Blog: Stressed out - the cost of shifting risk from institutions to individuals

by Shelagh Young, DHI Engagement Lead

Do you do a good day’s work after a poor night’s sleep? Do financial worries stop you focusing on the other things that matter in life - on family and friends, on your health or your job? 

Stress and anxiety have been the leading causes of lost working days in the UK for some time. But, despite increased productivity being seen as an essential component of economic growth, the impacts of stress and anxiety on the productivity of people who feel well enough to still go to work is comparatively less well measured or understood. 

Last month we reported that more than one in four Scots are losing sleep over their finances. In July the ONS reported the weakest annual growth since the first quarter of 2013 (excluding the Covid-19 pandemic period) and the weakest productivity output of worker per worker since 2009.

Are these two dismal facts related?

We think so. The research charity Centre for Mental Health calculates that mental health related  presenteeism, defined as being present at work but not fully functioning, costs the UK economy at least £21.2 billion a year in lost productivity. 

In the light of this it is obvious that government needs to lead on reducing stress and anxiety in order to boost wellbeing and therefore productivity. It cannot offload all of this responsibility onto employers, especially as not everyone is employed. Employers can rightly be held to account for reducing work-related stress and anxiety but the wider causes are not theirs alone to solve.

One of these sources of stress is the impact of what the Institute and Faculty of Actuaries (IFoA) calls The Great Risk Transfer. This is best described as a shifting of the burden of risk, such as ensuring our workplace pensions yield sufficient returns to keep us out of poverty in retirement,  from institutions to individuals. The IFoA argued that significant changes relating to pensions, work, health and insurance are placing more of the burden of risk on individuals with potentially socially and economically undesirable outcomes. 

We will be exploring our  research on this topic in a forthcoming lecture at the University of Edinburgh Business School. This work, which was supported by the IFoA,  found that the changes the IFoA identified were often poorly understood by the people most affected and not always their top priorities. For example, while the IFoA included precarity at work in its exploration of risk transfers, our research revealed greater front of mind concerns about precarity in housing.

We found that most people had a very partial understanding of the financial risks they were facing but that did not mean they were unaffected by financial risk-related stress. We heard a lot about the stress of coping with financial responsibilities and that was before the cost of living rose so dramatically. This matters because stress is not just a problem of presenteeism or individual unhappiness. Chronic stress causes long-term and profound health problems including weight gain, heart disease and strokes. All of these are a major concerns when it comes to costs to the public purse. 

We will be following up on our work around risk soon to find out more about what could be done to enable people to cope better. But the one thing we know already is that, while actuaries are professionally trained in risk-management, most of the rest of us are not. We need people to stay healthy enough to be at work but we also want their minds on their jobs for the sake of productivity. It is simply not good enough to design and implement policies that overload people with ever greater and more complex responsibilities which mean, as the FT described it earlier this year, we all need to be actuaries now.

ENDS

Click here to book for our upcoming event in partnership with the University of Edinburgh Business School.

Press release: Global expert calls for urgent change to prevent escalating crises in the UK

Professor Danny Dorling, the Halford Mackinder Professor at the University of Oxford, joined a sell-out crowd in Edinburgh to preview his latest book Shattered Nation. Inequality and the Geography of a Failing State' hosted by the David Hume Institute.

Professor Dorling argued, Britain needs change on a scale not seen since the Second World War to prevent the escalating economic and social costs of avoidable crises:

““The enormity of the challenges we now face, mean we need a scale of intervention not seen since the second world war - we can choose to step up to the challenges ahead, we can choose to create a thriving economy and society that does not leave people on the scrap heap, or we can blunder on fooling ourselves that if we just get economic growth to increase all the other crises will be sorted.””

— Professor Danny Dorling

The discussion addressed the key theme of his forthcoming book - that the failure to tackle rising inequality and to invest in ways of meeting the basic needs of people living in the UK puts Britain at risk of becoming a failed state.

Dorling named Scotland as a source of hope citing  policies such as the Scottish Child Payment and the announcement by the Scottish Government’s intention to move to a “Cash First” approach to reducing dependence on food banks.

““People need to know how much they stand to lose if we do not plan for ambitious change.  After housing costs are paid, the average household in Britain is already less prosperous than the median in every other large European country. We have been moving down the ranks for decades, and the fall has accelerated recently. This is not inevitable. We can plan to end the huge inequalities that are a key feature of this decline.”

“What is happening in Scotland shows it is possible to avoid a poverty of ambition where you hope for so little and ask for even less.””

— Professor Danny Dorling

Reflecting on the ambitions of the 1942 Beveridge Report, Professor Dorling identifies the five giants of twenty-first-century poverty that now need to be conquered: Hunger, Precarity, Waste, Exploitation, and Fear. 

Susan Murray, Director of the David Hume Institute, said:

“We were delighted to host Professor Dorling whose analysis of the data shows what can be changed, not just what has gone wrong.  We know from our quarterly Understanding Scotland Economy Tracker that significant numbers of the Scottish population are losing sleep over their finances and cutting back on the basics such as healthy food and heating. Our ability to achieve many goals, including increased productivity, is placed in jeopardy when the people who power our economy are struggling to afford the basics needed for life today.” 

ENDS

View the full David Hume Institute event recording with Professor Dorling

Notes to editors:

Shattered Nation: Inequality and the Geography of a Failing State by Professor Danny Dorling will be published by Verso Books and formally launched on 19 September 2023.

Press release: Is trust a must for a brighter economic future?

“Trust plays a crucial role in a successful economy.”  says Charlie Woods, the author of the latest David Hume Institute Discussion Paper launched today ahead of an on-line event on Thursday 23 May at 1.30pm. Is this being overlooked by business and political leaders who are seeking solutions to weaker than desired economic performance?

DHI Director, Susan Murray, will be joined in this webinar conversation from New York by Dr David M. Bersoff, from the Edelman Trust Institute, Charlie Woods, the paper’s author, and leading mediator John Sturrock , who works to build trust in negotiations.

David will share the global context on trust from the 2023 Annual Trust Barometer to help explore the relevance of trust to the economy and the labour market.

At a time when the majority of Scots are concerned about household finances, think Scotland is heading in the wrong direction economically and are pessimistic about our economic future, are we paying sufficient attention to the potential of increasing trust to boost economic performance?

David Hume Institute Director Susan Murray says:

“Research shows a strong relationship between levels of trust in society and economic performance with more trusting societies generating more income per person than others. Thinking differently about what helps boost economic performance might reveal we have been looking for too long in the wrong places to find the Holy Grail of a more productive Scottish workforce.”

The webinar is free to watch here.

ENDS

Notes to Editors

• For media enquiries contact Shelagh Young, David Hume Institute, shelaghyoung@davidhumeinstitute.org

• The Discussion Paper: Is Trust an undervalued ingredient for a thriving economy? Is available here

• The 2023 Annual Trust Barometer can be found here

• The David Hume Institute is an independent think tank based in Scotland. The charity was established in 1985 to increase diversity of thought on the economy and related public policy. Find out more on our website

Blog: Budgeting to save a global asset

Ahead of the UK budget Shona McCarthy, Chief Executive of the Edinburgh Festival Fringe Society, reflects on the latest Understanding Scotland economy insights and asks our leaders to lift their heads up from the ongoing crises and take a longer view.

