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    Social resources matter — we shouldn’t assume that only money talks

Social resources matter — we shouldn’t assume that only money talks

Everyone knows that money matters and most people would accept that social resources (relationships and identities) matter too, though in what ways and how much is perhaps less obvious. In a couple of recent pieces of research (here and here) we report on evidence of surprisingly high valuations of social resources and that different personality types benefit differently from […]

August 15th, 2018|CPNSS, Economics|1 Comment|
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    When machines become sentient, we will have to consider them an intelligent life form

When machines become sentient, we will have to consider them an intelligent life form

For most of us, our understanding of robots and artificial intelligence (AI) is drawn more from science fiction than from fact. Intelligent robots are often portrayed as either a virulent threat to humanity, as seen in the Terminator series of films or in Isaac Asimov’s I, Robot, or a socially beneficial tool, as with the Star Wars robots R2-D2 […]

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    Currency unions do little to boost trade among established commercial partners

Currency unions do little to boost trade among established commercial partners

Currency unions are an important institutional arrangement to facilitate international trade and reduce trade costs. In the period since World War II, a total of 123 countries have been involved in a currency union at some point. By the year 2015, 83 countries continued to do so. In addition, various countries are considering to form new currency unions or […]

Why do large companies pay higher salaries?

Why do small establishments pay employees less than large establishments? The final pieces of this puzzle have not been found yet. This paper suggests the joint role of the division of labour and employee characteristics as an additional explanation for the firm-size wage gap.

The intuition is that individuals who work for large firms focus on a limited number of […]

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    UK entrepreneurship is doing well, but key constraints need to be addressed

UK entrepreneurship is doing well, but key constraints need to be addressed

Experts in the field of entrepreneurship recently met at the LSE to discuss reform strategies proposed in a new policy brief, which seeks to promote entrepreneurship in the UK. Mark Sanders, associate professor at the Utrecht University School of Economics, presented on behalf of the Financial and Institutional Reforms for Entrepreneurial Society (FIRES) research team, following the publication of its seven step […]

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    When a large company enters a local market, it stimulates local innovation

When a large company enters a local market, it stimulates local innovation

Cross-country investment flows are a peculiar trait of the modern economy and have been progressively increasing in the last two decades. Even with a substantial decline after the Great Recession, there were 2.86 trillion of dollars net flows in 2016, according to data published by the World Bank. There has been an intense debate on the effects of this investment on […]

How the Blitz enhanced London’s economy

The Blitz lasted from Sept 1940 to May 1941, during which the Luftwaffe dropped 18,291 tons of high explosives and countless incendiaries across Greater London. Although these attacks have now largely faded from living memory, our recent paper shows that the impact of the Blitz remains evident to this day in both London’s physical landscape and economy.

Using recently digitised National […]

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    Christopher Pissarides: ‘I’d like to see a UK equivalent of Germany’s Work 4.0 white paper’

Christopher Pissarides: ‘I’d like to see a UK equivalent of Germany’s Work 4.0 white paper’

In late 2016, the German government published the white paper ‘Work 4.0’, the result of 18 months of discussion with academia, trade unions, employer organisations and the public. The paper was a blueprint for how society should face the technological disruption taking place in the world of work and business. This is what Sir Christopher Pissarides thinks the UK should do if it wants to […]

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    What Twitter reveals about a company’s reputation and productivity

What Twitter reveals about a company’s reputation and productivity

Reputation plays an important signalling role in an imperfect information world and companies endeavour to preserve it. In this study, I evaluate empirically the role of reputation for companies that engage in Twitter. The results confirm that getting negative tweets, many expressing grievances, strongly correlates with low firm performance, suggesting the importance of social media (SM) in times when […]

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    Cryptocurrencies: the future of money, speculative bubble or something else?

Cryptocurrencies: the future of money, speculative bubble or something else?

This month’s episode of the LSE IQ podcast investigates whether cryptocurrencies are the future of money, a speculative bubble that will burst, or something else.

