Budget 2011: The new flat rate pension will reduce poverty among the retired, but employers who offer good pensions may be penalised financially as a result

Last Wednesday’s budget introduced the government’s plans for a flat rate pension credit. While Tim Leunig welcomes these plans, he finds that the burden for funding this new system may well fall on employers in a significant way

The Higher Education White Paper is a good start at introducing real competition between universities for academic places

The Higher Education White Paper, released today, proposes to make student 85,000 places ‘contestable’ between universities over the next two years, allow institutions to take on more high achieving A-level students, and create up to 20,000 places for universities that charge a yearly fee of less than £7,500. Tim Leunig welcomes the White Paper and its proposals, but argues that the proposed changes will do little to improve access to and the quality of, the student experience. ‘Real’ competition is needed

Growth figures show that Britain is essentially going backwards. Bringing forward the £10,000 tax allowance is the best option to encourage growth.

According to figures released today by the Office for National Statistics , the UK economy grew by only 0.2% in the second quarter of 2011, down from 0.5% in the first quarter. Tim Leunig argues that these figures should be much higher, and that the government’s policy of cutting the deficit quickly is restricting the growth potential of the economy.

New answers to old questions : explaining the slow adoption of ring spinning in Lancashire, 1880-1913.

This paper re-examines theories previously advanced to explain Lancashire’s slow adoption of ring spinning. New cost estimates show that although additional transport costs and technical complementarities between certain types of machine reduced ring adoption rates, these supply side constraints were not dominant. Instead what mattered most were demand side factors. Lancashire produced far more fine yarns than other countries and that yarn was better spun on mules. Furthermore, Lancashire had a sizeable export yarn trade, a market again more suited to mule spinning. Low ring adoption rates were a positive response to demand patterns dominated by high quality goods.

The rise in global gas prices is being passed on disproportionately to the poor by utility companies.

In this short comment, Tim Leunig explains why the recent rise in gas prices will affect the poorest the most.

Spinning Welfare: the Gains from Process Innovation in Cotton and Car Production

Economists and economic historians want to know how much better life is today than in the past. Fifty years ago economic historians found surprisingly small gains from 19th century US railroads, while more recently economists have found relatively large gains from electricity, computers and cell phones. In each case the implicit or explicit assumption is that researchers were measuring the value of a new good to society. In this paper we use the same techniques to find the value to society of making existing goods cheaper. Henry Ford did not invent the car, and the inventors of mechanised cotton spinning in the industrial revolution invented no new product. But both made existing products dramatically cheaper, bringing them into the reach of many more consumers. That in turn has potentially large welfare effects. We find that the consumer surplus of Henry Ford's production line was around 2% by 1923, 15 years after Ford began to implement the moving assembly line, while the mechanisation of cotton spinning was worth around 6% by 1820, 34 years after its initial invention. Both are large: of the same order of magnitude as consumer expenditure on these items, and as large or larger than the value of the internet to consumers. On the social savings measure traditionally used by economic historians, these process innovations were worth 15% and 18% respectively, making them more important than railroads. Our results remind us that process innovations can be at least as important for welfare and productivity as the invention of new products.Process innovations, new goods, welfare, consumer surplus, mechanisation, massproduction, automobiles, cotton, industrial revolution, second industrial revolution

In brief...Cotton and Cars: the Huge Gains from Process Innovation

New inventions are good for economic growth, but equally important are improvements in the way we make things - what's known as process innovation. Tim Leunig and Joachim Voth measure the impact of two such innovations - mechanical cotton spinning and the motorcar assembly line - on the world's material wellbeing.Process innovations, new goods, welfare, consumer surplus, mechanisation, mass production, automobiles, cotton, industrial revolution, second industrial revolution

Water companies should incentivise businesses to use less water and charge households that use high amounts more per unit

Tim Leunig argues that Britain has a lot to learn from Western Australians about how to use water effectively. They are generous to people who use relatively little water, while charging those who are indulgent a great deal more

Housing is expensive in Britain. This is because we have built too few houses for the number of new households – land auctions will help give us the homes we need.

The budget today will almost certainly see the announcement of new plans for land auctions. Tim Leunig outlines how, if introduced, these ‘community land auctions’ will give councils an absolute right to decide on new development – and the ability to benefit far more greatly from new development than they do under the current system.

Did smallpox reduce height?: stature and the standard of living in London, 1770-1873.

In this paper, we re-examine the effect of smallpox on the height attained by those who suffered from this disease. To this end, we analyse a dataset assembled by Floud, Wachter and Gregory on the height of recruits into the Marine Society, 1770-1873. Using both time series and cross-sectional analysis, we show that smallpox was indeed an important determinant of height: those who had suffered from smallpox were significantly shorter. This suggests that the increase in heights documented by Floud et al. may be explained not just by increased nutritional intake, but also by the eradication of smallpox.