Dr. Liam Delaney discusses Behavioural Economics

Dr. Liam Delaney discusses Behavioural Economics.

With thanks to Dr. Stephen Kinsella http://www.stephenkinsella.net/ and the University of Limerick for facilitating today’s session.

The Chat:

Peter Carney >> (All): (queue) Q: Irish data gathering and utilisation is poor; why do you think we are so far behind in this regard? is this a demand or a supply issue?

Colm Harmon >> (All): sorry to be so blunt – fact remains that the data does actually exist in the administrative files of Government and some will to sort them out will transform things

Rob Gillanders >> (All): Since Peter got the ball rolling: Economics is sitll a science even if done without RCTs, no?

Will Hawkes >> (All): If economics in Ireland, and elsewhere around the world, is to move from the macro level to the micro level, do you believe that we will see a resurgence of the praxeological method used by the Austrian School?

Conor Lawlor >> (All): Liam to what extent does the Civil Service/central gov depts collect data? Data that can be used for ‘trials’ and ‘experiments’. Pilots even.The UK civil service has dedicated statistical and social research services and are used quite well. The churn in surveys and data surpasses Ireland by a large amount. They have dedicated statisticians and researchers providing well needed and used data. Data is readily available and it doesn’t take a mission to retrieve.Ireland doesn’t seem to have anything close.

Colm Harmon >> (All): Conor – good point and the data exists. Precisely right track – we need administrative data, with core surveys (like CSO datasets or things like PISA) linked, and experimental policy approaches layered on top.

Martin Ryan >> (All): Just want to link up the comments about RCT’s and Govt. investment in scientific research. Jaffe (1998) and Jaffe (2002) discuss program evaluation of scientific spending. Randomisation and regression discontinuity design (RDD) mentioned by Jaffe.

Rob Gillanders >> (All): I agree Liam. Right tool for the right job… On data stuff: I was shouting at one of Irish Aid’s bigwigs not too long ago about the need to evaluate their interventions and she didn’t even seem to understand why someone might want to do such a thing.

Fearghalx >> (All): Conor, Colm – I’m under the impression that the Civil Service doesn’t even have the capacity for specific Policy Evaluation, let alone for general Reality Evaluation. Should we be more concerned with Bureaocratic Reform rather than Political Reform, given that whatever happens in a given election it’ll be just one lot or the other in power. Or will Shane Ross, Peter Matthews, et al ensure we don’t wreck the economy again?

Fearghalx >> (All): Do we need to introduce more competition in the pension market, or increase regulation, though? Don’t the pension industry have very high charges?

Conor Lawlor >> (All): Ireland doesn’t even have an economic service or statistical service within the civil service? The basics. The administration duties within Irish gov depts is far proportionality higher compared to the UK setup. You can’t expect the ONS to shoulder all data issues. The civil service has a huge role in collecting and providing data.Working in the GES (government economic service) here, you can have a strong influence on policy that’s very well reflected in society. You are supported by a strong research staff of statisticians and social researchers. Better decisions are made based on a foundation of well collected data. Also, on salaries a lot lower than general admin staff in Ireland. Not in Ireland of course- most economic research is privatised and dissected by groupings of administration staff within central depts.

eamonn kinsella >> (All): ”Govt can facilitate not influence or create innovation”..? What of the influences of lobbyists, and,”outside” interested parties directional driving monies?Bureaucracy needs tailoring as Rob said.But does this mean the Legals elite will have to be challenged? Can’t see that happen easily, if at all.

Rob Gillanders >> (All): can they opt everyone into a pension and still take a chunk of it as a levy?

Martin Ryan >> (All): Liam, following on from your point that Governments should not choose areas of priority for scientific research, I just want to flag that there is still a case for Govt. investment in basic scientific research. It has been shown that basic research has a higher return than applied research (Lichtenberg and Siegel, 1991). However the returns can come quite late and in unexpected ways. Due to time-lags (as discussed by Mansfield, 1998) and unexpected outcomes (as discussed by the U.S. Committee onEngineering and Public Policy, 1999), estimates of the return togovernment investment in basic scientific research may be downward-biased.

Rob Gillanders >> (All): small chunk

Fearghalx >> (All): Martin, that might make it a high risk proposition for a small economy like Ireland’s. Might be better to pursue basic research through a European framework

Rob Gillanders >> (All): my basic financial econ is well rusty, but does theory say people diversify fully conditional on being investors or everyone invests and does it “properly”?

karl deeter >> (All): Liam, at what point do you divide between libertarian paternalism and any presumed societal responsibilities toward the individual (eg: if a person decideds to not take out health insurance, you can’t turn them away, so what is the solution?)

talentcoop >> (All): History, parents, background, education affect – Value ‘roof over head’ prime security. ‘Cash is king’, ‘Not for the likes of us’ IMHO

