Thursday 17 December 2020

Home Economics: Why we are not learning how to cook even when we cook.

The weekend newspaper fans across the kitchen table and the glossy supplement catches your eye. As you are perusing, you come across a recipe and suddenly get the idea stuck in your head that you simply must make this tonight.

But, how do you go about it? Are you the type of person who worries about needing the specific type of mid-sized game bird, and go from shop to shop in search of the holy quail? Or perhaps you are a chancer, a substituter, a leaver-out-altogetherer – you live for culinary Jenga.

Most people learn to cook like this but I suggest this is not really learning. Or at least how we think about learning in many other areas of life.

When you first learn economics, you generally learn a collection of models (I could use other analogies, but this is a vaguely economics-related blog and I’m trying to protect the brand here). To really understand models, you need to play around with them. What happens if I increase this parameter, what if the situation was reversed? This is why exam questions are usually slight adjustments of the main model, to check you actually know what you are doing.

You may have heard of some chefs being “classically” trained. All this means is that they have learned to cook by making classic French dishes (think duck’a l'orange or coq au vin). It is often said that a chef needs to master the classics before you go on to create anything yourself. I don’t think this is strictly the case, but what it does do, is give the chef a collection of techniques and an understanding of why the recipe works. For example, orange works with duck as duck meat is strong and fatty, the orange provides sweetness and acidity to cut through the fat and provide freshness. This is why you often see duck paired with other fruit in restaurants: they are essentially variations on a classic recipe. It is the same with economics as you often take a basic model and tailor it to a specific situation.*

When you read most recipes, however, they don’t really give you an understanding of what each component does. One exception to this is Felicity Cloake’s “how to cook the perfect…” in the Guardian. The idea is quite simple: she reads lots of recipes and synthesises them to make what she deems to be the perfect version of a recipe. But the best thing about it is that she explains what each part of the recipe is actually doing, by noting the differences amongst recipes. It doesn't matter if it is the perfect recipe or not. By playing around with different variations and noting what happens when she tries means you actually learn something from her.

The reason why all this is so important is often (and you may have noticed this) things don’t always go according to plan in the kitchen. When you mess up it is incredibly frustrating. The pile of washing up grows as you have turned the bottom of the pan to carbon. You are stressed. You are hungry. The most frustrating thing of all, however, is if you don’t understand why the thing you have made went wrong. It just didn't work. Usually, this means never trying the recipe again.

I am here to tell you that it is not your fault, you just have a bad teacher: a recipe hardly ever tells you what happens when things go wrong. For example, google any meringue recipe and most will tell you the bare minimum. It doesn’t really tell you what the hell stiff peaks are (a David Lynch adult movie?), or why you need to add the sugar slowly, or what the sugar even does? It also doesn’t tell you that you can overwhip a meringue, what that looks like, or how to remedy it if it happens.

The thing is, when stuff goes wrong and you understand why it went wrong, you have actually learned something. It’s a radical new pedagogical concept called “learning from mistakes”. This is a good thing. However, you can only really learn from your mistakes if you understand what each component does. It is equivalent of changing loads of stuff in your model at the same time and wondering what made it crash. You need to change one bit at a time to see what happens. 

So how do you go about learning how to cook? Well, the way I earned was by setting out to learn different techniques and researching them before I attempted it. Recently, I have been trying to improve my pastry skills so I am making a lot of pies and tarts. I now know why you need to “rest” the pastry in the fridge, what it actually does to the dough, and why you can’t really skip it.

Although the learning curve is a bit steeper, it does end up saving you a lot of time if you enjoy cooking. You don’t have to rigidly stick to the same few recipes and it's much less stressful. Things go wrong less often, and you can also understand what stuff you can actually leave out of a recipe or substitute. If I do use recipes, it is usually for inspiration or to learn a new technique.

Cooking, it is my hobby, so I am going to spend a lot more time on it than the average person. But if you want to make cooking more enjoyable and less stressful, you got to do your research. Also, am happy to help if anyone wants advice :)


*I don’t want to enter this debate but you don’t have to be classically trained to be an amazing chef, and you don’t have to be neoclassically trained to be an amazing economist.

Friday 11 December 2020

Why did some people think the UK/EU deal would be the “easiest in human history"?

A lot of people think free trade is all about tariffs. I think this is why some people thought the deal between the UK and EU would be the “easiest in human history”.

The logic for free trade is compelling because it is not immediately obvious. If you know the basic story, you may know a little bit more about trade than the average person. This may lead you to believe that anyone who disagrees with you is simply misguided. Cod economics, ya da ya da.

I am going to explain the Econ101 version of free trade which has become a bit of an Econ101ism. A lot of people may roughly understand the arguments in favour of free trade but haven’t got the complete picture.

So, a tariff is just a tax on a good that you import from another country. A tariff not only raises revenue for the government but also gives an advantage to home producers over foreign producers. Why does this happen? Let’s take a simple example.

You are in the UK and want to buy some chocolate. You see that the UK and US make similar quality* chocolate and are available at the same price, so it’s hard to decide which to buy. If, however, the UK imposed a tariff on chocolate coming into the country, then US chocolate would now be more expensive. The decision is easy, you buy chocolate made in the UK as the price is lower.

When governments put a tariff on imports like this, it is thought of as protecting home producers - hence the term protectionism.

So why is this a problem? Well let's say that US firms find a new way of making cheaper chocolate via some nuclear reaction or whatever. US chocolate would now be cheaper than the UK if it wasn’t for the tariff. What this means is that consumers in the UK are going to lose out (this is why some people think Brexit will mean cheaper food prices).

But this is not the main compelling argument for free trade. Reducing tariffs means that the whole of society gains by more, on average, than under tariffs. Tariffs impose what is known as a dead-weight loss on society. We can prove this with lots of nice graphs that involve little triangles. The upshot of all this is that even though UK chocolate makers may gain from tariffs, the overwhelming majority of people lose from them. In fact, because there is a net gain from free trade, the winners can compensate the losers – everyone wins.

