March 2015

The impossible economics exam

Students at Sheffield University are complaining that the questions in their finals were simply impossible to answer. They’d not been taught the material, they were flummoxed, all most unfair:

Final year economics students at Sheffield University are furious after an exam this week contained questions they found “impossible”.

The paper, on the economics of cities, contained compulsory questions on topics they had never been taught, say the students.

More than 90% of those who took the exam have now signed an online petition demanding the university investigate.

The university said all questions were based on topics taught in the course.

But, in a tweet, one candidate complained: “Question three may as well have been in Chinese.”

Another asked: “How can they write a paper and include questions on something we haven’t been taught, or told to research?”

Just over 100 students took the exam on Wednesday.

Well, here is question 3. And it’s 30 years since I did any formal economics (or, indeed, any algebra and I never really did cotton on to that anyway). But I reckon that anyone reasonably attentive should be able to get 50% on this question in about 5 minutes.


Coordination costs are just what they say on the tin. There’s value to the division and specialisation of labour (derived from Adam Smith). There’s value to comparative advantage and trade in the resultant production (Smith and Ricardo). However, there’s obviously costs associated with finding the people one is going to divide and specialise with, who one is going to trade with, discovering what is comparative and so on. These are coordination costs. A close analogue is that we know that there are economies of scale at times: but we also should be aware that there are diseconomies of scale.

That the exponent on N is greater than 1 is simply a reflection of the thought that coordination costs rise with the number of people being coordinated with. To assume otherwise would be to assume that we had declining coordination costs with scale: that 2 billion people could work out how to divide, specialise and trade more easily than 2 people could. This is neither a reflection of the world we see out the window nor a reasonable starting assumption. Therefore we don’t make it.

The graph, well, I can’t work out how to draw an electronic graph. But axes, two lines. Optimal city size is where the lines cross. Must be: when the rise in coordination costs is lower than the extra production then the people in the city will be richer in a larger one. Where the marginal coordination costs are higher than the extra production then richer in a smaller one. What that actual size is depends upon what the actual values of the parameters are.

c) would take a bit more thinking about (hey, you have a go!). Just the above would provide a pass I’m pretty sure. Probably a Desmond these days actually.

And seriously folks, you really don’t need to be in your final year of an economics degree in order to get the above right.


No tax on the minimum wage

One of Ukip’s basic promises for this campaign. One of only five in fact.

Yes, we all know where my sympathies lie anyway. And some of us know the source of this policy as well. But it’s also a good enough policy to get my vote all on its lonesome.

A Murphmonster classic

HMRC announces that the number of tax investigations it is doing rises. Ritchie complains that it’s not enough:

And apparently knowing that suggests that there are just 60 people a year worth investigating. Even if we only assume they are looking at higher rate tax payers that is still only about a 0.002% chance of being investigated.


From his own source article:

A Finance Team set up by HM Revenue and Customs to target wealthy fund managers and investment bankers……The Finance Team is part of HRMC’s High Net Worth Unit, which targets high earners in private equity, investment banks, hedge funds and other funds.

This isn’t the team looking at high income earners. Nor the team looking at higher rate payers. It’s not even the team looking at rich people. It’s the team looking at one distinct subset of the finance industry who also happen to be rich people.

The total population being looked at here is some thousands, possibly extending to a couple of tens of thousands (there’s a few hundred thousand working in wholesale finance, this is some subset of that and then only the top earners/wealth owners in that subset).

There’s so much in this

A Christian street preacher has accused a judge of trying to “censor” the Bible after he was convicted of a public order offence for quoting an Old Testament passage condemning homosexuality.

Mike Overd was fined £200 for quoting part of a passage from Leviticus 20 which condemns same-sex relationships as sinful and calls for gay men to be put to death.

But District Judge Shamim Ahmed Qureshi told Overd he could instead have chosen a separate passage in Leviticus 18 which merely describes homosexuality as an “abomination” but does not specify death as a punishment.

He acquitted the former paratrooper, who regularly preaches on the streets of Taunton, Somerset, of a separate charge for suggesting that the Prophet Mohammed was a “paedophile”.

At least
one person manages to get it right:

“Whilst we all want to encourage public civility, there is a higher principle at stake,” he said. “As long as there is no incitement to violence, then people should be allowed to speak freely without fearing legal repercussions.

Quite, that’s what free speech means.

It should indeed be legal for me to stand outside Next and declaim that those wearing clothes of mixed fibres should be put to death.

Oh, well counted Ritchie!

