Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

161: Tyler Cowen on Stubborn Attachments – A Vision for a Society of Free and Prosperous Individuals

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161: Tyler Cowen on Stubborn Attachments – A Vision for a Society of Free and Prosperous Individuals


Tyler Cowen is Holbert L. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center at George Mason University.

He is coauthor of the popular economics blog Marginal Revolution and cofounder of the online educational platform Marginal Revolution University.

His latest book ‘Stubborn Attachments’ is part of our discussion in this episode.

“This is a book I’ve been working on for 20 years. You can think of it as an account of my stubborn attachments which are to the ideas of economic growth and liberty and human rights and also sustainability. So if you go back and you look at say Hayek, Mises, Rothbard, John Rawls, Robert Nozick and John Stewart Mill, they’re all trying to justify their vision of a free society. And in my opinion actually all of those attempts failed. So I’m trying to reconstruct the case for freedom and economic growth and also economics as a way of approaching human phenomena using philosophical argument. So in a way it’s my most personal book. It’s my most direct book. It’s the kinda final bottom-line analysis ‘here’s what Tyler really thinks’ and for 20 years I would spend maybe a month a year working on the book, maybe two months a year. Always returning to it trying to improve it, changing my mind on things and this is the final result of that.” – Tyler Cowen on writing Stubborn Attachments

People Mentioned in this Episode:

Arjo Klamer, Kenneth Rogoff, Patrick Wolf (Hedge Funds), Paul Krugman, Adam Smith, John Maynard Keynes, Milton Friedmand, F. A. Hayek, Patrick Collison, Margaret Atwood, Daniel Kahnemann, Aristotle, Socrates, Ayn Rand, Spencer McCallum, William Boumal (was a wood sculptor), John Rawls, Robert Nozick, N. N. Taleb, Paul Ehrlich, Julien Simon, Elvis Presley, Chuck Berry, The Beetles, Bob Dylan, Andy Warhol, Jasper Jones, Roy Fox Lichtenstein and Banksy.

Podcast:

Writing Tips:

“Write every single day. Make it a routine. Even if it’s a small amount, I assure you if you write every day it will pile up and you’ll get things done.” – Tyler Cowen

Links:

Books:

Patreon

If you’re a fan of the podcast and would like to show your support in anyway, please check out my Patreon page at www.patreon.com/economicrockstar where you can sign up for any of the awards for as little as $1 a month or you can simply follow me on Instagram, the Economic Rockstar Facebook page or on Twitter or simply recommend the show to a friend, especially if they have never had the opportunity to study economics.

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053: Helena Norberg-Hodge on Localisation, Trade Treaties and the Economics of Happiness

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053: Helena Norberg-Hodge on Localisation, Trade Treaties and the Economics of Happiness

Helena Norberg-Hodge is the founder and director of Local Futures. A pioneer of the ‘new economy’ movement, she has been promoting an economics of personal, social and ecological well-being for more than 30 years.Helena Norberg Hodge

Helena is the producer and co-director of the award-winning documentary The Economics of Happiness, and is the author of Ancient Futures: Learning from Ladakh, described as “an inspirational classic”.

Helena has given public lectures in seven languages, and has appeared in broadcast, print, and online media worldwide.

She was honored with the Right Livelihood Award (or ‘Alternative Nobel Prize’) for her groundbreaking work in Ladakh, and received the 2012 Goi Peace Prize for contributing to “the revitalization of cultural and biological diversity, and the strengthening of local communities and economies worldwide”.

Economics:

In this interview, Helena mentions: localisation, globalisation, deregulation, finance, banking, money, real economy, price, demand, subsidies, tax, business alliances, lobbying, competition, trade treaties, unemployment, poverty, natural environment, growth, climate, energy consumption, comparative advantage and GDP.

Economists:

In this interview, Helena mentions: Alex Tabarrok, Adam Smith, David Riccardo,

In this episode you will learn:

  • how and why Helena decided to advocate for and promote localisation.
  • about Ladakh and how it was removed from the rest of the world.
  • how the global market was very destructive to the local market in Ladakh.
  • how globalisation destroyed the livelihood of farms and local businesses and created unemployment.
  • how the happiness and high self-esteem among the people of Ladakh was destroyed after a decade of economic development.
  • why extreme tensions between buddhists and muslims erupted after living in peace for over 500 years in Ladakh.
  • about Ladakh, where the Dalai Lama is the spiritual head.
  • how Ladakh has become a case study on how a local economy has been quickly affected by globalisation.
  • about the phenomenal work Helena is doing to highlight the changing lives and economy of Ladakh and other regions.
  • about the true meaning of the real economy and how cheap money and speculation is destroying it.
  • why the earth is so precious and must be protected before we see irreversible and horrific damage.
  • about the terrific work being undertaken by Local Futures to highlight the need for economic change to protect our earth.
  • why we need to make the local food market a global initiative.
  • how small towns and villages are taking initiatives to feed their community with fresh, organic foods.
  • how schools are integrating nature into their infrastructure to increase the well-being of staff and pupils.
  • how nature provides profound and important psychological healing benefits.
  • how diversifying and staying local can provide more diversified foods per unit of land and water than the large monocultures.
  • why farmers prefer to work closely with the customer than with large-scale supermarkets.
  • whether small farmers and businesses should create a group to represent the their interests and to lobby governments in much the same way as large companies like Volkswagen and Monsanto.
  • how to make small and local businesses more visible.
  • about Helena’s mantra for resistance and renewal – resisting trade treaties and renewing localisation.
  • about the law that was passed in Sweden to have trade treaties to be discussed in secret.
  • how, under the new trade agreements, multinational corporations can sue governments if they inhibit their profit-making ability of that governments country.
  • whether GDP is a good measure of progress and how Helena interprets its true meaning.

Quotes by Helena on the Economic Rockstar Podcast:

“The EU is essentially an economic union and it’s bringing with it a centralised bureaucracy” – Helena Norberg-Hodge

About Earth Being Our Only Economy:

“The earth is our only economy. There’s nothing we use that doesn’t come from the earth. Nothing, nothing. Every iPad, every shoe, every television. And that economy, the real economy, is diversity. It requires and can only continue to live by respecting the uniqueness of every leaf, of every human being. Everything that lives is unique and is changing from moment to moment.” – Helena Norberg-Hodge

“I describe Nature as the economy, but it’s also our Mother. It’s our spiritual home” – Helena Norberg-Hodge

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“Usually when people talk about the economy, they’re just thinking about paper money. They don’t think about culture and farming as having anything to do with the economy.” – Helena Norberg-Hodge

“The global food economy, from beginning to end, is the biggest contributor to CO2 emissions, and it’s not just because of the factory farming with animals. It’s across the board.” – Helena Norberg-Hodge

About the Stock Market and Cheap Money:

“The market is really young lads sitting in front of computers speculating with huge amounts of money. And they inevitably have to and do favour the giant. They’re betting on the giants ‘horses’ like Monsanto, McDonalds and Walmart. And so this connection between that flood of cheap money created out of thin air, now has become a sort of a ‘blind machinery’ that is eating up the real economy, the earth, extremely rapidly and we’re going to see more horrific examples.” – Helena Norberg-Hodge

Other Quotes:

There is a growing local food market that is going global – Helena Norberg-Hodge

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GDP is an outrageous measure of progress. It is simply a measure of commercialisation – Helena Norberg-Hodge

With Riccardo and the notion of comparative advantage, it sounds good on the surface. But let’s remember it was brought in in a time of slavery – Helena Norberg-Hodge

Where to Find Helena:

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050: Dan Ariely on Irrational Behavior and the Importance of Our Environment When Making Decisions

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050: Dan Ariely on Irrational Behavior and the Importance of Our Environment When Making Decisions

Dan Ariely is Professor of Psychology & Behavioral Economics at Duke University in North Carolina. Dan’s interests spanDan Ariely a wide range of behaviors, and his sometimes unusual experiments are consistently interesting, amusing and informative, demonstrating profound ideas that fly in the face of common wisdom.

In addition to appointments at the Fuqua School of Business, the Center for Cognitive Neuroscience, the Department of Economics, and the School of Medicine at Duke University, Dan is also a founding member of the Center for Advanced Hindsight.

Dan is the author of the New York Times bestsellers Predictably Irrational, The Upside of Irrationality, and The Honest Truth About Dishonesty and his latest book Irrationally Yours is now available.

Dan has received numerous honors and awards in medicine, psychology and economics.

Dan received a B.A in Psychology from Tel Aviv University, an M.A and PhD in Cognitive Psychology from University of North Carolina and another PhD in Business Administration from Duke University.

Influencer:

Professor Hanan Frenk, Tel Aviv University

Economists:

In this interview, Dan mentions: Brian Wansink. 

Psychologists:

In this interview, Dan mentions: Mike Norton and Elizabeth Dunn.