And because we can rework this example from a US perspective, the same logic applies to the US. As the logic for free trade is undeniable, both countries sit down and agree not to impose tariffs over a cup of tea and it will be the easiest deal in history…

There are a number of important criticisms of this theory that are not as widely known as the above. Not least, the idea that the winners compensate the losers has not really happened in practice. This is related to the whole globalisation and inequality issue. But this is not what I am going to focus on as I want to talk about why trade deals are not actually so easy.

Tariffs are probably the most conceptually obvious way in which you can prevent free trade. But, they are not the only way.

Subsidies are another way you can distort the process of free trade. A subsidy is the opposite of a tax. Instead of taking away, the government gives. For example, rather than imposing a tariff on US chocolate, the UK government could subsidise UK chocolate. This would allow UK firms to charge a lower price than US firms, giving them a competitive advantage. Even though those subsidies** would actually give us cheaper chocolate than putting a tariff on US chocolate, we are going to have to pay higher taxes to fund those subsidies. So there is still a deadweight loss (despite chocolate lovers gaining).

Regulations are also another example of distortions. If the UK allows the use of less expensive graphite tips in their nuclear chocolate reactors and the US doesn’t, then the UK has a competitive advantage over the US.

Now at this point, you may be thinking “isn’t government regulation a market distortion in itself?”. You would be correct in thinking that. This was seen as a benefit of Brexit, to be free from the red tape of Brussels.

This, however, is where trade deals get complicated. This is because regulations are what sovereignty is all about. What is a law other than a regulation? One person's red tape is another person's necessary safety measures. You can make your own regulations that are different from other countries, but if this gives you an artificial competitive advantage over other countries, then you shouldn’t be surprised if that country won’t sign a trade deal with you.

To put it simply, there is a trade-off between sovereignty and free trade. 

You can’t have your chocolate cake and eat it too. This is literally baked into free trade theory. However, when you learn the basics of free trade you just assume (for pedagogical purposes) that the other country has the same preferences as yours. 

This does not mean, however, that Brexit was a bad thing. If the UK has different preferences to the rest of the EU then it makes sense to sacrifice some wealth (via trade) to satisfy those different preferences. The problem, however, is that many people who voted to leave not only had different preferences from the EU, but also different preferences from each other. Some wanted more protectionism/regulations, whereas others wanted less.

When the UK was inside the EU, they had a say in what regulations were imposed, but other countries could also influence these regulations. As the UK leaves, it can impose its own regulations, but other countries are still going to influence these regulations via trade deals.

You can’t really escape the fact that if you want to trade, and preferences differ, you are going to have to find some way of compromising over these regulations.

 The trade-off is real. This is why, sadly, it wasn’t so easy and was never going to be.

*If you are from the UK and have ever tried a Hershey’s kiss, this quality analogy might be a bit of a stretch. Perhaps this is why the US needs so much ice if they have to put wax in their chocolate to stop it from melting.

**The EU does actually allows a certain level of subsidies (or state aid). The crucial point though is that the rules have to be the same for everyone or else there is a risk of other countries having an unfair advantage.

Thursday 10 December 2020

An economist's guide to Christmas (not).

After discussing the idiosyncratic way I buy presents (more of which later) with Tom Chivers, he said: “An economist's guide to Christmas would make a good book title”. To which I sent him back a vomit emoji (Tom and I are actually writing a book together that doesn’t actually make me want to vom).

I am a little weary of pop economics advice on how to improve your life. I think sometimes the advice is a bit of a stretch from what economic models or empirics tell us.

For example, if I were to write a book like this, I could point to evidence that finds that we tend to overvalue the gifts we give others. Or perhaps highlight the fact that people would not pay as much for the gift they are given if were they to buy it themselves. I would then triumphantly argue we should just give people money instead.

This is bad economics and bad advice. This reasoning doesn’t take into account the warm glow you feel from giving the gift or the fact that someone went to the trouble of buying you a gift makes you happy. After all, isn’t this the reason gifts exist in the first place?

If you were to take anything from this, it suggests that giving a gift that is difficult to put a direct value on may be worthwhile – a homemade gift for example. But it depends on lots of factors which I am sure you already consider when giving gifts such as… do you think they will like it?

Let's be honest - we have all received gifts that we have been disappointed with. I remember my Dad once told me about the time my Grandfather gave him some sort of electronics set for his 18th birthday. My Dad recalled thinking at the time “does he even know me?”. This is probably why giving a gift can be so stressful, the thought that the other person won’t like it and think badly of you.

I think the old saying of “it is the thought that counts” is extremely important here. If you accept that giving gifts is a good thing and want it to continue, you also need to accept that people are going to get it wrong occasionally: it doesn’t necessarily reflect how they feel about you.

So how do I give gifts? Well I really like buying gifts for people. But the way my wife and I give gifts to each other is as follows: we don’t. Well, strictly speaking, this isn’t true. If we find something nice that we think the other will like, we buy it (recently, my wife bought me Dirt, a fantastic book about a journalist training to be a chef in Lyon and I loved it).

However, we worked out that birthdays, anniversaries, and Christmases amounts to 3 gifts a year, each. Given our average life expectancies (and marriage expectancy?) we are looking at well over 200 gifts. Buying one, thoughtful gift for someone is hard enough. Repeating the process every few months makes it ever more difficult, so we decided to stop.

We also have an aversion to accumulating physical stuff (despite my love of kitchen gadgets). So instead of buying each other stuff on special occasions, we tend to just go to restaurants or visit places to celebrate. But when we do get each other gifts, we are usually really happy with them and it removes the stress involved with time constraints of birthdays, etc. It also has the added bonus of being a surprise!