While both UK and Scottish Governments have much to do to address current suffering, the key to sustainable economic growth and wellbeing includes investing in our cultural capital. 

A report by the Lords Communications Committee recently stated that creative industries should sit at the heart of the UK’s economic growth plan and criticised senior politicians for failing to spot its potential.

Investment in culture, which makes up a tiny 0.8 per cent of the Scottish Government budget, has been steadily declining year on year, comparative to other UK nations. This is despite its obvious pre-pandemic economic contribution. The sector has been hit hard by the loss of European funding which has not been replaced at the same level by the new UK Government funds. A rumoured injection of £8.6m for Edinburgh Festivals in today’s budget will be a welcome boost.

In 2019 the creative industries employed over 90,000 people in Scotland with the previous year’s economic contribution measured at £4.6 billion in GVA and £4 billion in exports. But as the sector tries to recover from the debt and ravages of covid, sustaining this contribution and growing the culture and creative sector over the coming years, will require similarly sustained investment, something which does not look likely in the current climate.

Of course governments should be responsive to the electorate’s priorities. It’s no surprise that in the recent Understanding Scotland survey, people in Scotland placed the cost of living and anxieties about NHS performance high on the list when asked to name the issues that most concern them. But we also know from Creative Scotland research across Scotland that 84% believe that it is right that there should be public funding of arts and cultural activities in Scotland. 98% of the Scottish population engaged in cultural activity during lockdown. 93% believes that creative activity is essential for children and young people’s learning and well-being. Alongside addressing immediate concerns is it too much to ask that our political leaders keep their eye on the long game? 

Current challenges and the way governments respond will have long-term economic consequences. In the same Understanding Scotland survey over 60% of Scots said they were cutting down on leisure spending in response to rising costs. In terms of income this could be a knockout blow for those venues and creative practitioners already placed in jeopardy by the impact of the pandemic. As far as the Edinburgh Fringe is concerned I fear there is a sense that it will always be there. The Fringe began as a platform for inclusion and freedom of expression. And it is the very nature of its openness and inclusivity that has caused it to grow organically over 75 years to include more artists, more creatives, more voices from every walk of life and every nation. As we have seen with the plight of the Film Festival this year, we can’t afford to just take it all for granted.

It is astonishing to think the ticket-selling collective of Edinburgh’s Festivals in August are now equivalent in value to a FIFA world cup, and second only to the Olympic Games every single year. 

If cities were bidding now to host what Edinburgh delivers every August, there would be enormous competition.

If the arts were treated like a major sporting event, at least £100m of UK government investment would be on the table to cover the cost and supporting infrastructure. Even comparing, to the much smaller, Eurovision Song contest the UK Government pledged £10m to support the winning city.  

The Edinburgh Festivals are a UK asset, valued world wide which we need to treasure. The arts are a vital part of the UK economy and we need everyone to help us survive. 

ENDS

This article was published in The Scotsman on 15th March 2023

Blog: Celebrate or commiserate for IWD23?

8th March 2023

by Shelagh Young, Engagement Lead, David Hume Institute

Whatever happened to celebrating International Women’s Day?

Back in the day my heart was stirred by inspiring visions of a better future. Today the news is filled with the inescapable truth that far too many women are being left behind by a struggling economy and policies which ignore, and sometimes increase, many of the profound inequalities which first sparked the women’s movement into life. 

Take today’s PMQ session. When asked about action to close the gender pension gap Prime Minister Sunak responded by saying auto-enrolment had helped millions of women. It has but there was no mention of the 1 in 6 women who are currently ineligible to join due to low earnings. Delve a bit deeper and the Government’s own annual review of the scheme makes it clear that reducing the threshold for auto-enrolment was not considered useful for those for whom it  “could make little or no economic sense to save into a pension” stating that it would “divert income away from their day to day needs.”

If people can’t meet their day to day needs now without skimping on pension contributions, who will meet those needs in old age? This isn’t a problem solved easily even for those women who can work more hours or get a better paid job. 

As the consultancy PwC revealed this week, an 18 year old woman entering paid work today will remain permanently poorer than her male peers as she won't see gender pay parity in her working lifetime.

They also reported that childcare costs are so exorbitant that they are driving women out of the paid workforce.

Meanwhile the Joseph Rowntree Foundation pitched in with a cautionary tale about the numbers priced out of home ownership whose income in retirement will also need to cover the rent.

This gives a particularly sharp edge to this week’s advice from Scottish Widows which, as is so often the case, looks to individual women not society in general to solve a problem they did not cause. According to their report, in order to close the average £123,000 difference between men’s and women’s pension savings, young women in their 20s should save really hard before gender discrimination, motherhood and other caring responsibilities take their toll.  

Small wonder then that when we surveyed Scotland’s population for our most recent quarterly Understanding Scotland report, women were far gloomier than men when it came to their personal finances. 

Nearly half of women expected to see their financial position worsen over the next 12 months and 29% had lost sleep due to anxiety over personal finances, compared with only 19% of men. Women were also more likely than men to have skipped meals, reduced portion sizes and used less energy at home to save money. Unfortunately, this probably wasn’t about saving for the future. 45% of women had taken money out of savings and the same proportion had saved less than normal in order to cover current costs. Unsurprisingly, men lagged behind in this depressing race to the bottom by at least 5 to 10 percentage points in almost every domain.

Most shocking of all is that although half of men said they were confident they could cover an unexpected bill of £100 only 37% of women felt they could. This brings us neatly to the gender gap in paid working hours. If your washing machine breaks down there is still more likelihood of the woman in a household being responsible for sorting it out. Being poor keeps you busy but we know what sort of busy leads to better pay and it isn’t the domestic sort.

Which brings us back to needing something to celebrate. When it comes to achieving equal pay and economic growth which respects both planetary limits and the principles of social justice, we clearly have a gender problem and it isn’t just for women to solve.

Ends

Press release: Siloed land information is holding back Scotland

A new report published today by the David Hume Institute and Built Environment Forum Scotland, written by land reform expert Andy Wightman, says the lack of a fully functioning land and building information system is holding Scotland back.

Although Scotland has a considerable amount of information on land and buildings, a Scottish Government commitment in 2015 to deliver a comprehensive Scotland Land Information Service (SCOTLIS) has still not been met.

Information about land and buildings is used everyday by businesses, policy-makers, academics and ordinary people. This information includes who owns land, how much land is worth, building types and energy efficiency ratings, vegetation cover and flood risks areas. 

All of this information exists in some form, however much of it is not easily available and virtually none of it is made available in an integrated form. 

A fully functioning land and building Information system in Scotland would enable users to quickly and easily access information about any piece of land or property in Scotland through a single online source. This will allow for simplified property transfers, better policy and decision making, improved accountability and transparency, and more innovative use of data for wider social and economic benefit. 

