Tim Harford The Undercover Economist

Articles published in December, 2010

Happiness: A measure of cheer

‘The welfare of a nation can … scarcely be inferred from a measure of national income.’
So the US Congress was warned in 1934 by Simon Kuznets, who thus continued a long tradition of pointing out that there is more to life than money. But the economist’s comments broke particular ground: they were attached to the first serious attempts to produce national income accounts – the tally of all that a country produces and earns – for the US. Kuznets and his small research team had built them, and he knew their limits.
Where Kuznets led, others have followed. From the upper echelons of the administration of President Barack Obama to the offices of Nicolas Sarkozy, his French counterpart, to David Cameron, UK prime minister, the goal of gauging a nation’s well­being has captured the imagination of policymakers. They join less likely countries such as Bhutan, whose mission to measure “gross national happiness” has made the Himalayan mountain kingdom a trendsetter.
Mr Cameron was the most recent to take up the cause, saying Britain needed to look for alternative measures that would show national progress “not just by how our economy is growing, but by how our lives are improving; not just by our standard of living, but by our quality of life”. While some analysts suspect each politician has his own motives – appearing nice to electors, flattering the economy and so on – the result has been to create a sense of momentum behind happiness economics. Learn More

Christmas presence

Christmas looms. Personally, I’m delighted. I have young children, they love Christmas and, therefore, so do I. If you must, by all means moan about the stress and the expense and the orgy of greed. But you are surely compelled to acknowledge that Christmas, as celebrated in modern western societies, has evolved into the perfect festival for children.

The anticipation, the decorations, the carols, the traditions, the magic of the stockings being filled, and of course the sweets and the toys – it’s hard to imagine what could beat it. (And yes: for broken families or those unable to participate without financial hardship, it can be miserable. That’s not a flaw in the festival itself, but a recognition that families need certain resources to join in properly.)

Some families, of course, choose not to take part. My five-year-old daughter came home from school last year to announce that her classmate “didn’t believe in Father Christmas”. My hackles rose in indignation at the vicious rumour, until my daughter pointed out her classmate was a Muslim. Hmm. Well, yes – I suppose it is reasonable for Muslim children to deny the existence of Saint Nick.

It’s easy for atheists to join in with much of the spirit of Christmas: dig into the turkey, pass the brandy, and go easy on the God thing. But for families bringing their children up in an entirely different religion, the whole business is a bit more tricky. And if their children have classmates who are eagerly anticipating Santa Claus, these families may feel compelled to fight fire with fire by creating a substitute Christmas.

The idea might sound strange, but three economists, Ran Abramitzky, Liran Einav and Oren Rigbi, have recently discovered evidence of exactly that. In research published recently in The Economic Journal, they explore what effect Christmas might have on the celebration of festivals in an entirely different religion: specifically, Hanukkah, a relatively minor Jewish festival which just happens to take place in December.

One clue comes from a survey of undergraduates in Tel Aviv and Stanford. The Israeli students overwhelmingly included Passover and Rosh Hashanah, the Jewish new year, among the three most important Jewish holidays, with Hanukkah, Sukkot and Shavuot as the main also-rans. In the US, Hanukkah was emphatically on a par with Passover and Rosh Hashanah: it is simply a more prominent festival there.

The economists looked for stronger evidence than this, and found it. They discovered that the surge in Hanukkah celebrations is stronger in families with children under 18, and that this effect itself is stronger among reform Jews – who are far more likely than orthodox Jews to be living in Christian neighbourhoods and sending their children to largely Christian schools. The effect is even discernible in retail sales figures. However measured, Jews who have children and mix with non-Jews tend to get into Hanukkah in a big way, just as Christmas approaches.

It will be interesting to see whether the finding generalises.

Do Islamic festivals compete with Christmas where Muslims are an integrated minority group? What happens when Jews are a minority in Islamic countries – do they compete with the most “attractive” Islamic festivals?

Yet the other striking conclusion from all this is how gregarious our festivals are. If Hanukkah responds to Christmas, isn’t it reasonable to suggest that Christmas also feeds off itself? The bigger the fuss we see others making, the bigger the fuss we ourselves tend to make. And of course, competitive gift-giving is hardly limited to rivalries between religions. Christmas, then, in all its consumerist glory, is a self-perpetuating piece of groupthink.

I love it. But it is possible to have too much of a good thing – even at Christmas.

Also published at ft.com.

Why education fails the poor

Students took to the streets of London last month to protest against a stiff increase in course fees.

I can hardly blame them, but the fee increase is not the great injustice that they claim. In one sense it is unfair, of course: earlier generations of students paid less. Some paid nothing at all. My Oxford education was free – as was that of David Cameron, who did the same course in the same college less than a decade before me – and I am grateful.

But was that free education an example of great social progress? Cameron’s family was hardly poor. He did well enough out of his Oxford education. Is it really outrageous to suggest that he, rather than taxpayers, should have paid for some of it?

And while the percentage of under-thirties attending university rose from 5 per cent to 35 per cent between 1960 and 2000 – with a surge during the early 1990s – it is still the preserve of relatively wealthy families. According to the economists Jo Blanden (University of Surrey and LSE) and Steve Machin (LSE and UCL) this expansion actually widened the participation gap between richer and poorer children. (To oversimplify, only kids from well-off families go to university, but whereas it was once just the bright boys, now the girls and the dim boys also get to go.)

