Design tools, paradigm shifts in economics, the AU summit, and climate change mitigation/adaptation

I’ve caught up on the rest of my RSS backlog, and I’m glad I did. Turns out there were some real gems worth sharing.

1. Tools for design

Via IPA’s blog, there’s now a set of flashcards on how to design to influence behavior. This post describes them, and you can download the cards here. A small part of me still finds this kind of thing sinister and manipulative (one of the categories is actually called “Machiavellian”), but a larger part of me recognizes that these are just tools like any other. They can be used for good or for evil.

2. Paradigm shift in economics?

The global financial crisis has opened space for dissent in economic thinking. The Economist describes how conventional equilibrium models are being challenged by agent-based models. The best analogy would be to call the conventional conceptual models “top-down” while the agent-based challengers are “bottom-up” (not to be confused with Easterly’s top-down planners v. bottom-up searchers distinction).

In a similar vein, Rethinking Development Economics links to a speech by Dr. DeLisle Worrell, the Governor of the Central Bank of Barbados. He argues that traditional economics is the equivalent of 19th century physics and that “complexity economics” may provide the paradigm shift needed to keep the discipline relevant. The whole speech is full of gems — e.g. he says that continuing to use GDP rather than HDI for comparing countries is “inexcusable” — and worth a read.

3. Discussion of Somalia dominates AU summit

Lest you think the US is the only country that ignores important concerns when terrorism strikes, the East African describes how the Kampala bombing overshadowed the recent AU summit’s official theme of “Maternal, Infant and Child Health and Development.” Of course, aid groups are not happy about it.

4. Climate change: mitigation, adaptation, and…

Simon Maxwell at ODI wants to expand the discussion of climate change beyond mitigation (e.g. switching to solar power) and adaptation (e.g. building flood defenses, developing drought-proof crops) to include the other ways climate change will affect national economies and development. He argues that climate change will cause changes in relative prices of resources, demand for tourism, technological innovations, and other important elements of the economy. I think he’s right that the focus on mitigation/adaptation has crowded these other topics out of the discussion.

However, I also think there’s good reason why mitigation/adaptation dominate the agenda: these two are clearly within the realm of government action. They deal with provision of public goods and the need to correct for market failures (e.g. externalities of burning coal). On the other hand, planning for changes in prices, supply and demand, etc. are not clearly within a government’s purview, and to the extent that they are, they involve a lot more than just climate change. These are questions for industrial policy broadly, and governments are notoriously bad at picking winners. When dealing with the uncertain impacts of climate change, why would we think they can do any better?

Maxwell promises more on this topic in the future and I look forward to seeing where he goes with it.