tag:theconversation.com,2011:/africa/topics/lse-32393/articlesLSE – The Conversation2018-03-29T19:01:42Ztag:theconversation.com,2011:article/930162018-03-29T19:01:42Z2018-03-29T19:01:42ZDebate: What is missing in the ‘33 Theses for an Economics Reformation’<figure><img src="https://images.theconversation.com/files/212411/original/file-20180328-109182-179osyu.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1497%2C853&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Andrew Simms (New Weather Institute), Sally Svenlen (RE student), Larry Elliott (_Guardian_), Steve Keen (Debunking Economics) and Kate Raworth (Doughnut Economics) symbolically nail the "33 Theses" to the door of the London School of Economics in December 2017</span> <span class="attribution"><a class="source" href="http://www.rethinkeconomics.org/projects/reformation/">rethinkeconomics.org</a></span></figcaption></figure><p>On the occasion of the 500th anniversary of Martin Luther’s Reformation, <a href="http://www.newweather.org/wp-content/uploads/2017/12/33-Theses-for-an-Economics-Reformation.pdf">33 Theses for an Economics Reformation</a> were formulated by Rethinking Economics and the New Weather Institute. The document was symbolically nailed to the door of the London School of Economics In December 2017 and <a href="https://www.theguardian.com/business/2017/dec/17/heretics-welcome-economics-needs-a-new-reformation">endorsed in <em>The Guardian</em></a>, and was supported by an impressive list of over 60 leading academics and policy experts. The initiative offers a rare and most welcome refreshing message from the House of Economics.</p>
<p>Several elements in the theses are long overdue – for example, the existence of planetary limits, the superiority of political deliberation over economic logic, the appreciation of the role of uncertainty in economic predictions, the non-independence of facts and values when economic thoughts are formulated, the warning against over-reliance on modelling, econometrics and formal methods. Also important is the indication that both growth and innovation need to be conceived with a desirable end in sight, one which can be associated with material and spiritual progress – rather than with misery, inequity and inequality. It is finally all important that in the teaching of economics itself the history and philosophy of economics should be taught, together with all economic theories: not just the family tree of mainstream economics.</p>
<h2>Three omissions</h2>
<p>While the “33 Theses” are a much needed initiative, three absences are nevertheless noticeable:</p>
<p>While the problems of financialisation are discussed, by going back to Martin Luther himself, in his 1524 book <a href="http://www.lutherdansk.dk/Martin%20Luther%20-%20On%20trading%20and%20usury%201524/ON%20TRADING%20AND%20USURY%20-%20backup%20020306.htm"><em>On Trade and Usury</em></a>, we find an older tradition that more clearly separates <em>unproductive hoarding</em> from <em>productive finance</em>. In his 1355 <a href="https://www.institutcoppet.org/2011/05/29/oresme-traite-de-la-premiere-invention-des-monnaies-ca-1355"><em>De Moneta</em></a>, Nicolas Oresme contrasts the negative effects of hoarding with the positive effect of investments in the real economy:</p>
<blockquote>
<p>“It was this consideration that led Theodoric, King of Italy (493-526), to order the gold and silver deposited according to pagan custom in the tombs to be removed and used for coining for the public profit, saying: ‘It was a crime to leave hidden among the dead, and useless, what would keep the living alive’.”</p>
</blockquote>
<p>The religious term for unproductive money is <em>mammon</em>. If we combine Oresme’s insight with <a href="http://www.econlib.org/library/Enc/bios/Schumpeter.html">Schumpeter’s understanding of financial crises</a> as an occasion to clean out failed investments from the global portfolio, we find that in the name of “saving” investments we have made the mistake of saving bad projects and poor nations that should have been allowed to go bankrupt. We have helped accumulating <em>mammon</em> at the expense of real investments and consumption that would have “served the purpose of life” as Luther would have put it. Seeing the present world through the eyes of King Theodoric, we have printed mammon – unproductive capital – which is useless to keep the living alive, but which promotes speculative bubbles. By doing this we have made the perfect conditions for vulture funds, but failed the poor.</p>
<p>The second is the absence from the list of theories to be taught of <em>Erfahrungswissenschaft</em>, economics as a science of experience. This is in essence what most economics has been about until fairly recently. How influential this experience-based historical school was can be seen in a working paper, <a href="https://developingeconomics.org/2017/06/01/80-economic-bestsellers-before-1850-a-fresh-look-at-the-history-of-economic-thought/">“80 Economic Bestsellers before 1850: A Fresh Look at the History of Economic Thought”</a>. On the list is Adam Smith’s <em>Wealth of Nations</em>, chronologically No. 53 of 80 bestsellers before 1850, reflecting the fact that capitalism and industrialization were already long in existence when Smith wrote what today’s students are misled to think was the beginning of economics.</p>
