Case:
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| Group activity: Complete the Max U quiz. |
If you’re unsure about the basic rules of differentiation, see this handout:
If you’re unsure about using the Lagrangian method, here’s a video overview:
Another good example is here:
| Learning Objectives: Analyse alternative indifference curves. Solve a Lagrangian maximisation
Focus on diversity: Joan’s utility function is named after the famous economist Joan Robinson |
I know some of these links are dead, but don’t worry: the internet remembers!
| Lecture handout: Incentives matter* |
| Case: Incentive Design, January 2023 // or complete this form |
| Activity: Soviet Planning, June 2022 // or complete this form |
Textbook Reading: Chapter 1 (Intro and Section 1.1; pp. 5-16)
An introduction to the economic way of thinking, which pushes the boundaries of the power of incentives.
Incentives are what economists define as the relationship between the benefits (the value we expect to gain) and the costs (the value we expect to give up) of a decision.
In this lecture we saw how conventional wisdom believes that seatbelts make you safer. But economic wisdom asks how they affect the benefits and costs of being in an accident. The lecture content on seatbelts comes from a great book called “Risk“, by UCL’s John Adams. Risk compensation is a well known concept in international relations – in September 2023 Jake Sullivan, national security advisor to Joe Biden, proposed adding all 5 members of the UN Security Council to the existing nuclear hotline system. As The Economist reported, however, the response was discouraging:
“If you wear a seatbelt in a car, you’re going to be incentivised to driver faster and more crazy, and then you’ll have a crash. So, in a way, better not to have the seat belt.”
This point was well understood by Gregory House:
An interesting argument against mandatory car seats for children is that by making it harder to fit three or more children into a car, it reduces fertility rates and this outweighs the safety benefits (i.e. we lose more children through a lower birth rate than are saved through better protection in an accident). According to this study, seat belts saved the lives of 57 children in 2017, but reduced the birth rate by 8,000! For more, see “On Car Seats as Contraception” (and if you do want 3 young children you can do what my sister did and buy a wide bodied Ford S Max. In europe, minivans never caught on, and in America, they’re dying out).
Regarding bicycle helmets, here is a New York Times article claiming that “Bicycle Helmets Put You At Risk”.
In 2013 Ian Walker wrote a response to criticisms of his study. Read it here. I originally reported that the 2007 studies main finding was that “Wearing a helmet meant that 23% more cars came within three feet!!” but even the critics accept the evidence that “drivers passed around 8.5cm closer on average when a helmet was worn”. In terms of academic studies, there is some interesting evidence. Schmidt et al (2019) find that wearing helmets reduces the cognitive control of riders, and reduces risk sensitivity. Hoye et al (2020) found that the cyclists under their observation in Denmark who wore helmets did not demonstrate signs of riskier behaviour than those who didn’t, but acknowledged that this may be because their risk compensation is inhibited by the fact that people who wear helmets are more likely to be safety conscious than those who don’t. Indeed given that helmet wearers are systematically more likely to be risk averse, evidence of no difference in actual risk taking may be considered evidence for risk compensation! A 2013 paper by Ben Goldacre and David Spiegelhalter argue that the arguments in favour of mandatory helmet laws are weak. Indeed the BMJ report that when Australia mandated cycle helmets head injuries fell (albeit in line with existing trends and this was true for all injuries, not just head), but there was a 20-30% fall in cycling. Particularly amongst teens 🙁
Finally, the issue is serious and I have no intention of contradicting the claim that if you happen to be in an accident, it is good to have been wearing a helmet. Indeed Olivier and Creighton (2017) looked at 40 studies to conclude that for people who are involved in an accident, helmet use reduced the likelihood of serious and fatal head injuries.
The excellent podcast Science Fictions devoted an episode to this:
| Activity: Here is short quiz on the effect of taxation |
The lecture also looked at how coordination might take place without centralised control. This clip of San Francisco in 1906 demonstrates a spontaneous order:
And here’s a video on the concept of “shared space”, and what happens when traffic lights are removed:
This is a great photo essay about “continuous sidewalks” and here’s a video about their usage in the Netherlands:
Recommended reading:
| Learning Objectives: Understand and apply the “Economic Way of Thinking”.
Spotlight on sustainability: A discussion of cycling safety |
“Strategies emerge for coping. There are many, but in essence they all boil down to two: filter and search” Gleick, 2011, p.409
The Filter^ was created in a Birkenhead chippy, in January 2004. Stephen Lai and Anthony Evans were both recent graduates from the University of Liverpool, and wanted to present interesting and accessible academic ideas to a wider audience.
