Comments | peterbirks: Why macro-economists never win the Nobel prize

peterbirks

Why macro-economists never win the Nobel prize

Oct 15, 2012 19:29

Alvin Roth and Lloyd Shapley have won the Nobel Prize for economics. It's another kind of gane-theory award. You might as well award the Nobel prize for economics for showing the optimal strategy with two draws to come and a Kxxx badugi against one opponent who is drawing one ( Read more... )

Comments 4

john_f_hopkins October 16 2012, 08:14:49 UTC

Pete, You say "People already retired (my italics) who are on final salary schemes are big winners. Those on fixed incomes, or about to buy an annuity, are big losers".

I don't follow. Once past the point of retirement., those (who were) on final salary schemes are then on fixed incomes - although sometimes with modest below-inflation adjustment.

peterbirks October 17 2012, 17:41:14 UTC

Good point. An example of what happens when you type stream of consciousness and do not go over what you typed with a fine toothcomb; because, of course, it's easy to get lost.

To explain the source of the contradiction. I was actually writing about two different things, and failed to spot this.

1) Those who have retired on final salary schemes (many of whom do indeed receive an indexed increase every year) are almost certainly getting more out of the economy than their rentier status is generating in their pension funds. They are, therefore, net winners. If their pension funds were accumulating extra cash, and disbursing this elsewhere (e.g, if the companies operating them took pension holidays) then retired final salary scheme members would be net losers ( ... )

jellymillion October 16 2012, 08:42:45 UTC

"Make it so people can't afford to retire. Try to improve worker efficiency."

The only way those are compatible would be with significant absolute economic growth, wouldn't it? I'd say a lot of theoretical retirees would be seeking to postpone annuity purchase right now (and probably for several years into the future) but what do they do instead? Stay in work? Without growth there aren't any extra jobs, so youth unemployment goes up. Improving efficiency surely contributes to the problem if fewer workers are needed to get a constrained amount of work done. Or is this tied in with the QE/inflation idea: create the need for more work by stimulation?

I must say I'm glad I'm not ready for retirement age yet - I don't think I could afford it if I was.

peterbirks October 17 2012, 17:52:20 UTC

Blimey Mike, considering how much the investment banks have taken out of the real economy without, as far as I can see, giving much back, you must have spent one hell of a lot of that unearned income (I'm not saying that you didn't earn it, merely that your bank paid itself, and, therefore, you, out of "profits" that were not genuinely created wealth, meaning that you were paid a bonus on wealth that was fictional) in the past decade if you aren't ready to retire. And, yes, I do include your bank in this -- that $5bn or so that it got from the US government in 2009 over AIG's 100 cents on the dollar basically just came from the printing presses. In genuine terms it should have been about 40 cents on the dollar ( ... )