<p>The third missing element is the word <em>trade</em>. Neoclassical trade theory – based on the theories of <a href="https://en.wikipedia.org/wiki/David_Ricardo">David Ricardo</a> (1817) – presents trade as a harmony-producing mechanism. Ricardo achieved this by basing his model of international trade on the barter of qualitatively identical labour hours.</p>
<h2>How Ricardo saw it</h2>
<p>Ricardo’s trick of making every labour hour qualitatively identical is at the core of the problems of globalisation. At the intuitive level, economists understand this: no economist would ever advise his or her children to specialize in an apparent comparative advantage in washing dishes in restaurants. Intuitively, we all understand that there is a hierarchy of skills out there, and from that follows that it is entirely possible for a nation to specialise in a comparative advantage in being poor. </p>
<p>During the decades after Ricardo published his theory, US economists specifically referred to skill differences using a quote from the Bible that describes the cursed tribe that cuts wood and carries water for other tribes (Joshua 9:23). The United States did not want to specialize at the bottom of the skills ladder, and only wanted free trade when it had become an industrial power. Now, when the United States is no longer the world leader, US politicians from Trump to Sanders intuitively wish to go back to their own country’s long-forgotten theories.</p>
<p>Ricardo’s illusion is a main mechanism of today’s centripetal economic forces. This illusion has collapsed several times before, <a href="http://www.un.org/esa/desa/papers/2009/wp88_2009.pdf">most notably in 1848</a>, when the Ricardian economic paradigm was brought down through attacks from Marx and Engels on the left and the “great liberalist” <a href="https://en.wikipedia.org/wiki/John_Stuart_Mill">John Stuart Mill</a> on the right. Mill recognized that poor countries needed “infant industry protection” before they could graduate into free trade.</p>
<p>Historically, every rich country – starting with England from 1485 to the US and South Korea – for a time has <a href="https://www.goodreads.com/book/show/1340067.How_Rich_Countries_Got_Rich_And_Why_Poor_Countries_Stay_Poor">protected manufacturing industries</a>. At present, manufacturing, due both to its high productivity increases and to demand factors, tends to shrink as a percentage of GDP. However, the poor countries in the world periphery still have a huge potential national market for wealth-creating manufacturing.</p>
<p>We still see the destructive forces of the prevailing paradigm keeping poor countries poor, while leading to poverty and mass emigration from many former Soviet Republics. Cascading migration moves Polish construction workers to the UK and Scandinavia, Eastern Ukrainians to Poland to replace construction workers there, and Moldovans to the Ukraine to replace those who left for Poland, in the end creating lower wages in the West and a periphery without jobs and manpower. The backlash against the <a href="http://www.nybooks.com/articles/2017/12/21/karl-polanyi-man-from-red-vienna/">market utopia foreseen by Karl Polanyi</a> is happening.</p>
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<h2>Back to the future</h2>
<p>The <a href="https://en.wikipedia.org/wiki/Marshall_Plan">1947 Marshall Plan</a> and the <a href="http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e1529">1948 Havana Charter</a> represent the last time Ricardo’s illusion collapsed. The Havana Charter wisely describes under what conditions a country could protect its industries, as well as suggesting an international tax on trade surpluses. While it was blocked by the United States at the time, were such a rule in force today it would have been possible for the US to protect itself against deficits with China, and the Southern European countries of Portugal, Italy, Greece and Spain (often referred to by the acronym PIGS) against similar deficits with Germany, while allowing the poor unindustrialised periphery of the world to use the same mechanisms that produced the 30 glorious years of development of the West after World War II.