Economics

Two hundred and thirty eight years after The Wealth of Nations, Smith’s timeless ideas are still relevant and inspirational – both for policymakers and for economists. Smith remains the best teacher for anyone aspiring to understand how altruism and self-interest belong together in society.

When we are talking about a framework to measure the success of any government policy, we should also have a framework for what constitutes good policy. For this we need some normative principles. Walter Eucken’s list, despite originating in another place and another era, may be a good starting point for such an exercise.

The economics Nobel Prize is a funny thing. Not just because it does not exist. When Alfred Nobel donated his fortune to the awards in his name, he included Physics, Chemistry, Literature, Peace and Medicine. Economics, meanwhile, only got included when the Swedish central bank established the prize “in memory of Alfred Nobel” in the late 1960s.

Coase’s theorem has important implications for economic policy. Wherever externalities occur, clearly defined and enforceable property rights can reduce the need for government intervention.

Two recent studies on the subject caught my attention. Both deal with the impacts of TV; both are big, real-world experiments; and both reach some rather unexpected conclusions.

It is hard to foresee which effect will be stronger: a reduced demand from plain packaging or an increased demand from the policy’s unintended effects on price.

If economics wants to be as successful as the natural sciences, it should perhaps rethink using their language and methods. Seeing economics as a discipline that has more to do with history, politics and psychology than with mathematics may be the first step.

Countries where men and women have equal rights and opportunities do better at the Olympics. By contrast, women’s sports potential has not been fully utilised in countries that systematically disadvantage its female population.