January weight-loss challenge

UPDATE: check my progress via this link!

I want to lose four kilograms in January. I’m old enough to realise that midriff fat is not only unsightly but a health risk. I think I know the incentives that will make losing it a cinch.*

That’s not to say that losing 4 kilos is easy. But I have a three-pronged strategy that I believe will work on me.

1. Cash incentives. Humans hate losses more than they enjoy gains. I pledge to pay $500 in penalties if the 4kg is not lost by the morning of February 1. This is the concept behind the website stickk, set up by Yale Economics Professor Dean Karlan, which currently has $16 million of incentives pending. Enforceable contracts are powerful incentives.**

2. Writing down everything I eat, and its kilojoule content. I’ve done this before when I’ve wanted to lose weight. It works in two ways – I learn a lot about portion sizes, and what snacks are “bad value”; it also discourages me from eating something, because I know I will have to write it down and add it up at the end of the day.***

3. Transparency. I will create a separate page on this blog in which I will place a daily photo of my scales. Public enforcement alone can be insufficient, as News Limited economics editor Jessica Irvine so publicly proved at Dietonomics. The long-abandoned blog’s three weeks of sad posts stands as testimony to the difficulty of losing weight. But I think it will add to the power of the other two prongs

But that’s not all.

Just to ramp up the suspense, the donation I give if I fail will be to the Motoring Enthusiasts Party.  “Ugh!” I hear you say. “You are a sicko… Why would you want to donate to them?”

My response: “Precisely.”


The Motoring Enthusiasts could not be further from my affections. The thought of a slice of my recent redundancy payment going to them will be a strong motivator in case anyone opens a Haighs Dessert Block in front of me during January. The Motoring Enthusiasts will not see a cent. This is my pledge.

If you would like to get involved, please do so! Pledge a goal and an incentive and I can report your progress too. Doesn’t matter if you’ve missed the start of the month.

Weight Dec 31: 78.5kg

*Classic economic models of human behaviour do not make such a distinction between short-run and long-run incentives. Economics says if you are a bit overweight, that reveals a preference for being fat. Thomas the Think Engine adopts a more nuanced theory of human behaviour, including the possibility of hyperbolic discounting.

** This blog is run on these methods. As a self-manager, I know I want to post daily by 12.30pm. But my tendency is to procrastinate. So I must pay a $60 fine to my significant other if the blog is not updated by that time. Works a treat.

*** I’ve done this before when I’ve wanted to shed a few kilos, and I’ve learned a lot of very disappointing things about cheese.

EPILOGUE: I made it. See my progress at this link!

My last ever story at the Financial Review

Was in the summer “bumper edition”. It’s a fun one about the reason we wait so long in airports. It was not out of the paywall then, but now the Financial Review is doing its free summer promotion, so you can get a month of access to the whole site, gratis.

Sign up here: https://subscribe.afr.com/afr/offers/summer/

Then, read my story here, free!

waiting in airports

Gold, frankincense and anti-parasitic interventions. How to really give this Christmas.

At Christmas, it feels good to give. 

But the wrong sort of charity can be a disaster. Even if you have millions of dollars and can control the way it’s spent, you can go wrong. See Madonna’s school building attempts in Malawi.

The world is full of people sending clothes to Africa. For example, NPR’s economics blog, Planet Money, recently found a t-shirt for sale in Kenya labelled Jennifer’s Bat Mitzvah, 1993 and tracked down the original Jennifer.


No doubt throwing away clothes is wasteful. No doubt people in Africa would like a cheap or free T-shirt. And sure, if someone’s been hit with a typhoon, giving them food and clothes helps. But if they are working in a textile factory, bombarding their country with millions of tonnes of donated clothes every year can be harmful.

Charity grinch: Pouring cold water on your good intentions

In this case, it’s not the thought that counts.

There are charities sending food to Africa,  sending bicycles to Africa, sending iPods to Africa. In each case the people donating are the kind of good-hearted thrifty people who care about others and hate to see things go to waste. 

They are exactly the kind of people who should be open to critically examining their giving.

That’s where Givewell comes in. It compresses your warm fuzzy feelings into solid bricks and feeds them into the fire of critical analysis.

Set up by a Harvard university graduate and former hedge fund guy named Holden Karnofsky, Givewell now employs eleven full-time staff trying to figure out where you can invest your charity dollars without wasting them.

If this blog is sure of anything, it’s that human reasoning is weak. Especially where emotions are involved. That’s why this sort of effort is important.

Givewell is ruthless. Charities that don’t measure their own efficacy are not in the running. Charities that are not focussed on the world’s worst off are not in the running. They scoff at the idea of using the proportion of funds spent on administration as a measure of effect. They measure charities ability to absorb more money (their scalability) and cut them from the  list when it is exhausted.

They espouse a commitment to extreme transparency, which includes a prominent link on the front page of their website: Mistakes.

Givewell reviewed many charities in 2013 and recommended three. Two are programs that deworm children in Africa, and one makes direct cash transfers to the very poor in Kenya and Uganda.

