Standard of Living
Well that camel ain’t gonna fit there…
Over the last few weeks it seems like I’ve been discussing nothing but competition policy so I’ve decided to omit the two new stories about the OFT challenging tobacco companies and supermarkets, and cover something else a little more miscellaneous: the annual bitch about the UK’s super-rich.
More to life than GDP?
Happiness economics is a topic very much in vogue at the moment, and this year’s edition of Social Trends has clearly paid homage to that fact by including a measure of subjective well-being: Satisfaction with standard of living and financial prospects [Table 5.5]. The data made no attempt to debunk the Easterlin paradox: while household income has increased by over 60% and household wealth has more than doubled, satisfaction with standard of living has remained constant at around 85%.
Measuring the Black Economy
Moonlighting, ghosting,working for cash in hand, undeclared business profits, fraudulently claiming welfare assistance, failing to register a business for VAT purposes and organised crime. All of these ‘economic axtivities’ are said to operate in the shadow or informal economy and no one including the authorities have much of a handle on just how large is the size of the black economy.
Deflation in Goods
I have an admission to make. A few weeks ago I inadvertently dropped my digital camera and my Blackberry into a toilet during a rest-stop at Portsmouth FC’s training facility! The camera is now useless but the Blackberry survived intact and working fine!
Having decided to replace the camera I find on Amazon.co.uk that the same make is available for twenty per cent less than at the same time last year and perhaps a good example of the heavy rate of annual price deflation in the prices of household goods in the UK. In part this helps to explain why the official measures of inflation captured by the CPI and RPI remain relatively low despite sharply rising food, fuel and utility bills. But critics of the RPI and CPI calculation retort that few households replace their household goods every year – so price reductions have little direct impact on their annual cost of living. The Times covered this trend in an article in yesterday’s paper.
“According to Pricewaterhouse-Coopers (PwC), the accountants, the prices of everything from a kettle to a camera have tumbled by nearly 50 per cent since the early 1970s…..The biggest price-cuts have come in the past decade, as retailers have taken advantage of improvements in technology, the manufacture of products overseas and, most recently, the depreciation of the dollar against the pound.”
How long can this price deflation last? The pound is falling against the Euro and marking time against the US dollar, there is plenty of evidence of surging cost and price inflation in China and other emerging market countries.
Malthus in The Moral Maze
I’ve long been waiting for a chance to plug one of the best radio shows on this blog, and now is the perfect opportunity. Yesterday aired one of the most economic topics on The Moral Maze yet: the allocation of most necessary resource: food. Philosophy took a back seat on this issue as the panel threw words like Malthus and de-regulated markets around like they had PhDs in Economics. Impressive.
Do have a listen, and don’t let the religion tag scare you.
Bhutan and Gross National Happiness
Is there a trade off between wealth and well-being? I missed this Newsnight report from Mark Easton which appeared on BBC2 last month - but came across it whilst revising my work schemes for our new courses next year. This is a terrific eight minute video on life in the absolute monarchy of Bhutan - a country without traffic lights and which has banned plastic bags and adverts for Pepsi and Coca Cola. The video clip is excellent perhaps as an introduction to discussion on living standards or even the basic economic problem.
Tim Harford’s essay on happiness which was published a couple of years ago is still well worth a read.
Costs and Benefits of ICT
We live in an information age and a knowledge economy - but what price do we pay for instantaneous communication?
read more...»Robert Frank on Income and Happiness
One of my favourite authors, the ‘Economic Naturalist’, Robert Frank writes about real incomes and happiness in today’s New York Times. He makes the point that “findings suggest that relative income is a much better predictor of well-being than absolute income” and the article is excellent for students wanting to know a little more about the problems in adjusting for price changes in the economy when trying to capture real improvements in living standards.
“Since the mid-1970s, however, income growth has been confined almost entirely to top earners. Changes in per-capita G.D.P., which track only changes in average income, are completely silent about the effects of this shift. A society that aspires to improve needs a better measure of what counts as progress.”
See: Income and Happiness: An Imperfect Link
Living the high life
How would you assess your quality of life? Are you better off than this time last year or enjoying a better lifestyle than say five years ago? Do you live in a village, town or city where you feel the quality of the living environment is pretty good? If not, what is stopping you moving on and finding pastures new?
read more...»Yachts and the not have-Yachts
The number of US dollar billionaires has risen according to this BBC audio-visual clip and luxury goods and luxury service providers are reaping the benefit. The surge in the number of dollar billionaires from the emerging market countries is a key part of the trend but the rise is also due to several years of rampant asset price inflation (stocks, property and commodities) allied to the fall in the external value of the US dollar on the global foreign exchange markets. The Forbes list of global billionaires for 2007 can be found here.
