Science or religious war?

Are neo-classical and behavioural economics truly irreconcilable? Are the foundations of one of our great sciences crumbling before our eyes? Or, is behavioural economics a useful elaboration on the neo-classical tradition, that enriches rather than wrecks the great neo-classical insights?

My chips are on the enriching rather than wrecking side of the argument. Right here, right now, I clearly am in the minority. The sloppy-thinking chat tends to pit one tradition against the other.

Here is Elizabeth Kolbert, writing in the New Yorker.

"Rational calculators are supposed to consider their options, then pick the one that maximizes the benefit to them. Yet actual economic life, as opposed to the theoretical version, is full of miscalculations, from the gallon jar of mayonnaise purchased at spectacular savings to the billions of dollars Americans will spend this year to service their credit-card debt. The real mystery, it could be argued, isn’t why we make so many poor economic choices but why we persist in accepting economic theory."

Notice the condescension. "The real mystery...why we persist in accepting economic theory." She illustrates this self evident truth - that the assumption of rational economic behaviour is so broken that it is pitiful - with a personal anecdote.

Ms Kolbert was buying a book on Amazon for her work when a message popped up on her screen "add $7.00 to your order to qualify for FREE Shipping". She hesitated. Her nine-year-old twins wanted a Tintin book. She clicked it into the shopping cart and checked out, saving The New Yorker $3.99 and spending $12.91 of her own money.

Then comes the sucker-punch. "From the perspective of neoclassical economics, self-punishing decisions (such as this purchase of a Tintin comic) are difficult to explain." Really?

Neo-classical economics is very comfortable thinking about the Tintin comic as a bundle of information (about prices), services (delivery) and physical product (the comic book itself). Remember complements and substitutes from Econ 101? Amazon reduced the price of that bundle by flashing a free shipping advert on Ms Kolbert's screen, which reduced her tacit search costs, and by waiving the delivery charges. This prompted a purchase which otherwise wouldn't have happened. Lower price, more sales. This is the demand curve from Econ 101. There is no more unsurprising result in neo-classical economics.

Notice that the neo-classical theory makes no claims about the mechanism by which people maximize utility. In the neo-classical view people maximize utility the way a dog catches a frisbee. The calculations a dog needs to make to catch a frisbee are way beyond the scope of what a dog, or human, can consciously perform. Yet, dogs and humans successfully catch millions of frisbees every day.

This is where behavioural economics comes in. It sheds more light on the heuristics that people actually use while maximizing utility. This might prompt governments or businesses to use those heuristic mechanisms. For example, tax collections in America increased when taxes were collected at source. Once the money is in my bank account I am much more reluctant to give it to the government. Brilliant behavioural insight. By Milton Friedman, the godfather of neo-classical economics.

None of this challenges the one thought central to all of neo-classical economics: people respond to incentives. The way in which different people respond to different incentives is infinitely varied, which is why economic life is fascinating to observe.

Debark?

Much better than disembark.

Found it in Isabel Allende's Zorro. Thought it was Allende's genius that had conjured up the elegant new word. But http://www.m-w.com/ assures me that the word has been in use since 1654.

Stealing Music?

Fans and musicians are enjoying each other's presence at the South by South West music festival, unencumbered by record companies. And they are talking about how they can do just fine, forever after, without record companies.

It's good to move beyond the toxic divisions of the digital rights/ copyright wars and start the conversation about how the music industry ought to work.

Record company jobs and copyright laws serve a useful purpose if they bring together artists and fans. Everything else is secondary.

Nemo's dad can become Nemo's mom

It's true. Sure, it is not appropriate material for Disney movies. But the scientific fact is that when Nemo's mom was ate by a shark, Nemo's dad could have just turned himself into a mom.

All clown fish start their lives off as males. The live in colonies inside an anemone, typically on coral reefs. The largest fist in each colony is the breeding female, the next largest the breeding male. A number of smaller, sexually inactive clown fish also live in the anemone. If one of the breeding couple dies, the biggest of the sexually inactive lads will step-up-to-the-plate and become a breeding male. The promotion always goes from sexually inactive lad to breeding male, because if the fish who died was female the breeding male will become a breeding female.

There is a rigid hierarchy from sexually inactive lad, to breeding male to breeding female. Promotion up the hierarchy is based on an objective criterion: size.

It is fairly common for reef-fish to be able to change gender. A quick Google search did not reveal the genetic basis for this gender identity. But clearly gender in reef fish is something more subtle than X and Y chromosomes.

