Economics Photo of the Week (March 16)

Here's a photo of the trading card for Kenneth Arrow, winner of the 1972 Nobel in economics. I have a set of these cards. A friend of mine actually has the set with most of the cards autographed.

Happiness and Well-Being by U.S. State

The new Gallup-Healthways Well Being index is available. The index is an attempt to “measure what it is that people believe constitutes a good life, who is feeling good about life, and who is in need of a helping hand,” and has 6 sub-scales: life evaluation, emotional health, physical health, healthy behavior, work environment and basic access.

Here are a few interesting facts about well-being in the U.S.:

1. People in Utah report the highest levels of well-being; Wes Virginia the lowest.
2. There is only a small (but statistically significant) positive relationship between median income and well-being.
3. My home state (California) falls behind Wyoming and Utah.
4. In terms of healthy behavior (one of the many reports you can generate from the survey's web page) is lowest in the southern states.
5. In terms of emotional health, those states closest to the Canadian border score higher than do those in the south.
   

The Canadian Institute for Advanced Research has a group that studies well-being and happiness.

Employee FreeChoice Act on Democracy Now

In a previous post I put up the details (and its supporters from the economics profession). Today, the act was discussed and debated on Democracy Now. The guest providing the discussion are James Sherk (Bradley Fellow in Labor Policy at the Heritage Foundation) and Stewart Acuff (special assistant to the president of the AFL-CIO).

Amartya Sen on Adam Smith and the current economic crisis

Nobel Prize winner Amartya Sen has a new article in the Financial Times. In it he discusses how Adam Smith did not imagine markets as the neoclassical models currently place them. In particular, markets (in Adam Smith's view, as discussed by Sen) exist within a structure of institutions. I find the following excepts particularly interesting:

It is often overlooked that Smith did not take the pure market mechanism to be a free-standing performer of excellence, nor did he take the profit motive to be all that is needed. Perhaps the biggest mistake lies in interpreting Smith’s limited discussion of why people seek trade as an exhaustive analysis of all the behavioural norms and institutions that he thought necessary for a market economy to work well. People seek trade because of self-interest – nothing more is needed, as Smith discussed in a statement that has been quoted again and again explaining why bakers, brewers, butchers and consumers seek trade. However an economy needs other values and commitments such as mutual trust and confidence to work efficiently. For example, Smith argued: “When the people of any particular country has such confidence in the fortune, probity, and prudence of a particular banker, as to believe he is always ready to pay upon demand such of his promissory notes as are likely to be at any time presented to him; those notes come to have the same currency as gold and silver money, from the confidence that such money can at any time be had for them.”

Smith explained why this kind of trust does not always exist. Even though the champions of the baker-brewer-butcher reading of Smith enshrined in many economics books may be at a loss to understand the present crisis (people still have very good reason to seek more trade, only less opportunity), the far-reaching consequences of mistrust and lack of confidence in others, which have contributed to generating this crisis and are making a recovery so very difficult, would not have puzzled him.

There were, in fact, very good reasons for mistrust and the breakdown of assurance that contributed to the crisis today. The obligations and responsibilities associated with transactions have in recent years become much harder to trace thanks to the rapid development of secondary markets involving derivatives and other financial instruments. This occurred at a time when the plentiful availability of credit, partly driven by the huge trading surpluses of some economies, most prominently China, magnified the scale of brash operations. A subprime lender who misled a borrower into taking unwise risks could pass off the financial instruments to other parties remote from the original transaction. The need for supervision and regulation has become much stronger over recent years. And yet the supervisory role of the government in the US in particular has been, over the same period, sharply curtailed, fed by an increasing belief in the self-regulatory nature of the market economy. Precisely as the need for state surveillance has grown, the provision of the needed supervision has shrunk.

Economics Photo of the Week (March 9)

From the Life magazine library by Google Images: "Nikita S. Khrushchev speaking at the Economics club dinner (NY, NY, 1959)." I'm dying to know which economics club got him as a speaker.

Is this really a degree?

The University of Calgary has a new School of Policy Studies. Eventually the new school will be offering a degree. However, hopefully it won't be like this one: quoted from the Liverpool Hope University's website:

Liverpool Hope University has launched a brand new MA in The Beatles, Popular Music and Society, the first of its kind in the world.

The new course, which can be studied both full and part time, covers four modules with specific issues relating to The Beatles and Popular Music, consisting of four 12-week taught modules, plus a dissertation.

Mike Brocken, Senior Lecturer in Popular Music at Hope, said 'There have been over 8,000 books about The Beatles but there has never been serious academic study and that is what we are going to address.

'Forty years on from their break-up, now is the right time and LIverpool is the right place to study The Beatles. This MA is expected to attract a great deal of attention, not just locally but nationally and we have already had enquiries from abroad, particularly the United States.

''The Beatles, Popular Music and Society' marks a seminal advance in popular music studies. For the first time in the UK and possibly the world, a postgraduate taught course is offered to research into The Beatles, the city from which they emerged, the contexts of the 1960s, technology, sound and songwriting and the industries that have set up in their wake to capitalise on tourism in the city of Liverpool.'

For further information, please call the postgraduate enquiry line on 0151 291 3389.

Symbols of Economic Recovery

I've always been interested in how symbols affect judgment and decision making. From a marketing perspective, that's the whole game. If you think back to the Great Depression, the National Recovery Agency (the NRA) had a logo. The logo had a blue eagle (a symbol of strength, the U.S.'s national bird) holding a gear (a symbol of industrialism). The red, white and blue of the poster further tied the NRA directly to the U.S. The logo was displayed in various businesses. Businesses not displaying the logo were often boycotted. By most measures, it was a successful marketing campaign (and a largely successful recovery).

So now we have a new recovery effort in the U.S., and a new logo. The Obama administration, in an effort to maintain transparency regarding the stimulus measures taken, has set up a new web site which has a new logo. The logo displays a portion of the US flag, along with a gear (industrialism) and a leaf (agriculture, maybe green technology). We'll see how things play out and how the logo comes to represent the recovery effort. Only time will tell if this is as good of marketing as that used by the NRA.