To get a sense of the perceived influence of economics on global thinking, it is worth looking at Foreign Policy magazine’s list of 100 most influential thinkers. An economist beats Obama to first place. Other economists who rank highly include Thaler and Sunstein at number 7, Robert Shiller at number 22, William Easterly at 39, Paul Collier at 36 and Esther Duflo at 41. Others on the list include Stiglitz, Ostrom (we claim her now!), Stern, Roubini, Sachs, Krugman, Posner, Sen, Buiter, Oster.
Author: Liam Delaney
Fine Gael’s PRSI reduction proposal is linked here
“As part of their ongoing commitment to focus on job protection and creation Fine Gael have announced plans to reduce the upper rate of employer’s PRSI by 20% and the lower rate of employer’s PRSI by 50% as part of a €900m pro jobs tax cut for December’s budget. The proposal, which will benefit 175,000 employers and their 1.7m employees, was announced in the Dáil today by the Fine Gael Deputy Leader and Spokesman on Finance Richard Bruton T.D. The €900m tax cut for jobs plan will be financed by the broadening of the tax base to include a carbon tax (480m), a windfall levy on power generators (200m) and the abolition of the PRSI allowance and the ceiling on employees PRSI (470m) while contributing €250m to deficit reduction.”
Also, a simplified explanation of the job sharing incentive scheme referenced by Krugman is available from the author Dean Baker of CEPR in Washington here
David Blanchflower’s ideas on stimulus have received a lot of attention but the core of his paper, namely the imperative to act on the youth labour market side did not receive much debate. It is good though to see that the most downloaded article for the last day on the Irish Times website deals with this part of his talk and hopefully he has succeeded in pressing home the urgency of this problem.
However, those who argue that active intervention in the Irish labour market is counter-productive will be given further credence by the reports on the FAS Work Experience Programme. If the Times is correct, it is very likely that this has flopped and is currently under review.
However, if something is designed in such a way that it has no chance of success then its unclear how much we have learned from its failure. In terms of graduates, FAS simply does not have a recognition among graduates as a place to go to look for work (though even with this caveat it seems to have attracted greater interest from graduates than nongraduates). The process required companies to actively apply to FAS and also made the stipulation that the applicants themselves be unemployed for six months or more before applying. Even with this, it still got nearly 2,000 applicants.
It is important that they get this right, and start by taking it out of FAS and placing it between departments packaged in a way that will attract both the companies and the graduates. The 6 month proviso is also pointless in the current market and this should be relaxed. We cannot say that active interventions do not work until we actually begin to experiment properly with their design and approach them with more vigour than these efforts.
It is worth discussing whether the report that the unemployment taskforce does not seem to have gotten off the ground is worrying. On the one hand, it potentially points to a failure to take seriously an issue that may have enormous consequences for the future economic and social well-being of everyone living in the country, particularly younger people. On the other hand, it may be saving the waste of another talking shop that will have no teeth and ultimately will not be able to achieve anything. Can a committee meeting on a regular basis to draft recommendations to government bodies on unemployment achieve something? If so, what should this committee be doing and what should it be empowered to do? If not, then should it simply be wound down now rather than cluttering the policy environment?
On November 6th, we will hold a one-day session on the interaction of Economics and Psychology. Full details of this are here. All are welcome. There is no registration process but perhaps email emma.barron@ucd.ie to confirm attendance.
The current literatures in areas such as intertemporal choice, well-being, emotional decision making, experimental economics, identity, risky choice, neuroeconomics, and related areas are changing modern economics entirely and increasingly behavioural economics is being debated in core policy discussions, particularly in areas such as taxation and pensions. This session and previous sessions have attempted to gather people working in this area in Ireland and are complementary to the wider international conference on economics and psychology that takes place every year.
Speakers for the day include Professor Arie Kapteyn, who is a pioneer in the use of subjective measures in economics and, among many other things in a very distinguished career, founded CentER in Tilburg and is currently head of the Labour and Population Division at RAND. The current head of CentER, Professor Marcel Das will also present on the MESS and LISS projects, two of the largest social science projects in the world that are bringing economics and psychology together in a way that is dramatically expanding the data and measures available for researchers to look at complex economic questions.
There will also be a number of speakers from UCD, ESRI, Maynooth, UL and from other national institutions. While the day is focused around the talks, we hope that there will be a lot of discussion about the implications of behavioural economics for public policy and for regulation. I have posted previously on the topic of whether policy-makers should care about behavioural economics. Hopefully we can talk further about that on the day.
Some of the speakers may be wondering why there are 60,000 people outside the venue protesting. I have told them that behavioural economics is controversial in Ireland and to expect trouble.