Economics and similar, for the sleep-deprived

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Update: seemingly not

Update: Oh yeah!

Friday, February 08, 2013

From my email outbox, on UK libel laws ...

It's also worth adding that [Simon, in an article] Singh is quite inaccurate in his discussion of the UK libel laws.  The points he makes are:

1.  "Defendants are guilty until proved innocent, a reversal of normal

This isn't a reversal of normal practice; even (informed) libel reform campaigners recognise that this is more or less intrinsic to the nature of libel  (  It's similar to "the burden of proof" being on someone accused of trespass to prove that he has the legal right to be where he is.  It's actually the practice in the USA too, except as modified by the very unusual public figure doctrine.

2.  "On the other hand, claimants do not even need to prove that they have been damaged in any way".  I think he must mean that defendants don't have to prove specific harm - they do have to show that they have a reputation in England & Wales to defend (subject to a test which libel reformers think is not stringent enough), and if you have a reputation, then libel to it is itself a harm.

3.  "Moreover, there is no robust public-interest defence".  Just not true.  There is Reynolds qualified privilege and there are all the protections in the European Convention and the Human Rights Act 1998. I suspect that what Singh means here is that there isn't a catch-all- come-free libel-as-you-please clause for people who are acting "in the public interest" by being on the right side in public debates about alternative medicine or terrorist funding or what have you.  And of course nor should there be; the rule of law doesn't work like that.

4.  "When it comes to censoring publications and blocking online content, it is arguable that Britain has an even worse record than Hitler!".  (Actually he said "an even worse record than China", but it's hardly more ridiculous when altered for comic effect).

5. With regard to the "Funding Evil" lawsuit:  "The case was held in London, because an international businessman such as Mahfouz can claim a reputation in almost any jurisdiction".  He had a house and several
businesses there.

6.  "Mahfouz was able to play high-stakes poker with Ehrenfeld and push a $1 million stack of chips on to the libel table. Ehrenfeld and her publishers could not afford such losses as it would have meant bankruptcy, so they backed down, settled early and paid £30,000 damages and £80,000 in costs".  Actually Mahfouz desperately wanted the case to be heard so he could clear his name and spent a lot of time and effort providing evidence to allow the judge to make a ruling on the facts in any case.  Ehrenfeld never responded to the case, preferring to whine to the US press about the awful British courts. She also never refuted any of Mahfouz's case in subsqeuent US editions of her book, leading an awful lot of people who had supported her to feel rather burned.

In general, this debate is very confused.  There are a large number of issues:

a) Mr Justice Eady specifically, and whether he is too plaintiff-friendly (this is the only *legal* issue at stake in Singh's case, btw, which is otherwise an utterly straightforward one of a journalist having made a careless remark which was susceptible to a libellous interpretation, and not wanting to wear the consequences, combined with a plaintiff who is unattractive for unrelated reasons).

b) the extortionate cost (which I suspect is what Singh is *really* upset about and who can blame him.  It's unfortunately a consequence of the generally massive expense of the British courts, basically as a result of the opportunity cost of lawyers' time being so high because their next best thing to do is a massive international commercial case, of the sort that is always heard in England (legal tourism! oh noes!) because our legal system is so good).  But something probably could and definitely should be done here.

c) whether the UK should be the second country in the world to adopt the NYT vs Sullivan standard for public figures (which the British media love the idea of, because it would be carte blanche; anyone else should be very frightened of what might happen when British journalistic standards of ethics were loosed from any legal restriction at all).

d) whether the UK should refuse access to its courts to foreigners libelled here (which would be contrary to European law) or restrict that access more than it currently does.

e) whether Americans specifically, as Lord Hoffman says "should only have to say civis Americanus sum to cloak [themselves] in the immunity of the First Amendment against liability for injury which [they have] caused in a foreign country"

f) whether the burden of proof ought to be changed for defendants not subject to Reynolds qualified privilege (which already removes the burden of proof and substitutes a test of "responsible comment"). Which is more arguable, but leaves the unattractive prospect of someone like Robert Murat having his life destroyed because he can't prove he's not a sex offender.

Which of these ones are you actually up in arms about, [snip]?  I suspect that it's the public figure defence, but it needs to be recognised that this is a very US-specific feature and one that was invented quite recently by the Supreme Court in response to a specific historical situation in the Civil Rights period.  Other countries don't have the USA's history of vexatious libel and SLAPP suits so it's reasonable that we've made the  tradeoff differently.


0 comments this item posted by the management 2/08/2013 05:16:00 AM
From my email outbox, on the importance of independence for left opposition

[this was sent during debates over US healthcare reform - "Dennis" is of course Dennis Kucinich, "Jane" is Jane Hamsher of Firedoglake]

The logic is only difficult if you assume that it always makes sense to give up in an ultimatum game, always makes sense to blink in a chicken-game and that the outcome of a voting process is always the median.  If you get even a little bit more sophisticated then it can make a lot of sense to oppose from the left.  I'll try and set it out in a totally deracinated and oversimplified model (note that I am not going to use any iterated results; I think people are correct to be very suspicious of "reputation", "credibility" and other results from iterated game theory).