Givewell is not above criticism (1, 2), and it has competitors, including Aidgrade. But if you want to buy a present that make the recipient happier than the gift giver, $50 for a single mother in Uganda will go a lot further than a couple of DVDs for your dad.


Media and IT are the future, they said.

The total number of people employed in Information, Media and Telecommunications is the lowest since 1999, according to new official data from the ABS. In the last three months, under 200,000 people were employed in the sector, down 23 per cent from the peak over over 250,000 in 2006.

That got me interested. I recently left a job with a major media organisation, at the same time as some heavy hitters (1, 2). How bad was it getting?

The answer: REAL BAD. In the publishing game (books, newspapers) employment fell during 2013 to the lowest since records began in 1984.


[All data from the Detailed Quarterly Labour Force series, Nov 2013].

Publishing is not the whole story.

Employment in traditional broadcasting has also seen very little growth. There were more people employed in the sector in one ebullient quarter of 1994 than during the most recent three months. (In 1994, SBS was finally available in all capital cities, but it broadcast the test patten for hours every day.)


That all makes sense.

Online, the classic economic distinction between work and leisure is shaky. People work on the internet for free.

The proponent of the idea is a man called Clay Shirky, and I have written about him here. He claims people would happily give up TV watching for something a bit more active and participatory, and so free content is booming. Content is not just blog posts like the one you are reading, but Youtube videos, Wikipedia, Reddit, Open source software and more and more #doge memes.

Also it’s hard to charge for things online.

So far so good.

But thanks to the mysterious ways in which ANZSIC standards move, folk who work in communications are included in the information and media statistics. This shocked me more. The way this little sub-sector has collapsed puts the newspaper game to shame.


This next graph may look less dramatic but the numbers of people involved are far greater. The communications sector is now employing fewer people than it has for ten years.


See that steep ramp-up in 1999? That was the year I started university.

I had long hair, I was 17 and I weighed about 60 kilos. I was getting paid $8.50 an hour in my part time job bussing tables at a very busy Cafe in the local shopping centre. I was studying economics and politics – which I loved – but I had a nagging feelings of doubt.

All the headlines were pointing to IT being the great gold rush.  In 1999 the Nasdaq index rose from 2200 to 3700. Another undergrad friend of mine became an executive in an online company that was apparently booming. I felt like I had missed the plane.

Boy, am I glad I studied economics and politics.

Who is making us rich?

Australia’s GDP is soaring. But per capita GDP is not.  

Source: ABS National Accounts

If the total income of the country is rising faster than the income of the individuals in it, that is because of population growth.

Where does Australia’s population growth come from? The ABS makes answering this question easy. Migration beats babies and has since around 2005.

Source: Australian Demographic Statistics


Specifically, China, New Zealand and India.

Source: ABS Australian Demographic Statistics

The boom in population is not working to increase per capita GDP. But there is a political consensus around strong migration. Wonder why?

Source: ABS Household Income and Income Distribution


One answer is that in the absence of strong productivity growth, we need population growth to prevent unemployment. The other, equally true answer is that immigration appears to benefit the rich.

It’s hardly surprising new arrivals don’t capture for themselves their contribution to national income. That necessarily flows to business owners and those already established here. It’s not surprising. Next time someone complains about immigration, feel free to pass them this link.

Debt, deficit, and political death by a thousand cuts

The Government’s latest budget update is part of the political plan but could also be its undoing.

The Mid-Year Economic and Fiscal Outlook’s shock projections of $667 billion in debt and deficits until 2023-24 lays the groundwork for the Commission of Audit.

The Commission of Audit is the government’s major economic ambition for its  first term and its job is to find ways for the government to save money. Mr Abbott has been promising it since March 2012.

Hockey and Abbott want the Commission to have the most receptive environment in which to publish its plans (the Interim report is due in January, the final report by the end of March).  So they need the intense sense of a budget emergency.

MYEFO “will show the Australian people the problem we’ve inherited, and the budget will deliver the solution,” Treasurer Hockey said in November.

Cuts a-coming.
Cuts a-coming.

Rudd tried reform on the tax side.  Disastrous. So this government is prioritising reform on the expenditure side. (The Government has promised a white paper on tax reform within two years – a softer pledge). From an economic perspective that is fair. But it raises political questions.

What is the last “cut” that is heralded as a major political reform? Howard strangled the dole payment down below some estimates of the poverty line, but that’s oddly omitted in his hagiography. Even right-wing economist Judith Sloan has argued the dole should now be raised.

When we list the economic reforms that have made Australia great we include microeconomic reform, floating the dollar, an inflation-targeting central bank and the GST.  Not cuts.

If the Abbott government first term economic reforms can mainly be labelled “cuts”, what will be its legacy? It needs to frame these cuts in a positive way. But that is not easy.

