What prompted you to write a sequel to The Undercover Economist?
The Undercover Economist was about microeconomics and this new book is about macroeconomics. PJ O’Rourke jokes that there are two types of economists in the world: microeconomists and macroeconomists. Microeconomists are ones who are wrong about specific things whereas macroeconomists are wrong about things in general.
The new book asks questions like: How does the economy work as a system? Why do we have recessions? Why do we have unemployment? Why do we have inflation? Can George Osborne do something better? Can Mark Carney [the new governor of the Bank of England] do something? If so, what? How does one guy stimulate the economy?
I ask the reader to imagine that they are in one of these positions of power and the book is a conversation between me, The Undercover Economist and the reader, who is in charge and looking for advice.
The reason I did it like that is because in macroeconomics everything is interconnected; whenever you point to one effect there’s some other effect going on behind your back. This format allows the reader to push back a bit and say: ‘Prove it!’. Sometimes I can, but sometimes I say: ‘No, I can’t prove that at all, I’m just guessing’. So it enables me to engage with that uncertainty and have a bit of fun.
Another thing I did was to look at other systems. There’s a very famous example (and I’m not the first economist to write about this) of a co-operative babysitting circle that had a recession. I also look at a recession that happened in a prisoner of war camp in the second world war - there was an economist who, when he got out, wrote about it in a learned journal. These were both simple systems but the interesting thing is that they were two totally different kinds of recession. So when we talk about austerity and should the government be trying to stimulate the economy or tighten belts to reduce the deficit – there’s actually an argument about whether the economy is more like the babysitting co-op or the prison camp. Rather than people yelling at each other across the political divide, I’m trying to say, what’s this argument really about?
What is your view on the way statistics are reported in the media?
It’s hard to generalise. There are different kinds of journalists. The BBC’s home editor Mark Easton is superb; he’s interested in where the numbers come from and what they really tell us. Then there are journalists, posting apparently in the same context, who are young, in a bit of a hurry and have not been trained in this kind of thing, who just make errors. I think that’s probably true of any media outlet. There are people who really care about getting this stuff right and there are people, who, for various reasons, get it wrong.
Good statistical journalism, in most cases, is just good journalism. It means asking, why does this story matter, am I being fooled by spin? The same can be said about any story, and often the same techniques apply, ie a bit of skepticism, getting a second opinion, getting some context. These are not statistical techniques, these are journalism techniques.
Most journalists are happy to grab statistics and throw them in to a story. What they pass over is the discussion of where on earth the numbers came from.
Is this what you try to do with 'More or Less'?
In 'More or Less', we have a wonderfully loyal and engaged bunch of listeners all over the world who are very happy to talk to us, send us ideas and challenge us when we’re wrong. That’s one of the things that makes the show so terrific, the amount of interaction we get. Listeners write in and say, ‘I think I’ve figured out everything – what do you think of my analysis?’ And we look at it and say, ‘well, that looks good to us’.
I’m not a statistician, I’m an economist. The people who work on the programme usually do not have advanced maths or statistics, they’re often humanities graduates. You can go a long way dealing with numbers often by asking intelligent questions and displaying a bit of common sense and scepticism.
One of the things I really love about the show is the mix of stuff that’s quite technical and stuff that’s very simple. Some errors are total howlers, where anybody who stops for a second will see that it doesn’t make sense. Then at other times we get really quite technical at the frontiers of statistics and we get the experts in to explain it to us. That mix is a lot of fun.