However, and this is the crucial thing here, I AM NOT ADVISING YOU TO DO WHAT WE DO. If you enjoy giving and receiving presents with your partner, or anyone for that matter, continue doing so. If you read this and think you might like to do the same, great. If not, also great!

In economics, we often model decisions as utility maximisation (basically, doing what makes you happiest). But what makes you happy is down to your preferences which are extremely difficult to change. Although it may be the case that you just don’t know until you try, if you are happiest in what you are doing, then keep on doing you. Oh and if do want to buy someone a present for Christmas, buy my book.

Tuesday 18 August 2020

You can’t blame an algorithm: A-levels and unintended consequences.

You are at a stag do and in charge of paying the bill and you need to do long division which literally no one knows how to do by hand. So, you attempt to divide £2344 by 24 (lads) into your calculator. But because the multiple rounds of black sambuca adds to your already poor levels of coordination you drunkenly mash the last digit and end up typing in 2344/26. Inevitable you get the wrong answer and argue with the waiter for half an hour.

Who is at fault here? Could it possibly be you? No, it is the calculator’s fault. The calculator, being a sentient and telekinetic being should have known you meant to type 4 and not 6, like you definitely did do with your actual physical finger.

The problem with the word "algorithm" is that it makes you think of complex mathematical equation that makes decisions for us. But this is not correct all. An algorithm is not sentient, it does not make the decisions, it just follows orders. When you type 2344/26 into your calculator the calculator is following an algorithm. It is taking your input of 2344 and splitting it up into 26 equal parts for you. It does exactly what you said, it does not look around the table and notice there are only 24 people (lads) and think "ah I know what he means here".

Even the most complex of algorithms, so called “artificial intelligence” follow the orders we give them. We may not be able to understand how they solve problems but that does not mean we didn’t design the rules which they follow (it is quite an interesting subject really, someone should probably write a book about it).

However, the “algorithm” used to assess A-level results was not anywhere near as complex as artificial intelligence. It wasn’t even a “black box”: a situation which describes not knowing precisely how the data in your algorithm is transformed (usually as a result of complexity). But it was trying to deal with a complex task of assigning grades to students without them sitting exams.

The problem of designing algorithms is similar to that of designing laws. After all, laws are basically simply algorithms without numbers.

For example, I think most people would agree that stealing is wrong, and we should have a law that prevents people from stealing. So, let’s say we write a law that says “do not steal” and hope that does the job.

But what if a situation occurs where someone was bleeding badly in the street. I run to the nearest chemist and grab some bandages from the shelf, run out of the shop and dutifully tend to the bleeding person. 

If we were to enforce our “do not steal” law here I would have committed an illegal act despite my heroic efforts and would have been stopped by a security guard. Perhaps I could have gone back in to pay for the item, but it isn’t really clear whether this is stealing or not. This is because haven’t really established what “stealing” technically is in our “do not steal” law.

Writing laws are particularly difficult because of this. We need caveats and exceptions, we need careful definitions. But even this process isn’t perfect. We still need judges and juries to interpret the law on a case by case basis. 

The problem with laws and algorithms is that they can have unintended consequences. The "do not steal" law did not intend for a person to bleed out on the street. The question which we should then ask is who is to blame for these unintended consequences? Can we really blame someone who did not intend for these things to happen when they were acting in good faith?  In the A-levels case the answer is yes and no.

Firstly, I do not think we should blame the designers of the algorithm for having unintended consequences. It is not like they didn’t think things through or create an overly simple law. They did carefully check for certain things such as if their algorithm was favouring certain groups.

What happened, however, is that their algorithm potentially favoured private schools since private schools tend to have small class sizes and the model relied heavily on predicted grades for groups smaller than 15. Now you may say this is “obvious” but we have the benefit of hindsight and they were also dealing with a number of complicated issues. The fact that something would have escaped their model is not surprising at all which is why I do not think you can blame the designers completely for this.

However, you can blame someone for not acknowledging the fact that their model will have unintended consequences. Because of the high likelihood that something will go wrong you need to discuss the model with as many informed people as possible to spot potential issues. The other thing you need to do is take it as given that there will be unintended consequences and work out ways to mitigate their impact. Essentially, planning to fail.

The thing is, just as we need laws, we also need algorithms to help us. Imagine the scenario where we just said that students’ grades would solely be based on teacher assessment. The amount of pressure on teaches to inflate grades would be extremely high. Even if they would not do it themselves, they may be worried that other teachers would do it and not inflating grades would put their students at an unfair advantage.

But when we make algorithms, we need to be sufficiently prepared to deal with unintended consequences.

Thursday 11 June 2020

Why do we still have journals?

When academic journals first came into fashion, they were primarily a way to disseminate research. Unless you attended a lecture, there was no other way you could keep up to date with new findings in a field without seeing a physical written copy. One would think that the invention of the internet would revolutionise how this process happens but this has not been the case. In fact, it is deeply weird how much academia sticks to pretending the physical publication is still a thing. I have never seen a physical copy of any of my publication let alone held one.

We are all still pretending that lots of people read physical copies of journals. We even format papers designed to be read like they are still physically printed objects. It is the equivalent of logging into the New York Times website and there just being a bunch of pictures of the physical newspaper itself.
We do not need journals to tell people about our research. All we need is a website that we can upload papers to so people can search and access them. If only there was a way to publish a PAPER we are currently WORKING on? We really don’t have to waste time with font sizes or fiddle with how to present references.* And if you want to have a physical copy of them then you can cut down a tree and buy a printer yourself.

So if not dissemination, then journals must be of some other value right? There are two main reasons which often come up when defending journals: scientific rigour and quality. These both come from the process of peer review: where you send your paper to the editor of a journal who then sends them out to anonymous referees and they are rude to you.

In terms of scientific rigour, having a few people read your article closely for mistakes is a good thing. But you know what is better than a few people? Lots of people looking for mistakes. If I made a typo in this blog, due to the magic of the internet, I can quite easily change the typo. I can even post longer amendments and changes based on people's suggestions as they read my piece. If someone disagrees with me so much, they can write their own blog saying I am wrong.