There are challenges to overcome but failing to rise to the challenges means Scotland is not reaping the benefits other countries are seeing from similar work. 

Andy Wightman, author of the report said: “A new, fully functioning version of Scotland’s land information system could be in place by 2025 if there was the political will to make it happen. In the past, lack of political leadership failed to establish the governance framework necessary to deliver the ambition for Scotland so the land and building information system remains a vital missing link. ”

Susan Murray, Director of the David Hume Institute said: 

“This report shines a light on the potential of a land and building information system for Scotland. This is essential infrastructure to support the modern economy and transition to NetZero.  The David Hume Institute is delighted to have worked with BEFS, Andy Wightman and others like Professor Stewart Brymer to produce the paper. The ground work has already been done, it just needs everyone to roll up their sleeves and make it happen for everyone’s benefit.”

Ailsa Macfarlane, Director of Built Environment Forum (BEFS) said:

“Obtaining information about buildings can be extremely time consuming.  By bringing together information from different sources, it will be quicker for everyone to access land and building information.  We need a concerted effort to ensure Scotland does not get left behind internationally as other countries are already benefiting from advances in data processing and mapping technologies. As the impacts of climate change intensify, there is even greater need for more timely, more comprehensive and more accessible information about land and buildings in Scotland. A fully functioning ScotLIS will support progress towards achieving Scotland’s net zero goals by 2045.”

The David Hume Institute is hosting a free online event to discuss the paper on Wednesday 8th March. Further details can be found here 

Ends

Notes to editors:

1. About the report: This paper was jointly commissioned by the David Hume Institute and Built Environment Forum Scotland and written by Andy Wightman. It originated from a conversation as part of DHI’s Action Project and it’s development has been supported by a number of individuals, organisations and roundtable discussions.

2. About the author Andy Wightman is a writer and researcher focussing on land governance, land ownership and community land rights. He is the author of publications including Who Owns Scotland (1996), Scotland: Land and Power (1999), Community Land Rights: A Citizen’s Guide (2009) and The Poor Had No Lawyers (2010). He runs the Who Owns Scotland project. From 2016 to 2021, Andy was a Member of the Scottish Parliament.

3. About the David Hume Institute: The David Hume Institute is an independent think tank based in Scotland. We carry out research and host public events on a range of issues related to the economy and society in Scotland.

4. About Built Environment Forum Scotland: Built Environment Forum Scotland (BEFS) is an umbrella body for organisations working in the built environment in Scotland. We focus on the strategic issues, opportunities and challenges facing our historic and contemporary built environment.

Blog: Shan Saba's view from the west

Shan Saba, Director of Scotland’s leading recruitment agency Brightwork Staffline, Founder, Scotland Against Modern Slavery and Board Member of the Refugee Survival Trust reflects on the latest Understanding Scotland Economy insights.

According to the latest Understanding Scotland Economy research people in the west of Scotland are more likely to believe that Scotland is moving in the wrong direction than those in the north and east.

We already know that growing up in Glasgow can be bad for your health so is that why optimism dwindles the further west you live? Or should we be asking if those poorer life chances sharpen people’s wits leading to a less positive but possibly more realistic picture of our future? As a "Weegie", perhaps I am better placed than those who are not from Glasgow to comment.

There is certainly little to celebrate in the fact that eight out of the ten most income-deprived areas in Scotland are all on the west coast (according to the Scottish Government SIMD 2020). Understanding Scotland shows that 46% of people living in Scotland’s most deprived neighbourhoods would not be able to meet an unexpected living expense of £100. This highlights how fragile personal economic situations have become and how people are responding. The research also records a rise in people looking to change jobs or increase their working hours in order to earn more money. 

Is this good news for our fragile labour market which has certainly been affected by difficulties in recruiting across several sectors in recent times?  It is hard to be sure. The dust has not yet settled from the storms caused by Brexit, the Covid pandemic, and the ongoing cost of living issues. The initial labour shortages caused by the departure of European workers translated into higher wages and improved working conditions in manufacturing, agriculture, and hospitality. It has even led to a relaxing of the UK government's stance on immigration. For example, social care workers have been added to the shortage occupation list. 

International students' numbers have had a considerable impact on UK immigration and the world of work. These students have eligibility to work in the UK, although with restricted hours, and they are now much more common in those sectors that were badly affected by the initial labour shortages. It is not uncommon to see African, Indian, and Pakistani nationals being bussed to work in manufacturing and distribution sites across Scotland, which makes me wonder what those Brexiteers who campaigned on an anti-immigration platform think of what has been achieved?

So what about those UK workers that Boris Johnson had proudly said would get up and take on the jobs that needed doing? In certain areas of Scotland, we have seen a slight increase in the availability of "home-grown" workers becoming available due to downsizing or redundancy, and sadly, people who desperately need to top up their income by taking on second or even third jobs to cover their increased household costs.

Overall the news is not great. Firstly because these people alone are not enough to fill the gaps and perhaps more importantly, because labour exploitation has been recorded at its highest level in Scotland since records began in 2002. Desperation can lead people to take on work that is undocumented, and the nature of that work is exploitative at its core.

A quick search on social media for cash-in-hand jobs will bring up plenty of options that can allow you to earn some quick cash with ease. Given the high numbers of people that this survey reveals to be in a seriously precarious economic position, there will undoubtedly be many who are at risk of becoming exploited.

If improved public health Scotland-wide is our goal, then maybe the West Coast pessimists are the modern day equivalent of canaries in coal mines. They might be warning us that there is nothing healthy about a toxic mix of in-work poverty and growing labour exploitation.

Press release: Scots’ pessimism about economic conditions remains

• Almost nine in ten (88%) Scots think that economic conditions are worse than they were a year ago. While two thirds (66%) of Scots say economic conditions will get worse in the next 12 months, this figure has dropped from 81% expressing the same sentiment in November 2022, starting what could be the beginning of an upswing in public opinion on the topic

• A majority (55%) of people believe Scotland is heading in the wrong direction. This is the first time a majority of people have expressed this opinion since Understanding Scotland began

• A quarter (25%) of people are not confident they would be able to pay for an emergency expense of £100 without having to take out a loan or borrowing money, pointing to an alarming level of financial precarity in Scottish households
  

This iteration of the Understanding Scotland Economy series, produced in partnership between the David Hume Institute and the Diffley Partnership, gathered economic attitudes and insights from more than 2,000 members of the Scottish adult population. 

Fieldwork was conducted the week prior to Nicola Sturgeon’s resignation, with results providing a snapshot of public opinion at the outset of ongoing SNP leadership campaign rather than following the announcement of the First Minister’s resignation. 

The new Understanding Scotland polling reveals a mixed picture of public opinion on the economy: while overwhelming pessimism coupled and evidence of harsh financial realities for households persists, people’s predictions for the next year appear less dire than in previous waves of data collection. 

Scotland’s Challenges...