Business council chief executive Jenniffer Westacott has a suggestion. She called the Commission of Audit a “once-in-a-generation opportunity to fortify Australia’s budget foundations and set in train a much-needed reform agenda to keep our economy strong.”

Reform is hard enough to justify on its own. Using reform to justify cuts is going to be a very hard sell indeed. Ms Westacott is not a politician.

When the Commission of Audit presents a menu of reforms, the government will have to read the mood of the nation and of opinion leaders.

Will the government be able to identify which cuts use least political capital? When Rudd picked the eyes out of the Henry Review, he thought the public would support a tax on rich miners and was proved quite wrong.

Abbott has a massive parliamentary lead, but Newspoll shows his government lagging, 48-52. The recommendations of the Commission of Audit will be picked through with an eye to 2016.

The further behind in the polls the government is, the more it will tread softly. Bill Shorten’s mouth will be so tired of using the terms “cut” “slash” and “hack” that by 2016, it will probably go on strike.


If the Government is too selective with the reforms, it will face accusations of having no backbone, and lose some of the most strident support from its barrackers in the News Corp press.  Far better, the Government may think, to be seen as having the courage of convictions even if it means putting some of its vast parliamentary majority to the sword.

But that is a gamble on the reputation of the political right. Too much cutting could poison the Liberals’ reputation as a party that builds the nation.

Can the government create clamour for cuts? Only if the narrative from this Daily Telegraph story sticks in the public’s mind:

“Australian families to wear the pain of Labor’s massive debt bomb, Joe Hockey warns”

UPDATE: I now read that the Tele is Australia’s least trusted news source according to a new survey. Dire warnings indeed.

How to think clearly about skyscraper proposals.

A new 50 storey building is being planned at Melbourne’s highest point, next to a park called Flagstaff Gardens in the centre city. Continue reading How to think clearly about skyscraper proposals.

My economic philosophy

  1. Free markets are the best way to allocate scarce resources.
  2. Markets need to be free of market failures – not just free from stifling regulation – to work best.
  3. Allocating scarce resources is not the only function of a society.

Continue reading My economic philosophy

Oh Mo! Laundry powder cartel reveals the stain that won’t come out of free markets.

The ACCC is fighting a washing detergent cartel. Turns out Colgate-Palmolive, Cussons and Unilever may not be so squeaky clean! Continue reading Oh Mo! Laundry powder cartel reveals the stain that won’t come out of free markets.

Why the Treasurer should celebrate higher labour costs

Holden is going to shut down in Australia, blaming high labour costs. The Holden 2011 EBA allows for trade employees to be paid between $1147 and $1547 a week, before allowances. Scarcely a fortune, but much more than the car industry pays workers in Thailand. Continue reading Why the Treasurer should celebrate higher labour costs

Yule know when it’s taper time.

In the United States, cause for celebration. Their budget is now guaranteed. Continue reading Yule know when it’s taper time.

Australia: Rich and in denial

Australia, you are rolling in it. You’re loaded. Flush. But you don’t seem to realise. Continue reading Australia: Rich and in denial

How to turn holidays into cash

If I was going to make an investment or start a business in this economy, there’s only one industry I’d be looking at. Continue reading How to turn holidays into cash

LA face, Oakland booty: The case against stamp duty

Round here, the houses are distended at the rear. Continue reading LA face, Oakland booty: The case against stamp duty


Australia’s car industry is leaving the party. Ford has said its goodbyes, Holden hasn’t announced it as such but it has put on its jacket and is looking for its keys. Continue reading DETROITELAIDE?

One way to save the news.

I worked for the last three and a half years for a newspaper called the Financial Review. Cover price is $3.30 and a full price online subscription costs $A680. That’s high. Continue reading One way to save the news.

Are SUVs making our streets safer?

That could be the conclusion you’d draw if you looked at the statistics for 2013. Continue reading Are SUVs making our streets safer?

Launching a drone attack on the most boring concept in economics.

Overnight, Amazon chief executive Jeff Bezos has released a plan that has the whole world talking. The online shopping company plans to deliver goods by drone. Continue reading Launching a drone attack on the most boring concept in economics.

What have I been up to?

What follows is a snapshot of my work over the last three years at the nation’s best finance paper:

All these stories are out from behind the famously high AFR paywall, so click freely!

Antimetabole – a language trap

Treasury Island – Nauru (6000 words – not only my longest but my best story ever)

How being wrong perpetuates itself

Game Theory and the labor leadership

Five reasons for an economic rationalist to vote Green

How the romance of trains trumps the practicality of buses, and why that’s bad

Skiing Salt Lake City

The 96 tram is an economic powerhouse

Leak highlights losses for Pie Face

How New Zealand is beating us to the next wool bonanza (magazine feature)

Learning second languages in school is a waste of effort and practically impossible anyway

Journalists in Australia retain copyright to their work, but it only applies to replication in books. When that clause was written, I bet there was no other way to reproduce a newspaper story. Now in the internet age, the newspaper’s power is much higher.  Sadly, hat means I can’t post any work from the paper directly to the blog.