Now some may argue that doing away with formal referees will mean we do not have anonymity and so may be afraid to speak the truth (or at least this is the view of wonk54 on twitter with an anime character as their profile pic). Personally, I am not massively convinced that this improves the process all much as it makes referees overly negative.

There is little incentive to referee for a journal other than academic duty, at the best of times. If there is an incentive, it is to signal to an editor that you have high quality standards. This, however, doesn’t necessarily lead to the overall goal we should all be working toward: increasing scientific knowledge.
The problem with the current approach is that a lot of the time reports are read more like how the referee would do the paper, rather than whether it is correct or not. Often reports don’t take into consideration whether the effort to re-run a study, to get one more data set etc is worth the marginal gain in improving the paper - they are not the ones having to do it after all.

The part I find the most frustrating about journals is the argument that we need to assign “quality”. In economics, we have 5 journals that are deemed the top in the field for historical reasons. I think calls to break up this oligopoly miss the point. We should be debating whether we need journals at all?

I am not against assigning quality to publications, but “quality” is not the same as saying the research isn’t publishable (don’t get me started on “not a good fit of this journal”). What you mostly end up doing is pinging about your research to journals in order to find one that would meet some quality threshold which can take years! Why doesn’t the first editor you send it to just say this if of X quality? Like having AER, and AER macro? Just say AER 1, 2, 3, 4. Or even the top X percent of AER submissions. Journals are not the only way to signal quality and we do not have to stick to this format. I think the film review site Rotten Tomatoes does a better and fairer job of assigning quality than academic journals.

I am not going to suggest exactly what replace journals with but alternatives already exist. For example, physics is already moving away from the journal format with something like Journals do not need to continue because we think this is how science has been done forever (peer-review isn’t actually that old). I am not really aware of any (peer-reviewed) evidence that journals are the best way to expand scientific knowledge???

The main thing I am worried about is we have a Lord of the Rings problem. We may all think that destroying journals is the best thing to do. But once people start publishing in these journals and become editors of these journals, they no longer want to lob them into the fiery pit of Mount Doom.
I am nowhere near good enough to be Frodo. But if people at the top are willing to get rid of journals, you will definitely have “my axe”.

*we still have to cite issue and page numbers as if we all have libraries in the east wing of our mansions. It is ridiculous.

Tuesday 5 May 2020

Judging a bookcase by its politician

Michael Gove’s bookcase has gained attention recently due to some controversial books which appeared on its shelves. Inevitably some people expressed concern that he would own these books as they inferred he may share their views. In response to this, some people suggested that just because he owns these books, doesn’t mean he agrees with them.
Even though it seems like a disagreement, both of these statements are compatible with each other. But to explain this, I am going to talk about a concept in economics called “signalling”. 

Signalling is when your action indicates to others some information about you. Let’s think of a situation where an employer has two candidates, one that went to university and one that didn’t. The candidate that didn’t go to university may actually be smarter (and hence more employable) than the one that did, but just decided not to go. However, the employer has no way of knowing this, and so must choose a candidate that they believe is most likely going to be smarter than the other. 

To do this, the employer reasons using conditional probability, sometimes referred to as Bayesian probability after the mathematician. Personally, I prefer to call it conditional probability as it helps people remember what it is: conditional on x happening, what are the chances of y. So the question the employer must ask is “given the condition that the person did or did not go to university, what is the probably that they are smart?”

The way to think about this is to look at the two different types of groups. Those what went to university have to be at least smart enough to meet the entry requirements. Those that did not go, however, include people who are not smart enough to meet the entry requirements. 

Therefore even though it is possible that the person who didn’t go to university is smarter than the person who did, it is still more likely that the person we pick at random, who went to university, is smarter. Therefore, one* reason why people may be tempted to go to university is because that it acts as a signal to future employers that they are smart.

Personally, I am really not a fan of how economics uses signalling a lot of the time. It is not that I do not think people should use Bayesian reasoning, it is that economists generally use signalling to find negatives in people. Telling some academic economist about a hobby is tricky as in their minds you should always be working on your research. Saying that I enjoy pottery acts as a signal to them that I am not spending every waking moment on a new paper. However, I have in fact started to tell economists about my hobbies. This is so that if they start saying anything about my research I have a signal that they are, most likely, assholes.

So what has all this got to do with Michael Gove’s bookshelf? Is a bookshelf a signal or is it just a place to store books. I can buy that some politicians may be sitting in front of their bookcases to appear smart, even going so far as to choose the books that are on view. But even if they were not consciously trying to signal something, we could still perform the same sort of Bayesian reasoning on them.

To say that we cannot learn anything about a person by their bookshelf is just silly. It either indicates they have read or are going to read a book. You should be able to work out from my bookshelf that I have at least studied economics given the amount of economic textbooks on my shelf. At the same time, it is also true that just because you own a book does not mean you agree with its views.

For example, owning a copy of Mein Kampf does not mean you are a Nazi. In fact, I am pretty sure most people who own a copy of Mein Kampf are not Nazis. However, if you do happen to be a Nazi, I think it is also quite likely you would own a copy of Mein Kampf. So if we were to pick a person at random who owns Mein Kampf, then we may be more likely to pick a Nazi then someone who does not own Mein Kampf.** But importantly here, even though we are more likely to pick a Nazi, it still pretty unlikely. This is because the overall number of Nazis is quite low. For example, let us say the probability of finding a Nazi, given that they own Mein Kampf, is 0.01%, whereas the probability of finding a Nazi, given that they do not own Mein Kampf is 0.001%.

So yes, I think it is more likely that Michael Gove holds these controversial views than people who do not own these books, but overall pretty unlikely that he does hold these views. Whatever my views are on Michael Gove as a politician, I tend not to think the worst in people in these sorts of situation. This is because as I was told never to judge a book by its cover (unless it’s a book about Beysian inference).