Acknowledgements: this post was inspired by a visit to the Sea Life aquarium in Birmingham

If you want to start a revolution...

...use radio. If you want to suppress a revolution use TV.

Radio forces people to focus, and listen to your words, and engage their imaginations. With TV, people are more focused on the colour of your tie than on what you're saying.

Just heard this on BBC Radio 4 ten minutes ago. I love the Marxist interpretation. TV is the ultimate capitalist plot to foil revolution by feeding the masses an opiate.

The Sultanganj Buddha

Should great works of art stolen by discredited, morally bankrupt empires be returned home?

This question has been rattling around in my head for a couple of weeks, since I stumbled upon a fabulous, life-size, 1500 year old bronze Buddha from Sultanganj, Bihar, in the Birmingham Museum and Art Gallery.

My mind came to rest at this thought: a day will come when India is rich enough and proud enough, to care for our heritage. Maybe not in my lifetime, but that day will come. That is when the Sultanganj Buddha ought to return home, perhaps to Sultanganj. But until then, it’s OK for the Buddha to stay on in Birmingham, where it has a place of honour and is displayed with sensitivity, respect and taste.

This is an interesting case, really. It is not an obvious story of rapacious, colonial plunder. This is not like the Kohinoor diamond, which was stolen by Queen Victoria for her crown from the crown of Maharajah Ranjit Singh.

Apparently, this Buddha was consecrated at the center of a Gupta era vihara on the right bank of the Ganga c. 500 AD. The vihara came under military threat c. 700 AD. The monks chose to bury their sacred icon rather than let it fall to their enemies. Their ruse worked. The vihara was razed. The Buddha survived, unseen but unharmed.

About 1200 years later, in 1862, a British engineer was laying a Railway line from Burdwan to Kiul. He was mining earth for ballast to lay under the railway track, and came upon a large, regular block harder than the earth around it. He mined around the block, dislodged it from the earth, chiseled open the block the next morning, and stared into the tranquil face of the Buddha.

The advice from his railway colleagues was to melt down the Buddha into rails. Not unreasonable; there is not a lot else that one can do with a massive metal thingummybob when living on a railway camp 500 miles upriver from Calcutta. But fortunately, a combination of fate, patience and the modern miracle of telegraph communication located a wealthy merchant who was willing to pay two hundred pounds to have the statue shipped to Birmingham. Maybe the Buddha travelled to Calcutta on the same railway tracks that he had so nearly become a part of. The weary Buddha finally reached Birmingham 1867.

The wealthy merchant, Mr Samuel Taylor, went on the become the mayor of Birmingham. On his death he donated his art collection to the city. Mr Samuel Taylor’s name is immortalized on a plaque near the Buddha. I couldn’t spot the name of the railway engineer.

So in what sense does the statue belong in India, or in Sultanganj, more than it does to the city of Mr Samuel Taylor?

One could make legalistic arguments here. The Greek state has trotted out a legal argument about the legitimacy of the Ottoman firman by which the British Museum acquired the Elgin marbles. But the argument which resonates with me (and apparently with the fair-minded British public who overwhelmingly support returning the Elgin marbles to Greece) is an argument about identity rather than legality.

India is not just the land of cricket, curry and customer service call centers. India is Bharatavarsh.

One of the most wonderful things about India - the modern nation state that was born in 1947 - is that India fiercely embraces its history. India isn't just a bunch of lines drawn on a map. India is charged with mythic meaning. India is the heir to the Mauryas and the Guptas, the Cheras and the Cholas, the grandeur of the Moghuls and the grit of the Marathas, heir to both Tansen and to Baiju Bawra. The choice of Ashoka's pillar as India's national symbol was inspired; the symbol of the "soul of a nation, long supressed, finding utterance".

That is the sense in which the Sultanganj Buddha might belong in India. The statue's story feels like the story of India itself. A nation, long suppressed, finds utterance. A magnificient statue, long buried, finds expression. The Sultanganj Buddha in Birmingham is just another beautiful museum-piece. The Sultanganj Buddha in India could be so much more redolent with meaning: the symbol of a great nation, once vanquished, now discovering it's own greatness.

The Sultanganj Buddha has his own tryst with destiny. The day hasn't yet come to redeem that pledge.

The last of the Eyak

Words are probably the wrong medium to express what this means

http://www.economist.com/obituary/displaystory.cfm?story_id=10640514&CFID=10936602&CFTOKEN=e5314cade73cf83b-6D129736-B27C-BB00-012B1E18390442D7

http://news.bbc.co.uk/1/hi/world/americas/7206411.stm