</p><img src="https://counter.theconversation.com/content/93016/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Erik S Reinert has received funding from national research councils, from the European Union, and from the Friedrich-Ebert Stiftung. </span></em></p><p class="fine-print"><em><span>Andrea Saltelli ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Nailed to the door of the London School of Economics, the ‘33 Theses’ offer a long overdue challenge to economics dogma. But there are omissions as well.Erik S Reinert, Professor of Technology Governance and Development Strategies, Tallinn University of TechnologyAndrea Saltelli, Open Evidence Research, Universitat Oberta de Catalunya and Centre for the Study of the Sciences and the Humanities (SVT), University of BergenLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/737742017-02-28T14:37:56Z2017-02-28T14:37:56ZHow Brexit put the brakes on LSE-Deutsche Börse mega merger<figure><img src="https://images.theconversation.com/files/158762/original/image-20170228-29929-aurlrx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">spatuletail / Shutterstock.com</span></span></figcaption></figure><p>The mega merger of London and Frankfurt’s stock exchanges looks in doubt after the London Stock Exchange said the deal was unlikely to be approved by the European Commission. There were a <a href="https://theconversation.com/how-lse-deutsche-borse-merger-of-equals-could-run-into-trouble-56391">number of reasons</a> why this €29 billion deal could have gone wrong, but Brexit can be blamed if it fails to go ahead at all.</p>
<p>Since the UK’s vote to leave the EU in June 2016 the motives for the merger between the LSE and Deutsche Börse stock exchanges have significantly changed. Prior to Brexit, the main aim was to create a European champion stock index and exchange. This was to take on the major US exchanges of Nasdaq and Intercontinental Exchange (ICE), and in the east, Singapore and Hong Kong exchanges. </p>
<p>But since Brexit, the motives for the shareholders and boards involved has switched to hedging their interests against the decline of London as a financial centre. In effect LSE shareholders would be swapping their LSE shares for shares in the merged business which means they benefit from any transfer of business from London to Frankfurt. </p>
<p>This would have been achieved through the orderly transfer of EU-based activities in London to Frankfurt. The fact that the Deutsche Börse CEO, Carsten Kengeter, would be at the helm of the newly combined index indicates where the power and influence really resides. So the proposed share swap would protect the interests of the LSE shareholders and board who, as a result, would become board members of a much larger international entity. If the merger goes ahead, the new index would be Europe’s largest, giving it dominance within the EU and a strong position in international trading too.</p>
<p>So if this benefits the LSE-Deutsche Börse shareholders and boards then who would have lost out? First, Paris as a financial centre. As a hard Brexit begins to bite, Paris would stand to benefit from a more disorderly loss of London trade. But the conduit of the new index would channel trade that France might have gained directly to Frankfurt. </p>
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<img alt="" src="https://images.theconversation.com/files/158747/original/image-20170228-29945-158e4d5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/158747/original/image-20170228-29945-158e4d5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/158747/original/image-20170228-29945-158e4d5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/158747/original/image-20170228-29945-158e4d5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/158747/original/image-20170228-29945-158e4d5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/158747/original/image-20170228-29945-158e4d5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/158747/original/image-20170228-29945-158e4d5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Frankfurt wants to become the centre of European finance.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
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<p>Clearly the French view is that there must be something in this deal for them. Otherwise it would limit their financial sector to being a minor player both inside the EU and internationally. Hence the manoeuvring to put pressure on the European Commission and specifically its competition authorities to make a <a href="http://www.bbc.co.uk/news/business-39098805">last minute demand</a> that the LSE sell its 60% stake in MTS, an important Italian trading platform. This follows on from a demand last year that the LSE divest its French clearing arm LCH, which it agreed to sell to Paris for €510m. It is highly likely that MTS would end up in Paris too.</p>
<h2>Trojan Horse</h2>
<p>The sale of MTS, according to the LSE board, is a step too far. And London would lose out too much in the long run (as well as the loss of many well-paid London-based employees who would lose their jobs). There <a href="http://www.dailymail.co.uk/wires/reuters/article-4264698/LSE-doubts-Deutsche-Boerse-CEO-leading-merged-firm--sources.html">has been talk</a> that, while the deal’s agreement was to have the head office in London, as with all undertakings this is likely to be finite. It may well eventually move to Frankfurt in substance, if not name. London as a financial centre could therefore lose out from this Trojan Horse, which would organise and direct trade to Frankfurt. There would be nobody to battle to retain trade in London. </p>