In short, a university education is a valuable product, largely consumed by the sons and daughters of well-off families, which plays a major role in ensuring that the sons and daughters are themselves well off – and, helps them to marry each other. This is the perk that students demand that the taxpayer should provide.

Of course, raising fees will discourage students a little. My reading of a recent study, commissioned by the Department for Business Innovation and Skills and conducted by researchers from the Institute for Fiscal Studies and the Institute for Education, is that adding an extra £5,000 of annual tuition fees, and funding that with an extra £5,000 of cheap loans, would dent higher education participation by about 6 percentage points. That is bad news (and subject to a high margin of error). But regressive? No.

If you want something to get angry about, I wouldn’t look at tuition fees. I’d look at a little graph produced by Leon Feinstein of the Institute for Education, which shows tests of cognitive development given to almost 2,500 children at the age of 22 months, 42 months, five years and 10 years. The very brightest 22-month-old working-class kids were inexorably overhauled by the very dimmest children of professional or managerial parents – apparently by the age of about seven, and emphatically by the age of 10.

Research by Jo Blanden and by Paul Gregg and Lindsey Macmillan of the University of Bristol, underlines this. We know that “income persistence” is high in the UK – that is, parents wealthier than average have kids who also grow up to be wealthier. In other words, social mobility is low. We also know that education seems to play a strong role in this: countries such as Denmark have egalitarian schools and low income persistence. Blanden, Gregg and Macmillan have found that you can predict much of this income persistence simply by looking at exam results at age 16. Higher education is the icing on the cake.

The real problem in British education starts very early indeed. Subsidising tuition fees for relatively prosperous students is not the solution. Subsidising poorer kids to stay on at school after 16 might help – although even that is too late for many – but this is a policy which the coalition government is set to scrap. It’s the three- and four-year-olds from poor families who have for decades been let down by this country’s education system. But toddlers don’t take to the streets in protest, no matter how right their cause might be.

Also published at ft.com.

One thing at a time, please

I just splashed out on a new widescreen monitor, which I have rotated and set alongside the near-identical widescreen monitor I already own. Now I have two tall screen monitors, side by side, and I feel like the operator of a nuclear power station.

Publilius Syrus, a Roman slave with a knack for writing maxims, observed that “to do two things at once is to do neither”. Presumably he would not have approved of the twin-monitor arrangement, had he had the faintest idea what a twin monitor was.

Poor old Publilius would have gone into conniptions if he’d seen what today’s teenagers get up to: watching television while sitting with a laptop, surfing the web, sending text messages and instant messages, and listening to music. No wonder so many commentators are concerned about our growing addiction to multitasking.

I have some sympathy. When I indulged, for the first time, in “live-tweeting” one of the leaders’ election debates in April (I’m @timharford on Twitter, by the way: follow me if you’d like to see my Publilius Syrus impersonation) I discovered something striking: while I had fun commenting and reading the comments of others, I later had very little recollection of what any of the three potential prime ministers had actually said. This is worth bearing in mind: I now strongly suspect that anybody who claims to be commenting live from any event is unlikely to remember much about what happened.

Researchers who study multitasking wouldn’t be surprised. In 2006 Karin Foerde, Barbara J. Knowlton and Russell A. Poldrack, then psychologists at the University of California, Los Angeles, showed 14 people various shapes flashing on a computer screen while playing them low and high tones. In some experimental runs the subjects were asked simply to make predictions based on recognising patterns in the shapes; in other runs they also had to count the number of high tones.

The result was fascinating: on the multitasking runs, people were perfectly good at making predictions on the fly, but couldn’t then explain the underlying patterns, or apply them flexibly in other contexts. The technical term for this is that their “declarative learning” was stunted by the distraction. In short, multitaskers seem competent at the time but may not be taking much away from their experiences.

I try hard not to make that mistake. Even the twin monitors are designed so that while I’m reading a research paper on screen, this column stays in view.

But I am guilty of an entirely different form of multitasking: in any given month, I have lots of projects on the go. This feels a world away from distracting myself with instant messaging. In fact it feels symptomatic of being a grown-up in the 21st century. But perhaps it, too, is unhelpful.

The psychologists’ lab isn’t well-suited to testing that hypothesis, but there is a new working paper from three economists, Decio Coviello, Andrea Ichino and Nicola Persico. They studied the caseload of 31 judges in a specialised court in Milan, who over five years dealt with over 58,000 cases. Because of the way cases are randomly assigned, and a rule stating that cases must open no later than 60 days after assignment, some judges find themselves with many more cases open at the same time. Coviello and his colleagues find that judges who have been obliged to work on many cases in parallel take longer to complete similar portfolios of cases. One implication is that the 60-day rule probably slows the average case down rather than speeding it up.

The message for the rest of us is that Publilius Syrus was right about multitasking. One thing at a time is best. The exception, I suppose, is if you’d rather not remember what you’re supposed to be doing. No wonder so many of us check our BlackBerries in meetings.

Also published at ft.com.


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