Dinner recommendations and stocking fillers 12 December 2025 Afternoon all, I’ve been taking a smidgen of time for post-Budget recovery this week, so can unusually provide dear TOTC readers with a cultural recommendation. All My Sons lives up to the cast and tells the tale of regrets of a businessman who during the war prioritised the temptations of capitalism over safety. It certainly put the findings of the Covid Counter Fraud Commissioner this week somewhat in perspective. It is at least nothing new for people to seek to make money in a crisis, even if those £10bn would come in pretty handy now. Keep reading for insights on the power of friendship and why hope matters. Plus, a handy tool to help you secure those elusive last-minute dinner reservations and a look at the cost of stocking fillers over time. Next week will be our Christmas special, so keep eyes peeled for that, and then I will be back in your inbox in the new year. Have a great winter break, Ruth The need for hope. How do people act when owning a home becomes increasingly out of reach? This paper analyses the behaviour of US households, comparing the work, spending and investment decisions of renters and homeowners. They find that renters with little-to-no hope of getting on the housing ladder spend more on credit cards, make less effort at work and invest in riskier assets like crypto. These patterns among renters are directly related to their chances of home-ownership – work effort is high for those with better chances but declines sharply once the probability drops below 60 per cent. Modelling results suggest this then has big implications for wealth inequality – staying the right side of the home hope barrier is crucial to outcomes. The authors propose a targeted subsidy to shift as many people as possible from one side of the barrier to another (a level of targeting that sounds easier in a model than in practice). Analysis suggests some similar trends here in the UK so boosting housing affordability might just boost employment too. It’s who you know. Turns out school gate interactions could be crucial to social mobility. The RSA and BIT have analysed the link between social capital and mobility in the UK, building on previous work that identified strong links between social networks and economic outcomes in the US. Turns out, who you know could be worth nearly £3,000 a year to British children in low-income families – those who grew up in the most economically connected areas earned that much more aged 28 than those who grew up in the least connected areas. Having friendships outside of the usual social circles is also a strong predictor of mobility. But how can public policy encourage social connections that bridge the income divide? The report has an intriguing range of suggestions – from giving communities more power over funding, to more random allocation in school admissions. Shocking times. As we’ve noted before, increases in the price of essentials disproportionately impact lower-income households – who spend a bigger share of their budget on them – worsening inequality in the process. Now, recent research into price shocks for American consumers has developed a new way to identify the sectors of the economy that have the biggest effect on inequality when prices spike. Their analysis confirms that essential sectors – particularly energy, food and healthcare (this is America, remember) – are the biggest culprits. In 2022, petroleum and coal products alone increased the Gini coefficient by as much as 40 per cent of the average annual increase in inequality between 1980-2022. When it came to food, the lowest income decile faced 1.06 per cent inflation versus 0.47 per cent for the top decile. The paper finds that there is a case for direct intervention in prices and it shouldn’t all be left to the central bank, especially from an inequality perspective. One to ponder since voters also really hate inflation (even more than they hate stagnant earnings), as many incumbent governments have learnt in recent years, and geopolitics could yet have more price-shocks in store. Grubs up. If you are scrambling to reserve a last-minute table for Christmas get-togethers, this might come in very handy… Data Scientist Lauren Leek made a google maps index of London restaurants that highlights underrated eateries. And it isn’t (entirely) frivolous. Google Maps wields a lot of power to direct foot traffic these days, so it doesn’t just reflect what’s popular – it actively shapes which restaurants survive by controlling visibility. Restaurants with more reviews get shown more, which gets them more reviews, creating a snowball effect that favours chains and central locations while making it hard for new independents to get discovered. So, the designer used machine learning to “predict what a restaurant’s Google rating should be, given only its structural characteristics”. You can highlight underrated gems, search by price or review level and set a minimum number of reviews. Go forth and get booking! Something for the weekend | Interesting times… We will most likely see another interest rate cut next Thursday, with people in the know reporting that 25 per cent basis point cut is nailed on. And it doesn’t stop there – the market’s central expectation is for one or two more cuts before calling time on the current rate-cutting cycle. Will this deliver much-needed Christmas cheer? That depends on your balance of savings and debt, which tends to fall along generational lines. So, on the face of it, this is good news for millennials and bad news for pensioners. The average household headed by a 65-74-year-old has 5 times as much in savings as the average 25-34-year-old household, and about 5 times less debt, so higher rates have been more helpful and less harmful for them. Great news for younger people with mortgages, right? The not-so-Christmassy twist is that they’ll have to wait longer than any other age group to feel the benefits. Only 6 per cent of 25-34-year-old mortgagors are on a variable rate, compared to more than a third of those approaching retirement. So, while this rate cut may come just seven sleeps before Christmas, those unlucky millennials may have to wait a few hundred more sleeps before they get their festive gift from the Bank (by which time rates could have gone up again). Bah, humbug! Chart of the week The professional preoccupation for political, policy, and economist types next week will be the cost of living, via the ONS prices data, while our personal preoccupation will be Christmas shopping. How should we think about these two seismic events? Fortunately, fresh from winning the innovation award at the recent think-tank awards, we now bring you…the RF Christmas Stocking index! Here goes…It may be unfashionable in geopolitics right now, but global trade has helped consumers to stay fashionable on the cheap, with the price of clothes down 46 per cent relative to the late 1980s, while the China shock has fuelled a 29 per cent fall in the price of toys. Stocking up on socks, PJs and Italian brain rot will save a few pennies this crimbo. Less good news for sweet-toothed intellectuals in your life – sweets and books have more doubled in price over the past 35 years. And, finally, naughty children beware – you are literally paying a heavy price for your antics this year. That piece of coal you’ve ‘earned’ has almost trebled in price, crowding out spending on all fun things you really want.
