Monday, December 28, 2009

The Grand Game!

Sometimes here at KPC someone sends a link that is just SO sweet that we have to examine it, savor it, and then leave it by the side of the road to rot.

While Sweden has a large state and well developed public services, in Japan government social expenditure makes up an unusually small part (compared to other OECD countries) of its Gross National Income. The same contrast exists among US states - even between neighbouring states like Vermont and New Hampshire. Vermont takes the big government route and New Hampshire the small. But despite the contrast in how greater equality is achieved, Sweden, Japan, Vermont and New Hampshire all enjoy good health, lower rates of most social problems - i.e. all the benefits of greater equality.

Here is just such a link, a set of "studies" so noisome, so nonsensical... well, enjoy. Here is the "evidence" page. This is a rare combination of almost painful self-importance and bad social science.


Mungowitz said...

I'll go first. Check this:

Are they kidding? Inequality causes obesity? Wonderful.

br said...

I'm having trouble locating the methodology used to derive the [ever important] x-axis - income inequality. It feels a little like an IFCC data strategy.

Simon Spero said...

"We are therefore the first generation to have to find new ways of improving the real quality of life."

The goggles - they do nothing.

Tim Worstall said...

It's a quite wonderful book.

When they look at the correlation between more equal societies and lower working hours they manage to miss three things.

1) They leave out Japan which would make some difference to their results.

2) They look only at market working hours. They seem not to have heard of household production.

3) They seem to miss the causation part. If greater equality is reached by higher taxation and redistribution then of course market working hours will be depressed.

But for a real giggle try their logic in the first few pages of the book.

Higher wealth (ie, higher GDP) above a certain level seems not to translate in to higher self perceived happiness. OK, marginal utility of income maybe....but they then say that this proves that economic growth is of no further value. Thus we can turn to distribution as the only imporant thing without worrying about the disincentive effects of taking everything off the people doing all the work.

Something of a leap there. Plus they miss out the thought that perhaps living in a society with economic growth (ie, things are getting better) makes people happy.

BTW, this book got rave reviews when it came ou in the UK and is now taken as gospel. The more unequal a society the worse it is for everyone. It would be very helpful if a smart economist (erm, Mike?) got a copy and then prepared a detailed rebuttal as the book is just launching in the US.

You're going to see everyeon like Krugman and Yglesias saying this just proves we must have more redistribution.

Willy B Good said...

William Bernstein, the financial writier from and Russ Roberts were debating this very thing last year -

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