Economics:

In this interview, Dan mentions and discusses: Tragedy of the Commons, behavioral economics, public goods, pricing, decision-making, choice architecture, Ulysses Contract, happiness, asymmetric dominance effect and choice.

Takeaway:

“Think about your environment and always experiment” – Dan Ariely

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In this episode, you will learn:

  • about Dan Ariely’s traumatic experience resulting in severe burns.
  • how Dan Ariely found his love for psychology and behavioral economics.
  • why Dan will not be teaching his Irrational Behavior course on Coursera.
  • the problems with MOOCs like Coursera and why it is making the wrong choice regarding its open platform system.
  • why Dan was turned down for his first book – a cookbook and what advice he was given by a publisher.
  • why we as humans make very costly mistakes and what we can do about it.
  • how people eat more than they realise and how experiments in economics have shown this.
  • why we are bad at doing things that makes us happy.
  • the most common mistake companies make when making decisions or processing information.
  • how companies can avoid making mistakes.
  • if anger is a good or bad emotion.
  • the most surprising finding from Dan Ariely’s research.
  • the most surprising question put to Ask Ariely.
  • how to get poor people in Kenya to save.
  • how your environment matters when making decisions.

Quotes by Dan Ariely in Episode 50 of the Economic Rockstar Podcast:

“Choice architecture is this idea that our environment influences how we make decisions” – Dan Ariely

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“In the process of trying to not make any mistakes, companies create environments that punish risk and therefore punish ingenuity and growth” – Dan Ariely

“Tim is a very interesting character and he is experimenting on himself. We have to realize that his experiments have the validity that they work very well for him” – Dan Ariely

On Coursera:

“I think we do need rules for trolls. I think that pricing is a very good mechanism for some things and I’m not sure it’s a mechanism for all for all things like this. The reality is that Coursera probably over samples from the people on the tail of the distribution in terms of mental stability.” – Dan Ariely

Books:

Resources Mentioned by Dan Ariely:

Where to Find Dan Ariely:

Transcript:

The full transcript of this episode with Dan Ariely will be available shortly.

Thanks for Listening!

Thanks so much for joining me again this week. Have some feedback you’d like to share? Leave a note in the comment section below!

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025: Dan Hamermesh on the Economics of Beauty: Attractive People Are More Successful

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025: Dan Hamermesh on the Economics of Beauty: Attractive People Are More Successful 

Dan Hamermesh is Professor in Economics at the Royal Holloway University of London and at thePortraitHamermeshwithoutJacket University of Texas at Austin. Dan researches the economics of beauty. He received his Ph.D. from Yale and has since taught at Princeton, at Michigan State, and at Texas. He has held visiting professorships at universities in North America, Europe, Australia and Asia, and lectured at almost 250 universities in 48 states and 33 foreign countries. His research, published in nearly 100 refereed papers in scholarly journals, has concentrated on time use, labor demand, discrimination, academic labor markets and unusual applications of labor economics (to beauty, sleep and suicide).

Professor Hamermesh has received many notable and distinguished honors and awards in recognition for his contribution to the field of economics. These include the Mincer Award and the IZA Prize in Labor Economics, the John R. Commons Award, as well as many teaching of excellence awards.

Daniel’s teaching include Microeconomics; Macroeconomics; Econometrics; Economics of Labor and Economics of Life.

Daniel is the author of many books including Demand for Labor: The Neglected Side of the Market, Beauty Pays: Why Attractive People Are More Successful, The Economics of Time Use and Economics Is Everywhere. He is also a regular contributor to the Freakonomics blog and podcast.

Economic Themes:

In this interview, Dan mentions and discusses:

Speculation, inter-temporal maximisation, labor economics, incentives, wages, welfare payments, comparative advantage and externalities.

Economists:

In this interview, Dan mentions:

 John Maynard Keynes, Gary Becker, Gregg Lewis, Robert Lucas and Michael Lewis.

Influencers:

Gary Becker and Gregg Lewis

A lot of my stuff is the weird kind of stuff that Becker pioneered – Dan Hamermesh.

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Gregg Lewis had a concern about data – about doing it right, making sure you were right. That’s a crucial thing. One has to take data seriously – Dan Hamermesh.

