Sunday 29 May 2016

How an Indonesian volcano created British democracy

Another departure from the usual Elegant Economist style - this post was inspired by this awesome In Our Time episode. Hope you enjoy! 


A tempestuous subduction zone in the India Ocean, Shelly’s Mask of Anarchy, and The Guardian – what on earth do they have in common?

This is quick, and hopefully entertaining, story to illustrate just how intricate and interconnected the world can be.

At a time when politicians are telling us there are 10-word answers to the immense challenges we face, it is useful to reflect just how complicated the world we live in really is. We so rarely understand, or even can understand, the implications of the actions we now take. So we should be wary indeed of politicians offering us ‘simple solutions’. Instead we should demand leaders who understand the nuance and uncertainty of today.





But this is abstract – let me instead start my story. One that will weave together geology, meteorology, politics, poetry and history.

It begins 340 kilometres north of the Java Trench, where the Indo-Australian Plate meets the bloc of the Eurasian Plate. Strictly speaking it’s where the Indo-Australian Plate gets subsumed by the Eurasian plate and is pushed beneath the Eurasian plate forming a subduction zone. A LOT of tectonic activity takes place here – think molten lava. 57,000 years ago all this activity formed a volcano called Mount Tambora, which eventually reached a height of 4,000 metres.

Unfortunately for the people of Tambora, it didn’t stay this high.


The rich magma building up under its cone was andesitic in composition. This type of magma emits copious quantities of gas but with nowhere to go. Pressure built until eventually it was all too much for poor Mount Tambora. It erupted. Spectacularly.

The eruption of Mount Tambora in 1815 lasted 3 days and is suspected to be the most destructive blast in 10,000 years. At its peak it is estimated to have been discharging material at rate of 300-500 million kilograms per second. 10,000 people died directly from the blast while a further 80,000 in the region are thought to have later perished from starvation.

Why starvation? This is where geology meets meteorology. Much of what Tambora shot up was sulphur dioxide, and, it turns out, if you shoot it high enough it can hang around for a pretty long time. (We’re talking years here). Up in the stratosphere it partially obscures the sun rays as well as increasing the solar reflection. Less sun, less heat. This doesn’t affect Indonesia so much as, well everyone.

Europe had already been going through of a cold snap known as the Little Ice Age. Tambora’s eruption exacerbated this. 1816 became known as the year without a summer, with snow falling in June in Central Europe. Quite apart from being depressing, it played havoc with agriculture. Cool temperatures and heavy rains resulted in failed harvests in Britain, Ireland and much of continental Europe. The price of bread doubled and many farmers abandoned their land, becoming refugees in their own country. It was the worst famine of the 19th century.

And this is where meteorology meets politics.

The result was that people were increasingly dissatisfied. But the climate wasn’t the only cause. The import-restricting Corn Laws amplified famine and unemployment in the North of England, as did the dip in textile manufacturing. This backdrop intensified anger at the political system, particularly the so called rotten boroughs. While major urban centres like Manchester with over 1 million citizens were represented by only two MPs, Old Sarum in Wiltshire elected two MPs with just 1 voter. Voting was also restrictive. Only property owners with an annual rental value of 40 shillings, could cast a ballot.

On August 16th, at St. Peter’s Field 60,000 protestors gathered to protest at their lack of representation. This was considered illegal and warrants were issued for the arrests of the protest organisers. But getting to them wasn’t going to be easy as they were in the very centre of the crowd. Calvary officers, who were later accused of being poorly trained and, perhaps, drunk, charged the crowds in an attempt to get to Hunt and other leaders as well as to disperse the crowd. This they did, but not before killing 15 people and injuring upward of 500.


                         

The carnage, referred to as the Peterloo Massacre, was widely condemned. And this was more surprising than you might think. It was one of the first events attended by journalists from important papers across the UK. Swiftly after, headlines about the massacre appeared in London, Leeds and Liverpool to the consternation of the government. They instructed the police and the courts to pursue journalists for “sedition”. Whilst in many ways this was a step back for the press, it did lead to the formation of the Manchester Guardian later to become The Guardian. Without this I may never have developed my productivity-killing addiction to its Life and Style section.

Meanwhile, the poet Percy Shelley, who had written about the strange weather of 1816 while on the shores of Lake Geneva, heard of the massacre only in September while in Italy. His response was the wonderful poem, the Mask of Anarchy, only published after his death. This mesmerising poem is even better listened than read. (I once heard a version read by Dominic West which was incredible but sadly I can no longer find).