Created in July 2004, The Filter^ REVIEW is an online assembly of cultural essays. Encompassing opera, music, theatre, and architecture our range of reviewers provide honest and independent assessments of live events. Our motivation is enthusiasm, and providing our part of the social contract between audience and stage. My theatre reviews are available here.
Back in 2005 I wrote a working paper called “Common Moments in c20th Art & Economics“. In 2025 I commissioned Boxmoor Creative to build a visually engaging online exhibition with the help of AI. I am delighted to launch:
Also see The Filter^ category. And here.
In December 2020 one of my favourite teachers, Walter E. Williams, passed away. Although my research in pedagogy is focused on innovative methods I always try to remember the key lessons of (i) knowing your content; (ii) delivering it well; (iii) conveying empathy and passion. Walter excelled at all three.
I’ve utilised experiential evidence to argue that my dissertation advisor, Peter J. Boettke, utilises a successful pedagogical philosophy that is common to being both a sports coach and graduate teacher. I also argued that the “case method” is a pedagogical method that should be of particular interest to economists.
As an instructor of managerial economics I try to employ innovative pedagogical techniques. I have created an app to help students learn about the financial crisis, and a simulation to understand the EU debt problem. I’ve also tried to champion the Dynamic AD-AS model.
I have written the following cases:
I believe that Austrian business cycle theory is both highly important and severely misunderstood. I’ve provided a simple framework for comparing Austrian approaches with Monetarism and Keynesianism, surveyed increasing attention to Austrian ideas in mainstream media, and claimed that it deserves a place at the top table of policy debate. Contemporary economic commentators tend to dismiss the Austrian position, so I have clarified what Austrian business cycle theory does and does not claim as true.
In a broad and wide ranging theoretical article I’ve attempted to look at Austrian business cycle theory in light of rational expectations, in particular at the role of heterogeneity, the monetary footprint, and adverse selection in monetary expansion. I’ve looked at the upper turning point of the boom bust cycle, and written about how access to finance impedes entrepreneurship. Empirically, I’ve argued that the monetary base still matters and found an estimate of the natural rate of interest for the UK economy.
I’ve attempted to disentangle the heterogeneous nature of entrepreneurship with some interesting empirical applications. I’ve used the Sunday Times Rich List to claim that those who fell out of the top 100 as a consequence of the credit crunch were disproportionately likely to have been recent new entries. And I’ve used Property Ladder to illustrate ways in which the 1994-2007 UK housing boom is a manifestation of the Austrian theory of the business cycle. I’ve also written a book chapter that utilised the concepts of “regime uncertainty” and “Big Players” to the financial crisis in the UK.
I have applied the Austrian theory of the business cycle to assess the Irish economic “miracle”, and asked whether it’s an example of a tiger economy or bengal kitten.
I’ve also written a “Choose your own adventure” style account of the UK financial crisis, which I turned into an iPhone App (coverage here).
I have also attempted to contribute to the literature on free banking, both in terms of pointing out scholarly flaws in criticisms of fractional reserve banking, and defending the legitimacy of (voluntary) demand deposit contracts, (twice). Also, here is a pamphlet with a simple proposal to reform the banking system.
I’ve also published many reports and blog posts through Kaleidic Economics.
“Between private, subjective perception and public, physical science there lies culture, a middle area of shared beliefs and values”
Douglas & Wildavsky, 1982:194
My desire to understand corporate culture in a broad way, rooted firmly in social anthropology, led me to the Grid/Group (or “Cultural Theory”) typology pioneered by Mary Douglas. I was fortunate to meet her several times before she passed away, and we worked on an application of Cultural Theory to organisational behaviour. I have attempted to bridge cultural theory with an epistemic and institutional approach to economics, and highlight some methodological parallels with Austrian economics.
Some of the examples of the usefulness of a Cultural Theory approach to organisational culture are internal prediction markets, and whistleblowing. In terms of the latter, I provide an explanation for why legislative and internal systems typically fail, and suggest ways to nourish a culture of dissent as a strategic advantage. My work on whistleblowing led to several trade journal articles and some media coverage.