The majority of people (52%) identify healthcare and the NHS as one of the three most important issues facing Scotland today. This is followed closely by the cost-of-living crisis (45%). There has been increased interest in education and schools as a key issue (cited by 15% of respondents compared to 9% in November 2022), correlating with coverage of strike action in the media recently. Interest in other topics covered in the media, such as gender recognition reforms is limited: only 6% of respondents view this as one of the top three issues facing Scotland. 

Scots continue to struggle to make ends meet. Almost six in ten (58%) of people report dissatisfaction with their income covering the cost of living, and 46% are dissatisfied with their ability to meet household bills. Most people continue to report taking action to reduce spending both in and out of home, 60% report not turning the heating on when they otherwise would have done to save money and 61% cutting down on leisure activities in response to rising prices and inflation. One in five (20%) have cut down on meal/portion sizes to save money.

Additionally, labour market activity continues to be shaped in reaction to rising prices: one in five (20%) of people have changed or looked at changing jobs to earn more money, 12% have taken on more hours or paid work, and 7% have tried, unsuccessfully, to take on more hours/paid work. 

Felt unequally...

Financial fragility is not felt equally by the population. While a quarter of Scots are not confident that they could pay an emergency expense of £100 without having to borrow or take out a loan, this rises to over a third (36%) of households with children and 46% of households in the most deprived areas. For an emergency expense of £500 uncertainty in the ability to pay out of pocket rises to 45% of all households, 60% of households with children, and 66% of households in the most deprived areas. 

In response to the cost of living crisis, people are being forced to engage in risky financial behaviours which could lead to increased financial fragility in future: over four in ten (42%) have taken money out of savings to cover higher costs, 41% put less money than usual into savings (with an additional 5% having stopped paying into a pension), all while a similar proportion (43%) reduced their donations to charity. With a quarter (25%) of people using credit cards when they otherwise would not have done and almost a fifth (18%) using ‘buy now pay later’ payment plans, the debt accrued during the cost-of-living crisis could extend its impact on the most financially vulnerable in Scotland. Nonetheless, just over half (52%) of people have hope that their own financial situation will, at the very least, not worsen in the next year.

This wave of Understanding Scotland paints a picture as Scotland gets set to welcome a new First Minister: the cost-of-living crisis continues to impact everyday behaviours, and healthcare and rising prices remain top of the public’s priorities. Nonetheless, amidst widespread disillusionment, a slight glimmer of reduced pessimism for the future in terms of the economy can be found. 

Mark Diffley, Founder and Director of Diffley Partnership, said: “It is clear that the ongoing cost of living crisis is still being felt acutely, and unequally, across Scotland. As we have seen in previous surveys, the impacts of the crisis go beyond immediate financial concerns and continue to have impacts on employment, health and levels of anxiety. A new question on being able to deal with unexpected bills reveals significant unevenness in financial resilience, illustrating that while 4 in 10 of the population would not be confident of meeting an unexpected bill of £500, this rises to two-thirds (64%) of those who live in Scotland’s most deprived communities.”

Susan Murray, Director of the David Hume Institute said: 

“The survey shows a significant number of Scots continue to be unable to cope with the everyday cost of living and are losing sleep over their finances. Even more are unable to cope with an unexpected bill or emergency costs. These results should not be taken lightly. If people are too tired or stressed to concentrate at work, the economy as well as individuals suffer. Living in acute stress affects people’s health and public spending, with the NHS likely to bear the brunt.” 

Understanding Scotland is a quarterly survey tool measuring the most important facets of our lives and decision-making in Scotland: our society, economy, and environment developed by Diffley Partnership and Charlotte Street Partners. Understanding Scotland: Economy is produced in partnership with the David Hume Institute.

We are hosting a free public event to discuss the findings of the report, further details can be found here 

Blog: A View from the Lab

by Shelagh Young, Engagement Lead, David Hume Institute

25th September 2022

Friday’s “fiscal event” has proved to be a powerful curtain raiser for new research we are launching later this week exploring how ordinary people are coping with growing risks to their financial wellbeing.

If you feel like a rat trapped in the Trussonomics laboratory unsure whether the trickle down drug will cure your financial ills, you are not alone. The markets have already announced their damning verdict on the risks being taken with the UK economy as the pound tumbled and money was sucked out of pension funds at a rate which will have a substantial number of people rapidly recalculating their retirement plans.

Even impartial commentators such as the Institute of Fiscal Studies, have referred to the UK Government’s decisions as a gamble. Chancellor Kwasi Kwarteng maintains that the tax cuts will benefit everyone while others have named it a “budget for the rich”. 

However it is described, the facts are clear. At the sharpest ends the tax cuts announced will give the average FTSE100 CEO a return of £162,500 a year while the Resolution Foundation has calculated the annual benefit to the poorest fifth of households at just £90. That staggering difference means the difference between paying your energy standing charges for just four months while the richest receive a tax cut worth more than 99% of the UK population are paid in a year.

The risks to the Government are obvious - electoral success in 2024 surely lies in ensuring that their hoped for economic growth meets the needs of our struggling NHS and social care systems as well as enabling people outside the top 1% to feel their living standards are protected. The risks to the rest of the population vary. Most obvious are reduced returns from pensions and other investments if markets slump further and the spectre of further austerity measures if the large scale public borrowing is not mitigated by growth.  

One tiny part of this unprecedented low tax, high spending, banker’s bonus bonanza of a budget provided a clue as to who is most at risk if the gamble doesn’t pay off. The decision to require low paid part-time workers who receive income top-ups through Universal Credit to seek more paid working hours. 

In August we surveyed how people in Scotland are responding to the cost of living challenge. 9% had already tried and failed to find more hours of work. The devil will be in the under-researched detail, but it is interesting to know why people cannot find more paid work when businesses are crying out for staff. Is it well-known barriers such as the fact that hospitality requires evening work which doesn’t fit with caring responsibilities or that wages are too low to cover the costs of additional child or elder care? This is the type of evidence that should be driving the Government’s policy. Instead, our poorest households are being forced into the vanguard of an unprecedented experiment.

The “fiscal loosening”  prescribed by Kwasi Kwarteng is based on the belief that low taxes and a small state are the treatment for fuelling growth.  Unlike the markets, business organisations have welcomed the approach but if the rest of the lab rats had been given a vote would they have chosen to test this risky drug?

Blog: Behind the scenes at museums

by Shelagh Young, Engagement Lead, David Hume Institute

2nd September 2022  

If you've been dreaming of saving on your energy costs by swapping a wintry day under your duvet binge watching box sets for time spent sitting on a hard bench surrounded by dinosaur bones or mediaeval quern stones, bad luck, it's just not happening. 

No sooner had museums been added to the list of suggested warm refuges from the cost of living storm, up pops the Museum Association to dust off one of today's rarest artefacts - the simple truth. A lot of museums and heritage centres won't be open as often as usual because they can't afford their energy bills either. 

This matters.

Not just because a huge number of people need more than imaginary warm spaces as a defence against the dark parts of winter but because museums are incredibly important to the economy.