Martin Ryan >> (All): Fearghal, you have hit on the main recommendation of Ireland’s Innovation Task Force. A central idea in the Irish case is to focus on being a “clever copycat”. This is based on evidence that the absorption of foreign knowledge is an important factor for economic growth (Bye et al., 2009).

eamonn kinsella >> (All): Diversify? We are an island.That cannot be left out of calculations re our lack of ‘actual’ access to markets without cost, and with the disconnect thinking that accompanies being not a part of the mainland. #Less risky

Peter Carney >> (All): do we underdiversity because we don’t *trust* anything intangible. it may not be just a *risk* issue

karl deeter >> (All): folks: please forward the link to the playback on this one to ppl you know. It is policy gold in the making. (disclosure: I’m a fan of Liams but it’s still cracking economic thinking that can be applied to policy)

Marie >> (All): Peter Carney – yes we joke about this in Malta. Our investors are still in “stone age” and they only trust physical property.

Martin Ryan >> (All): One point was that the negative effect of unemployment (on well-being, I think) is bigger than the effects of divorce and well-being. Liam presented that result in Limerick this morning

Peter Carney >> (All): Marie – how do we instil trust in financial instruments ? i presume we need more than education. i suggest we need concrete (pardon the pun) legislation that ensure we have prudent and transparent financial regulation. Despite our downfall here — we haven’t had this debate

Ken Curtin >> (All): as someone who has been unemployed from pesonal experience over last year or so Liam is on the button

Martin Ryan >> (All): *Typo: effect of unemployment bigger than the effects of divorce and chronic illness

scooter >> (All): Were u in Limerick today? Where was the presentation on?

talentcoop >> (All): Negativity breeds negativity and depression in unemplyment. Review needs to focus on aspiration, esteem building, real solutions for unemplyed.

Colm Harmon >> (All): this is not a frontier – this is just economics – it is an amazing movement for the discipline

Rob Gillanders >> (All): can I rail against liberal paternalism now, LD?

Emer OSiochru >> (All): Did you not attend Smart Taxes & Tasc conference last Monday where the Job Guarantee was discussed by Dr Randall Wray from MMT perspective? Videos and presentations will be up soon

Martin Ryan >> (All): @scooter. Not in Limerick. Just paraphrased Liam

eamonn kinsella >> (All): Liam that was a huge point on demoralisation of the unemployed.Great debate topic and should follow that thread you spoke of.Thank you for that.

Martin Ryan >> (All): Liam, did you see the comments by Master of the High Court Edmund Honohan that banks were driving some debt-ridden borrowers to suicide?

Peter Carney >> (All): risk v trust ??

Fearghalx >> (All): Investigating what works for the unemployment is a great idea – it’s a tragedy that we have such a large sample, but we could put it to some use

Emer OSiochru >> (All): Government can leave the euro – only way to solve unemployment – or be prepared to leave to encourage reform of ECB.

scooter >> (All): biggest problem in Ireland right now is the destruction of trust by unethical practices in the business world by employers etc.

talentcoop >> (All): Emer – support that

Rob Gillanders >> (All): micro-macro paradox?

Emer OSiochru >> (All): What about suicide and debt link?

scooter >> (All): debt forgiveness for unemployed mortgage holders?
Martin Ryan >> (All): Debt forgiveness? Legal system needs to be changed?

Emer OSiochru >> (All): Debt forgiveness full stop. Morald hazard my arse.

Rob Gillanders >> (All): I’d feel distressed if I ended up paying for other peoples silly mortgages 😛

Martin Ryan >> (All): Moral hazard is good point. Links in to ideas of “fairness” in behav econ?

scooter >> (All): the banks have got paid anyway via recap so why no forgiveness. Plus mortgage around shackle of person can b exploited by ppl in business too.

Fearghalx >> (All): I’m not sure I agree with Moral hazard being a problem – lessons have been learned, won’t be repeated
Fearghalx >> (All): Yes, what Liam said

Killian McCarthy >> (All): Do we need serious amendments to Irish bankruptcy legislation to offset a general malaise for people in debt (and suicide in extremes) and can this be done without offering over-incentivising bankruptcy without pursuing any and all alternatives?

Fearghalx >> (All): Thank you all
Kate >> (All): thanks!
Conor Lawlor >> (All): cheers.
Peter Carney >> (All): Thanks!
Rosie OFlynn >> (All): tHANK YOU!
Catherine OMelia >> (All): Thanks
Simon >> (All): thanks!
Fearghalx >> (All): yes
Clare D >> (All): Great session Liam, thanks.
eamonn kinsella >> (All): The unemployed, we should look at them as an asset and formulate their return positively(a new different approach), and not as a problem. One problem impedeing this is govt approach to the issue.eg:If local govt.’s were given their budgets, they would be managed more conscientiously with better placement. Thanks .Brill
Fearghalx >> (All): Hi joe, one technical question – I’m using Firefox and the comment window keeps reverting to default size and location. Any way of keeping it fixed?
Fearghalx >> (All): thanks Joe
scooter >> (All): bye

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