*I say ONE reason to go to university here, as I think it is important (especially as an economist) to say there are many reasons to go to university then just employability.
**It could be the case the owning a copy of Mein Kampf makes a random person less likely to be a Nazi if we believe many Nazi’s don’t actually read that many books.

Wednesday 22 April 2020

References, Applications and Monopsonies: Big businesses gain little but have no incentive to stop

Firstly, an important thing I want to make clear. I am more than happy to write references for my students and take great pleasure seeing them get the job or master’s programme they want. I really do not mind giving up my time to write references and I have never refused a student’s request to write them a reference. What I do not like, however, is for this to be used against me by institutions and firms, especially when they are gaining very little.

It is important I stress that I am being in no way critical of the students themselves who are just as much caught up in the system as I am. They face similar problems as I do when they apply for jobs and masters programmes, a subject which I will subsequently address in this blog.


Doing references does not take up a great deal of my time, but I do I write a number of references every year for students applying to post grad applications and jobs. The amount of references can be as low as 10-20, but given that many students will apply to multiple places, this can quite easily be something like 50-100 submissions.

The amount of references I do got me thinking about why references are useful in the first place. For example, if you are trying to distinguish candidates for a particular job, having information on them from a person who knows them well can be useful in making this choice.

References probably started as a way of employers having someone to “vouch” for the candidate to make sure they are of good character. In small villages & networks this probably works quite well, as everybody knows everybody the referee can be somewhat accountable for their reference. This lack of accountability in the modern age is one reason why everyone has glowing references and means they are of little use.*

When I have been on selection panels myself, I do not think I have read a reference that has affected my decision either way. So to me they are not so much use but I can imagine them being more use in other contexts and industries. The problem is we do not know how useful they are because references are free to those that demand them: the employer.

I am not one of those economists who think everything should have a price on it (especially as it opens up a whole other debate I do not want to get into). However, in the same way people started thinking about how many plastic bags they would take at the supermarket when a small fee was applied, having a price on references would make employers at least think about how they go about the process.

Even if you think that references are important, how they are submitted is vastly inefficient. At best I am able to simply send my reference via e-mail. Often, however, I have to type responses to questions in various boxes. Here lies the key problem with this process: even if these subtle differences add very little in terms of the benefit to the employer, it is still optimal for them to do it as it costs them nothing. They are not the ones having to fill it out. Here is the thing, I HAVE to fill it out – it is not like an optional survey.

This sort of bureaucracy** happens all the time in large businesses, I think mostly because they have established HR departments which have their own internal ways of doing things (I have little experience of small firms, maybe they are just as bad?). Filling out basically the same information in slightly different ways is extremely time-consuming and frustrating. My students often have to do these sort of applications when applying for jobs and masters during their final year of studies which is hardly idea for them.

This makes me think if anything, these firms have too much labour market power. In economics we call this a monopsony. A monopsony like a monopoly, but rather than a firm having market power over consumers, they have market power over suppliers  (in this case, labour).

You cannot imagine all these internal idiosyncrasies being implemented on consumers in competitive markets who would be put off by this sort of form filling. One of the reasons why PayPal is so popular is because you don’t have to fill out your details all the time. I even think some of these firms practises would be clamped down upon by the labour equivalent of a consumer watchdog. Unions could help here - but the focus for unions is primarily for those already in the job rather than those applying for the job.

As I have said, I really wouldn’t mind so much doing all this if I felt they were actually meaningfully giving good information to help selectors make decisions. But as it currently stands, I feel like no one is really winning from this system. 

How to improve the reference process:
  • Pooled submissions (UCAS for student applications the UK and for jobs are examples).
  • Standardised forms: these should be jointly designed by institutions, unions and applicants within industries. If any extra information is needed then this should be minimal with an explanation of why it is needed.
  • Only ask for references when decisions are at the margin, i.e. deciding between close candidates.
  • You do not need a reference letter if you are just asking for proof the person went to that institution.
  • End practise of offer subject to references (how often has an offer being rescinded as a result of this???)

*Even if we did obtain “honest” references from referees it would still actually be quite hard for them to be useful.  For references to work we would need to assume that each referee’s distribution of who they taught/supervised be roughly the same, as naturally referees will compare with everyone they have taught and supervised (this is also related to why I think Tripadviser is rubbish).

**Bureaucracy is a negative word which highlights excessive administration. However, there is no word for good administration which I think is a shame as good administration should not just be absence of bureaucracy.

Saturday 4 April 2020

How ideas spread: Why Econ101ism is economist's Frankenstein and we are to blame.

Alaspoor YorickI knew him well”
 William Shakespeare, Hamlet

Do you see a problem with the above quote? If you do, it is because you either know Hamlet very well or you know it is a famous misquote. The real line is Alaspoor YorickI knew him Horatio?". In fact, there are lots of famous misquotes that continue over time. Some of which you will have no idea that they were a misquote. I always found Neil Armstong’s “One small step for man, one giant leap for mankind” confusing: was it profound or just a tautology? In fact, he said “One small step for a man, one giant leap for mankind”, which obviously makes much more sense. The reason this misquote exists is due to the sound cutting out a little so you can barely hear the “a”. Listen to it again.

If a significant proportion of people know these misquotes exists, why do they continue? One would hope over time information about the correct quote would dominate the misquote, and the misquote would disappear from memory. As a result, I think the misquote is a good starting point to discuss how ideas and information spread.

The recent book by Robert Shiller’s Narrative Economics seems to agree with my view about how ideas spread, or at least I think that it does.  I haven’t picked up the book yet which has been sitting on my bedside table for a few weeks now. But after reading the blurb, I think I get the gist of what he is getting at, and I may never get round to reading it.