Alongside providing jobs they help drive tourism. 

The National Museum Director's Council states that 40% of visitors to the UK cite culture as their reason to visit, and 43% visited a museum or gallery while in the UK.  

They come to see the fascinating antiquities and that doesn't include us. But all old things need to be well looked after. If you've ever spent a night in the mildewed sheets of a damp caravan or thumbed the flyblown pages of a wrinkled vintage paperback you will already know that climate control is fundamental to the healthy preservation of stuff, not just people.  

Shorter museum opening hours cut some costs but climate controlled museum storage is a sophisticated and costly business which cannot be turned off without posing an existential threat to the heritage industry. 

Alongside uncapped unaffordable energy bills, which have reportedly risen by 400% for some institutions,  museums are seeing a reduction in donations and visitor numbers, both signs of growing public belt tightening. Without additional support we have to ask how long it will be before the cost of merely preserving collections, let alone enabling anyone to see them, outstrips the sector's ability to afford it? 

In a week in which health experts are warning that cold homes will damage the lung and brain development of children, it might seem odd to champion investment in the preservation of things. But a healthy economy including the arts, culture and heritage industries, is integral to maintaining public health. There is no better future to be built from ignoring the whole in favour of its parts.

Energy industry privatisation was likened to selling off the family silver. Looking at current energy industry profits, they’ve already turned our lost legacy into gold. Some would point to this as a sign that the private sector really does do the energy business better than public ownership ever could.

Whatever your view, it is surely far from ideal to forge ahead with policies that risk leaving many of the remaining national heirlooms too damaged to generate any income at all. 

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For an insight into how people in Scotland are feeling about the rising cost of living take a look at the latest edition of our quarterly Understanding Scotland: economy research.

Consultation response: public finances in 2023-24

Response from the David Hume Institute to the Scottish Parliament call for views on Scotland’s public finances in 2023-24 and the impact of the cost of living and public service reform.

About our submission

DHI welcomes the opportunity to respond to the Finance and Public Administration Committee’s call for views on Scotland’s public finances 2023-24 and the impact of the cost of living and public service reform.

Central to our work are the people of Scotland, including those who are seldom heard; from different ethnic and cultural backgrounds; different genders, ages and abilities. 

We apply the critical thinking which has long defined DHI to encourage action to address the contemporary issues of our time. 

Our response draws on a range of previous research including:

• The Action Project - the largest multi generational research project in Scotland in recent years heard from over 5,000 people about their thoughts on action to help Scotland build forward better.

• Our 2022 briefing paper on open data, which sets out the lack of progress on open data in Scotland and the cost to the economy and public services.

Summary

We call on the Committee to recommend that the Scottish Government:

• Maintain the essential focus on commitments to reducing child poverty and the transition to net zero is critical to the economy

• Fully implement the Scottish Government’s 2021 benefit take-up strategy

• Recognise that there is little evidence that tax cuts will help with the cost of living or inflation

• Work to reduce levels of ‘inactivity’ amongst those who want to work by reducing barriers to work in order to increase the tax base.

• Fully realise the benefits of their own Open Data commitments to improve public services and boost the economy.

• Better utilise the sustainable procurement duty to deliver national outcomes

Blog: The business of sleep

by Susan Murray, Director, David Hume Institute

25th May 2022

One in four people are already losing sleep over their finances and the cost of living crisis hasn’t fully hit yet.

This is bad news for people’s health and the economy.  The long term health implications are well known for individuals living in a state of acute stress, with lack of sleep increasing the risk of health conditions such as obesity, heart disease and depression.  Relationships suffer and the likelihood of family breakdowns increase.

These negative effects cause short and longer-term harm to the economy, as well as increasing public health costs. Lack of sleep affects your ability to make decisions and reduces productivity.

The cost of living crisis is already affecting individual lives and our research shows worrying signs for business too.  

70% of people have already cut back spending on anything that isn’t essential.  With the majority of Scotland’s business being small and medium sized, this reduction in spending will have a big impact.

Business leaders also have Brexit, labour and skills shortages, higher energy costs and supply chain issues to manage. Some have enjoyed unprecedented profits in recent times but others haven’t yet recovered from the pandemic.  There are tough times ahead for many businesses in Scotland and for some, there isn’t any slack in the system. 

It is understandable that many are calling on the UK treasury, bolstered by increased tax receipts, to step in swiftly with a basket of interventions aimed at reducing the length and depth of the recession.  In the long term we need to create more resilience in the system, but with an increasing number of people experiencing hunger and struggling to heat their homes, looking to the long term now feels like a luxury.

Whilst the big actions rest with government, if you have money and are not on the breadline, are you thinking about the impact of your spending or charitable giving?  

Making conscious choices with money - a priority people told us last year as part of the Action Project, is now even more important. 

With so many people in work using foodbanks and skipping meals - work is clearly not a guaranteed way out of poverty.  If you employ people, what support are you offering the lowest paid in the organisation?  Big employers like John Lewis are openly speaking about the range of measures they have put in to help their lowest paid staff.

In small businesses it can be harder to offer holistic support to employees - and we have thousands in Scotland. For small businesses cash flow is often critical for keeping their heads above water.  Although only a drop in the ocean in terms of the issues facing small businesses, paying invoices on time can make a big difference and saves hours of time chasing up payments.

Some rules are making it harder for those that are struggling most, and here regulators have a role to play. For example higher standing charges for prepayment energy customers.  I can understand Martin Lewis’s anger at Ofgem - it seems as though our energy market is in desperate need of an overhaul.  

The Understanding Scotland - Economy research shows the cost of living crisis is already affecting the majority of people in the country - a minority have savings and a cushion for the hard times ahead.  Let’s hope the pending announcement from the Treasury does something rapidly to help or the prospect of a peaceful night’s sleep is a long way off for many people.

New research reveals widespread economic anxiety in Scotland

Press release from the David Hume Institute & Diffley Partnership

25th May 2022

A new survey produced in partnership between DHI and the Diffley Partnership has revealed widespread anxiety about Scotland’s economic outlook. Amid surging prices, the new Understanding Scotland - Economy survey finds:

• A quarter of people have lost sleep due to stress over personal finances, rising to 3 in 10 people in the most deprived areas.

• Adverse financial conditions have pushed many to forego basic necessities, with 3 in 5 going without heating, and more than a fifth skipping or cutting down on meals to save money. 

• Rising prices also appear to be pushing people into more vulnerable circumstances, with a third of people eating into their savings, and a quarter taking on debt. The equivalent figures are even higher in deprived areas, at 36% and 32% respectively.

While concern is widespread, rising prices have not hit everyone equally: 23% of people in the most deprived areas say their finances have become ‘much worse’, compared to 13% in the most affluent areas. Parents and families are also feeling the squeeze, with 43% of households with children having taken on debt or borrowed money. In addition, three quarters of those unable to work due to sickness or disability, and four fifths of the unemployed also report feeling worse off.