In the poem Shelley calls out the senior government ministers such as the Viscounts Castelreigh and Sidmouth who defended their harsh response to Peterloo. They are represented by a number of characters; Murder, Fraud, Hypocrisy (riding on a crocodile no less), and Anarchy astride a white steed, echoing the four horsemen of the apocalypse. They, with Anarchy in the lead, lay siege to Britain under his banner "I am God, and King, and LAW". In this way Shelley represented the repression felt by an increasingly literate and empowered working class who consistently saw political decisions being made which favoured the elite at their expense. While it begins with their subjugation the poem ends with their eventual triumph over these "destructions". It is an ode to a democracy -"Let a great assembly be, of the fearless and the free" - that would take another 112 years to fully form.

In the third-to-last stanza of the poem, Shelley describes what he hoped the impact of Peterloo would be; "And that slaughter to the Nation, shall steam up like inspiration, eloquent, oracular; a volcano heard a far". Shelley did not know about Tambora, nobody in Europe did at that time. It would be at least 150 years before scientists began to piece the connections together. But in some respects The Mask of Anarchy, the Guardian and indeed British democracy owe something to "a volcano heard a far".

I said at the beginning that this was a story about the interconnection of things. Tambora wasn't the sole or even major cause of these changes. Instead it and other preceding events combined to create the chaos of August 16th, 1816.

And it is this ability to see complexity behind events which is so essential in our understanding of the modern world. Globalisation has only increased the links between people and systems. While this has created huge benefits such as rising life expectancies and falling poverty rates it has also intensified risks. Where sectors are tightly coupled, trouble in one area spreads too rapidly to destabilise other systems. We saw this in the financial crash of 2007-2008 - its fatal speed owed much to a system where many of the institutions were so interdependent that a failure in one inevitably set off a downward spiral that virtually brought down the entire financial sector.

Yet the point is not to try and stop this increasing interconnectivity, but to understand it. To take a step back from situations and events and reflect on the many different, and at first sight seemingly unrelated, causes. Only by understanding these, can we fully appreciate the scale and complexity of problems and determine smart solutions.

This is a lesson for us all, and not just for our political and business leaders. We have the global smarts to deal with the next big challenges - an anti-biotic resistant super bug, mass migration caused by climate change or even another overwhelming volcanic eruption. But we can't use these smarts effectively unless we take a deep breath, step back and analyse the multiple and varied causes of the challenges we face.
SHARE:

Saturday 19 March 2016

Tindernomics; An examination of microeconomic principles through the assortative pairing site, Tinder

The Elegant Economist is back!

And first I must apologise for my long overdue absence. I have spent the last 18 months focusing my efforts on project ‘Get into Grad School’. And now that the exams, essays and bureaucratic insanity is done with I can return to my first love; economics!

And love is indeed the theme of my welcome-back post. I have not been a total recluse and this post (previously a work-presentation would you believe!) is my back-to-basics economics refresher.
Instead of my usual recipe format, I will be covering some basic microeconomic principles through none other than the dating app Tinder. Welcome to Tindernomics.

But quickly for those of you who have never used Tinder (trust me, you’re missing out!) a quick three step guide.

  1. Download the app and sync it with your Facebook profile – this allows you to share your mutual friends and interests as well as a selection of photos.
  2. Look at pictures and swipe right for ‘yes, I like this person’ and left for ‘no, please keep them away from me’
  3. If they swipe right too, you match! And then you can begin messaging 


Now for those of you who had the good fortune never to study economics (or better yet never date an economist…) I’m going to run through a little introduction to demand and supply using a very similar commodity to boys…bananas.
If you look below you will see my banana demand curve. On its own it means nothing because it takes two to tango (or exchange bananas) so I add a supply curve. Where the two lines meet we have an equilibrium. With this I can find out how many bananas my supplier is prepared to sell me at a certain price.  

If this is sounding all a bit unromantic. Don’t worry it is. So, to a large extent, is online dating.



Now back to Tinder.

If you look below you can see my dating demand curve and my pre-Tinder sad little supply curve. As you can see it takes me quite a lot of effort (substituted for price here) to meet just a few guys. Pre-tinder I had to meet guys at bars, parties or once, memorably, dressed like Rene Magritte’s The Son of Man. 


   
Introducing Tinder! Now I am carrying round half of eligible London in my pocket. So my supply curve shifts way out. 



What does this mean? 

For much less effort I can meet many more guys. This is known in economics as a WIN. (Actually its not, it’s just what I call it)

The same is true for guys with Tinder but…less so. It’s an unproven observational finding that guys are much less choosy than girls on Tinder. Sadly for guys, as the diagram below demonstrates, this means while Tinder will shift your supply curve out, not as much mine. You’re going to have to work harder for fewer dates. 