Some of you will now be thinking this is sacrilege. This guy is meant to be an academic, he could be spreading misinformation about Shiller’s view, how scandalous! Well the reason I did this was to demonstrate my point.*

My actions were how a lot of people will come to understand and spread ideas. Even if I read Shiller’s book cover to cover, I may not do a good job of explaining what Shiller is getting at. Perhaps Shiller did a bad job of what he was getting at. Perhaps I misread what Shiller’s view is, and perhaps you misread my misreading and so on.

Now I am not suggesting that we can never understand anything or not seek to try and understand.  But I think it is important to recognise that information, or more importantly our
understanding of that information, is not passed on like carbon copies. Think “Chinese whispers” but on a much larger scale.

However, even if the idea is passed on correctly, certain ideas may spread faster and dominate other ideas. You may have heard the quote:

A lie gets halfway around the world before the truth has a chance to get its pants on.

Winston Churchill (did not say this)

So how fast an idea spreads is important for our collective understanding of that idea. But perhaps we believe that eventually the “truth” will dominate other ideas so we shouldn’t worry too much about it. However, even if we were to accept this always happens eventually**, there is still going to be a period of time where people will believe the lie over the truth.

In economics there is a term called Econ101ism. This is attributed to the simple ideas that are taught in Econ101 but then are often misapplied to more complex scenarios. A key example of this is people thinking the market is always efficient. What is strange is that in Econ101 you often see cases where the market is inefficient, such as externalities (think, pollution etc).

However, I would argue this is not really the fault of students misremembering what they were taught, it is partly a problem with how Econ101 is taught: it does not consider the consequences that students are actually going to misremember and forget in the future. So Econ101ism is economics very own Frankenstein (actually economists are Dr Frankenstein and they created the monster that is Econ101ism).

For the most part, Econ101 does look at benchmark cases where the market is always efficient. Even if we deviate from this to show how it often isn’t, students are going to hear “market” and “efficient” an awful lot. So it is hardly surprising that overtime many students will come away remembering the thing that was repeated over and over.

My greatest concern is that even if we spread the notion of Econ101ism, it is really hard sometimes to convince individuals once an idea such as Econ101ism takes hold.

So Econ101ism is out there and even if we were to change how Econ101 is taught completely, it is still going to take an awful long time to cure. As Shakespeare said “the truth will come out”. But my worry is, what happens in the meantime?

*This is one of my favourite pedagogical techniques. Yes I do wear a leather jacket and sit on my chair backwards whilst teaching, why do you ask?

**It may not always happen eventually. And yes, we can have a debate whether we can know something to be “true” or not but I need a drink first.


My friend Helen, a Shakespeare expert, informed me that it is actually “the truth will come to light”. I wish I could say I did this on purpose but sadly I did not. The weird thing about is I did in fact look this up before I posted the blog, so I must have subconsciously made the typo!

Friday 27 March 2020

On thinking about what I thought about the Coronavirus

On Monday the 16th of March, the government announced that we should “avoid” pubs, restaurants and theatres. For many people, this seemed so blindingly obvious given the threat posed by Covid-19 that they felt the government should have simply banned them even earlier.

Yet the day after, despite the governments warning, I saw people gathering in pubs and cafes. When people act in a way that seems so obviously wrong, it is really hard to understand their line of reasoning. Usually people try and explain away this behaviour as a combination of stupidity or selfishness.

However, I really do not think the vast amount of people who went to the pub last week are either of those things.

So as I was trying to put myself in the shoes of someone that went to the pub last week and see what possible reasons I may go, but the first thing that struck me is how quickly this crisis seemed to occur.

I am not one to always plug psychological explanations but to me a lot of people are experiencing hindsight bias: a lot of us feel that we saw this crisis coming way before everyone else.

So in order to test this I searched my e-mails and chats for any clues to my thoughts on the coronavirus over time and this is what I came up with (I suggest you try it too, it is a sobering experience).

January 31st, 2020
My diary tells me that on this day I played a board game with friends. I remember at the time not being concerned about the coronavirus and thinking everything would likely be fine. Even when travel restrictions were coming in, I still thought optimistically that the virus would still be contained. Perhaps it was because there has never an event like this in my life time or we just have an in built bias towards being optimistic, either way this is how I felt.

Why do I remember thinking this so vividly? Well the board game in question was called Pandemic (we lost by the way).

27th of February-ish, 2020
I remember around this week I talked to some Italian colleagues over lunch. They were telling me about the outbreak in Italy and whole villages acting like ghost towns. Italians I know are really worried about getting sick by what they call “a hit of air”, so I think I thought this was probably an overreaction. I do remember diligently washing my hands but I am pretty sure I remember being optimistic about the situation, even if I was a little worried.

6th of March, 2020
My worry was increasing by the day at this at this point. I remember seminars were getting cancelled because of travel concerns. But it wasn’t until this day that I really got it. I mean, this was the day I really understood the enormity of the problem.

Over whatsapp an Italian friend was telling me she was worried about travelling to the South of Italy as the virus may spread from the North. She told me that she was not worried about getting sick, but there was a lack of hospital beds in the South. I remember seeing the “flatten the curve graph” on twitter which is when things really started to click.

I remember telling people after the 6th of March that it was likely pubs were going to close here. People reacted to the news with disbelief, as if I were a crank holding up an “end is nigh" sign.

So if you were honest with yourself, when did you first understand the enormity of the issue we face? My feeling is it wouldn’t be that much before me or that much afterwards. And if it was way before me then you are either an oracle or most likely misremembering: a lot of epidemiologists were still unsure whether it was going to be a global pandemic up until a few weeks ago.

I am not trying to create a competition here as to who understood the problem first. The purpose is to understand why some people did/do not grasp the scale of the problem.

I am a nerd with Italian friends, whose job involves data, and follows other nerds on twitter. If there was ever someone who should understand the problem surely it would be me and others like me? However, I really only understood the problem a week before the government announced people to avoid going to the pub. This doesn’t sound like a lot of time to me to get the message across to people don't follow the news so closely etc.

