC) Doctoral Training Centre.

Applications are welcome from people with interests in either developing or applying quantitative methods in the social sciences, for example in economics, psychology, social policy, social statistics or sociology. The scholarships are open to students from any country worldwide, within or beyond the EU.

For details, see:

http://www.ioe.ac.uk/Study_Home/Quantitative_Methods_Cluster_PhD_Information_2012_Entry.pdf

For details of the Department and potential supervisors, see:

http://www.ioe.ac.uk/study/departments/369.html

Anyone interested in applying should contact Professor Lorraine Dearden (l.dearden@ioe.ac.uk) as soon as possible. Please note that although the initial deadline of February 1st mentioned in the further details has passed, the effective deadline is February 27th.