<p>The Bank of England does not have the power to intervene. The government may similarly not have the official powers to prevent the deal – though Prime Minister Theresa May is fresh from her victory over Kraft Heinz and their <a href="https://theconversation.com/kraft-heinzs-short-lived-unilever-swoop-is-a-warning-on-weak-takeover-policy-73533">short-lived bid for Unilever</a>. Greg Smith, the UK’s business minister, made a number of forceful but unofficial interventions which very likely scuppered that move. No one wants to be on the wrong side of a government, particularly one with a long memory of the <a href="http://www.independent.co.uk/news/business/news/kraft-is-truly-sorry-for-u-turn-over-closure-of-cadburys-somerdale-plant-1922339.html">broken promises</a> from Kraft during their acquisition of Cadbury. </p>
<p>May has not made any moves in relation to the stock market merger, but perhaps she was waiting for the European Commission to rule before acting. Its demands look like they will now prevent the deal. If the merger does end up going ahead, though, then the pressure would surely have been on May to act.</p><img src="https://counter.theconversation.com/content/73774/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Colley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>If the merger goes ahead, the new index would be Europe’s largest, giving it dominance within the EU and a strong position in international trading too.John Colley, Professor of Practice, Associate Dean., Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/679402016-11-02T10:32:57Z2016-11-02T10:32:57ZHow do children use the internet? We asked thousands of kids around the world<figure><img src="https://images.theconversation.com/files/144068/original/image-20161101-15814-wcg976.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Checking-in after class in the city of Cebu, Philippines.</span> <span class="attribution"><span class="source">UNICEF/Estey</span></span></figcaption></figure><p>The internet has reached almost every corner of the globe, but most research on how it is used, particularly among children, focuses on the US and Europe. This is a problem, because according to best estimates <a href="https://www.cigionline.org/publications/one-three-internet-governance-and-childrens-rights">one in three children around the world</a> now uses the internet – most of them outside the West. An increasingly global internet requires increasingly international policy decisions – which must rely on global evidence.</p>
<p>The <a href="http://www.globalkidsonline.net/synthesis">report</a> from <a href="http://www.globalkidsonline.net">Global Kids Online</a> is the first stage of an ambitious project to find out which children are using the internet, what they are learning, and the opportunities and risks it presents. To hear their perspectives, the project conducted interviews and surveys of children aged between nine and 17 in South Africa, the Philippines and Serbia, and aged 13 to 17 in Argentina. You can listen to South African children and their parents talking about the internet <a href="https://youtu.be/EU4n0MrXw1o">here</a>.</p>
<p>We did not really know what to expect, although we knew some of the problems. In Latin America, for example, children live in hugely different urban and rural environments, and at the extremes of wealth and poverty. South African society exhibits high levels of violence, which now extends online. The Philippines faces a growing challenge around child sexual exploitation and abuse, while Serbia struggles with the social exclusion of its Roma population. Does internet access help children and their families face these issues, or does it make them worse?</p>
<h2>Don’t take away my internet</h2>
<p>There is no doubt that children worldwide welcome the internet into their lives, even when it is expensive, unreliable, or can only be accessed through shared devices or community provision – unlike the ease of access enjoyed by children in the West. A recent worldwide survey reveals that they are beginning to think of it as <a href="http://www.unicef.org/publications/index_76268.html">a human right</a>, a necessity. Similarly, some of the children we spoke to see the internet as an inseparable part of their lives – something they are proud of, as this 15-year-old boy from Serbia said:</p>
<blockquote>
<p>We grew up with the internet. I mean, the internet has always been here with us. The grown-ups are like “Wow the internet appeared”, while it is perfectly normal for us.</p>
</blockquote>
<p>A focus group of 14-17-year-olds from South Africa’s Eastern Cape agreed:</p>
<blockquote>
<p>I’d say the generation of today knows more than our parents. We’re much smarter than the previous generation.</p>
</blockquote>
<p>It’s not surprising to learn that children love the freedom to learn or share what they are interested in, when they want to – as these Argentinian teenagers <a href="http://blogs.lse.ac.uk/gko/argentina/">explained</a>:</p>
<blockquote>
<p>I wanted to learn to play the guitar and went online.
<br><br>
Being in contact with the others all the time; knowing what the others are doing.