I think if we are going to try and understand why people went to the pub despite warnings, we need to do so from a place of humility rather than scorn.

Thursday 26 March 2020

What's in a name? The importance of names in understanding ideas

“What's in a name? that which we call a rose
By any other name would smell as sweet.”

 William Shakespeare, Romeo and Juliet

The above quote taken literally is something we could test. If we called a rose, a “putrid shit flower” and asked people to rate the smell of it, would it affect how we experience the smell? Perhaps we would rate the smell of the “putrid shit flower” slightly worse than if we called it a “rose” because our brains are looking for a foul smelling thing and we do not find one. When we smell a “rose”, however, we are looking for a nice smelling thing and find one. I am not suggesting that the putrid shit flower would smell bad but I could theoretically see how it would affect our experience of smell.*

The reason why names are important is because they are the first thing people usually come in contact with before understand ideas. You may hear the name of a concept in passing such as in a conversation or on the radio. Sometimes a name gives us clues to what the thing is about. For example the German word for gloves is handschuhe which directly translated into English means hand shoes. If I know what a hand is and I know what a shoe is, a shoe that goes on your hand is not a bad description for a glove.

Badly named ideas, however, are a problem. To understand this one only has to look at an idea that has only been really around in the UK for the last 20 days or so: social distancing.

The purpose of social distancing is to slow the spread of the pandemic. Not only do people need to comply with social distancing for it to work, they need to understand what it is first before they can act on it.

Now this point is often quite difficult to explain to informed people. My bet is that if you are reading this, you are more than likely aware of what socially distancing is and why it is important. But for a lot of people, they will form their understanding of the phrase “social distancing” from the word itself.

Let us try to imagine hearing social distancing for the first time. Social distancing sounds like a wanky thing that Gwyneth Paltrow would say like “self-care” or “conscious uncoupling”. This is especially so if you first heard it from a celebrity rather than a scientist. You may also think that it means to stop hanging out with friends. Being “social” is more frequently used to mean interacting with your mates rather than relating to society as a whole. Even though not interacting with your friends is partly right, you may still continue to gather in crowds when you shop which is wrong.

You may rightly ask, if people were unsure of the concept why do they not ask? Firstly, you need to be aware that you are unsure. You may think you have guessed right from the name alone like handschuhe. Even if you do ask someone else, they have to correctly know what social distancing is or they may give you a wrong answer. Assuming you do find someone that knows the correct definition, there are still a multitude of ways things could go wrong. Maybe you were too embarrassed to ask because you didn’t want to look stupid. Maybe you misheard the explanation. Maybe you didn’t bother asking as you thought it wasn’t important.

Finally, some of you may go so far as to even google it but again there are still loads of problems here: you gave up trying to understand due to conflicting information or got distracted etc. So after all this, you are still stuck with your gleaned understanding from the naming of “socially distancing” itself.

The problem gets worse once someone’s understanding of an idea takes hold. For example, some people will be adamant that social distancing means staying at home all the time. Trying to convince them otherwise can be extremely difficult. To this extent I think the WHO trying to rebrand socially distancing as physically distancing won’t catch on.

So what can we do to solve this problem? Well firstly, when you think of a name for something, be extremely careful! However, most of the time names for these sort of thing are not made up with this in mind. It was probably a couple of epidemiologists in a room  who both understood what the concept meant and needed a quick shorthand for it. But when communicating this idea to the public they really should have thought about the consequences. If you can model for the spread of disease you can a model how people will understand a concept!

*My anecdotal evidence from wine tasting is that people are easily primed. If you say some random fruit, people will start to smell that fruit. It is kind of like saying to someone “don’t think of an elephant”.

Sunday 22 March 2020

Socially Distanced Football: Can you modify football so you can still play while social distancing?

The basics of social distancing is that if you are symptom free, you can meet with people outside but have to be 2m apart. Also passing things to each other with our hands could also potentially spread the virus so this should also be avoided. This makes a lot of sport impossible to play (unless you like golf).
So I have tried to adapt football to adhere to social distance rules and I think the game actually sounds quite good in theory. It definitely teaches more about positional play and avoids you being two-footed by a red-faced centre back.
There is a big disclaimer here, I am not an expert in how the virus spreads and haven’t thought all of the consequences through. Also, our knowledge of how the virus spreads will change by the day so this may change the rules slightly or make the game unplayable. So what I am saying is, if this becomes a massive thing and the virus spreads even more as a result of it, I really do not want to be held responsible for the avoidable deaths of thousands of people.

If you also don’t want to be responsible for thousands of avoidable deaths then I suggest you follow social distancing rules. As I am writing this people are still gathering in crowds and it is likely we will be in lockdown soon.

The Rules

The rules are basically the same as football with a few alterations to the pitch and certain things borrowed from basketball and volleyball. This game is set up for a 5-a-side match but I am pretty sure you can adapt it to how many players you have by moving the boxes around.
The pitch consists of boxes. Each player must stay with within their own box during play. The boxes are all 2m apart and this creates a deadzone which I will call the 2m zone (if I was a kid playing this everyone would call it the coronazone but as I am an adult this is really inappropriate).

The No.1 Rule

You are not allowed within 2m of anybody in any circumstance.  Not your team or the opposition players, not when you score a goal or after the game is over. If anyone doesn’t adhere to these rules, they cannot play.

The Basics

The game starts with one team’s goalkeeper having the ball. Let’s call the team that starts with the ball the offending team, and the team that doesn’t start with the ball, the defensive team.
You must stay inside your box during play. You can dangle a leg into the 2m zone to intercept a pass but you must not place a foot down or it is a foul. 
You are only allowed 7 seconds on the ball before you have to pass or shoot but you can
take as many touches as you want in that time.