Sorry about that.

So we’ve established that Tinder is great for the increasing quantity of men trying to take me out. But the quality…?

Not so much. 

This is because of something economists applaud and I despair over; low barriers to entry. 
What do I mean by that?

Let’s imagine we are trying to enter the airline market.  To do this we need to finance and purchase a fleet of planes and comply with a litany of regulation. That’s a lot of effort and money or what economists call High Barriers to Entry. 

Now what about a boy trying to supply me with a date on Tinder. What does he need to enter the market? 

A smartphone and opposable thumbs (I’m not even sure the latter is a deal breaker) or Low Barriers to Entry. 

There’s another economics challenge I face on Tinder, incomplete or imperfect information. 

If we think about my bananas from earlier. Now when I’m looking to buy bananas I have most of the information I need. I can see them, check their ripeness and because they’re from a well-known brand I can safely assume they’re not organic and thus free of organic things like disease. 

Unlike bananas, Tinder profile tells me remarkably little information about the product. 

Let’s use my own profile as an example. 

First, it less is relevant to know how good I look half way through an amazing holiday and more important to know how I look first thing in the morning.



I’ve included a picture of me scuba diving to make me seem fun and adventurous.



This in no way indicates that I will likely bore you with anyone of the following subjects over dinner; the history of cartography, institutional reform in Southern Italy, third-wave feminism and, of course, micro-economics.

My profile may tell you I am 26. 



What it won’t tell you is it that I more often behave, and sometimes dress, like a 6 year old.

Economists have developed a few methods for overcoming this. 

The Nobel-prize-winning economist Michael Spence, proposed ‘signalling’ as a way to overcome imperfect information in markets where it was inevitable. Following this theory, sellers (my future Tinder dates) ‘signal’ their value to me. This is why on Tinder, boys over 6ft always mention their height…and boys under 6ft never do. 

Yet signalling may not be enough to overcome this information gap. George Akerlof, another Nobel-winner, predicted that in markets where there were too many lemons (bad Tinder dates) that couldn’t be detected the market would decay to the point of nonexistence. Perhaps this is why I have not invested in Tinder yet…

If you do manage to overcome the vast quantity and variable quality of Tinder choices you may get to the messaging stage. 

This is where the romance really can die. 

Messaging on Tinder closely resembles something economists call the prisoners dilemma but which I call EGO-FAIL. It’s briefly this. 

Let’s say I have finally found an acceptable Tinder date; Ryan Gosling. I am excited that I have matched with Ryan and I obviously want to message him all the time.

But, I play it cool. Why? Because the risk of being friendly is too high! 

For example, it’s possible that I message Ryan a lot and he messages me too. This is the ideal, as we can see in the diagram below. Both I and Ryan’s utility (economist speak for happiness) has shot up by 10 points. This is what we call a Pareto optimal situation and where romance can bloom.



But there’s a risk.  If I’m excited, and Ryan is not, my EGO will take a huge hit. Now instead of being top left box, we’ve sunk to the bottom one. Ryan is enjoying all the attention so he is still up by 10. But my utility has fallen by 20 points. What this translates to in real life is misery. I can no longer concentrate in meetings because I’m wondering why Ryan hasn’t replied. Did I seem to keen? Does Ryan really hate girls who scuba dive? 

Because this situation is relatively worse than the happiness I get from messaging Ryan (-20 is greater than +10) I will do all I can to avoid it. I message less. If Ryan follows the same strategy based on ego we both end up in what economists term a Nash equilibrium or ‘just what we’re stuck with’. Where no one gains but no one’s ego takes a hit either.



Too long here and you can end up in Tinder-nertia. Once you’ve reached there a date will never happen. 

There is only one escape from the dilemma – finding a Tinder match with no shame. 

Feeling depressed? I am. After all, they don’t call economics the dismal science for nothing. 

But as its valentine’s day let me offer you a little ray of hope from my own life. I first started using Tinder two years ago. This time last year after about 25 first dates I did indeed find a Tinder date with no shame (aka he’s Italian). Last month we celebrated our 1st anniversary.  

And I have Tinder to thank.  Who knew that somewhere out there in London there would be a boy that really has no interest in scuba diving but who did appreciate my first date chat on microeconomics, cartography, institutional reform in Southern Italy, and feminist theory. He thinks I look cute in the mornings (though he is VERY short sighted) and he is remarkably tolerant of my childish behaviour. I guess my point is that even for economists, love is possible folks. 

Now get swiping! 


SHARE:
© The Elegant Economist. All rights reserved.
Blogger Template Designed by pipdig