<br><br>
You can contact somebody who is far away over Skype or a video call.</p>
</blockquote>
<p>But in the face of moral panics about online risks, we should remind ourselves that children mainly want to learn and to be in touch with people. It is important that adults – whether parents or politicians – do not close off those opportunities.</p>
<h2>The good and the bad</h2>
<p>In many ways, children from very different countries share similar online interests. In the Philippines, for instance, children love Facebook and YouTube, and their top online activities are learning something new, social media, watching video clips, using the internet for schoolwork, and playing online games. In other words, pretty much <a href="http://blogs.lse.ac.uk/mediapolicyproject/2014/12/02/maximising-the-opportunities-for-kids-online-where-are-we/">the same as found in Europe</a>. </p>
<p>It’s possible to see the fact that the same huge tech companies are able to extend their reach and profit from children worldwide as a problem. It is also not yet clear what children learn online – or whether it truly benefits them. But internet access does provide clear opportunities. </p>
<p>In South Africa, up to two in five teenagers look up health information online at least weekly. It is easy to imagine that teenagers value that they can find this just-in-time information online, confidentially. Where might they have found it before the internet? But there are issues surrounding the quality of information on the internet. Is it what they need? And do they have the critical skills to tell reliable from misleading information? We do not know, although what we have found does provide grounds for concern regarding the digital and critical skills of younger users.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/144069/original/image-20161101-14771-1lbhj6x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/144069/original/image-20161101-14771-1lbhj6x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/144069/original/image-20161101-14771-1lbhj6x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/144069/original/image-20161101-14771-1lbhj6x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/144069/original/image-20161101-14771-1lbhj6x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/144069/original/image-20161101-14771-1lbhj6x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/144069/original/image-20161101-14771-1lbhj6x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">That’s a pic to upload later … boys and their smartphones in Mdantsane, South Africa.</span>
<span class="attribution"><span class="source">UNICEF/Afhsin Rohani</span></span>
</figcaption>
</figure>
<p>Asked whether anything had happened to them online that upset them in the past year, three-quarters of the children in Argentina surveyed said yes – twice as many as in Serbia and the Philippines. In South Africa it was only one in five. Some examples of upsetting content include:</p>
<blockquote>
<p>Gossiping about other people and there are ugly comments about other people.
<br><br>
Racism, xenophobia and killings.
<br><br>
Frequently having older strangers inviting me, seeing nude adverts.</p>
</blockquote>
<p>From the Philippines, we heard reports of <a href="http://blogs.lse.ac.uk/gko/reportphilippines/">direct personal threats</a>:</p>
<blockquote>
<p>There was a time when I was impersonated by someone else on Facebook, the user has my photo as the profile picture but with a different name. (Girl aged 12-14)
<br><br>
I once experienced a stranger asking for “my price” - meaning how much it would cost the stranger for the child to do a sexual activity. (Boy aged 15-17)</p>
</blockquote>
<p>But lest parents be tempted to ban their children from the internet, we also found lots of positive responses. Two thirds of Argentinian teens were very sure that “there are lots of things on the internet good for children my age”. Those in Serbia and the Philippines were a bit more lukewarm, and South African children more divided still. Striking the right balance of risk and rewards may be hard to achieve.</p>
<h2>Risks and opportunities intertwined</h2>
<p>To understand this, we have to consider the nature of the internet. Take social networking sites, for example: children can use them to connect with their friends, but they are also made visible to unknown others. Reflecting the risk and rewards children from each country experienced, we found that 92% of Argentinian children but only 65% of South Africans say they are allowed to use these sites at any time, with Serbia at 85% and the Philippines at 79%. </p>
<p>So whether parents take a more restrictive or laissez-faire approach makes a difference. But this is not an easy choice for parents to make. Partly because many parents judge their children’s digital skills to be greater than their own, and partly because they try to fit cultural norms and parenting styles, and the specific needs of their children.</p>
