Autumn 2023 Newsletter


Google and antitrust We previously covered Microsoft’s struggles to buy Call of Duty’s producer Activision Blizzard. In October the Competition and Markets Authority in the UK finally permitted the takeover after Microsoft offered to sell cloud gaming rights to another competitor. An even bigger antitrust case just got underway in the USA (some say it is the biggest case in decades), with the US Department of Justice accusing Google of abusing its market power in the internet advertising market. Not the present Google was hoping for to celebrate its 25th birthday.

Clearly this is an area where economists will have a lot to say. The US Department of Justice claims that ‘Google engaged in 15 years of sustained conduct that had — and continues to have — the effect of driving out rivals, diminishing competition, inflating advertising costs, reducing revenues for news publishers and content creators, snuffing out innovation, and harming the exchange of information and ideas in the public sphere’. Ouch!

Defending Google will be their Chief Economist Hal Varian. Hal Varian is well known to many economics students as the author of standard microeconomics textbooks. First published in 1978 – two decades before Google was founded – Varian’s Intermediate Microeconomics is now in its 9th edition and runs to 800 plus pages. In 2009 Wired Magazine called Hal Varian the “the Adam Smith of the new discipline of Googlenomics”. This will be quite a case.

HS2 and the Northern Powerhouse Cost-benefit analysis really comes under scrutiny when appraising major infrastructure projects and there isn’t anything bigger in the UK than High Speed 2. With construction costs soaring, public finances stretched and original estimates suffering from optimism bias, the government’s decision to abandon the northern section of the project is not surprising. The Institute for Government has a good summary of how HS2 costs have changed over time, including how the project’s ‘value for money’ valuations have changed since inception. The Benefit Cost Ratios were always higher for completion of the full network, so it is somewhat ironic that now only Phase 1 (between London and the Midlands), which had a weaker economic case alone, will be built. No doubt there will be reflection on the whole decision making process and of course potentially lessons to learn for cost-benefit analysis itself.

Exploding costs – the cost of the energy transition Talking about soaring costs, what about the cost of the energy transition? In 2020 the Climate Change Committee estimated the cost of Net Zero at less than 1% of GDP throughout the next 30 years with savings offsetting costs in later years. But how realistic is that now? No wonder there has been some backtracking on the timetable towards net zero. There is also the question of who should pay. With the cost-of-living crisis still with us, it is increasingly difficult to ask households and businesses to foot the bill. But does the government have the fiscal space to offer generous financial support in the form of, say, subsidies for EVs or heat pumps or corporate tax credits? If you think about it that way, postponing the transition might be seen politically as the only way forward for the government now. Can planet earth wait though?

Data linking Catherine Connolly recently talked with Prabhat Vaze, from Belmana Consultancy, about how linking together big datasets has the potential to transform our understanding of policy impact. Prabhat illustrated how data linking can help policy evaluation using the UK Government’s Regional Growth Fund. You can watch the interview here: Transforming policy analysis through data linking

Upcoming events and courses

Courses are currently delivered both online and in person. SPE Courses are run for professional analysts by economicsense on behalf of the Society of Professional Economists.

Strategic Career Development for Analysts 10am–1pm, 12, 19 January and 15 March 2024 This course is designed to support strategic career development for experienced analysts. Whether you are considering promotion, looking to deepen your knowledge as an expert in your analytical field or simply deciding what to do next, the course will provide you with tools to develop a fulfilling career. This course is run online. To book: Strategic Career Development for Analysts

Cost-benefit analysis for non-economists 9.30am–12pm, 12, 13, 14 March 2024 Ideal for government analysts (outside economics), and policy and finance professionals who are involved in preparing and reviewing business cases and impact assessments. This course is run online. To book: Cost-benefit-analysis for non-economists

SPE Courses

SPE Courses Overview of Cost-benefit analysis with applied example 9.30am–12.30pm, 21, 22, 23, February 2024 This popular course is ideal for analysts who want an overview of cost-benefit analysis. Run online over three half days we cover all basics of a good CBA and then bring the theory to life with an applied example conducted in excel. To book: Cost-Benefit Analysis with Applied Example

SPE Courses Macroeconomics refresher and update 9.30am–4pm, 18, 19 March 2024 Professor Andy Ross returns for this popular two-day course run in person. The course sets out the key macro models in use today and relates them back to understanding key policy questions. To book: Macroeconomics – Refresher and Update