First, set up a simple median voter model.  You've got a spectrum of possible healthcare reforms from 0 to 100, taking 0 as the rightmost and 100 as the leftmost position.  Say also that there are four groups in a unicameral parliament with 99 members and simple majority voting that are going to vote on it:

49 republicans, clustered at position 0
30 mainstream democrats, clustered at position 50
19 rightwing democrats, clustered at position 20
1 leftwing democrat called Dennis at position 100

The mainstream Democrats choose what bill to put before parliament and we assume that if it fails, this is equivalent to a bill of value 0 being passed.

Now let's take three alternatives

One, pure median voter with no strategic behaviour.  Everyone's (negative) utility is simply equal to  the difference between their ideal point and the outcome (if you are hung up on utilities being positive numbers, you can say that utility is equal to 100 minus the difference but frankly I think it's clearer to just work with negative numbers).

Outcome:  It is fairly obvious to see that the eventual outcome will be 39 - this has a value of -19 to right-dems which is better than -20, and for everyone to the left of them clearly any bill is better than 0.  This is the median voter theorem.

Two, Dennis's strategic model.  Make the additional assumption that for all Democrats except Dennis, there are political considerations which make the value of not passing a bill equal to -90 rather than 0.  For the right-dems, there is a 10 point political penalty for voting for any bill above 50.  Also assume that an outside party (called Jane) will give Dennis a psychic gift worth 98 if a bill pitched at less than 100 fails.

Outcome:  This is an equally uninteresting corner solution - there is one party who can make a credible threat and he gets what he wants. Dennis considers any bill at less than 99 as worth more to him dead than alive because of the present he gets from Jane. A bill at 99 is worth -89 to right-dems (79 for distance from their ideal point, plus 10 point penalty), but this is better than the -90 they would get from a total failure.  Since the mainstream Democrats need to make a coalition of themselves, the right-dems and Dennis in order to pass
the bill, they have to give him all the concessions.

Three, something closer to reality.  This is like model two, but the penalty for not passing a bill is X, an unknown number, and the value of the utility Dennis gets in the event of failure is Y, a number known only to Dennis and the unwillingness of the right-Dems to vote for a leftwing bill is Z, a number known only to them.

Outcome:  In order to pick their bill, the mainstream Dems need to make an estimate of X and Y, and then (on the assumption that these values are consistent with a bill being passed at all), choose the bill that combines the best chance of passing with the best outcome for them in terms of their ideal point of 50.  You can't say what will definitely happen, but you can be sure that the higher the Dems believe Y to be, the higher the number they will pick.  The relationship between X and the solution is complicated (because a bill
can fail because of either the right-dems or Dennis) and so is the relationship between Z and the solution, for the same reason.

Basically the point I'm making here is the one I made to Rich - if there is no possibility of left-wing opposition, then this just becomes a median voter game, in which the left will always lose.  If there is even a small likelihood of a nonzero Y, then it becomes a much more complicated game, but a game in which the eventual outcome gets monotonically better for them the more credible their threat is. In actual fact, Y is almost certainly a very small number compared to the difference between 0 and their preferred policy outcome, but clearly it makes sense to bluff that it might be a bigger number.


0 comments this item posted by the management 2/08/2013 04:57:00 AM
From my email outbox, on behavioural economics ...

sadly, behavioural economics is really really plagued with the same sort of pathological incentives as "Freakonomics", because like quirky-dataset regressions, it really lends itself to small-topic research of the sort that will get your PhD completed on schedule and/or produce a stream of publishable[1] papers to demonstrate one's value to a department research assessment exercise.  As a result it has basically spent the last twenty years working on producing a theory to describe the behaviour of one particular class of person (economics graduates students) in one particular situation (behavioural economics laboratories) and is nearly there.  IMO, behavioural economics is to a significant degree responsible for the suspicion in which interdisciplinary research is held by economics profs, as it appears to me to be chock full of people who have used the psychology department's ignorance of economics and the economics department's ignorance of psychology to play the two off against each other and avoid going into either in any depth[2].  Which is a form of arbitrage, so I suppose they know a bit about economics after all.

The trouble is - as I say, most interesting economics problems are not really about psychology.  If it takes 9 minutes of labour and 10c worth of metal to make a widget which sells for $2.50, then the answer to "what is the wage rate in widget manufacture" is going to depend on specific conditions relating to the widget industry, not general theories about altruism.  Nearly all the time spent on behavioural economics would be better spent on specific institutional work.  It is notable that the puported big success of BE - the "hyperbolic discounting" theory of why people undervalue future benefits and costs - is so transparently nothing more than a redescription of the problem that after ten years it still basically hasn't left the psychology lab (apart from showing up in a couple of Freakonomics papers).


[1]Where "publishable" is defined in strictly empirical terms related
to the current academic journal industry and implies no wider
judgement on whether these articles ought to be stuffed in a bottom
drawer somewhere forever.

[2] Apologies to any list members working in the field but come on,
you know what I'm talking about.


ah yes, I forgot the other tendency of economists - the appropriation of already existing concepts by claiming that it was economists that put them on a rigorous footing.  I mean, the  Yorkshire Penny Bank was founded in 1859, and the concept of weakness of will was being noted by the Ancient Greeks.  British Leyland in the 1960s actually had an automated machine that could split a worker's pay packet into a number of different envelopes of cash, reflecting family preferences for housekeeping, rent and beer money.  There's probably a good article for someone in finding out how many of the hard-won results of behavioural finance had already been discovered by Victorian ironmasters.


3 comments this item posted by the management 2/08/2013 04:36:00 AM

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