With the UK having now left the European Union here is a very amusing clip from the BBC series “Yes Minister” (1982) in which Sir Humphrey and Jim Hacker discuss Brussels and the notion of the UK trying to pretend that they are European. Also discusses why other European nations joined the common market in the first place.
Went through the consumption function this morning with my A2 class and I recalled the superb cake that A2 student Lara Hodgson made for the class a few years ago – here’s hoping for a similar cake this term. Remember that the standard Keynesian consumption function is written as follows:
C = a + c (Yd) – where:
- C = total consumer spending
- a = is autonomous spending
- c (Yd) = the propensity to spend out of disposable income
Autonomous spending (a) is consumption which does not depend on the level of income. For example people can fund some of their spending by using their savings or by borrowing money from banks and other lenders. A change in autonomous spending would in fact cause a shift in the consumption function leading to a change in consumer demand at all levels of income. The key to understanding how a rise in disposable income affects household spending is to understand the concept of the marginal propensity to consume (mpc). The marginal propensity to consume is the change in consumer spending arising from a change in disposable income. The higher the mpc the steeper the gradient of the consumption function line. As you can imagine the consumption of cake was fairly rapid.
I am working may way through the Yes, Minister series and found an amusing clip where Humphery is advising Sir Desmond about the possibilities of getting the Minister to make the decision that they want him to make. However the start has Sir Desmond getting a little confused with his economists and giving his reason for buying the Financial Times.
Here is a really funny video by the students of Columbia Business School (CBS) – you may have seen it before but I find it very useful when you start teaching monetary policy and interest rates.
Back in 2006 Alan Greenspan vacated the role of chairman of the US Federal Reserve and the two main candidates for the job were Ben Bernanke and Glenn Hubbard. Glen Hubbard was (and still is) the Dean at Columbia Business School and was no doubt disappointed about losing out to Ben Bernanke. His students obviously felt a certain amount of sympathy for him and used the song “Every Breath You Take” by The Police to voice their opinion as to who should have got the job. They have altered the lyrics and the lead singer plays Glenn Hubbard.
Some significant economic words in it are: – interest rates, stagflate, inflate, bps, jobs, growth etc.
From the Bank of Jamaica.
Diane Coyle wrote a piece on the Project Syndicate website discussing that computers are designed to think like economists. Artificial intelligence (AI) is a faultless version of homo economicus as it is a rationally calculating, logically consistent, ends-orientated agent capable of achieving its desired outcomes with finite computational resources. They are perceived as much more effective than a human in achieving the maximum amount of utility for an individual. Coyle does go onto say that economists today cannot offer a measure of actual utility.
Jeremy Bentham’s famous formulation of utilitarianism is known as the “greatest-happiness principle”. It holds that one must always act so as to produce the greatest aggregate happiness among all sentient beings, within reason. John Stuart Mill’s method of determining the best utility is that a moral agent, when given the choice between two or more actions, ought to choose the action that contributes most to (maximises) the total happiness in the world. However this assumption can produce some unease.
- Most of those designing algorithms are utilitarians who believe that if a ‘good’ is known, then it can be maximised. Therefore how much thought is there about possible societal impacts of algorithms as they are designed to optimise efficiency and profitability.
- Algorithms are created using current and future data that is full of bias. The result could be the institutionalisation of biased and damaging decisions with the excuse of, to quote ‘Little Britain’, ‘the computer says no’. see video below.
- Algorithms make it easy for consumers to decide things and it acts as a short-cut (heuristic). Therefore we become a slave to the algorithm rather than taking more ownership of our thinking /reasoning. Those who control of the algorithm have an unfair position.
There is no doubt in certain aspects of society AI is extremely useful and can cut down bureaucracy and lead to improved efficiency in everyday life. The real issue extends beyond the use of algorithmic decision-making in corporate and political governance, and strikes at the ethical foundations of our societies. As Coyle points out we need to engage in self-reflection and decide if we really want to encode current social arrangements into the future.
Below is a funny clip by Seamus O’Rouke that was on RTE Radio 1 (Irish National Broadcaster). He has his own unique reflections on the benefits of having a hard border for the people of Leitrim.
The introduction of a hard border would have massive implications for business and personal travel between Northern Ireland. There has been an understanding between Britain and Ireland for decades that has led to this de facto agreement which has served both countries well for years. The other option is for the current situation to endure soft border, whereby vehicles, goods and people can freely pass through a porous border.
A hard border would see the reintroduction of cameras at checkpoints, and all vehicles being stopped as they approach the numerous crossing points. As it stands, there is complete freedom of movement between Northern Ireland and the Irish Republic. The border is barely recognised, with minor road markings being the only sign that you are moving between nation states.
Seamus O’Rouke tends to disagree with the soft border.
As the World Cup enters the quarter final stage we have seen the same old tricks played by players to try and influence the decision of the referee.
- France’s Lucas Hernandez admitted to flopping in France’s 2-1 win against Australia in an attempt to get Australian midfielder Mathew Leckie sent off.
- Spanish defender Gerard Piqué accused Portugal’s captain Cristiano Ronaldo of exaggerating a fall to secure a penalty kick in their 3-3 nail-biter. Piqué said Ronaldo has a habit of “throwing himself to the ground.”
- Neymar rolling around in what seemed to be excruciating pain when there was contact on his ankle and that was on the sideline. What would he have done if it was in the penalty area and Brazil were 0-1 down?
That being said it was hoped that the VAR system would start to see this sort of tactic removed from the ‘beautiful game’. Some of the techniques of faking an injury are below – HT to Kanchan Bandyopadhyay.
The Economist has looked at this area and I thought that I would delve a little deeper. There is no doubt that if you study the costs and benefits of faking an injury there are certain sports where it is perceived as quite worthwhile – i.e. the benefits outweigh the costs. Cost benefit analysis is part of Unit 3 of the AS Level course. What is cost-benefit analysis (CBA)?
Cost Benefit Analysis (CBA) refers to estimating the private and external benefits of an investment project – airport, rail link, road etc against the private and external costs. Once these costs/benefits are established a decision is made as to whether the project should go ahead.
CBA can be applied to any decision you make and below is a table outlining the cost and benefit of faking a peanalty or injury in particular sports. I see the benefit in soccer of diving in the box and being awarded a penalty outweigh the costs by a significant amount. Firstly, if the appeal for a penalty is turned down it is very unlikely that the referee will administer any punishment to the player faking a foul. In too many cases they are happy to let the game play on as they feel under so much pressure anyway for not awarding it. Whilst in ice-hockey a suspension of either 2 or 4 minutes has acted as a deterrent to those caught “embellishing” . I have put some values in the end column which will no doubt encourage a lot of discussion – remember Warren Gatland, the Welsh coach in the Rugby World Cup 2011, considered informing a player to fake an injury so there would be no pushing in the scrums. This was after their captain, Sam Warburton, was sent off early in semi-final against France.
However, with the perceived benefits of diving in soccer it does encourage players to even practice this activity. This reminded me of a great advertisement run by the Guardian Newspaper for the Euro 2004 Soccer Cup – see below
Sad news yesterday of the passing of John Clarke. As well as his Fred Dagg character he was part of ‘Clarke and Dawe’ which aired on ABC Australia in which prominent figures speak about matters of public importance. Below is the time they look into what Quantitative Easing actually is. Very amusing and his sense of humour will be missed.