I also believe that Cultural Theory can help to explain the fascinating social dynamics that occur in Office Christmas Parties. Just after the launch of ‘The Office‘ there was a fly on the wall documentary called ‘The Armstrongs‘. You can find some episodes on YouTube, but the pilot episode (filmed in 2003) isn’t available. After I blogged about the series I received a DVD through the post from one of the production team. This is important because it focused on the Christmas Party. It’s no coincidence that the high point of the UK series of ‘The Office’ was Tim and Dawn’s kiss, which occurred at the Christmas Party. And one of the best ever cinematic moments occurred during the Christmas Party scene in Tinker Tailor Soldier Spy. My ambition was to conduct an anthropological study of the Christmas Party. One day
Matthew Taylor, former head of the RSA, likes cultural theory. Notice the influence here:
I still have plans to run an MBA course called “Corporate Cultural Theory“. I am collecting cases and if I find sufficient interest (either from co-instructors, universities, or potential students) then I will pick it back up again. For an indication, see my 2007 article: “Towards a Corporate Cultural Theory“. It was published as a working paper by the Mercatus Center, and it also appeared in a Semiotics course on Cultural Theory.
During my graduate studies I specialised in the field of Public Choice. I took classes with Charles Rowley and Gordon Tullock, and attended James Buchanan‘s seminar. However I felt there was a tension between the “Virginia” school and “Chicago” school. I’ve argued that the latter approach reached a dead end, and advocated a distinctly subjectivist approach to political economy based on the core insight of the “Epistemic Primacy Thesis”. An example of this is the difference between radical and rational ignorance – if people acquire information through “browse” rather than “search” there is scope for a genuine theory of error.
Companies can and do build unique constitutional orders, and there’s lots of potential to apply the field of Constitutional Political Economy to the study of organisations. One example of constitutional management that I am especially interested in is Market-Based Management (R), which treats the institutions that generate economic prosperity as being analogous to the institutions that improve corporate performance.
As part of the Mercatus Center‘s “Global Prosperity Initiative” I undertook fieldwork in Liverpool’s Chinatown to understand the economic organisation of ethnic communities. I used interviews, surveys and observation to show how the availability of regeneration funds can create incentives for voluntary community associations (i.e. “clubs”) to switch into predatory rent-seeking collectives.
I’ve attempted to apply a subjectivist approach to public choice theory to the collapse of communism in Eastern Europe. I’ve utilised the concepts of operational codes, epistemic communities and the structure patterns of ideas to argue that “constitutional moments” show how ideas can can underpin and direct the formation of interest groups.
I have also documented the spread of the Austrian school in Central and Eastern Europe following the fall of the Berlin Wall, providing a rare history of “centre-right” political ideas in Eastern Europe; a chronology of the development and influence of libertarianism; cursory intellectual biographies of neglected Austrian economists; and empirical evidence that contributes to the epistemic communities approach to the study of idea diffusion.
My 2009 book, The Neoliberal Revolution in Eastern Europe, (co-authored with Paul Dragos Aligica) developed two research agendas: the study of the spread of ‘neoliberalism’ – as seen from the perspective of Eastern European post-communist evolutions; and the study of Eastern European transition – as seen from an ideas-centred perspective.
I have done fieldwork in Romania to understand the spread of the flat tax. I utilised the “economic theology” literature to claim that whilst ideas are usually adopted for their empirical and operational content, if this is lacking, due to the novelty of the idea, or the uncertainty of the political environment (for example when following regime change), their normative content can generate a crucial carrying capacity. I have also introduced and applied a synthetic comparative method to study its spread in nine Eastern Europe countries. According to this book I have produced “seminal analysis of the spread of the flat tax throughout much of Central and Eastern Europe”.
I have a longstanding interest in Belarus. I have published an extensive slide deck that summarises its social, economic and political history which is available as a book (to buy or to download) or as a podcast. I written memos on the main lessons from transition (with an addendum that applies them to Belarus) and one about the 2020 protests. In terms of my academic work, I have published articles that look at the competitiveness of the mechanical engineering cluster and an estimate of Belarus’ ranking on competitiveness economic freedom. I have also looked at how Lukashenko’s dictatorship relates to the concepts of competitive and informational authoritarianism.
This is a list of ~80 minute sessions that I regularly teach across various general management programmes. The links provide access to lecture slides, cases, classroom activities, and additional resources that I make available to students once they’ve taken the class. If you are an instructor you can contact me directly for board plans and further advice.
Each session contains learning objectives as well as an assessment of cutting edge theory (c); a focus on diversity (d); and spotlight on sustainability (s). Note that Marginal Revolution University have a series on women economists.