<p>Of course, irregular or expensive internet access can be a problem in itself. Our South African colleagues have used these findings to call for more affordable internet access, given the <a href="http://blogs.lse.ac.uk/gko/research-results-southafrica/">high cost of data</a> – this goal is now included in South Africa’s <a href="http://www.gov.za/issues/national-development-plan-2030">National Development Plan 2030</a>. Argentinian children reported using internet most at school, so our Argentinian colleagues have called for more support through a national digital literacy programme.</p>
<p>Global Kids Online is a joint initiative from <a href="https://www.unicef-irc.org/">Innocenti</a>, the research arm of UNICEF, the <a href="http://www.lse.ac.uk/media@lse/research/EUKidsOnline/Home.aspx">EU Kids Online network</a> and the London School of Economics and Political Science, supported by the <a href="http://www.weprotect.org/">WeProtect Global Alliance</a>. This research is just the beginning, and it will be hard to identify cross-cultural trends until more countries take part. But we would urge lawmakers in countries where little reliable evidence exists not to rush into new legislation until they are better able to understand how children and parents balance the risks and rewards they face.</p><img src="https://counter.theconversation.com/content/67940/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sonia Livingstone receives funding from UNICEF and WeProtect Global Alliance</span></em></p><p class="fine-print"><em><span>Mariya Stoilova receives funding from UNICEF and WeProtect Global Alliance</span></em></p>The developing world is waking up to the internet. We need to know how new generations of children use it.Sonia Livingstone, Professor of Social Psychology, London School of Economics and Political ScienceMariya Stoilova, Post-doctoral Researcher, London School of Economics and Political ScienceLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/673292016-10-19T16:43:01Z2016-10-19T16:43:01ZWhy do wind farms drag down house prices in some places but not others?<figure><img src="https://images.theconversation.com/files/142355/original/image-20161019-20340-wqvak4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Whitelee wind farm near Glasgow.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/amagee3/6702100955/in/photolist-bdf27K-dxWjRt-7QN6kD-9fK23X-dy2Ynh-76h514-7Pp5iJ-dy2Wvu-dxWxk2-73GgGK-dxWkP8-76m4YS-7QReBW-7QRsim-76h5bR-76h5o8-dxWvEi-dy2Mxf-8NvXBZ-8KaCCi-aCVjBF-8NyPzN-dxWp9D-dy2QdA-82EJ3Q-8Nw5qZ-8Nz8uU-9EsVZX-8Nz5VA-dxWhnB-8NvEFB-8NyWTU-8Nw1KZ-8NyMCs-8NvW2B-96EQBz-8NvCja-dy2LSC-8NyVd9-cc2pE7-8NyRD3-8NyTh5-8Nvzfv-73Lf4f-8NvT8c-8Nz1ds-sp6kf3-8Nw4wR-aCVkyT-8Nvwaa">Andy Magee</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Two years ago, the London School of Economics delivered bad news to the renewables industry. It published a <a href="http://eprints.lse.ac.uk/58422/1/__lse.ac.uk_storage_LIBRARY_Secondary_libfile_shared_repository_Content_SERC%20discussion%20papers_2014_sercdp0159.pdf">research paper</a> that showed that house price appreciation was significantly reduced by being near wind farms in England and Wales. This overturned previous work in both the <a href="https://emp.lbl.gov/sites/all/files/lbnl-6362e.pdf">US</a> and <a href="http://www.tandfonline.com/doi/pdf/10.3846/1648-715X.2008.12.251-269">UK</a> which had found no robust evidence of a negative effect. </p>
<p>But what about Scotland? With emptier countryside and stronger winds, not to mention a more pro-renewables government, more than twice as much onshore wind power capacity <a href="https://www.carbonbrief.org/factcheck-which-parts-of-the-uk-are-windy-enough-for-windfarms">has been</a> built north of the border than in England. Until now, nobody had attempted a robust empirical study of the effect on Scottish house prices – despite some anecdotal claims of a negative impact. </p>
<p><a href="http://bit.ly/2e6eD3A">We set out to discover</a> whether there was evidence to support these claims, using similar methods to the LSE study. But <a href="http://www.climatexchange.org.uk/reducing-emissions/impact-wind-farms-property-prices/">our results</a> suggest the impact is very different in Scotland. </p>
<h2>Turbine testing</h2>
<p>We looked at 500,000 house transactions compared to the 1.7m that LSE looked at in England and Wales. The graph below shows the overall house price trends for houses in Scotland that can and can’t see wind turbines. The blue line is houses that can see them and the red line is those that can’t. The fact that the blue line lies slightly below the red line suggests that wind turbines in Scotland tend to be built in areas where housing prices are low – not surprising, since they tend to be built in rural areas where land is relatively cheap. </p>
<p><strong>Change in house prices 1990-2014</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=420&fit=crop&dpr=1 600w, https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=420&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=420&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=527&fit=crop&dpr=1 754w, https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=527&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/142343/original/image-20161019-20298-xu9sj7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=527&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Gwilym Pryce</span></span>