So, Ritchie tries a calculation:

According to the FT:

Mr Cameron will use his Downing Street press conference to claim that Labour would put up taxes by £3,028 for every working household — a calculation based on a 50:50 split between higher taxes and spending cuts to eliminate a £30bn structural deficit in the next parliament.

I admit I cannot see any logic to this claim.

There are about 65 million people in the UK and about 31 million income tax payers. The average household has, according to the ONS, 2.3 members. So there are about 28.3 million households.

Between them these households have to pay in tax £15 billion extra according to the Conservatives. That is, if that need is correctly stated (which I dispute), £530 a household.

Even over five years it does not come to £3,028 a household.

This claim looks to be very straightforwardly wrong.

Hmm. Well, the number of households isn’t far off. However, he’s forgotten that “working” bit.

Some 16% of the population are pensioners. Not exactly right to call that households but it’ll do. And some 16% of working age households are not working.

28 million households x .84 x.84 gives 20 million to our level of accuracy. Looks like that might actually be an underestimate of the amount each working household has to pay. We get much closer to Cameron’s number if we don’t adjust for pensioners but do for working/non-working households. Or vice versa actually.

If only

Instead of micro-demographic categories, what we’ll need to understand are dreams. These can be reduced to three geospatial identities, which I’ve labelled Scandi-Scotland, the asset-rich south-east and post-industrial Britain.

The whole drama of the election rests on the fact that none of the major parties has fully accepted the emergence of these new faultlines, and are still trying to capture a political centre that does not exist.

Let’s start with Scandi-Scotland. If the polls are right, the next parliament will be dominated by the issue of Scottish independence. If you think this was settled in last September’s referendum, you’d be wrong. Large numbers of Scots, even some who voted no, have formed an identity best summed up by the pre-referendum poster that said: “Welcome to the warm south of Scandinavia”. It is left-social democratic in content, but globalist and Europeanist in reach. Whatever the unionist parties say about a coalition with the SNP, the question of whether this dream can be fulfilled within the UK will be crucial.

Paul Mason’s missed the same thing that most Scots have missed. Sure, the Scandis are high tax, high welfare state, high redistribution types of places.

They’re also, underneath that, rather more vehemently classically liberal free market types of places than the UK or US are. It’s rather what makes the places work in fact. And there’s just no way at all that the SNP, or Scottish Labour, would countenance the sort of economic freedom that this implies. And, sad to say it, but the high tax high redistribution model doesn’t actually seem to work unless you’re running over that free market economy.

Of course it bloody is

Countryside pursuits of game shoots and hunting have divided the nation for years, with animal rights activists and advocates of the gentleman’s sport at constant loggerheads.

But a fresh row has erupted after an unexpected voice weighed into the argument, claiming that pheasant and partridge shoots were actually beneficial to wildlife.

The Royal Society for the Protection of Birds (RSPB), whose foundations were built on an endeavour to discourage the “wanton destruction of birds”, said the impact of managed shoots could be “very positive”.

Martin Harper, the RSPB’s conservation director, posted a blog on the charity’s website defending aspects of the sport.

He said that some shoots “provide beneficial habitat management for wildlife” and often result in increased numbers of some birds.

Pheasants aren’t
native to the UK and they are usually bred commercially.

It’s possible that they’ve been around long enough that they would survive without continually being bred in that commercial manner. But certainly not in the numbers we’ve currently got. So, yes, obviously, commercial shooting increases the numbers of birds.

An interesting morning so far

One of my major outlets has decided to cut pay (pay per traffic that is, the rate at which it accumulates) by 40%. An interesting start to a Monday morning and it’s only 7.30 am.

So, am I subject to an income effect, in which I attempt to write more in order to regain that lost income? Or a substitution effect in which I go off and do other things? Upon such questions does the Laffer Curve depend….

Reality is almost certainly that in the short term the income effect will prevail, in the longer term the substitution….

There’s free range parenting and then there’s….

Agreed that today’s helicopter parenting is a bit much. And that yes, of course 8 year olds can go to the park on their own. 5 year olds be left in the car for 5 minutes as Mom slips into the 7-11. And then there’s truly free range parenting:

A 4-year-old Pennsylvania girl surprised a driver and passengers when she boarded a public bus alone in the middle of the night on a quest for a sugary slushie, transportation officials said on Sunday.

Surveillance footage shows the pint-sized girl with blonde hair, bundled up in all purple, boarding a Philadelphia bus at 3 a.m. local time on Friday and sitting down by herself as a handful of passengers look curiously toward her.