Advice:

Do what you think you’ll enjoy, because if you think you’ll enjoy it the odds are pretty good you’ll do well at it. You’ll be motivated to work hard and to succeed – Dan Hamermesh

Find out:

  • how economics can be used beyond the theoretical framework we see in textbooks.
  • why we should think about economics in things we see or do in the real world.
  • how students of economics can inspire their professors in a two-way mutual learning process.
  • how economics is everywhere – we just need to think, see and interpret.
  • how economics is enjoying a revival in reaching to mass audiences.
  • why we should read interesting books on economics.
  • if happiness is related to how beautiful or attractive you are.
  • why better-looking men are happier.
  • how to recognise if you are beautiful.
  • what good-looking attorneys, prostitutes, politicians and NFL quarter-backs have in common.
  • if economists should be studying the effects of being attractive and ugly.
  • if people have an increased need to become beautiful.
  • whether increased spending on cosmetics, hair and clothing by women will have a pay-off in the labor market.
  • if plastic surgery to alter beauty results in higher earnings.
  • about the disability benefits available to obese people.
  • if an obese person is perceived to be less beautiful than a slim person.
  • if there is a relationship between ugliness and where a person lives.
  • why Dan was interested in studying the economic impact of beauty.
  • which economic markets show evidence of the impact of beauty.
  • how Dan first met his wife of 42 years.
  • what Dan thinks of Abercrombie and Fitch’s ‘six-pack’ hiring policy.
  • if being attractive prohibits opportunities in the labor market.
  • if you should work in the private or public sector if you are good-looking.
  • how to identify an externality on the side-walk.
  • why you should do what you’ll enjoy rather than chasing the money.

Why Attractive People Are Happier and Economically Better-Off.

Attractive people have been found to be happier than not-so-good-looking people. Better-looking men receive higher incomes, which make them happier overall. Attractive women are also happier, but their happiness is more direct in that their happiness is the result of knowing that they are good-looking. Attractive women do receive higher incomes but this is not a direct link to their happiness as it is for men.

“The beauty itself is directly more salient to them than it was for men, even though the overall effect was identical for both genders” – Dan Hamermesh.

How someone realises if they are attractive or not is due to the reinforcement by other people in making you aware whether you are good-looking or ugly. “Better-looking babies are treated better by their parents and by other people. Better-looking 5 year olds are treated better in kindergarten than ugly ones. When you’re chosen for teams or go out in High School, the better-looking people do better. And they also, given even the amount of education they attained, they’ll do better in the labor market. They’ll get better jobs, make higher pay, even within the same occupation” (Dan Hamermesh). Good-looking attorneys, prostitutes, politicians and National Football League quarter-backs make higher pay than their uglier colleagues.

In the labor market, the top one-third of people who are considered good-looking will earn 10 to 12% more in income independent of any differences that might exist between them and those not considered good-looking.

A woman’s increased spending on cosmetics, hair and clothing will not increase her perceived beauty and will also have a minimal pay-off on the labor market for her. Plastic surgery for cosmetic reasons does not have a benefit in terms of increasing earnings in the labor market. You do it to feel good. It’s not an economic investment, it’s a feel-good investment.

“Unless a person is morbidly obese, people do not view him or her as being any uglier than anybody else, all things taking together” – Dan Hammermesh.

Does Location Determine Whether You Are Beautiful or Ugly?

I ask Dan whether a person’s good looks are determined by the area in which they live. The reason I ask this is based on our earlier discussion on why attractive people typically earn a higher income. It can be fair to suggest that cities or regions that pay more would consequently attract good-looking people.

Dan states that “if you’re a good-looking person, you’re going to flock to an area where your looks pay off more. And if you’re a bad-looking person, you might want to go away from an area where looks pay off. In the UK, where people who were born in Scotland and Wales, if they’re good-looking, are more likely to migrate to South-East England (London) than other people”.

Also, “people who were born in South-East England (London) who are bad-looking appear to move to outlying areas where their looks aren’t so important”.

“Looks not only affects where we live in terms of what we make, but where we choose to live in terms of where we spend out adult lives. You’ll go where you get the biggest bang for your buck or, in this case, the biggest pounds for your beauty.”

Economic Markets Where Beauty and Attractiveness Are Present:

  1. Labor Markets: Higher wages and better conditions.
  2. Marriage Markets: A good-looking woman will attract a man who earns more.
  3. Market on Unsecured Loans: Attractive people are more likely to get a loan and on better terms.

Recommended Books:

Where To Find Dan Hamermesh:

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021: Paul Dolan on the Economics of Happiness

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021: Paul Dolan on the Economics of Happiness

Paul Dolan is an internationally renowned expert on happiness, behaviour and public policy. He is currently a Professor of Behavioural Science in the Department of Social Policy at the London School of Economics and Political Science.

Paul has previously held academic posts at York, Newcastle, Sheffield and Imperial and he has been a visiting scholar at Princeton University, working with Daniel Kahneman.

