Double issue this week.

  1. John H. Cochrane - “Knowledge, Decisions, and Incentives”
  • In this overview of Hayek and Sowell’s famous work on distributed knowledge, Cochrane highlights how prices are “signals wrapped in incentives,” moving knowledge to where it’s needed without central planners.
  • Institutions succeed or fail based on how they gather, authenticate, and act on information - then learn via feedback.
  • Decentralised systems adapt; categorical mandates in bureaucracies freeze trade-offs and stifle learning.
  • Reform = redesign decision structures (sunsets, shot clocks, retrospective review), not just “better people”. We need to create institutions that work despite the people that are in them.
  • Knowledge, Decisions, and Incentives – The Grumpy Economist
  1. Fedorenko, Nagar & Gibson - “Computer programming ability is more closely related to language than logic”
  • Language aptitude explains ~70% of variance in coding skill; numeracy ≈2%.
  • Brain activity during code learning aligns with language regions, not maths circuits.
  • Treat code like text: syntax parsing, vocabulary, discourse - less algebra drill, more reading/writing practices.
  • Bilinguals and strong readers may ramp faster; hiring and teaching should reflect that.

figure 3

  1. ONS - UK private vs public sector productivity (1997–2022)
  • Market (private) productivity up roughly 35–40%; public sector flat, with a sharp pandemic dip then rebound.

Image

  • Public output is hard to price; proxies risk understating quality improvements - measurement matters and the former Chancellor Jeremy Hunt made it one of his main policies to implement the world’s best public sector productivity measurement system.
  • Competition, capital deepening, and restructuring power private gains; bureaucracy and risk aversion blunt public progress.
  • Sensible fixes: outcome-based metrics, procurement that rewards adoption, and managerial autonomy with accountability.
  • Productivity by sector: data & releases – ONS