Friday, 17 April 2015

Interview in the FT

I very kindly get an interview in the FT this weekend:

Should national accounts stick close to business accounts?

My friend and co-author @carolcorrado makes a very valuable point.  
  1. People say that national accounts should stick close to business accounts.  So national accounts should not capitalise intangibles since business accounts don't do so.
  2. But, that's not so clear. When companies merge, and intangible value is realised in e.g. pricing goodwill, that is put on the balance sheet.  So, in fact, the treatment of intangibles in business accounts is inconsistent between merging and non-merging companies.  
  3. Thus to say that national accounts should stick to business accounts could mean capitalising intangibles but equally not capitalising them.

Knowledge workers demystified


Wednesday, 25 March 2015

Behavioural economics
Asymmetric bayesiansim or why people are so tribal. 

Sunday, 22 March 2015

Rationality in Economics

At an Economics conference last week, Alan Kirman made the point that when economists say "rational", they don't mean rational as most people think i.e. fully optimising, relentlessly all-knowing calculating.  They mean "consistent".

Lots of psychology looks at individual motivations, what should economics do with all these studies?  Here is Peter Abel in a paper I have not seen before.

Psychologists and, indeed, many sociologists often allege that economists adopt
an over-simple model of the individual (i.e. usually rational, calculating and self-
interested). Maybe they do, but the important point is, nevertheless, that the social
sciences should only adopt the simplest model of the individual consistent with
validated psychology theory, which can in turn contribute to an account of the sys-
tem state. This being the case, the social sciences will not always, or even usually,
shift with changing fashions in our understanding of individual psychology. Unfor-
tunately many sociologists have not taken this lesson to heart, with the result that
a type of literature has evolved which tries to locate ever more refined ways of
understanding individuals and their interactions. Social scientists have very little to
learn from this literature.

Sunday, 15 March 2015

Monday, 9 March 2015

How many firms are innovating without doing R&D?

Innovation findings from the 2013 Survey.
a. From table 1 we find that in 2013, 45% of firms are innovation active, that is, they product or process innovate, or introduce new processes etc. 
b. From figure 1, we find that 15% of firms are doing R&D.
c. That means, that assuming those 15% of firms report they are innovation active, 66% or 2/3rds of firms are innovating without any R&D. 

The Rate of Return to R&D: teaching notes

Frontier Economics have a nice report on this. Figure 4 in particular is a nice summary of the range of findings on rates of return, see below, and Appendix, P.149 is a good summary of the methodologies to estimate a rate of return.

Saturday, 14 February 2015

Why everyone should know how to conduct statistical analysis

Among all the heart-searching on what to teach in economics here's why we should keep teaching proper statistical analysis.

Friday, 5 December 2014


Am attending a session at on Catapults.  I have learned a bit on what they do.

  1. They are prevented by state aid rules from offering aid to firms.  
  2. So, they identify areas that the UK might be good at and where markets will be substantial.  They then set up a network in that area and invite companies etc. to come and participate in that network.  So for example, a small firm who would want to get finance from a Euro research grant would join that network and make an application through the network.  Or, there might be money from InnovateUK, the past TSB, that could be applied for.
Some thoughts.
  1. To get this working they have to identify some technologies to get into and some to not.  That very hazardous.  So they try to keep things general e.g. setting up a platform in exchanging information.  Nonetheless, it does mean they have to guess what technologies will be big and we will be good at.   In 1967  Sir Donald Gibson, Director of R&D at the Ministry of Public Building and Works, suggested a new airport made of expanded polystyrene floating on the mud flats of the Thames.  Passengers would travel to this remarkable construction by hovercraft.  I see there is not catapult centre on floating polystyrene airports. How do we know that is not going to be winning technology?
  2. The constraint they cannot offer aid is important. in answer to the question, what can you do for a small firm they cannot do themselves, it is not that they can get money. It is that they can help the small firm join the network and then stand a chance of getting money which would otherwise be too complicated to get hold of.  In that case, it would be better to simplify the process.