I read that the Anglican Archbishop of Sydney, Dr Peter Jensen, very much disapproves of playing I Did It My Way at people’s funerals, describing it as ‘vulgar egotism’. This is a pity because, in my own vulgar and egotistical way, I like to think that, in the more than 30 years I’ve been the Herald’s economics editor, I’ve tried to do it my way, not the way other journalists would do it. The besetting sin of journalists is to write to impress other journalists. Failing that, they write to impress their contacts. But I’ve always believed in writing for the benefit of the Herald’s readers, for the intelligent layperson.
Perhaps because I didn’t take enough notice of the economics they tried to teach me at Newcastle Uni, I’ve had to work to understand economics, to understand what’s happening in the economy and understand the rationale behind the economic policy of the government of the day. But once I’ve figured it out, I’ve been keen to pass on that understanding to my readers. I write for the person who, though they lack formal training in economics, knows the topic is important and is keen to learn about it.
In my latest book, Gittins’ Gospel, a selection of my columns, I confess that my father was a preacher and I’ve inherited his sermon-delivering habit. Like his sermons, mine have been less fire-and-brimstone and more about teaching, although since journalists aren’t supposed to teach I prefer to say I’m an exponent of ‘explanatory journalism’. In the first part of my career I acted as a kind of missionary, trying to convert people to the economists’ way of thinking (and, indeed, there is a section of the book devoted to helping people understand how economists think). But as my career has progressed - as I’ve read more about economics and got older and, I hope, wiser - I’ve become more aware of, and critical of, the limitations of economists and conventional economics. So these days I see my role as more like that of the Herald’s theatre critic - I explain economics and the economy, but I also offer my readers a critique of economics and economists, pointing out their weaknesses and helping readers make up their own minds on how much to believe and not believe.
The full title of the book is: Gittins’ Gospel: the economics of just about everything. ‘The economics of just about everything’ is the title for our meeting tonight, and Ross Kerridge has given me a list of just about everything he wants me to talk about. I’ll get on to that in a minute, but first I should say something about why I was so vulgar and egotistical as to call a book, Gittins’ Gospel.
Well, it was partly an allusion to the sermonising habit I inherited from my father - who, by the way, delivered his sermons to tiny congregations in New Lambton (where I was born) and Cessnock, went away for some years but came back to Lambton, Merewether, East Maitland and Shortland. But it was also a reference to the main conclusions I’ve come to in almost 40 years of studying the topic, and the main messages I’ve been trying to get over.
Economics need not be stratospheric or incomprehensible: it’s about the ordinary business of life, about going to work, earning and income, then spending that income on all the things we need. But it’s about the material side of life and, important though that is, it’s not the only dimension of our lives, and we oughtn’t to focus on it to the exclusion of the other important dimensions: the relational, the social and even the spiritual. Similarly, the community and our political leaders need to take their advice from a much wider range of experts than just economists. Nor should we allow economists to advise us on matters outside their field of competence - as they often try to do. In other words, a big part of my gospel is that economics needs to be kept in context.
Another theme of my gospel is that the modern practice of lobby groups, and even governments, commissioning supposedly ‘independent modelling’ to bolster their case for or against some policy change is almost always an attempt to blind the public with science. I see part of my role as to demystify econometric modelling. Economic modelling is at once hugely complicated and surprisingly primitive. It rarely proves what the people who paid for it say it proves. It’s always built on assumptions - which are rarely spelt out by the people waving around its conclusions - and it’s always possible to vary the assumptions to ensure you get the results the outfit paying for the research was hoping for. The media should be a lot more sceptical in its reporting of the results of supposedly independent modelling, and in the book I look at three well-publicised cases and show how the modellers managed to produce the misleading results they did.
I love being a journalist, but the longer I stay in the business the more critical I become of the way the media do their job. A lot of what they do can be misleading, and in the book I devote a section to explaining how not to be misled. Literally, the word ‘gospel’ means ‘good news’ - but the media seem increasingly, almost exclusively, full of bad news - which some readers are finding increasingly off-putting. Well, I’m an optimist and, though I’m not afraid to face up to the problems we encounter - as of course we do - nor am I reluctant to point to the respects in which we’re doing quite well. This book is a book for optimists.