Professor Dolan has over 100 peer-reviewed publications which cover many topics including behavioural science, subjective wellbeing, equity in health and health valuation.

Paul is currently a Member of the World Economic Forum Panel on Behavioural Science, the Chief Academic Advisor on Economic Appraisal for the UK Government’s Economic Service. He is also a member of National Academy of Sciences Panel on Wellbeing and of the Measuring National Wellbeing Advisory Forum for the Office for National Statistics in the UK.

Paul is the author of ‘Happiness by Design’.

Economic Themes:

In this interview, Paul mentions and discusses:  behavioral economics, happiness, nudging, trade-off, pleasure-purpose principle, production function, utility models, causal relationships, priming effects, System 1, System 2

Economists:

In this interview, Paul mentions: Daniel Kahneman, Amos Tversky, Irving Fischer and Gregory Mankiw.

“2,500 years of ethical discourse hasn’t resolved the question what is the source of happiness” – Paul Dolan

Find Out:

  • how Paul evolved from a health economist to a behavioral economist.
  • how many years of your life would you be willing to give up to avoid being anxious or being down.
  • if Aristotle and other philosophers are right in saying that happiness can only be defined on a death-bed when reflecting upon your life.
  • how to create a pleasure-purpose balance that’s right for you.
  • how you can use the production function process to produce happiness.
  • what is this production process that makes us happy.
  • if money makes you happier.
  • how happiness studies influence policy decision-making.
  • about the limitations to happiness research and what can be done to make better research.
  • what nudging is.
  • how nudging by policy-makers can make you happier.
  • about the morality of nudging.
  • how supermarkets can nudge you into buying their breads and cakes.
  • why self-help books are a waste of money as they try to change your mindset.
  • why Paul’s book, ‘Happiness By Design’ will help you to change what you do.
  • about Paul’s ‘3 Pillars of Happiness’ – Deciding, Designing and Doing.
  • how designing your life to make things simple and easy can help you achieve your goals.
  • about the essence of mindfulness.
  • why people who are easily distracted are more likely to be less happy.
  • if your phone can make you unhappy and what you should do about it.
  • why Paul is a ‘Happy Hammer’ (West Ham fan) despite never winning the league.
  • how the power of ‘hope’ can make you happy by allowing your imagination run freely.

Pleasure-Purpose Principle

Alongside pleasure sits purpose. Happy lives are ones that have a good balance between experiences that are pleasurable on the one hand and purposeful on the other. You need to find out the right balance between pleasure and purpose that is right for you.

The creation of happiness is like a product function of a firm. A firm uses inputs, puts them through a production process to create outputs.  A person can equally use inputs like money, marriage, sex, jobs and watching television that are stimuli and we can convert them into happiness by a production process.

What is that production process? According to Paul this production process is called ‘Attention’. Attention is the ‘glue’ that keeps our lives together in terms of behaviour and happiness. The answer to the question ‘Does money make you happier?’ depends on how much attention you pay it.

“Most of economic modelling is based on looking at what people do, not what people say”

Challenges with Happiness Economics: “A lot of what we think we know comes from making inferences from associations. We need to to do more research and field experiments where we look at the causal impact of interventions on people’s happiness.”

You can beg, borrow and steal money, but you’re never going to get time that’s lost – Paul Dolan

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Lost happiness is lost forever – Prof Paul Dolan

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Nudging

Nudging can sometimes be overt and sometimes covert. It can take the form of financial incentives or below-conscious stimuli such as sounds, tastes and smells. The latter is known as priming effects.

According to Paul Dolan, the definition of a successful nudge is one where people, who are being nudged toward a particular direction with the expectation that they would be better-off, become happier as a result of being nudged.

Policy-makers assume after a nudge that people are better off, but research hasn’t captured the after-effects of these nudges to find out if they are indeed better off. Paul is all for designing nudges that make people happier, not by how he judges how they should be happier but according to what large datasets tell him what affects people’s happiness.

Listen to Paul’s 3 Pillars of Happiness: Deciding, Designing and Doing 

The Essence of Mindfulness: “We’re generally happier when we’re paying attention to what we’re doing and who we’re doing it with – living in the moment” – Paul Dolan.

“When you’re switching activities, your brain is using energy and it makes you more tired and less happy” – Paul Dolan.

“Being a football fan is a bit like faith. You can’t really change it once you’ve got it” – Paul Dolan.

Recommended Book:

Where To Find Paul Dolan:

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