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Economics

This year’s Nobel Prize: A case of market failure

The Nobel Prize in economics left me somewhat puzzled. To be sure, the recipients Peter Diamond, Dale Mortensen, and Christopher Pissarides are all highly respected economists. In another sense, too, the choice of the three labour market specialists is hardly revolutionary. Though their models are elegant, what they are actually saying is very much common sense. [...]

Economists should learn some history

Economists should take the time to ask themselves what they can learn from the events of the past three years. If they were honest with themselves, they would conclude that many of them had been too optimistic about their ability to predict the future with certainty. They would have to confess that the world is too messy a place to be expressed in models of ‘general equilibrium’ or ‘perfect competition’. [...]

Poverty does not make you happy

There is nothing wrong with happiness, of course. In fact, it was the Americans and not the Bhutanese who first declared the pursuit of happiness a national goal. But it’s nevertheless a bit odd to present Bhutan as the role model for global happiness and well-being. [...]

A new modesty for economists

Economists should take the time to ask themselves what they can learn from the events of the past three years. If they were honest with themselves, they would come to the conclusion that many of them had been too optimistic about their abilities to predict the future with certainty. They would have to confess that the world is too messy a place to be expressed in models of ‘general equilibrium’ or ‘perfect competition.’ [...]

Stimulating letter writers

Maybe we should not be too critical of economists writing open letters. At least they have kept a few journalists busy writing newspaper columns about economists writing letters. [...]

A simple idea for our ever more complicated bureaucracy

The Red Tape Trading Scheme would make it possible to reduce administrative burdens without a top-down strategy. Instead, it would give incentives to bureaucrats to spot opportunities to still achieve the same goals of regulations but with less bureaucracy. [...]

Lost in numbers

A billion here, a billion there, and soon we’re talking about real money. But how could we make the money figures our politicians are throwing around more comprehensible? [...]

An end to all lists

What a miserable place Australia must be if it finds itself behind a bankrupt economy and a country left ungovernable by the financial crisis. However, we may feel a bit better because Australia did not need to be bailed out by the IMF, nor did our capital cities see rallies of angry citizens which recently brought Dublin to a standstill. [...]

Rational thieves to go out of business

Stealing a car is perhaps not the most obvious activity that economists would pay attention to. But it turns out that car theft is the perfect example to show how people react to incentives. [...]