Blog: Economics in Action

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Two odd pieces of economic research have been highlighted in the Ig Nobel Prizes, awarded each year by the magazine the Annals of Improbable Research.

The first study examined tips given to lap dancers. Unfamiliar with lap-dancing, Geoffrey Miller and colleagues read up on the relevant sociological and feminist literature before getting eighteen dancers to record their earnings for two months. They found that earnings were greater when the dancers were ovulating: the male patrons expressed a preference for dancers who were currently fertile, even if not consciously aware of the difference.

The other study was by behavioural economist Dan Ariely and colleagues, who found that the placebo effect of a pill was weakened when the pills were discounted in price. In other words, some medicines are more powerful in virtue of being more expensive.

The full references are Geoffrey Miller, Joshua M. Tybur, Brent D. Jordan (2007) “Ovulatory Cycle Effects on Tip Earnings by Lap Dancers: Economic Evidence for Human Estrus?” Evolution and Human Behavior, vol. 28, 2007, pp. 375-81; and Rebecca L. Waber, Baba Shiv, Ziv Carmon, Dan Ariely (2008) “Commercial Features of Placebo and Therapeutic Efficacy” Journal of the American Medical Association, March 5, 2008; 299: 1016-1017.

In the latest of a series of interviews from the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to Emma Tominey about the effect of smoking during pregnancy.

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Mothers who smoke during pregnancy will have smaller babies. But much of the harm is due to unobservable traits of the mother. If mums stub it out by the time they are five months pregnant, the damage is as good as undone.

At the same time, the lasting harm to babies is greatest if the mothers have low education. So a much more holistic approach to improving child health in pregnancy is needed to help thousands of children break out of the poverty trap.

These are the conclusions of extensive new research by Emma Tominey, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick, 11-13 April. (more…)

In the latest of a series of interviews from the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to Victoria Prowse about the ‘Part-time Occupational Penalty’ for UK women.

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No matter what qualifications they have or how big their family is, British women face a substantial occupational penalty if they work part-time. That is the central finding of new research by Victoria Prowse, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick. (more…)

In the latest of a series of interviews from the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to James Walker about the pay of UK academics.

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Academics are underpaid and overworked compared with other graduate professions and this is likely to have consequences for the quality of UK degrees. That is the conclusion of new research by James Walker and colleagues, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick. (more…)

In the latest of a series of interviews from the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to Kerry Papps the effect of divorce on women and work.

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Married women work more hours in the labour market when they face a high likelihood of divorce: for example, a woman who is unhappy with her marriage will work on average 283 hours more in the following year than a woman who is very happy with her marriage. In contrast, married men are unaffected by the probability of divorce.

These are among the findings of new research by Kerry Papps. The study also finds that both single men and single women work more when they have a high chance of marrying in the near future.

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In the fourth of a series of interviews from the Royal Economic Society annual conference 2007, Romesh Vaitilingam talks to Costas Milas about UK interest rates.

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Monetary policy-makers do not make minor adjustments to interest rates when inflation is close to the inflation target  but they do respond vigorously when inflation begins to move further from the target. That is the central argument of new research by Professors Christopher Martin and Costas Milas, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick.

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In the third of a series of interviews from the Royal Economic Society annual conference 2007, Romesh Vaitilingam talks to Stephen Drinkwater about self-employment among Britain’s Asian community.

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The typical Asian working age male is now younger, better educated and more likely to be UK-born than his parents generation were. According to research by Ken Clark and Stephen Drinkwater, each of these factors contributes to lower rates of self-employment, particularly among men of Indian and Chinese ethnicity. This suggests greater assimilation of these groups into the UK labour market and education system.

But the study, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick, also finds relatively stable rates of self-employment among Pakistani and Bangladeshi men. It seems likely that discrimination in paid employment against these groups is keeping them in self-employment, working long hours in relatively poorly rewarded sectors such as catering and taxi-driving

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In the second of a series of interviews with economics researchers at the Royal Economic Society Conference 2007, Romesh Vaitilingam talks to Richard Kneller about the effect of exchange rate movements on UK exports.

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Changes in exchange rates have little impact on UK manufacturing exports and are likely to have only a modest effect in reducing the countrys record trade deficit, according to research by Dr Richard Kneller and colleagues, presented to the Royal Economic Society’s 2007 annual conference at the University of Warwick.

Dr Kneller said:

The findings may surprise many people intuitively you would expect a strong pound to be bad for exports and a weak pound to lead to much greater exports. (more…)

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Britain’s national minimum wage has not only raised the pay of low-paid employees. It has also led to a reduction in the rate of these employees absence through sickness  and hence improved their productivity. That is the finding of new research by Marco Ercolani and Martin Robson, presented at the Royal Economic Society Conference 2007. This effect might help to explain why the introduction of the minimum wage was greeted with apparent equanimity by many employers.

Employee sickness absence is widely recognised as a major problem for the economy. In recent years, for example, it has been calculated that the direct costs of sickness absence in terms of the value of lost output amount to over £11 billion per annum; around 1% of the country’ annual GDP.

On top of this, there are the indirect costs such as the loss of employee morale among those required to cover for absent colleagues. While many instances of employee sickness absence represent genuine cases of ill health, a significant proportion almost certainly does not. (more…)