While the present picture is concerning, most people expect things to get worse before they get better. The poll finds that 84% of people believe that economic conditions in Scotland have deteriorated over the past 12 months, and 77% expect this downward trajectory to continue. A similar picture emerges with regards to people’s personal finances, which 62% judge to have worsened over the same time period, and 59% expect this to continue over the coming year.

Mark Diffley, founder and director of Diffley Partnership said:

 “These are some alarming results with no silver lining in sight. Our polling finds extensive and, for some, acute anxiety over a cost of living crisis that is hitting people across all parts of society. A majority of people in all forms of work say that their incomes simply aren’t going far enough, and the picture is even more alarming for those out of or unable to work.”

Susan Murray, Director of the David Hume Institute said:

 “These findings draw attention to the urgent need for action to help those at the sharpest end of surging prices. A quarter of people across the country are losing sleep because of worry about their finances and over half of people are cutting back spending. The potential long-term impacts on the nation's health and economy are huge.”

ENDS

Notes to editors:

1. Designed by the Diffley Partnership, the survey received 2,203 responses from a

   representative sample of the adult population, aged 16+, across Scotland. Invitations were

   issued online using the ScotPulse panel, and fieldwork was conducted between the 5th - 9th

   May 2022, and received 2,170 responses from the adult population, aged 16+, across

   Scotland. Results are weighted to the Scottish population (2020 estimates) by age and sex.

2. About Understanding Scotland: Understanding Scotland is a high-quality quarterly survey

   that delivers insights into Scottish behaviours and attitudes towards society, the economy

   and the environment. The survey fills a vital gap in research, providing the socioeconomic

   insights and indicators needed for effective decision-making, with regularity and timeliness.

Blog: Level up Scotland's virtual bridges

by Lucy Higginson, David Hume Institute

29th October 2021

Many of us evolved into screen junkies over the course of the pandemic. Ofcom found that the average adult spent over 6 hours a day watching TV and online video during the first lockdown. Demand for streaming services rocketed, and there was a massive rise in use of Zoom, Microsoft Teams and new apps like HouseParty as people adapted behaviours to socialise, learn, work and care online. 

Without the internet and the ability for organisations of all scales to pivot to online working, the pandemic would have been far more disruptive. Experts acknowledge that if this had happened ten years ago or even five, the impact on our lives and the economy would have been far greater.

As part of the David Hume Institute’s research conversations for the Action Project, we heard from young people about new opportunities at home that they hadn’t imagined before.  Staying at home to study has lowered costs and other pressures for some students. The Stay Local orders meant they could keep their support networks without fear of being judged for not flying the nest.  

Will the pandemic change the old rite of passage of leaving home to study? Online learning has shown that you can study anywhere - you just need a reliable internet connection.

As part of the David Hume Institute’s commissioned research, A Scotland of Better Places, the Rural Youth Project shared insights of what is most important for young people in rural Scotland. Housing, transport, employment and education opportunities all came out unsurprisingly high - but an eye-watering 98% cited digital connectivity as critical to their future. Currently, only 13% currently have access to high-speed broadband. 

For many people operating businesses in rural areas, reliable broadband is their biggest issue. Turning on a camera for a Zoom meeting can require a coordinated shut down of all other devices. If you want good sound, many can’t have a picture too. As business moves increasingly online, unless we dramatically accelerate rollout of superfast broadband across the country, levelling up will remain a pipe dream - without the pipes.

Our places and the infrastructure we need to connect them have changed fundamentally.  The mass realisation of what the internet can do means people’s priorities have changed. People are no longer tied to cities as they were before. Many have moved closer to family or are planning to do so in the near future.  

But with this great opportunity, we are also facing great inequality.

We heard through A Scotland of Better Places about Balquhidder.  Village volunteers worked for years to bring broadband to the village, finally resorting to digging the ditch and laying the cable themselves after years of fundraising. This included European LEADER funding.  Other villages would struggle to follow this route without community capacity and with EU funds fast drying up. Replacement UK Levelling Up funds appear to have very different infrastructure priorities. 

The rollout of superfast broadband is fundamental to economic recovery from Covid.  Good broadband connection is now intrinsically linked with all aspects of people’s lives and livelihoods.  The UK and Scottish Governments must work together to make rollout happen faster as the current timetable is far too slow.  

The full picture of the UK Government’s new infrastructure priorities are beginning to emerge - the first announcements for the Levelling Up fund showing some unexpected projects. The Fraser of Allander Institute’s examination of criteria shows puzzling inclusion and exclusion of criteria for different parts of the UK. The focus for politicians remains stuck on traditional infrastructure like bridges and roads, rather than the critical high speed virtual connections the final 5% of Scotland is crying out for.

Blog: To field our best team we need a more diverse squad

Blog by Susan Murray, the David Hume Institute

6th September 2021

As the football transfer deadline day passed last week, many teams made key appointments to their squads. Player’s data and match statistics underpinned transfer decisions. It’s no different in business: data matters and should affect the choices being made. 

However, new data from the David Hume Institute shows that business leaders are limiting Scotland’s potential by not prioritising diversity in their top decision makers.  Diversity of thought increases resilience, productivity and innovation as well as improving risk management.  Scotland’s top team is missing out.

The research investigated investment and angel investment leaders in Scotland.  Scotland’s investment companies have less diversity at the top than companies elsewhere in the UK. Although angel investment leaders are more diverse than the bigger companies.

The data on who is, and isn’t securing business investment and who can access the resources to grow is shocking - and again, limiting potential.

The data shows those with resources and connections are more able to reach the top.  This limits the pool of top decision makers and risks group-think - a risk Scotland should be aware of after the last financial crisis.

Business and investment leaders lag behind other sectors, and are not responding to the data linking diversity of thought with successful outcomes.  

So why isn’t change happening faster? 

Studies from around the world show overt and covert bias is limiting the pool - so this is a great opportunity.  Awareness is the first step - just like players on a football pitch, knowing your own statistics helps improvement.  Leaders have the power to champion and deliver change in Scotland.

Three out of ten of the top 50 business leaders also hold positions on other boards, meaning they can influence change beyond their own companies.  Similarly, the power to decide who gets investment is in the hands of the investment leaders.

Why does this matter? Improving gender diversity alone could add up to £250 billion of new value to the UK economy, if women’s new businesses were invested in and scaled up at the same rate as men’s. If women’s participation rates matched men’s there would be the potential of c.35,000 more direct jobs in the Scottish economy.

The leaders have the power to bring change. The country has big challenges ahead and leaders need to rise to those challenges.  Scotland needs its top team on the pitch.

The IOD conference last week challenged Scotland’s Directors to think about the IPCC code red: “the costs of inaction on climate change are greater than the cost of action.  There needs to be a bias towards change rather than a bias against it.”  

The same is true of diversity of thought.  The benefits are widely known and there are costs to inaction.  It's time for Scotland’s top business and investment leaders to bring more breadth to their squad and champion change.

This piece was originally published in The Times on 6th September.

What next for Scotland’s places?

