Who doesn’t invest and why? A behavioural data science perspective
As we adjust to a high inflation environment, those who are fortunate enough to have savings are seeing their purchasing power erode by up to 10% per year. In the UK, one way to mitigate the effects of inflation is through investing in Stocks and Shares ISAs. But why… Read More
The use of discrete choice experiments in applied economic analysis
Observed behaviour is usually understood to be the best indicator of future choices. This ‘revealed preference’ data is therefore favoured by practitioners as the basis for economic models. However, many economic questions involve looking at markets that do not (yet) exist, or ‘but for’ hypothetical situations that did not actually… Read More
Interminable: who can read T&Cs?
Many products form a contract between a firm and a customer, the details of which are specified in the terms and conditions (T&Cs). But do customers always understand what they are agreeing to? With the help of a mathematical formula, we find that the reading age and time requirement of… Read More
The Consumer Duty: don’t do more—do differently
The UK Financial Conduct Authority (FCA) has finalised the rules, guidance, and implementation period for the new Consumer Duty. The FCA’s journey The Consumer Duty is the product of 15 years of evolution in the regulation of financial services. It’s not so much a change… Read More
Hidden talent: the economic benefits of social mobility
Social mobility is widely considered to be intrinsically good: decoupling an individual’s prospects from their social status or family background is a key pillar of fairness and social justice. This perspective has filled philosophy textbooks and opinion columns, but what is less well understood is the role that social mobility plays in boosting productivity and economic output. Read More
Causality and natural experiments: the 2021 Nobel Prize in Economic Sciences
The Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021 to three economists—Joshua Angrist, David Card, and Guido Imbens. Their contributions to the economics literature shaped economists’ understanding of when causal relationships can be established, especially using non-experimental data, and what kinds of methods and assumptions allow us to uncover the true causal effect of one variable on another. Today, businesses, courts and policymakers rely on causal empirical evidence to make their decisions. Read More
Bits of advice: the true colours of dark patterns
Dark patterns are deceptive online interface designs that are used to trick people into making decisions that are in the interests of the online business, but at the expense of the user. In this second article of our ‘bits of advice’ series on digital regulation, we dive into the economics behind dark patterns: what are they; what can economics teach us about how they work; how is digitalisation changing their costs and benefits in the eyes of businesses; and how can competition and consumer protection authorities respond? Read More
COVID-19, the Olympics and Belarus: using new data to understand the aviation sector
While the aviation sector is still in the early stages of its recovery from the COVID-19 pandemic, there are signs that it is also rapidly changing. Airlines are experimenting with their networks, and it is predicted that there will be consolidation.1 Some airlines that have made substantial cuts to their crew and fleet now face the challenge of ramping back up to meet demand. There have also been events such as the Tokyo Olympics and the ban on flights in Belarusian airspace that have had significant effects on specific route markets. This article examines aviation data that Oxera has collected to better understand how fares and frequencies are evolving as a result of the pandemic and these recent events. Read More
Zombie firms: how can new assessment tools effectively direct credit supply?
While the post-pandemic economic recovery continues, governments and credit institutions will need to decide where to direct their financial support, selecting companies with a strong potential for growth rather than those that are destined to decline. This is not a straightforward task, since post-COVID-19 events are influencing the business models of entire industries and affecting companies’ short-term economic performance. As Oxera Associate Fabio Menghini explains, the effectiveness of traditional credit risk assessment tools may need to be re-evaluated. Read More
Tipping: should regulators intervene before or after? A policy dilemma
In digital markets, platforms often reach a tipping point. When network effects are sufficiently strong, users are drawn towards the network with the highest number of other users, making it more attractive, until the market eventually tips in its favour. While there are benefits to market tipping, concerns regarding abuse of dominance may also arise, which, as discussed in this article, can present a dilemma for policymakers. Read More