New additions

I've just added to the main site a couple of features and reviews published in the past few months.

In features:
another in-depth piece for Corporate Financier, looking at the increasing use of formal advisory boards by corporate finance firms. Who advises the advisors? What do they offer the firm and its clients, and what exactly do they do?
and, for Real Business, a look at the real world of business angels in the wake of the success of the Dragons' Den TV series. I modestly reckon this is as good an introduction as any for entrepreneurs wanting to tap this sort of funding, with practical advice from people who've successfully gone that route and from the angels themselves.

And in reviews, a couple more pop science books reviewed for the Fortean Times - Joseph Silk's The Infinite Cosmos, and Are we alone? The Stanley Kubrick Extraterrestrial-Intelligence Interviews. Both, sadly, rather disappointing. Next up for review is Clifford Connor's intriguing-sounding A People's History of Science.

On experts

Another fun wee column from John Kay in the Financial Times, summarising Philip Tetlock’s new book Expert Political Judgment -

Isaiah Berlin, historian of ideas, made a distinction between the intelligence of the hedgehog – which knows one big thing – and the intelligence of the fox – which knows many little things. Hedgehogs fit what they learn into a world view. Foxes improvise explanations case by case. The world needs both but today it needs fewer hedgehogs and more foxes. Berlin’s terms are used to describe styles of reasoning by the American psychologist Philip Tetlock, who has spent 20 years asking pundits to predict who will win elections, what countries will acquire nuclear weapons or enter the European Union and how the first Gulf war would end. He has tested 30,000 predictions from 300 experts against outcomes.
Mr Tetlock finds that his respondents are not very good. They do better than a chimp who answers at random, but not much, and worse than simple forecasting rules based on extrapolation. But some pundits are better than others. A little knowledge is helpful. Dilettantes – people with the information you will acquire from diligent reading of this newspaper – do much better than undergraduates who based their judgment on a one-page summary of the issues. But experts have little advantage over dilettantes. The reputation of the experts is a guide to which are worth following. But not in the way you might expect. Bad forecasters are consulted more frequently than good ones. The more famous the expert, the worse his prognostications.

Kay's own new book on business strategy, The Hare and the Tortoise, is also recently published. Must remember to seek out and buy.

Summer break

I'm off for a couple of weeks, diving and loafing around the Maltese island of Gozo (reputedly the island where Ulysses was bewitched by Calypso and held captive for seven years). Assuming I escape that fate, I should be back home and open for work from Tuesday 27 June.

Occult rich of Cameroon

Another piece of African economic research sponsored by NWO in the Netherlands.

PhD researcher Basile Ndjio has examined the so-called Feymen of Cameroon, young men from a poor immigrant background who have grown rich through tantalisingly unspecified 'occult' methods of swindling. According to the NWO press release:
Swindlers in Cameroon, with expensive cars and flashy clothes, are the embodiment of occult economies. These nouveau rich mostly come from poor backgrounds with few prospects. 'Feymania', as the Cameroonians refer to the swindling practices, are often interpreted in terms of magic and witchcraft. And as they are so rich many hold them in awe, to the extent that the new generation has even adopted them as role models.

More here, from the University of Amsterdam:
Ndjio concludes firstly that the popularization of feymania-related activities as well as the idealization of feymen as role models is the result of the lack of employment perspectives for urban youths, the marginalization of the youth by state power, people’s disenchantment with the democratization process of the early 1990s, and the steady loss of social prestige of the évolués-fonctionnaires (civil servants, and educated elites at large).
Secondly, both the vilification of feymen as mokoagne men (rich sorcerers) and the depreciation of their extraordinary riches as a mokoagne moni (occult or magic money) are informed by moralizing discourses that condemn asocial modes of wealth accumulation and consumption that do not correspond to accepted patterns of self-realisation and social norms.

Intriguing from both an economic and a fortean point of view.

The dismal science gets happy

A couple of interviews from the Guardian with people working on the economics of happiness. With opportunistic politicos like David Cameron calling for measures of wellbeing and personal fulfillment to be included alongside GDP and all the other macro indicators, it seems an idea of the moment. But will there be any lasting impact?

