Thursday, January 24, 2008

An employment Huqabust?

Chris Dillow writes some really clever posts. He is one of the best UK bloggers of any type or ideological persuasion. Unfortunately, he has something of a penchant for pursuing arguments that he must know are decidedly silly. Elaborate houses of cards (like these).

Yesterday he gave us Konnie Huq's contribution to unemployment. As her pleasant appearance makes unemployment more enjoyable - "Why bother going out to work when you can stay home and look at her?" - she must have contributed to the social and economic costs attached to unemployment. This is the obviously silly bit in Chris's post. Despite her obvious charms no one is remaining unemployed in order to stay home and watch Konnie Huq.

So far, all good fun and I might sound like a bit of pedant to be writing about this at all. However, Chris argues there is a serious lesson to be learned from all this silliness:

"The point: does this seem absurd? It shouldn't. It's merely the logical consequence of the assumption that people on benefits could work if they want to. Perhaps it's this premise that's wonky."

That point doesn't stand up to the slightest scrutiny. The reason why it seems absurd that Konnie Huq created unemployment is that it is not plausible that she made a concrete difference to the utility attached to remaining unemployed. Images of beautiful women, on a screen, are easy to come by. The absurdity of a Konnie Huq effect on the unemployment figures says nothing about the likely effects of a more credible alteration to the conditions attached to unemployment - a change in unemployment benefit rates, for example.

I don't think it is a wonky premise that some people on benefits could work if they wanted to. Particularly given the number of immigrants, even to poor areas of the country, demonstrating that it is possible to find work here. A lot of those immigrants are low skilled so are not taking jobs beyond the locals.

In the end, the premise Chris attacks as possibly wonky is just saying that the unemployed are responding to incentives like anyone else. If the benefits to entering work aren't sufficiently high relative to the benefits of staying in unemployment (and those benefits include leisure time) for some people then there is a good chance they won't try and get work. Others might not look as hard or accept less than ideal jobs. It's a very simple intuition that is also behind iniatives that I know Chris supports, like the Citizen's Basic Income.

N.B. I apologise for the title of this post. It is a reference to the term "Huckaboom" used to describe Mike Huckabee's meteoric rise in the American opinion polls a little while back.


chris said...

Konnie doesn't have to have made a big difference to the utility of being unemployed. She only has to make a very marginal one, the one that tips the balance between work and not.
It's true that images of beautiful women are easy to come by. But it's much easier to do so at home than at work.
Which is the point. If you believe a cut in unemployment benefit would get people back to work, why shouldn't cuts in other forms of out-of-work utility - be it daytime TV, internet porn or whatever - do so?

Matthew Sinclair said...

Absolutely. But they need to be significant changes. A good comparison would be the proposal to make the unemployed clean up parks. It makes unemployment less attractive as there isn't time to watch Ms. Huq or do whatever else.

My point is that your mechanism for changing the incentives was what was absurd, not the idea of changing incentives in general. Which is quite plausible and, indeed, the rationale behind the citizen's basic income.