</figcaption>
</figure>
<p>The fact that the two lines move in parallel means their <a href="https://dl.dropboxusercontent.com/u/988239/WindBlog_Note_relative%20value.txt">relative value</a> has remained stable despite the rapid growth of turbine construction (see the graph below). If turbines had a major negative effect on house price appreciation, we would expect these two lines to diverge – they didn’t. </p>
<p><strong>Cumulative number of wind turbines in Scotland 1995-2014</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=497&fit=crop&dpr=1 754w, https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=497&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/142344/original/image-20161019-20340-be3egg.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=497&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Gwilym Pryce</span></span>
</figcaption>
</figure>
<p>When we factored in a house’s distance from the wind farm, we found that the house price effect was essentially zero up to 4km. With houses where turbines were visible 4km to 5km away, there was actually a slight benefit of circa 1% to people’s house prices. By contrast, the LSE study found that in England, house prices grew between 5% and 6% more slowly when properties were within 2km of a visible wind farm. </p>
<p>We identified a couple of factors from the LSE approach that might have affected applying it to Scottish data. The LSE’s researchers calculated distance from a house’s postcode to the centre of a wind farm, but some wind farms are more spread out in Scotland than England so a house could be a long way from the centre but close to a peripheral turbine. </p>
<p>LSE also relied on undulations in the natural landscape to determine which wind turbines were in the line of sight, and ignored the height of the built environment. We factored both these things into our methodology to see if they made any difference in Scotland, but our results essentially remained the same. </p>
<h2>What to make of it</h2>
<p>The first question is, why might wind farms have a positive effect on certain house prices in Scotland? One possibility is that wind farms <a href="http://eric.ed.gov/?id=EJ913167">may boost</a> local economic activity by providing employment and other economic and leisure benefits to local communities. </p>
<p>The <a href="http://www.whiteleewindfarm.com">Whitelee wind farm</a> near Glasgow, for example, provides 130km of tracks for walkers, cyclists, horse riders and dog walkers, and <a href="http://www.pfr.co.uk/cloich/15/Wind-Power/23/Tourism/">attracted</a> 25,000 visitors in the first two months. Also, some energy companies have provided community funds, such as the £17.5m SSE fund for the <a href="http://www.southlanarkshire.gov.uk/info/200168/getting_involved_in_your_community/571/sse_clyde_wind_farm_fund">Clyde wind farm</a> in South Lanarkshire. It is conceivable that this boost to local demand could lead to a positive effect on house prices. </p>
<p>Second, why are the results different to those in England and Wales? It could be a question of different attitudes to wind farms. Two surveys from around the same time last year <a href="https://fullfact.org/economy/what-do-brits-think-about-wind-farms/">indicate</a> that Scots are <a href="http://www.businessgreen.com/bg/news/2400139/poll-scots-want-more-wind-power">slightly keener</a> on more onshore wind farms being developed, 71% in favour versus 65% for the UK as a whole. </p>
<p>Another reason might be that in Scotland, a much higher proportion of turbines are built on moors and mountains where the value of alternative uses of the land may be relatively low compared with desirable farmland locations in England and Wales. </p>
<p>Either way, it suggests the relationship between house prices and wind turbines is far from straightforward. More work is needed to understand why different places might be affected differently. But the message for now is this: living near a wind farm in England may temper your house price growth, but in Scotland the effect is likely to be zero and may even be positive.</p><img src="https://counter.theconversation.com/content/67329/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gwilym Pryce is on the Economic Advisory Panel for Defra. He was a consultant to the Glasgow Solicitors Property Centre, computing their quarterly house price index, from 2002-2016. This research project received funding from the Scottish government via ClimateXChange and the ESRC. </span></em></p>Just when you thought wind farms were bad for house prices everywhere, a new piece of research from Scotland suggests otherwise.Gwilym Pryce, Professor of Urban Economics and Social Statistics and Director of the Sheffield Methods Institute, University of SheffieldLicensed as Creative Commons – attribution, no derivatives.