Conversations on Refugees: NOW!!

Our latest Conversations in Economics session is about to begin, on perhaps the hottest topic of the (increasingly chilly) Autumn: Refugees.

It promises to be a challenging hour: who are refugees? Are they who we think they are? Are we who they think we are? Can we and should we apply economic reasoning to the situation?

Here’s the slides I’m using to introduce the discussion in a few minutes:

See you there 🙂

Evidence? Who needs evidence…

Economics is an “observational science”. What does that mean? It means that, by and large, its something we observe rather than something we recreate in the laboratory under controlled conditions.

Why does this matter? Because it makes strong statements about what caused what more difficult. If we can’t be sure that something else didn’t cause what we’re looking at, then that casts doubt on our proposed explanation.

This is perhaps most acute in the area of public policy, particularly when it comes to the macroeconomy. Earlier in the week the Chancellor of the Exchequer (in charge of fiscal policy) was able to make a lot of concessions to a lot of people because of better than expected growth (that’s expected to happen). But is that better than expected growth due to great fiscal policy since 2010 (as some might argue), or due to more favourable other factors (less austerity than the government wanted to do since 2010)? Or something else entirely – better growth in our trading partners? The answer to this question matters a lot, since it tells us what fiscal policy would be more effective.

It’s always interesting to draw parallels with other fields, particularly when things are topical. As you’ll be aware, at the moment there are reforms being proposed for the NHS – namely to turn it into a seven-day service from its current (supposed) non-seven day service. A huge amount has been written and said and shouted about this, but the bottom line is if you’ve ever been into hospital on a weekend you’ll know that the NHS does indeed function on weekends.

As such, the argument has switched to whether it’s more risky to have been admitted on a weekend. Two studies have been relied upon, but the problem is that these studies are based on observational data. A comment published two days ago by the British Medical Journal (BMJ) says:

1. This is an observational study and cannot determine causation.

This is, alas, true. We cannot determine it. We can have a bloody good go at it, nonetheless, and you’ll learn a lot in econometrics about how we can go about this. But we cannot determine it, we can only be sure of it to some degree of confidence – usually 95%.

This doesn’t nullify the use of economics as a field of study, nonetheless – there’s a lot we can understand much more clearly via further study – but it is important to keep this in mind when studying economics…

Terrorism and Economics

What is your reaction when you see the continued news stories surrounding the Paris terrorist attacks? Brussels today, for the third day in a row, is on lock down – army everywhere, most things shut down, people being told not to congregate in groups.

Your response, hopefully, is not necessarily with the economic impact of all of this – there’s a human impact first of all, and hopefully the very strong measures being taken in Belgium will have had the impact of saving some innocent lives.

In light of the Paris attacks, much commentary has been written; not least: why do we care more about Paris than Beirut? Here’s a piece written last week on the potential economic impact: the stock market effect was muted, but it may be that in the longer term we notice effects more in terms of economic efficiency in Europe – much production relies on cross-border transport links, which are being disrupted this year firstly via the refugee crisis, and now from the increased level of terror alerts across the continent.

Places like Egypt and Tunisia have undoubtedly suffered differently in the longer term after terrorist atrocities, via lost tourism income. It’s clearly a secondary impact compared to the initial impact of any attack on human life, but an impact nonetheless. Are we generally sufficiently risk averse that terrorist attacks will influence our consumption patterns, even if the likelihood of being caught up in a terrorist attack is incredibly small?

Today: Vince Cable!

Vince Cable – pic from Telegraph

On campus this afternoon we have Vince Cable, former Lib Dem MP for Twickenham, and former Former Secretary of State for Business, Innovation and Skills.

He’ll be talking at 4pm in G11 in Henley Business School, talking about his recent book, “After the Storm”.

Vince Cable before getting into politics lectured in economics, and got a PhD from the University of Glasgow, so he’s quite a heavyweight when it comes to economic matters.

Even if (in fact, particularly if) you disagree with his politics, I challenge you to come along and listen to what he has to say, and try to reason with yourself why he is wrong in a manner that doesn’t rely on resorting to political differences. Next term we’ll start thinking much more seriously about macroeconomic policy and we’ll quickly see the differences between the major political parties in very different terms. It’s good to be analytical as much as possible when thinking about policies and economic ideas.

Monday’s Conversation: Greece, EMU and Austerity

Every Monday during term time we meet in less formal circumstances to talk about economics: these are our Conversations in Economics, in which we usually reflect on some pertinent real world event, and attempt to apply some economics to it.

Last week we talked about Corbynomics in light of the Labour Party conference, and on Monday of next week we meet in HumSS 125
at 1pm to talk about Greece, EMU and Austerity.

While Greece may have fallen off our news radars in recent months, at least in terms of its economic situation (as opposed to one of the first places refugees have been arriving in the EU), it remains a place with deep economic problems, as the chart below shows:

Greek GDP since 1995

Since 2006 Greek GDP has fallen by a third in real terms. To try and make some sense of that, if a road had 9 factories on it, 3 would have by now shut down and not be producing anything (with subsequent unemployment that that would entail).

So, it’s still as important a time as ever to be talking about Greece, its situation within the EU, and the austerity it has had forced upon itself.

See you all on Monday!