In between visits by my students to office hours today I picked up again Thomas Schelling’s Choice & Consequence and re-read the final essay, ‘The Mind as a Consuming Organ’. Recently I wrote something about this for the FT. It’s such a rich essay – well, I’d be overjoyed to have written any of the essays in the book.

The bit that resonated today was this reflection on consumption:

“Take the rational consumer in economic theory: what is he consuming?

“What do I consume when I purchase The Wizard of Oz? Physically I buy a book or a reel of videotape. But that is a raw material. I ‘consume’ two hours of entertainment. But should I say that, like Dorothy, I consumed a trip to Oz … the adventure, with the risk and poignancy and exceitement and surprise?…

“There is no question but that part of what I get from a two hour movie or two hours with a book is ‘two hours’ worth’ of something…. But do we consume the contents of the story or just the time?”

These were profound questions in the early 1980s, but more so now a high proportion of rich consumers’ expenditure goes on experience goods. The underlying question is what is being maximised when an economic agent maximises their utility – and what are the implications for welfare economics of preference formation over emotions or mental processes. I don’t know the answers, but standard economics will struggle more with ill-defined and relative or fluid preferences than with any number of financial crises.

Martin Wolf has always been super-gloomy. In 2016 he really came into his own, as the year delivered him so much to be gloomy about. His latest column in the Financial Times is a great example, ending with a prediction that authoritarian nationalism is centre stage and will change everything about the world order.

The column alludes to Benedict Anderson’s Imagined Communities, so I went back to the book today. I’d underlined this definition of ‘official nationalism’: “An anticipatory strategy adopted by dominant groups which are threatened with exclusion from an emerging nationally-imagined community.” Not so much the left-behinds as the ‘once-aheads, really don’t like their loss of status in a changed nation’.

As Wolf puts it: “[T]he politics of nationalist resentment are not just an upsurge from below. They are a tactic of power-seekers.” He argues that economics is bound to find itself in opposition to official nationalism: “Perhaps the greatest contribution of economics is the idea that societies will gain more from seeking to trade with one another than trying to conquer one another. … The wise relationship between states, therefore, is one of co-operation, not war, and trade, not isolation. This brilliant idea happens to be correct. But it is also counter-intuitive, even disturbing. It means that one might gain more from foreigners than fellow citizens.”

So brace yourselves, fellow economists. The Govian war on experts will continue.

Recently Dave Giles linked to an old blog post on his wonderful Econometrics Beat about plotting the data before running regressions. This is a habit drummed into me at an early age but youngsters don’t seem to always do this.

Dave mentions the well-known Edward Tufte books, The Visual Display of Quantitative Information and Envisioning Information. (I think I have the entire Tufte oeuvre.)

I like Howard Wainer’s books also: Graphic Discovery and Picturing the Uncertain World. I don’t have his latest, Truth or Truthiness: How to Think Like A Data Scientist, and might need to remedy that.