ways of vibing

treatments and responses in the real world

Long term readers will know of the mythical “post-it note” on my computer screen, the one that tells me not to use the Substack to pursue social media arguments in an environment in which it’s less easy to answer back. So I won’t directly get into the Discourse relating to this substack post, in which (in my view) someone does a lot of quite questionable envelope maths to reach a really important conclusion, that conclusions being that the way the modern economy is set up, it’s basically impossible to afford entirely normal aspirations like having a young family, unless you’re either earning a lot more than the median income or qualify for means-tested benefits.

Nor will I get (much) into the Discourse about how the world of Poverty Statistics Knowing has reacted to the post, which appears to be “yes that’s true and important, but it’s nothing like as important as everyone recognising how clever I am, as set out in this long list of things the author has got wrong”. To my mind, that’s a crazy way to react; in the wacky world of inequality statistics, lots of things are really difficult to observe or quantify, so when you have a big socially important fact that’s so obvious in the data that it can be established even with a motley grab-bag of numbers and a cigarette packet, you ought to grab for it. As always, my criterion for the quality of information is decision based, and if you ask “to what extent might this lead people to make wrong decisions”, then even quite seriously technically flawed work can be good and technically excellent work can be bad.

What I want to talk about is something else, but related to the general thesis of “Angrynomics”, to quote the title of Mark Blyth and Eric Lonergan’s book, and the tendency of the policy community to yaddayadda important facts like “extremely normal things for people to have in their life plans, like starting a family, are unaffordable”. Rather than pick passive-aggressive fights with anyone else, I’ll use myself as an example of a regrettable tendency to make what I now think is a serious mistake in thinking about economic “vibes”.

“If you characterise it that way, you can quickly chuck out a lot of candidate explanations. Inequality, social mobility and inadequate welfare state provision are all bad, but they didn’t start three years ago. And although it’s true that people hate inflation, this isn’t the first period of inflation that we’ve ever seen; we need a theory which explains why consumer sentiment is so much worse than you would have expected it to be given all the other economic indicators.”

The mistake here is in the background – it’s the hidden assumption that the connection between the economy and the way people feel about it has to follow a treatment-response model, with no more than a fairly short lag.

There are a lot of other possibilities!

· “The straw that breaks the camel’s back”. Familiar from employment law, where the institution of “final written warnings” means that it is usually the case that the thing you get fired for is relatively trivial compared to the things you got away with. The post-pandemic inflation led to the anti-incumbent election wave that brought in Trump, but that might not mean “wow, people hate inflation so much”. Maybe they already hated the entire system (Angrynomics was published in mid-2020, largely based on evidence from the 2010s). Maybe the inflation was just the last insult.

· “Another world is possible”. Familiar from the collapse of authoritarian regimes, where the moment of maximum danger is not when material conditions are at their worst but rather when they improve and raise aspirations. Familiar from the divorce courts too. It’s been pointed out to me that if all you ever looked at was your own bank balance, you’d conclude that Donald Trump introduced a Scandinavian-style social insurance system and Joe Biden abolished it. Across the world, the pandemic support mechanisms might have raised questions in people’s minds about why things which had previously been dismissed as impossible were actually possible, and made them less inclined to be satisfied with the return to a normality they had previously tolerated.

· “One day, he just cracked”. Or there might not be any particular catalyst for the “vibecession”. Vibes might be like a supercooled fluid, just waiting for a random shock to change phase. Angrynomics documents how much reason there was for people to be angry, and how far back these problems had been in place. Then one day, it all crystallised.

What I think I’m saying here is that if you want a theory of economic vibes, it is vibes you need to be theorising about. Once more, it’s an issue of “having respect for the problem”; if this is a puzzle or anomaly for normal economic analysis, it’s unlikely to yield to one more heave through the chartbook and it’s unlikely that you’re going to be able to convincingly explain it away. And, in what I think is quite a serious flesh wound for the general agenda of Dataguyism, a statement like “public sentiment about the economy seems to be uncorrelated to measures of how the economy is actually performing” might be a lot less impressive than it sounds.