C-minus. This was the grade awarded by journalist Martin Grieve for the accomplishments of the ‘nudging’ techniques implemented over the last few years by the US and UK governments. Nudging is the policy approach that seeks to encourage people to behave in ways that enhance their health, wealth and wellbeing by tinkering with the way choices are presented to them.
In April 2010 intrade.com, the spread-betting website, launched a new contract that allowed punters and pundits to bet on the breakup of the eurozone. More precisely: “any country currently using the Euro to announce intention to drop it before midnight ET 31 Dec 2012.” It immediately changed hands at 27 (per cent probability) and scarcely ever saw any price below 20 in the subsequent two years. Last autumn it reached a peak of 60. Today, it trades at 10.
Classicalmusic doesn’t figure very highly among my musical preferences but I have been known to attend the odd concert when particularly celebrated artists perform. In the past few years, encouraged by my wife, I have learned to appreciate the finer side of violin and viola, as well as the talents of musicians like Sol Gabetta, Nigel Kennedy or Uto Ughi. So my ear is familiar with the sound of bow on string. Yet, even though I may be more attuned to classical music than many, I am not sure that I would not have been taken in by this extraordinary experiment.
I have been repeatedly asked over the last few weeks what could be the worst-case scenario for the eurozone debt crisis. It is not a question I like to answer; there are large number of possible paths the crisis could take, which means that there is no single worst-case, but many. And this ignores the effect of the government policy responses those paths would undoubtedly encounter along the way. I do not attach any meaningful probability to it, but when one thinks about any worst-case, it is easy to conjure up images of a total collapse of the economic system as we know it – money, banks, financial markets, growth-based priorities – and some kind of new beginning.
A recent US academic study that showed college students feeling “empowered” by student debt has baffled many observers. In an environment of over-indebtedness and increasing joblessness, one would have thought that a student loan would be perceived as a burden. But no, according to researchers at the University of Ohio, the greater the debt the higher college students’ self-esteem.
Nick Clegg, the leader of UK government’s junior coalition party, wants to give voters free shares in the partially state-owned bank, RBS (83 percent) and Lloyds (41 percent). The populism of the plan is obvious, and Clegg certainly needs to score some points with a public that has grown increasingly sceptical of the Liberal-Democrat leader in particular and with coalition politics in general. However, Clegg defends his stance with appeals to psychology: during a visit to Brazil, he argued that it was important for Britons to ‘feel’ that they hadn’t been overlooked.
A little over a month ago the Fukushima catastrophe was on round-the-clock television and Geiger counters sold out in Germany and in California. The whole world seemed panicked, fearing that the worst was still to come. Meanwhile the situation in Japan hasn’t changed all that much, but one would have to look long and hard to find any current news on the disaster. For instance, most of the world never even heard that another atomic power plant leak was reported in Tsuruga, some 360 kilometres away from Fukushima, at the beginning of May.
I am not sure whether it is a good or a bad thing, but a mid-afternoon workout on the cross-trainer at my local sports studio invariably has me watching TV shows that I would not ordinarily choose to view at home. The machine stands right in front of a huge flat screen whose soundless images ultimately become so annoying that I reroute the headphones from my iPod to the sound jack on the machine’s control panel. Today the show was about the luxury lifestyles of the rich and famous.
The Masai call it ‘the never-ending plains’, the savannah that stretches from northern Tanzania to southern Kenya. The Serengeti is also home to constantly migrating animal herds, including some 1.3 million gnus, 400,000 Thomson’s gazelles, and 200,000 zebra, the last existing ecosystem where the huge herds are able to gather and roam. Tanzania’s National Park Service once had plans to downsize the endless plains, including ring-fencing a part of nature preserve in the 1950s
Yet another amusement arcade has just opened in my neighbourhood. This one stays open 24/7. I have seen the boss; he is no fly-by-night. And, in contrast to his clients, he is always very elegantly dressed. Business is obviously booming.
Paris, 2nd November 2010: An 18-month-old child accidently falls from a seventh floor balcony. Below is a café which, although closed, still has its awning extended because the owner had trouble with the winding mechanism.
‘Do the right thing’ may become a quaint historical slogan as the US housing market edges toward a double-dip downturn. The Fed already reckons that 20 percent of borrowers owe more than their houses are worth.
My friend is a well-to-do guy. He is not known for having a particularly pronounced commitment to social causes, but he was moved by a television report on the recent flooding in Pakistan. On the very same evening, he made out a cheque to the charitable organization whose details appeared on screen throughout the broadcast. He sealed the donation, a goodly €1,000, in an envelope and stuck it in his jacket pocket to post on the next day. However, the next day was a particularly hot July day and so he left his jacket on the back seat of his car.
I have to admit the news that Michael O’Leary, the outspoken boss of low-cost airline Ryanair, wants to run the company’s fleet without any co-pilot sent a shiver down my spine. It is not that I recall any incident where a pilot suffered a mid-flight heart-attack or some other malaise and the plane had to be brought safely to the ground by the second-in-command; my perceptions about in-flight safety are more influenced by 70’s disaster movies where the pilot ‘ate the fish’. Still, a co-pilot – a back-up – just seems to be a sensible thing to have. Am I wrong?
This time last quarter, stock investors were very enthusiastic because US corporate earnings were outpacing expectations. Investors presumably shifted their expectations for future earnings correspondingly higher, discounted these future cash flows the then present value, and decided that stock prices deserved to higher than they were.
A patient, when offered the opportunity to take a break midway through a painful medical procedure will often accept the offer. However, a spa client offered the chance to take a short break during a relaxing massage session will typically refuse. In each case, the people on the receiving end of these experiences intuitively believe that they are improving their happiness with their choices. But do they?
Unite, the trade union currently in dispute with BA, is incensed by the airline’s decision to take out full-page colour press advertisements for new cabin staff at salaries that are almost half of that currently earned by its cabin personnel. We suspect, however, the step might not be about hiring anybody at all. It may simply be the use of a wily behavioural trick called resetting the reference point.