The girl, who appeared cheerful as she stretched and dangled her boots off of her seat, told bus riders that she wanted to get a slushie, Southeastern Pennsylvania Transportation Authority spokeswoman Kristin Geiger said.

Police called, girl reunited, parents etc. And no, Mom had not said that this was OK.

But, umm, it was OK, wasn’t it? 4 year old girl, wandering around at 3 am, in search of a slushie….

Nutter drives plane into Alp

Don’t stigmatise depression after Germanwings crash, says top doctor

Doctor says…..well, it’s all a bit Heinz Kiosk, isn’t it?

I think what we’re looking for here is a way to correctly stigmatise depression. To the point where someone more likely (at whatever level of significance we feel happy with) to drive a plane into an Alp doesn’t get to fly while someone who has had a problem or two but is now over them (whether simply so or as a result of ongoing medication) does get to fly.

It’s a bit like that shouting match over discrimination, even racism. There’s times when discriminating on one ground or another just isn’t important and there’s times when it’s the entirely rational thing to do. Similarly with racism. Kaposi’s Sarcoma generally used to appear in middle aged men of Mediterranean descent. When very Waspish young men started presenting with it it was the consideration of race which told everyone that something new was going on.

Stigmatise, discriminate, they’re synonyms for select (of varying power). And yes, we really do want to be selecting but only on the right grounds.

Interesting question

Ed Miliband’s shadow cabinet ministers are preparing themselves for defeat in the general election because they fear the party will be wiped out in Scotland.

The Labour leader has ordered his most senior MPs to flood into Scotland for the final weeks of the campaign, in a repeat of the saturation tactics deployed in the frantic final days of the Scottish independence referendum last year.

Does sending
Labour MPs scrambling around Scotland increase or decreases the Labour vote in Scotland?

Perhaps more importantly does not having them scrambling around England increase or decrease the Labour English vote?

This is a problem?

It was Kleiner Perkins that was on trial, though, so it was natural that the harshest revelations were about that firm. The trial revealed that the partnership didn’t have an internal human-resource department or clear policies around hiring and firing.


I can imagine an HR department being useful in a large firm. But the absence of one is a concern now?


A female venture capitalist has lost a high-profile sex discrimination case that shone a spotlight on the “boys’ club” culture of Silicon Valley.

Ellen Pao, who worked as a junior partner at Kleiner Perkins Caufield and Byers, had accused her former employer of passing her over for the position of senior partner while her male colleagues were promoted.

After more than two days of deliberation, the jury of six women and six men on Friday found that Kleiner Perkins had not acted unfairly or unlawfully and that gender had not played a part in the company’s decision not to promote her.

Ms Pao said she filed the case as she “wanted something to change” in the industry, where sexism has become so pervasive it has been likened to the Wall Street of the 1980s.

The 45-year-old told the San Francisco Superior Court how she was excluded from an all-male dinner with Al Gore, former US vice president, and felt “very uncomfortable” hearing male guests of the firm talking about pornography on a private jet.

She was given menial tasks to do that were below her pay grade, “in order to embarrass her”, her lawyers had argued.

She also testified that one male partner was “relentless” in his pursuit of her and cut her out of email chains and meetings when she ended the affair upon discovering he was married.

After the verdict, Ms Pao told the courthouse that people around the world had reached out to her and told her that they had stories similar to her own.

“If I’ve helped to level the playing field for women and minorities in venture capital, then the battle was worth it,” she said.

Well, given that the jury found out that they’d done nothing wrong I’m not all that sure how much leveling has been done there.

And do you know what? I might fire a senior manager who pursued more junior colleagues for sex. But I certainly wouldn’t promote someone without the wit to work out whether a sexual partner was married or not before they became a sexual partner. It’s not as if this is a random meet in a nightclub after all, it’s easy enough to ask around at work if your boss is married or not, no?


The Arkansas Senate overwhelmingly approved on Friday a Republican-backed bill whose authors say is intended to protect religious freedoms but critics contend could allow businesses to refuse service to gay people.

The Republican governor of Indiana signed into law a similar “religious freedom” bill on Thursday, prompting protests from human rights groups and criticism from some business leaders.

The bill advancing in the Republican-led Arkansas legislature says “governments should not substantially burden the free exercise of religion without compelling justification.”

Supporters say a business should not be forced to, for example, cater a same-sex wedding if doing so would violate the religious beliefs of the owner.

Well, umm, shouldn’t you be allowed to turn down business if you want to?