Free transport, the productivity puzzle, and paying attention to Angry Birds

Are those wedding bells we can hear, or just the normal Friday afternoon fire alarm tests? The good (or bad, if like one RF colleague you live in Windsor) news is that you will be hearing wedding bells tomorrow. Try to contain your excitement. If, controversially, your plans don’t include watching the full five hours of TV coverage, the reads below might be of interest.

Poverty and minds. Counter to the widespread view that bad decisions lead people into poverty, a blog from US academics explains how the strains of poverty lead to bad decisions – of a sort. They run experiments with people playing mobile games like Angry Birds (David Cameron was not involved)…. Interestingly they find not that having less leads people to make ‘worse’ decisions, but that it makes problems feel bigger and take up more of your attention. The conclusion: poverty saps people’s attention rather than their decision-making ability– and bad decisions therefore arise from difficulties in absorbing information.

Puzzling productivity. A NIESR and ONS paper dives into the weeds of the ten-year UK productivity slowdown. The good news is its an interesting paper – the bad news is our productivity slowdown is complicated… It’s biggest in the industries that were growing fastest before the crisis (which isn’t that surprising given you’d be hard pressed to argue that growth was sustainable/real in all cases). As for why the slowdown is continuing so long after the crisis, the paper argues that – in service sectors at least – we’re creating jobs but not putting any cash into new capital…. Time for some badly needed investment.

Égalité? Sounds utopian, perhaps, but in Paris it’s being taken very seriously by city hall. Mayor Anne Hidalgo announced last year that she’s considering the €6 billion plan that would make Paris (with 11 million people in the Ile de France metropolitan area) the biggest free public transport zone in the world. Before you get all defensive/jealous – just remember, the French might get free transport, but they’ll never have a royal wedding. So there.

Taxing bedrooms An LSE blog summarises a recent paper on what effect the bedroom tax actually had. You’ll remember that the policy was meant to ‘remove the spare room subsidy to promote downsizing in the social rented sector – one spare room cost you 14% of your housing benefit, two spare bedrooms meant a 25% cut. The topline is that most people didn’t move, despite that being the policy intent and anxiety of many critics of the policy. Instead they just got poorer – by an average of £8/week. Those that did move (not necessarily because of the bedroom tax) did however tend to downsize.

How businesses are tackling the gender pay gap. Americans aren’t all focused on our (and their, it turns out) Royal wedding – some want to talk about our gender pay gap. Good on them. A long-read from the New York Times takes a view from across the pond on how UK businesses are trying to improve reduce their gender pay gaps. Case-studies include broadband engineers, law firms, tech companies and…wine tasters.

This week’s chart… comes from the analysis behind today’s RF Low Pay Britain report, the latest in our blockbuster publication series which – like Star Wars – is now into its eighth edition. A few weeks back we said we were starting to look at the issue of monopsony in the UK – the idea that if there are very few firms in a sector or place they may be able to exercise a lot of power over their workforce, who cannot simply go and find work elsewhere. Our labour market might not be a competitive nirvana…. in which case the result could be lower pay or worse terms and conditions. This chart shows that if anyone is being affected by this in the UK it’s the low paid – where more than one in seven employees work in the top 20 firms. That’s 50% higher than for medium or high paid workers. Digging into the data further shows that nearly 30% of low paid retail workers work for just five firms, as do 20% of low paid workers in Nottingham.

Note: ‘low-paid’ means less than two-thirds of the hourly median wage; ‘mid-paid’ means in deciles 5 and 6 of the hourly pay distribution; ‘high-paid’ means in deciles 9 and 10 of the hourly pay distribution.