Happiness, Wealth, and Sandra Bullock

I think it was Woody Allen who once quipped something to the effect of 'what's the use of happiness if it can't buy you money?!' Well, the relationship between wealth and happiness is now a respectable academic field of research and is a hot topic here at the LSE. But what does Sandra Bullock have to do with all of this? In a much emailed article today in the New York Times, columnist David Brooks writes a nice article that I thought summarised quite succinctly the collective wisdom to date emerging from this literature. How could these new approaches and insights be used to improve development policy?

Recycling Kills Trees

Many of you may remember that during DESTIN's Economics pre-sessional workshop I made the outrageous claim that recycling paper could be bad for the environment. I even backed up my claim with some circumstantial evidence that I've been accumulating over the years (I make the claim every year, and it always manages to generate a reaction...!). Now, apparently, the evidence in my favour is growing - an ex-DV409er from a few years ago, Casey Torgusson, had always remembered that argument and two days ago he emailed me this link to a media campaign for print making exactly 'my' argument. So, folks, you heard it here first!!

Alice in Wonderland

As many of you who have visited my office will know, I am a huge fan of 'Alice and Wonderland' for a number of reasons. This delightful NPR radio piece from this weekend discusses some surprising relationships between 'Alice' and mathematics.

Behavioural Economics

Here are some interesting clips with colourful descriptions of the implications of behavioural biases on economic decision-making. How can mistaken expectations, whether we are in control of our own decisions and what increases our propensity to cheat affect the type of economic development policy decisions we have been studying in DV409? Dan Gilbert and Dan Ariely discuss how behavioural biases affect our reactions to terrorism, health care, important financial decisions, and whom to go out to a bar with if you are looking for a date.

Kahneman on the other hand suggests that last impressions are as important as first impressions. How could this affect the way we design policies? Or how firms build reputations? Or how politicians get re-elected?

Sachs vs. Easterly Battle Getting More Interesting

For years Jeff Sachs has been tirelessly, and for the most part evidence-lessly, plugging his big push-types of ideas for foreign aid, all the while heckled from the stands by a more amusing, regression-toting (and much better coiffed) Bill Easterly.

However as an article in today's New York Times discusses, many of those Millennium Villages that Sachs is sponsoring are looking pretty good! There are still excellent Easterly counter-points that the article reviews, but you have to admit it is not quite as easy to roll your eyes at the Sachs camp these days... What do you think?

Tricky Trade Questions

This Op Ed piece in the New York Times this week raises some apparently very shocking questions about how productivity is measured and the supposed benefits of 'offshoring' jobs and trade. These kinds of arguments are everywhere, but is the analysis correct? In thinking about this, you might want to remember the 'Iowa car crop" example from Krugman that we discussed in early in the year. Also, what is American labour productivity? Should it reflect the average labour productivity of every human being across the globe that has contributed to the goods we produce? Is it misleading to only count U.S. based labour? What if China had machines to make the goods rather than people? Would it, as the op-ed implies, make U.S. consumers better off to choose policies that target a more 'global' labour productivity measure instead? If we decided to do that (for whatever reason), what would those policies likely look like, anyway?

It's a small world... and it is getting smaller

Some interesting maps showing world connectivity with surprising findings! The Amazon is as well-connected by ground travel as Quebec.

Some interesting links on the topic of networks and development and growth:

1) maps of business networks : www.xigit.net and www.orgnet.com. How can this affect the nature and structure of businesses?

2) social networks. How could this affect development policy?

3) specialization and export behaviour. Very cool project. How could this affect growth? But how should it affect policy?

Is Fair Trade a development strategy?

In seminar this week we had a brief discussion on how to secure "fair" labour conditions in developing countries. The traditional model is for the state to intervene in setting minimum wages and prices. More recently, an alternative model has emerged in the form of the Fair Trade Movement. Fair trade certification requires farmers or producers to comply with certain rules ( no child labour, adoption of environmental practices, participation in democratically-run cooperatives) in exchange for fair trade certification. There is very limited evidence out there on the real impact of fair trade, but for a handful of case studies that have a hard time overcoming selection bias.

One of you suggested in class a different model altogether based on increasing transparency in the supply chain. This would not impose constraints on farmers to become certified but would require companies to disclose more information to the consumer on the how it sources its products. Presumably, this would be verifiable information (if not by an individual consumer by watchdogs, NGOs, etc), creating incentives for companies to truthfully report information.

The new wave of cause-related marketing and inclusive business gives us plenty of reasons to pay attention to this issue. The number of products you can find at a supermarket these days that include some sort of claim to support either local communities, an orphanage in Haiti or an endangered species is growing exponentially. Could there be diminishing returns to this strategy? Could this type of consumer activism become a sustainable model of development and would it crowd out traditional charity or even other forms of political participation?

On the bright side, here is an organization that is striving for more transparency. Here is a more negative take on project RED, headed by Bono, a popular charity scheme.