Welcome

Welcome to economic-truth, a website for students of economics.  Please see our about page to learn more.

  • Notes and essays are grouped into subject area and academic level.  Please see the site map on the right of the front page, or the menu above, for this content.
  • Commentary on recent events from an economist’s point of view can be found below or via the link in the menu above.

Enjoy your visit, we hope you find this site useful.

New mobile site

With upgrades to WordPress’s standard tools, economic-truth now has a new look on mobile sites, enabling you to catch up on articles anywhere.  There area few features missing – search for one – which will be added over time.  Your comments are appreciated! Continue reading

Becoming something else

Rebranding a business costs a huge amount of money.  The cost is both direct (through ordering new stationery, relaunching a website, changing signs on doors and designing a new logo) and indirect (potential lost business from people not recognising the company, time lost through employee training on how to use a new brand). Continue reading

When the population isn’t homogenous

A recent post at the Freakonomics website set out their plans for a changed NHS.  My opinion is that the main issue with the NHS is not to do with the demand side (which in any case is pretty tightly controlled through referrals through GPs and the NHS Direct portals) but rather the supply side (with too much spent on management, administration and inefficiency).  Leaving that aside, does the Freakonomics proposal make sense? Continue reading

Is a book worth £500?

When looking to buy a copy of Newton’s Telecom Dictionary I noticed that as well as the standard page on Amazon, there was another page on which the price was set rather higher, along with a more convoluted title.  The first time I saw this second page there were in fact three booksellers, all with very high prices:

Sam Books 432.98
Greenpastures UK 598.97
UK BOOKDEPOT 599.00

Why would these sellers set such a high price for a book that is readily available?   Are they hoping that someone may not be able to find the cheaper version, and mistakenly pay £600? Continue reading

Pushing regulatory boundaries

Regulation is typically used where there is market failure, such as the natural monopolies in energy distribution, or asymmetric market power such as between banks and individual account holders.  In these instances, governments try to restore the market by restricting prices or actions. For example, in order to overcome monopolies in the postal sector, the regulator may set the price at a level that would be expected to be seen in perfect competition – price set according to a marginal cost (often calculated using a Long-Run Incremental Cost, or LRIC, model). Continue reading

How to know what didn’t happen

One of the key types of projects I work on is the economic impact study, which looks at how government expenditure, regulatory changes, public policy or commercial decisions have changed or will change the welfare of the country.  In order to carry out such an exercise, you must build a model which estimates economic activity (in terms of money spent and employment) under two scenarios – with and without the policy or commercial decision. Continue reading

Is it good business sense to reduce your customer base?

The following graph would appear to be bad news.  This shows the reach of timesonline.co.uk – that is, the proportion of daily Internet users who visit the site.  For the first half of 2011, around 0.07% of Internet users visited the site each day; while that seems small, it’s a small proportion of a very large number.  Then, in late 2011, the number of users dropped significantly, and (other than a brief temporary increase in early 2013) the site now has a userbase around a quarter of its old level. Continue reading

A progressive approach to tax

The US Congressional Budget Office has recently published some information on who pays income tax in the US (or, at least, who did so in 2010).  There’s an interesting graph included showing how effective tax rates vary by income group over time. Continue reading

The value of a New Year’s resolution

On 1 January every year, one of the most common questions asked must be: “Have you made any New Year’s resolutions?”  Why do people make resolutions only once a year?  What is special about New Year’s Day? Continue reading

Racing to the bottom

How much was the last app you bought on your smartphone?  It’s very likely that the answer to that question is less than a pound, no matter how complex or detailed that app was.  When Apple launched the App Store in 2008, the average price of apps was significantly higher, with games such as Super Monkey Ball selling for £5.99 and Crash Bandicoot Nitro Kart at $12.99.  Over time, the huge competition has led to games dropping prices to 69p, or even free, with new revenue streams being established through advertising or additional purchases.  Along with this fall in pricing, many firms have found that it’s not profitable to spend time developing complex games and applications, leading to a proliferation of match-three and simple physics puzzlers. Continue reading