Global Expert considers the actions needed to help all of Scotland’s places thrive post-pandemic

A new report by Professor Duncan Maclennan, commissioned by the David Hume Institute, examines how the country can move forward to A Scotland of Better Places.  

The report explores how thinking has to move to comprehending place policies that match real social, environmental and economic systems and that connect places rather than separate them into different, arbitrary categories for policy action. 

Covid shone a light on the places in which we live, work, study, play and grow.  Our places will play a central role in Scotland’s recovery. They are inter-connected, inter-dependent and impact on every aspect of our lives.

The report is part of David Hume Institute’s Action Project investigating actions for Scotland to move faster towards a country that is more prosperous, sustainable, inclusive and fair. The project engaged more than 4,500 people from across Scotland, bringing together a broad range of perspectives. 

Professor Duncan Maclennan said “There is not a single magic action to make all of Scotland’s Places thrive. Over the years there have been many policies, strategies and initiatives, often top down and not involving local people. The events of the last year have dramatically changed many people’s relationships with the places in their lives.  

This is an opportunity to build forward better from Covid-19 and recognise the connections within and between places.  There are major long-term changes required, and much agreement about what needs to change and how to change it. Bold policy choices could remake the sub-national governance and government of Scotland to match modern place challenges.”

Professor Maclennan suggests “Using reformed financial and tax structures, listening to communities and individuals, (and especially younger and poorer Scots) in the democratic processes that will make Scotland a more prosperous, sustainable, inclusive and fair country.” 

Professor Maclennan’s report is based on conversations with over 600 people in webinars.  The conversations revealed the broad range of new ideas that individuals and communities are ready to share and enact with governments.

Catch up with our launch event with report author Professor Duncan Maclennan and Deputy First Minister and Cabinet Secretary for Covid Recovery John Swinney MSP.

Blog: How broad are your shoulders?

Blog by Susan Murray, the David Hume Institute

20th May 2021

We have all had to think about risk a lot over the last 12 months. But how much do you know about the risk in other aspects of your life?  

Our lives have been dramatically affected to reduce the risk of spreading Covid. Decision-makers have had to weigh up risks against other potential harms caused by the consequences of restrictions and talked about this openly.

People see the risk of Covid differently. This led to stark contrasts in attitudes and behaviours. From rising OCD and anxiety disorders for some, to taking to the streets in anti-mask protests for others – these contrasting approaches can also be seen in attitudes to risk in other areas of our lives.

New research from the Institute and Faculty of Actuaries examines what they call the Great Risk Transfer. Over the last few decades, there has been a largely politically driven transfer of risk from organisations to individuals in many aspects of our lives – but with very little public awareness or education.

Until the 1980s, there had been an implicit contract between citizens and governments: in return for their generalised contribution to the nation, the government would provide economic security in times of need.

Over time, this approach gradually shifted, resulting in a modern social system that expects individuals to take on the responsibility for managing risks. The relationship between contributions and benefits has become much more transactional. One result of this is that there are much greater demands on individuals to devote time and effort into understanding and navigating financial markets and risks.

Expanding individual choice can be seen as positive and some parts of society stand to benefit from the enhanced freedom and flexibility this represents.

But making these choices can often be extremely complex. Managing the risks involved often requires an advanced level of knowledge and understanding, and numeracy skills beyond the general population level.

This is one of the big ironies of the Great Risk Transfer: institutions that are well-equipped with systems and processes to manage risk are passing risk over to individuals, who in most cases are not. We should consider the link between our ability to control or mitigate the risks in our lives and our mental health.

The 2015 pension reforms meant many people withdrew lump-sums from pension pots and some spent their cash on holidays or home improvements rather than investing for their future.

But with rising life expectancy and many expected to live well into their 80s, your pension might have to last 35 years and some individuals are now lamenting earlier choices that are affecting their day-to-day quality of life. Despite the free, impartial advice available from Pensions Wise, only a small proportion of people are using the service.

Thinking about saving for a pension is a luxury for many in Scotland today. The nature of many people’s employment is precarious. The rise of zero-hour contracts and the push to self-employment mean often individuals are shouldering more risk than ever before.

In the David Hume Institute’s research, people especially in rural areas, often working in microbusinesses, told us of the need to have multiple income sources to try to make ends meet.

Lack of sick pay or predictable monthly income means reduced financial resilience. The stark rise in food-bank use shows how many people in Scotland are struggling to put food on the table – so they are unlikely to be worrying about pensions, insurance or social care costs in later life.

The Great Risk Transfer has been a gradual but concerted social change, heaping risk onto individuals, which has largely gone under the radar for the general population.

The last year has seen Covid exacerbate already stark inequalities. We have seen those with resources in a position to consolidate and those without, often in insecure employment with little, if any, personal reserves, see increased costs and increased risks.

The changes to pension auto-enrolment have meant many more people are starting to save for retirement. However, many mistakenly assume the minimum auto-enrolment contributions will cover a comfortable lifestyle in retirement. Unless information becomes more accessible, people may only realise at the doorstep of retirement that they have not saved enough.

But it’s hard to think about retirement for young people who might be worrying about getting or keeping a job, or repaying student debt. The data shows, with little exception that, now only young people with parental assets are able to think about buying a home.

For people in this lucky position, few are considering that in many new estates, roads and other services (like street lighting and play parks) have no plans to be adopted by local councils. This means maintenance – and quarterly health and safety inspections for play parks – become costs, and potential risks, shared between a smaller number of people through the annual factoring bills, no longer the responsibility of the local council.

If residents were to fall on hard times, there is no support available to help with factoring costs, unlike with council tax. This is worth thinking about as many opt for new-build dwellings, believing it will lead to reduced property maintenance costs but, like with some of those affected by the cladding scandal, property owners could find out they are shouldering the risks and are personally liable.

Going forward we need to re-examine and reinvent the way risk is shared. Flood Re, a joint initiative between government and insurers, has done this successfully for property in flood zones. But with a quarter of homes across Scotland having no insurance, many are choosing or defaulting to shoulder this risk because money is so tight.

The Great Risk Transfer is arguably one of the biggest factors changing society, and as we consider how we rebuild the economy post-Covid, we have a unique opportunity to re-examine, and perhaps re-invent, the way risk is shared.

This article was originally published in The Scotsman.

Blog: Do we need to find our inner child?

Blog by Susan Murray, David Hume Institute

April 2021

Many of us will know or have children who ask ‘why’ a lot - sometimes so often that no matter how much you want to encourage curiosity and learning, you lose patience and resort to phrases like “because I say so”.  

On the whole though I am delighted to be asked questions. Two recent favourites from my children have been: if two wrongs don’t make a right, why do two negatives make a positive?  And, why do people buy pencils with rubbers on the end, as the rubber always runs out before the pencil and then the metal bit is just waste? A good question for Zero Waste Scotland.

I had never thought about either of these things before and as an adult, I wonder if too often people forget to ask questions.  

The daily coverage of the economy is a good example. For years the economic narrative has been dominated by a narrow range of voices. What has become clear through Covid is every choice can have benefits and consequences. Choices about the economy are no different. And, with choices, there are trade-offs to consider.

