The benefits of decisions are sometimes hard to nail down and quantify, while the costs are almost always reducible to hard cash. That can lead to uncomfortable comparisons, but can they really be avoided? — Commotion in the UK last week. In July 2022, the Welsh approved a proposal by the devolved government to reduce the speed limit on about 7,700 km of roads from 30mph (48 km/h) to 20mph. Back then, this event went pretty much unnoticed by the national media, but as the…

Peddlers of misinformation typically appeal to their audience’s emotions. But emotion also has a benign role in our cognition. How to spot the difference? — You don’t need to look far for examples of disinformation — two instances that passed through my line of sight this week were the claim that the World Economic Forum (WEF) is “planning” a new pandemic, and the claim that median rents in the US have vastly outstripped household income…

Money is widely associated with value (the economics textbooks literally say it is a store of value), but that does not mean that all value can be expressed as a sum of cash. — Despite recent turmoil under new management, Twitter is still a valuable source of knowledge, insight and, occasionally, provocative statements that make you question your intuitions. The other week, economics blogger Noah Smith cited an old tweet saying, “The saddest part of free market ideology is that, if you know your…

Can voluntary transactions raise ethical questions? Yes, they can! — It has just gone midnight and you are walking home from the station, down a dark and deserted street. Suddenly, a figure jumps in front of you from the shadows, wielding a knife under your face, threatening to use it, unless you hand over your wallet and your phone. What…

The writing of the father of modern economics is, 250 years later, still very much worth reading — especially beyond the snappy, but sometimes selective, quotes — Written by Koenfucius and Lionel Page Lionel Page is a behavioural economist with a unique capability to seamlessly and lucidly integrate economics with just about any other discipline that studies human behaviour, from philosophy, game theory and evolutionary biology to psychology, political science and neuroscience. His recent book, Optimally Irrational…

How the same price, with different pricing methods, leads to different consumer behaviour, and how the president is needed to facilitate the adoption of a superior pricing method when it bumps into game-theoretic obstacles — As a savvy buyer, you probably have a keen eye for the price labels of the goods you buy during your grocery shop. You carefully weigh up whether today’s cherry price justifies getting some of those rather than strawberries, or work out the more advantageous way to buy olive oil…

Why it is good not only to have an eye for detrimental unintended consequences — Much of what we do in our day-to-day life can be viewed through economic glasses: transactions with costs and benefits for the parties concerned. When these are voluntary, as most are, the benefits for each participant exceed their costs, and the transaction has a positive sum. An obvious example is…

What can a peculiar collective choice — and how the decision-makers have been feeling about it since they made it — tell us about the regrets (and joy) of decision making? — Many of our decisions are made “under uncertainty”. Often, we cannot be certain of the outcome, because there are certain elements we do not know, or that are so unpredictable we cannot even know them. We must therefore sometimes speculate, and indeed just hope for the best. This is one…

We often act like economic beings, weighing up the pros and cons of options looking for the one with the best overall net benefit. But sometimes we don’t, and then we may find ourselves on thin ice. — Here is a thought experiment: imagine that a pharmaceutical company launches a safe pill with the remarkable ability to neutralize all alcohol in your blood within minutes, costing no more than about half a typical alcoholic drink. No matter how many pints, shots or glasses of wine you consumed, swallow…