Archive for August, 2008

Regenerating Britain’s cities

Recent coverage of a report by the Policy Exchange, a think tank closely linked to the Tories, has been dominated by one rather trite idea – the suggestion that people should move from Liverpool, Bradford and Sunderland to the south and, specifically, London, Oxford and Cambridge.  This is a rather simplistic reading of the report.  The report suggests that economic regeneration has not had the effect we might expect or hope and that some northern cities will struggle economically.  The three that have been the focus are chosen because they are neighbours to what the report considers more economically viable cities – Manchester, Leeds and Newcastle.  They predict inevitable population decline and suggest that more space be made available in the south where opportunities will arise.  I am no economist and cannot comment on this.  But it is simplistic to think that that is the way the world works.

Many economists have the bad habit of assuming that we all think the same way they do.  We are all calculating the best options for ourselves at every moment so that we can maximise our income, prospects or whatever.  They do not cope well with the reality – that is that we actually make decisions in very different ways.  So the way in which the report analyses the prospects for the future is based upon a model of humans that do not exist.  At the same time, their conclusions are presented in a way that only an audience of economists would find acceptable.  Politically it is unaccapetable.  Hence the emotional response, the headline coverage and the instant dismmissal of the report by the Tories.

What has been missed is a more interesting question, and one that has been posed by others.  Why is it that those areas of the country that receive regeneration funding (and let’s not forget there are parts of London and the south that receive such funds) are largely the same areas that received similar funding 20 or 30 years ago?  What impact has this money had?  Has it been wasted or would those same regions been in a worse condition if they had not received the funding?  These are serious questions that have been completely lost in the instant furore prompted by the headline conclusions.

To read the report, visit: http://www.policyexchange.org.uk/Home.aspx

For coverage further, see: http://www.guardian.co.uk/politics/2008/aug/13/conservatives.regeneration and http://news.bbc.co.uk/1/hi/uk_politics/7558742.stm

The Politics of Nudging

In recent weeks and months, we have been told that a publication, Nudge: improving decisions about health, wealth and happiness by Thaler and Sunstein, is required reading for Tory MPs.  Apparently, Cameron and Osborne have found it a source of interesting ideas.  Unfortunately, I too have now read it.  It is another in a long series of books, including The Wisdom of Crowds and The Tipping Point, which present often banal observations as profound truths.  They gain some coverage and enter our everyday lexicon for a period of months or weeks.  But the absence of substance and of real insight ensures a brief lifespan.

So what is interesting about Nudge?  The book argues for what the authors call ‘liberal paternalism’.  At first sight, these are two words that should sit uneasily together.  They argue for the freedom to choose moderated by a paternalistic concern with our best interests.  So, we can choose, but the way those choices are framed and presented can be legitimately played with in order to ‘nudge’ us towards those choices that are in our best interest.  This sounds rather patronising, except that they qualify it by saying that what consitutes our interests are those choices we would choose if we paid full attention, had perfect information and could exercise total self-control.

They then divide the world into homo economicus and homo sapiens.  The one is rational, the other is prone to make errors.  I know I am not rational in that sometimes my attention wanders, I have less than perfect information and my self-control needs a little work.  So they judge my decisions to be prone to errors.  I cannot help thinking that they are looking down their nose at me as they say these things.  And who are these rational superbeings?  Does anyone have access to perfect information?

However, there is something in what they say.  It is true that the way choices are presented influences the choices we make.  But how does this observation inform policy-making?  What can messers Cameron and Osborne really learn from this book?  Should public servants be ‘nudging’ us rather than delivering, say, health services or pensions.  Or should we be nudged by supermarkets to buy more healthy options.  I am not clear what the consequences are.  Do we need to rearrange the shelves for every consumer who walks by, because their choices and interests would be different even if perfectly informed etc.?

A hint – no matter where this book is placed on the shelves, walk on by.

Further discussion of these books can be read at: http://www.guardian.co.uk/commentisfree/2008/aug/05/conservatives.ukcrime