Many people that previously felt on a treadmill are stepping off as the pandemic has given them a chance to re-evaluate what matters in their lives. My first visit to the hairdresser post pandemic was a good example. My hairdresser sold her house last autumn. She has moved out of the city and has gone mortgage free by combining resources with her sister and parents on a single property. This solves several problems the family had been worrying about for years; about intergenerational caring responsibilities; mortgage payments and pension worries. Put simply it “takes the pressure off so we can all enjoy life more now and are not worrying about money so much”. 

As many commentators speak of the economy returning to normal, they fail to notice that my hairdresser is not the only one whose life has changed dramatically over the last year. So many people have experienced bereavement, loneliness and loss of income, but even for those that have remained relatively unscathed their lives have changed in other ways. 

My family, like so many, have got a dog. After years of thinking about it and using the website Borrow My Doggy we took the plunge. Lockdown was a great chance for puppy training and our new addition has had a huge positive impact on my children, but this means even when everything is opened up again we are likely to be living very similarly to this moment.  Long family walks and holidays in Scotland. The massive rise in dog ownership means many people’s future economic choices are likely to be different. 

Recent research from the David Hume Institute showed how many people intend to continue their 2020 behaviours in future. Covid brought communities together and many people have experienced the power of being connected through helping others. So what if – my favourite question opener – the economy doesn’t return to “normal”?

Pre-Covid our economy encouraged people to increase their consumption and buy more stuff, but the data shows this wasn’t making people any happier. More and more people are living alone, and we have been accepting this trend by building more single person dwellings, but the data clearly shows people living alone are more likely to be lonely and be financially insecure.

What if we can return to something better than the old normal?

I was listening to Professor Ben Friedman talk recently about Adam Smith and what he really meant by wealth. It showed how much of economic thinking in recent years has been dominated by a narrow mindset and assumptions. Many use the term 'wealth' to simply mean money but in economics, wealth refers to those goods which satisfy human wants, but all goods which satisfy human wants are not wealth.

My hairdresser certainly feels more wealthy now than previously when she owned more stuff. Over the course of the David Hume Institute’s research I have heard so many stories of people making changes to their lives which on the face of it could have a negative effect on GDP - for instance as consumption could go down by combining houses. 

But surely those who argue for a return to normal would not want individuals to continue struggling in their old lives when there is an option to be happier and wealthier in the true meaning of the word?

Is rational economic man dead?

Blog by Susan Murray, David Hume Institute

25th February 2021

Put simply, yes. 

For the much more detailed answer, read Professor Linda Scott’s The Double X Economy. The book is a whistle stop tour of anthropology, history, science and economics. It firmly positions economics as a social science and shows how interpretation can vary depending on your personal experience.  Professor Scott’s much longer answer is that rational economic man never existed other than as a concept in textbooks.

The Double X Economy does for economics what Caroline Criado Perez’s book Invisible Women did for data. It brings together research from many sources and systematically debunks myth after myth relating to economics.

It is no wonder that the book is being shortlisted for business and science writing prizes, and in 2021 is being translated into 40 languages.

The Double X Economy discusses the historic origins of the myth about women’s inability to manage money.  And how this is connected to the lack of women’s voices being heard in economic debates or taken seriously as academic economists. For too long only a limited number of voices have been heard when it comes  to our economy.

I’ve heard many of the myths mentioned in relation to business in Scotland. For instance to explain away the stark differences in who receives venture capital funding “Women just don’t start the kind of businesses that scale.”

Linda examines this self-perpetuating funding cycle, that male-led businesses receive more funding and so they are more able to grow, so are deemed to be more successful, and the cycle goes on. Although there have been some in-roads in terms of new angel investors targeting women-led businesses, the majority of VC funding is still received by a narrow group of people.

The data clearly shows the volume of missed opportunity from an unequal economy - not just in terms of starting and growing businesses, but also in terms of managing and governing them.  By not valuing diversity of thought in business we are failing to allow organisations to benefit from a wide range of experience that can make organisations stronger - as well as risking group-think. As the David Hume Institute found in our 2020 analysis of Scotland’s top leaders, almost every sector in Scotland suffers because it lacks diversity, but business suffers the most. Just 5% of Scotland’s top business leaders are women. 

If we want a thriving economy it is time to stop wasting talent.  We must value diversity in all its forms and all work harder to achieve it. 

If you missed the event with Professor Linda Scott and Rachel Statham or would like to watch again, the recording is available here. Subtitles are available through YouTube.

If you are interested in diversity of thought in economics, join the David Hume Institute in conversation with Dr Arun Advani and Mairi Spowage on 23rd March to discuss Arun’s latest research on diversity in economics. Register here.

Blog: Prioritising priorities for economic recovery

Blog by Susan Murray, Director, David Hume Institute

20th April 2020

We are moving into a new phase of the Covid-19 public health crisis and thoughts are turning to the foundations for economic recovery.

The sudden and dramatic disruption of the shutdown, triggered an economic shock far bigger than anything we have in recent years. In a webinar, Adair Turner said the number one priority should be increasing consumption to help GDP return to pre-coronavirus levels. Many economists are emphasing the need to make this a V-shaped shock, a sharp decline followed by a quick sustained economic recovery.

But the shutdown has also provoked much reflection on how we are living our lives, both individually and collectively.

Post-pandemic we will still have a climate emergency.  The world’s resources are still finite.  Encouraging those that have money to spend unsustainably might not be the best way forward.

There is a chance to think about established norms.  For instance, will long complicated global supply chains still be desirable?  

Food security has fallen off the Government’s radar in recent years but an increasing number of people have taken action to grow their own food according to figures from the Royal Horticultural Society. Is this a sign of loss of trust in supply chains?

Acting locally doesn't have to be a substitute for thinking globally, it can be an ally. 

The Scottish Government was the first in the world to sign up to the Sustainable Development Goals.  Now more than ever before, these goals need to underlie decision making and ensure that it is not just the industry that shouts the loudest or has the best lobbying that secures public funding.

Scotland would not be alone in considering this as a chance to rethink the path ahead. A group of 180 political decision-makers, business leaders, trade unions, campaign groups and think tanks urged the EU to adopt green stimulus measures. Amsterdam has already shown leadership in announcing it is working with economist Kate Raworth, author of Doughnut Economics on delivering a “Doughnut City”.  

In Denmark bold leadership from the government means companies which pay out dividends, buy back own shares or are registered in tax havens won’t be eligible for any of the aid programs.  Will other countries follow this lead?

Fears of the economic deficit must not be allowed to crowd out smart thinking. There are very strong reasons for not returning to business as usual so propositions aimed at taking us back to things as they were are particularly unlikely to constitute the best approach.

Constructing a positive way forward will involve embracing the complexity of our future choices.

The Scottish Government must hold strong to the UN Sustainable Development Goals and emissions reductions targets, and ensure any precious public money invested to reboot the economy, does maximum public good.