Economics is meant to be about people and for people; take the people out of an economy and you don’t have an economy. But much of the economics you read seems remarkably impersonal. So another theme of my gospel is that we need to get the people back into economics. We need an economics fit for humans. You often see me writing that conventional economics incorporates a misleading model of human behaviour. Its two big weaknesses are its assumptions that we’re all coldly rational calculators of what’s in our interests, and then that we’re all rugged individualists - that our attitudes and behaviour are never influence by the attitudes and behaviour of those around us, and that we never act in groups. In truth, the findings of modern psychology show we’re highly instinctive and emotional animals, and also that we’re highly social, ‘groupish’ animals. So in recent years I’ve been reading a lot more widely than conventional economics so as to get a better picture of how humans actually behave. And when that reading leads me to something interesting and important, I pass it on to my readers. The book contains a section - We’re only human - that brings together 10 of the columns I’ve written about these findings.
For instance, rationality tells us we need to be completely realistic about the state of the world and our place in it. But psychological research tells us that’s bunkum. It turns out to be healthier and more useful to hold a few unrealistic views about ourselves and the world.
People with high self-esteem---which is most of us---believe themselves to be healthier, more intelligent, more ethical, less prejudiced and better able to get along with other people than average. Obviously, a lot of those judgments are unrealistic. But that’s beside the point. The point is that self-esteem makes us both happier and better equipped to deal with the world. The lack of self-esteem is highly debilitating.
People with the freedom to control their own lives, make their own choices and decisions---at work and at home---are happier and even healthier. But it’s a question of perception---how much control you think you have. People with a positive attitude to their boss, for instance, may see themselves as having more freedom of action than those who see their boss as censorious and untrustworthy. (What’s more, in my experience such attitudes tend to be self-fulfilling.)
But nowhere is self-deception more prominent than in the personal characteristic of optimism. Indeed, it’s virtually built into the definition of optimism. Optimists are people who take the credit for their successes but blame their failures on others or on circumstances. They regard setbacks as temporary rather than permanent, and specific (I happened to strike a bad teacher) rather than universal (all teachers are bad).
So optimists tend to overestimate their abilities and their chances of success in dealing with the world, whereas pessimists tend to underestimate their abilities and their chances of success. Fortunately, most of us are optimists, which does much to explain why most of us are reasonably happy most of the time.
So much for the virtues of a little self-deception. Now let me ask you a personal question: how honest are you? According to the people who study these things, not as much as you think you are. In an experiment in which people were asked to solve puzzles and were paid a set amount for each puzzle they solved, some participants were told to check their answers against an answer sheet, count the number of questions answered correctly, put their answer form through a shredder, report the number of questions they got right to the experimenter and receive the money they had earnt. A second group wasn’t allowed to shred their answers before reporting how many they got right. Those whose claims about how many they got right couldn’t be checked claimed to have got significantly more correct than the second group.
Those who cheated probably counted a problem they would have answered correctly if only they hadn’t made a careless mistake. Or they counted a problem they would have got right if only they’d had another 10 seconds. In other words, they didn’t tell blatant lies, they just gave themselves the benefit of any doubt, bent the rules a little bit in their own favour. And get this: they wouldn’t have thought they were cheating. When subjects are asked to rate how ethical they are compared to other people on a scale of zero to 100, where 50 is average, the average rating is usually about 75. That is, almost all of us consider ourselves to be more ethical than other people. Clearly, that’s not possible.
We’re often unaware of how inconsistent we are. We may think of ourselves as scrupulously honest because we’d never steal and would always return a wallet we found, forgetting that we take home office stationery because this is ‘not the same thing’. That’s why it’s always hypocritical to accuse others of hypocrisy---all of us are hypocrites.
The psychologists who study ‘behavioural ethics’ say our ethical behaviour is often inconsistent and, at times, even hypocritical. ‘People have the innate ability to maintain a belief while acting contrary to it,’ they say. ‘Moral hypocrisy occurs when individuals’ evaluations of their own moral transgressions differ substantially from their evaluations of the same transgressions committed by others.’ Hypocrisy is part of the human condition; we’re all guilty of it. So you could say accusing someone else of being hypocritical is itself a hypocritical act.
One lesson from a new field of study known as ‘neuro-economics’ is that our brains seem to have different systems for ‘wanting’ and ‘liking’. Wanting is about motivation, whereas liking is about pleasure. Think of the kid who begs and begs his parents to buy a pet---or a guitar---then loses interest in it within a few days. There was a yawning gap between wanting and liking. All of us have times when we lack the motivation to do something we know we’d enjoy. That’s almost the definition of being depressed. It’s given rise to a psychological therapy called PAT---pleasant activity training: make a list of the things you enjoy doing and then do them more often. Don’t scoff.
That’s just a sample of the topics I cover in the book, so I hope you enjoy it.