From today's Education section, a profile of Andrew Oswald of the University of Warwick -
Oswald's long-held view that advanced western economies should concentrate less on growth and more on the wellbeing of their citizens has captured the zeitgeist.
"Why else would the BBC be putting out programmes like that in more or less prime time?" he asks. "Hardly a day passes when I don't get a call from a journalist somewhere in the world."
The Tory leader, David Cameron, has been saying recently that it is time we concentrated not just on GDP (gross domestic product), but on GWB (general wellbeing). So is Oswald beginning to take calls from politicians as well as journalists? He shuffles his feet around, looking rather embarrassed, before confirming that he does. "I'd prefer not to go into names," he says. And before I ask, no, he says, he has not been approached by Cameron.
The defining variables are, as might be expected, relative rather than absolute -
"Before we can tell how happy we are, we have to keep comparing ourselves with the neighbours. To keep up with the Joneses, we spend a vast proportion of our income on things we don't need. It's the way human beings are. But, collectively, we can't all be ahead of the average. That's the key factor in why the continued emphasis on economic growth doesn't work for the whole of society."

Last week, John Sutherland had a similarly-themed chat with Richard Reeves of thunktank the Intelligence Agency -
Is happiness, then, something that society should be aiming at as an end in itself?
"I think it is. Happiness is one of the things that we really should be directing ourselves to, as a society. There's a lovely quote from John Maynard Keynes, writing in the 1930s about 'the economic prospects for our grandchildren'. Keynes predicted that 'there will come a time when we've solved the economic problems - at which point we shall be faced with the permanent problem of mankind: how to live wisely, agreeably and well. It will be those societies which cultivate the arts of life who will best be able to enjoy the abundance when it comes.'
"In my view, Keynes was entirely right in his prediction. And it's fascinating that an economist should concede that economics is only useful until it reaches its own point of diminishing returns. We are at that point now. So the Keynesian question is, 'Are we enjoying the fruits of our abundance?', 'Are we living wisely, agreeably, and well?' My answer would be, 'Not as much as we could do'."
...
"I don't think it would make electoral sense for Blair, Cameron or Campbell to say, 'We're the happiness party, and we're going to make you happy.' None the less, I firmly believe that politicians should take seriously people's sense of their own wellbeing, and of the wellbeing of society generally, and see that as an important policy goal. It should not be something that is giggled out of court".

An experiment in trust

Shortly before christmas last year, I took part in an economics experiment run by Paul Mosley and Pamela Lenton at the University of Sheffield. An interesting experience - a few years ago I'd interviewed Vernon Smith, who won a Nobel for basically inventing this kind of classroom experimental economics - and a rewarding one, as I ended up with 50-odd quid (and some fair-trade chocolate coins).

Mosley and Lenton were basically looking at interpersonal trust in economic exchanges - how personal background, attitudes and experience might affect your behaviour in a series of standard economic games, in which players have the option to invest in other players. The other players were anonymous in some rounds, while other rounds were played face-to-face. Players were given the real money they won during the games, so there was a real incentive to maximise your profits (especially just before xmas).

They've now released their preliminary paper on the research. Some interesting results - while actual trusting behaviour isn't correlated with how trusting people say they are (a well-established result, apparently), it is with various social and personal factors. In general, the higher income and more social engagement (with university clubs, etc), the more trusting you are. Also, the more politically 'progressive' you are (ie, the less conservative, or even Conservative, you are), the more trusting - notably, those who say they oppose tougher controls on immigration and support higher spending on health have a particular predisposition to be more trusting. Mosley and Lenton's interpretation is that "people's already formed political attitudes have an influence on their predisposition to be trusting of other individuals which is independent of other elements in the 'social history'... interpersonal trust does not just derive from interpersonal experience but from attitudes formed in other domains." That seems an important distinction - people aren't less trusting or more conservative because they've learned better, as some cynically claim.

Also, people were generally more trusting and trustworthy in the face-to-face or publicly conducted games than in the anonymous ones. Or to put it the other way, people are more likely to be nasty if they think no one's looking.

So, people with progressive attitutudes in a generally open society are more trusting and have more of what economists like to call 'social capital'. Or on the other hand, that might just make them easier to take advantage of... and as the researchers note, trust is easier to lose than to regain.