In 2008 a person or group going under the pseudonym ‘Satoshi Nakamoto’ published a white paper setting out the fundamentals of a peer-to-peer electronic cash system called bitcoin. This would do away with the need […]

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    Two corporate governance mechanisms: activism and hostile takeovers

Two corporate governance mechanisms: activism and hostile takeovers

Hostile takeovers have long been considered the quintessential disciplinary governance mechanism. A similarly confrontational strategy has lately come to prominence by way of activist hedge funds that buy into poorly run firms and use the threat of hostile tactics to pressure management into accepting specific proposals to improve shareholder value.

Our paper compares these two governance mechanisms within a unified framework where any outside investor […]

Why the co-working industry must take creativity seriously

The rapid, ongoing growth of the co-working industry reflects a broader transformation: over the past decade or so, work has not merely become increasingly flexible and entrepreneurial – it has also been reinvented as a commodity. Sold to people desiring autonomy, comfort and a cure to entrepreneurial loneliness (among other things), co-working providers are refashioning work as a consumer experience requiring […]

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    2018 is a crucial year for the platform-publisher relationship

2018 is a crucial year for the platform-publisher relationship

Is 2018 the year when the publisher/platform relationship is turned on its head? Is this the moment when policy-makers change the balance of power between the tech giants and the content creators?

Recent years have been tough on publishers as the social networks and search companies have grown up from transformative teens to dominating adults. Once mighty media brands have […]

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    How businesses in sub-Saharan Africa are adapting to climate change

How businesses in sub-Saharan Africa are adapting to climate change

Climate change poses increasing risks to economic growth and development across the world and particularly in developing countries. A critical issue is the extent to which private actors, and especially businesses, are able to adapt to climate risks. In Africa, the private sector generates two-thirds of the continent’s investment, 75 per cent of its economic output and 90 per […]

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    Charting a course for investment management in the 4th industrial revolution

Charting a course for investment management in the 4th industrial revolution

The problem with the future is that it is not here yet. Virtually every aspect of our lives is in a state of flux. While change may have always been a constant, several factors come together to make this an industrial revolution of a fundamental kind. Every profession is having to grapple with existential questions as well as questions […]

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    How much attention do investors pay to rounding in earnings forecasts?

How much attention do investors pay to rounding in earnings forecasts?

Evidence exists that investors are subject to attentional constraints when making economic decisions and as a result focus on subsets of publicly available information that are more salient, i.e. that tend to stand out and are easier to process. Selective attention to salient stimuli can be economically justified if time and attention are costly.

A large literature to date examines […]

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    The quality of financial information explains why stocks and bonds co-move

The quality of financial information explains why stocks and bonds co-move

The sensitivity of corporate bond returns to changes in the value of equity is a fundamental input for portfolio asset allocation. Since imperfect correlation of asset returns is a key assumption in portfolio theory, stock-bond return co-movement is important to determine the diversification benefits of bonds, and to hedge common exposures across the two asset markets. Because bonds exhibit […]

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    What power does to you – the psychological consequences of power

What power does to you – the psychological consequences of power

We often blame the behaviours of those who have power and abuse it on the individual and his or her personality. That is, we make what psychologists call a dispositional attribution. But there is more to individual and personality differences when it comes to understanding the behaviour of those in power. In fact, what is often occulted are the […]

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    Why the Bank of England should stay put and not raise rates now: the view of leading economists

Why the Bank of England should stay put and not raise rates now: the view of leading economists

Ahead of the May 2018 interest rate decision of the Bank of England’s Monetary Policy Committee, more than two-thirds of leading economists surveyed by the Centre for Macroeconomics (CFM) agree that in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy-makers can afford to wait for greater certainty about real wage […]

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    Skilled migrants have higher earning potential in countries with more inequality

Skilled migrants have higher earning potential in countries with more inequality

Attracting and retaining high-skill individuals is vital for the development of knowledge-based economies, in which ideas drive technological progress. Understanding whether and why high-skilled individuals stay in a country or leave it is therefore crucial – for sending and receiving countries alike.

A very influential theoretical model of migrant selection (Borjas 1987, building on Roy 1951) predicts that migrants to […]