Who would listen in Australia? Justin Wolfers profile in The American

Here’s a resurrection of Don’s post of a couple of days ago just before the great unbacked up server crash.

I put it up because, having read the Wolfers piece I wanted to offer a comment on it. Over the fold is Don’s post and my response.

I could do the same work Im doing now for an Australian institution, and the truth is, no one would listen, says Australian born economist Justin Wolfers. At 34 year Wolfers is an assistant professor of business and public policy at the Wharton School of the University of Pennsylvania.

Around the Australian blogosphere Wolfers is best known for his work with Andrew Leigh on betting markets as a tool for predicting election results. And he applies the same thinking to decision making in private companies:

Wolfers says that companies have shifted to prediction markets because they work better than the traditional means for gathering data and making forecasts, such as sales meetings. Think of what a meeting is, Wolfers says. Its some fat, obnoxious guy who talks for three minutes despite the fact that he knows nothing. In the meantime, theres a woman who sits in the back and says nothing because she may feel her opinion isnt taken into account. And then theres the brown-noser, who wants to be senior VP and will say anything the boss wants to hear.

When you set up a prediction market in which employees bet actual cash, you weed out those who dont know anything. As for the sycophant: if the boss isnt watching, hes more likely to bet what he really thinks. With a prediction market, everyone brings a small piece of information to the table, and the consensus proves surprisingly accurate.

Caren Chesler profiles Wolfers in the May/June edition of The American a new magazine published by The American Enterprise Institute.

Regarding the first quote, perhaps Wolfers means that heterodox ideas are taken more seriously within American academia. I expect that’s right. They’re a smarter and (perhaps partly on account of that), less insecure bunch. But it’s not true of policy. At least until the deadening hand of the Howard Government Australia had an excellent record of policy innovation. Thus HECs, export facilitation as both a means of and as an adjunct to trade liberalisation in the car industry, and the use of the Tax Office to secure maintenance payments all provide good examples of policy innovation in Australia. More generally for as long as it worked the Accord was also a big (and unexpected) success – which is not necessarily a claim that it should or could have lasted forever. Having made that snarky comment about the Howard Government it did give us the Job Network in its early years, and however well or otherwise it was implemented, I find it hard to believe it wasn’t a sensible reform in principle.

The US doesn’t have a record like that – though I guess what innovations it has championed are more directly drawn from the economic textbook – I’m thinking of tradeable permits in managing pollution. In any event, when I read those words I thought of a quote in a very interesting piece on Australian economists in the thirties (pdf) by Alex Millmow. The words come from a response by Australian Colin Clark to JM Keynes in response to Keynes entreaties to Clark for him to stay in Cambridge and not return to the land of Oz. This is how Clark replied.

I am reaching the conclusion I want to stay in Australia. People have minds which are not closed to new truths, as the minds of so many Englishmen are: and with all the mistakes Australia has made in the past, I still think she may show the world, in economics…in the next twenty years (JMK Vol. XXII, 808). Clark followed up with another apologetic letter informing Keynes that the opportunity of putting economics into practice by advising the Queensland Premier was a job offer that even Keynes would think twice about (J.M.K. Vol. XXII, 801).

In Millmow, Alex, 2003 The Power of Economic Ideas: Australian Economists In The Thirties“, History of Economics Rview, No 37, Winter, pp. 84ff. (pdf)

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16 years ago

The other issue diasporans have to be aware of is rubbishing Au, even if warranted, runs the risk of having themselves Helen Reddy'd. Prior diasporans such as Greer effectively took themselves out of the Auian dialog through that method. Even though I think nationalism causes more problems than it solves, as a second order political and cultural effect it has to be taken into account.

I know what Wolfer's means; I have been exposed to more opportunities IMO, by being in the US. The American attitude to achievement can be quite liberating and challenging too.