The ball cannot be kicked above waist height
Everyone must use their feet, including the goalkeeper*
Teams can swap positions when the ball is out of play.


There are no free kicks, throw-ins or corners. The only way play can restart is giving the opposition goalkeeper the ball.
Restarts occur when:
a) A goal is scored.
b) A rule is broken (e.g. a player enters the 2m zone)
c) The ball goes out of play (this includes the 2m zone). The team that touches the ball last gives the ball to the opposition goalkeeper.

The Max Pass Rule

The GK always starts with the ball and they start play.
The defenders of a team incorporate the goalkeeper and the two closest players to the goalkeeper. The Forwards are the two players that are higher up the pitch and are separated by the opposing team’s players.
The max pass rule means that defenders can each have the ball only once between themselves before passing forward or shooting (if they must).
Forwards can have the ball only once between themselves before shooting or passing backwards to defenders. 

If the defenders receive the ball from forwards then the max pass rule is reset: each defender can only have the ball once before passing forward and shooting.
If the defending team intercepts the ball, they become the offending team and the offensive rules apply to them.
For example, the goalkeeper passes to the right-side defender who then passes to the left-side defender. They then pass the ball to the left-side forward who then passes to the right-side forward. The right-side forward can either shoot or pass back to any defender, but they can’t pass back to the other forward again until it has been passed back to a defender first.
This rule (although a little complicated on paper) avoids teams just passing it back between themselves like England defenders at a major tournament. Allowing forwards to pass the ball back to defenders is designed to make for more interesting styles of play. Also, the opposing team’s forwards can try and intercept the ball if the ball is passed back to defenders. Basically, if you didn’t have this rule, the ball would always have to go forward and play wouldn’t last very long.


I originally started this as something to do on a Sunday with no football on the tele. But worryingly, I have convinced myself that this game doesn’t sound all that bad. It would be good if someone could make a FIFA mod of it to see how it would work.
I have never written anything like this before so comments from referees, football tacticians, and most importantly, virologists and epidemiologists, are most welcome.
Finally, If you end up playing it in the park you are going to need a lot of jumpers.

*Perhaps when information changes about Covid19 you could have the GK using their hands and allow the ball above head height, but I am erring on the side of caution on this one and I want to encourage position swapping. You also now have a legitimate reason to pretend you’re RenĂ© Higuita.

Friday 20 March 2020

The Media and Panic Buying

The problem with seeing pictures of empty shelves is that it just makes panic buying worse. The media have an important role to play in this but first let's try and understand why panic buying is a problem. In short: panic buying means resources are not allocated to those who need them.

Imagine if there were only two people in a village, Helen and Jack. Every week they go to the village shop and on the shelf there are 6 cans of soup.

Each week, Helen goes in and usually buys 1 can of soup and Jack goes in and buys 2 cans of soup. Sometimes they may buy more or sometimes a bit less. However, the important thing is the shopkeeper roughly knows how many cans of soup she needs on her shelf. Each week she will replace the ones that got bought and keep the shelves full with 6 cans.

Now let us say suddenly something happens like the coronavirus, people are worried that they may need to stay indoors. Jack is concerned and decides to buy 6 cans of soup so he has enough soup for 3 weeks. Helen comes into the shop afterwards to find the shelves completely empty.

So the problem is not that there isn’t enough soup, it is that Jack has enough soup for 3 weeks and Helen does not have any soup at all.

But there is an important psychological effect here that is not demonstrated in the above example. When we go to the shops, we take visual clues in order to estimate how large the total supply of the soup is.

Consider the case if Helen comes into the shop first and sees the usual 6 cans on the shelf. In this example, she is worried about the virus and Jack is not. As Helen is worried, she buys 3 cans rather than her usual 1.

Jack comes in after Helen, he isn’t worried about the virus but the shelf is looking a bit empty. Usually there are about 5 or 6 cans on the shelf when he comes in but now there are only 3! So he is now concerned something may have happened to the total amount of soup and so decides to buy the 3 remaining soup cans that are left on the shelf rather than his usual 2. As there is now no soup on the shelves, if anyone else comes into the shop looking for soup they will have no soup!

So what can we do to stop this? Well let’s say the shop keeper had some spare cans of soup in the back, as soon as Helen bought 3 she could have restocked the shelf before Jack came in. As Jack isn’t so worried about the virus when he comes in, he sees a shelf full of soup and only buys his usual 2. Even if he has heard a rumour that people are panic buying soup, seeing a full shelf will mean he is still less likely to buy more soup. Seeing a full shelf shelf makes him question the rumour as he has no need to believe otherwise.

Although supermarkets do have some spares in the back, most of their cans are in warehouses where there are giant stacks of soup cans that go on for miles. The problem with panic buying is not that there isn’t enough soup to go round, but it is that the delivery drivers can’t get the soup to the stores quick enough to restock the shelves. When we see empty shelves we wrongly assume that soup is running out. The only thing that is running low is the soup on the shelves, not the soup the total amount of soup the super markets have.

So what can the media do? Well the media have a duty to cover important events like when people panic buy. But they also have a duty to cover it responsibly. By showing empty shelves this triggers the same psychological response as Jack had in the previous example, it makes us think that something is in short supply. 

So rather than showing empty shelves and having a random guy in a high-vis vest saying “don’t panic buy”, it would be better so show pictures of these giant warehouses full of stuff and explain how their supply chain works.

So if by seeing these gigantic warehouses full of stuff on the news and enough people believe* (correctly!) that there is enough supply of food, then the problem of empty shelves will go away!

*A similar problem happens sometimes when people are worried a bank is going to run out of money. This causes a bank run and people start queuing to take their cash out. One way to solve this bankrun is for the government to come in and back the bank and say they will supply all the short-term cash they need. As a result, people no longer think the bank will run out of money and so stop queuing up at cashpoints. Amazingly, by the government SIMPLY announcing this decision solves this problem, they may not even have to act!

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