Just as almost anyone has a near veto power in a bureaucracy even if they don’t have much power, so the street theatre of outrage can have a powerful effect on politics even if the majority of people think that the minority putting on some show are way out of line. When things are really bad this is a very good thing. I expect most people thought that civil disobedience in the early days of the civil rights movement was ‘going too far’, but it achieved a lot.

And now we have all sorts of nonsense. As Greg Mankiw reports from the Harvard Crimson:

For a Statistics 104 final project, a group of students asked 1,035 undergraduates to gauge their impression of Occupy on a scale of one to ten, with ten being most positive. They found that the average ranking of Occupy Harvard was 2.84 out of 10.

Now Occupy Harvard might not achieve much, but civil disobedience almost always has highly undesirable aspects of social holdup, whether it’s a picket line (effectively turning the collective action of workers into property rights in their jobs) or truckies surrounding Parliament House and preventing others using the roads in defence of various subsidies implicit or otherwise. Yet very often it works for its instigators.

Is this good? Like most things in life, it’s got it’s good side – and its bad side. As Alvy Singer’s mother says to his father in Annie Hall “Have it your own way, the Atlantic Ocean is a better ocean than the Pacific Ocean”.

Seems like an important paper – which I’ve not read yet.

Trustworthy by Convention, By: M. Bigoni, S. Bortolotti, M. Casari, D. Gambetta, URL: http://d.repec.org/n?u=RePEc:bol:bodewp:wp827&r=evo

Social life offers innumerable instances in which trust relations involve multiple agents. In an experiment, we study a new setting called Collective Trust Game where there are multiple trustees, who may have an incentive to coordinate their actions. Trustworthiness has also a strategic motivation, and the trusters’ decision depends upon their beliefs about the predominant convention with regard to trustworthiness. In this respect, the Collective Trust Games offers a richer pattern of behavior than dyadic games. We report that the levels of trustworthiness are almost thirty percentage points higher when strategic motivations are present rather than not. Higher levels of trustworthiness also led to higher levels of trust. Moreover, strategic motives appear as a major drive for trustees, comparable in size to positive reciprocity, and more important than concerns for equality.

If Don McLean could write a smash hit about the death of Buddy Holly, I can at least do a blog post about the death this morning of Robin Gibb of the Bee Gees.

The Bee Gees were hardly the most fashionable of pop groups among the cool kids, either at the time or now.  But I reckon I Started a Joke is still one of the greatest and most moving pop songs of all time (albeit a bit corny for some tastes).  Even if schmaltz isn’t your schtick, you’d have to agree he had an extraordinary voice and it’s showcased here to perfection. RIP Robin Gibb.

Access to justice should be a big issue in Australia, as my Introduction to Public Law class explored yesterday in the context of discussing administrative law merits review.As commenter wilful observed on my last post about lawyers:

I can reflect on my sister’s recent experience. She lost and lost badly, because she had no money to represent herself, the judge was disuninterested, and the husband’s lawyers were reprehensible, with no interest whatsoever in the truth, the interests of the Court, the child that was being contested or the Family Law Act. They threw every bit of sh*t at her that they could invent (and it was basically all made up) and they got away with it. They had a barrister, she’s a part-time school teacher, the whole thing left me feeling sick to my stomach. I do not trust or expect justice in the family law courts in Australia any more. The lawyers involved should be deeply ashamed of themselves.

Legal aid is also hardly ever available for litigants before general merits review tribunals like the Administrative Appeals Tribunal and its State equivalents. Yet unrepresented litigants are at a major disadvantage when facing “lawyered up” government departments, despite the exhortation in section 33 of the Administrative Appeals Tribunal Act 1975 that proceedings should “be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act … permit”.

Continue reading →

This area features older but noteworthy articles which are still attracting discussion. Hopefully featuring them will prolong constructive conversation. Comment on the feature slider is invited.

Your editorial (Politics of envy threatens our economy and ethos, 2 May) claims that “Research by the National Centre for Social and Economic Modelling has shown that all income levels prospered in the Howard years and that under the Rudd-Gillard governments the gap between rich and poor has widened.”  This is close to the exact opposite of the facts. While it is true that all income groups benefited from real income increases in the Howard years, the gains for high income groups were much greater than for low income groups, and the gap between rich and poor widened.  In contrast, ABS statistics show that income inequality fell slightly under the Rudd-Gillard government, partly due to the impact of the GFC, but also because the very large increase in pensions in 2009 helped some of the poorest by the most. I have not been able to find any NATSEM document that actually says what the editorial claims.

Peter Whiteford, University of New South Wales

Interest rates in Australia have just been reduced by 0.5% in the hope that this will stimulate the economy. Will it work? Uncertain. But will politicians say it will work in the coming federal budget? Almost undoubtedly.

Perhaps displays of optimism are not such a bad thing, even if they are unwarranted.

In a study that just came out, we (myself, David Johnston at Monash and Gigi Foster at UNSW) found that optimistic expectations are key to making  people happy with their lot in life. People are much less affected by regret than previously thought, nor do they tell themselves things will be bad in the future so that the present will be a pleasant surprise: people systematically over-estimate how rosy the future should be and this is crucial for their well-being.

Our study, of which the working paper version is here and the on-line article is here (for those with access) has the following highlights:

1. In a sample of over 10,000 Australians followed for 9 years (the HILDA), it turns out that people’s expected future health has about 1/6^th the effect on current happiness as their actual current health, with any difference between the health that was expected and that eventuated having very little effect.
2. Future imagined health was more important to Australians over 35 and to women than to men and those under 35, for whom future imagined health was not important for happiness.
3. As a result, we concur with the medical literature that has long argued that hope is important in itself for health, as witnessed by the strong placebo effect. In the medical literature hope has now become the default standard for new medicines in that new medicines have to be better than placebos if they are deemed to be of real use. Our advise is also to err on the side of optimism whenever possible.

Now, to classically trained economists, the fact that hope itself is a consumption good quite apart from realised consumption may be surprising, but in the reality of economic policy the big lesson from this kind of finding has been incorporated long ago: always pretend the economy will keep going strong or will soon improve unless there are really strong indications to the contrary. Hang on to see many an overly optimistic statement in the Federal budget next week …. and rightly so.

For more information on the study, see here.