Science Slam Economics
Scientific battle in the field of economics
In early April, was the first in Russia Science Slam on the economy, which competed students of the New Economic School (NES). Each participant had 10 minutes to be available and interesting to talk about his idea in the field of economics and finance. And the audience defined the applause of the best. Who needs renewable energy in Russia? Do smokers keep a promise to quit smoking?
Anastasia KIM, a student at the New Economic School:
Hello! I have a request to all: let’s imagine, within the next 10 minutes, that we are in the circle of anonymous neurotics? And now you will hear my story. Please, take it seriously.
So, my name is Nastya, and I believe in renewable energy. Well, to the world, of course. I believe that someday windmills, solar panels and mini hydro power plants will become an integral part of our life – the same as electricity once was.
Now the technical question is: during the next 10 minutes you will very often hear from me the abbreviation of RES, which means “renewable energy sources”, and not a pop group (VIA, vocal and instrumental ensemble). Please, remember!
Several years ago I was lucky enough to live a little in Oman. This is a wonderful country! There 342 days a year the sun shines. And what do you think, what is the basis for the energy system of this country? You are right: there is burning oil to get electricity! And solar panels, unfortunately, a little – they can be counted on the fingers. I still could not understand why this was so. After all, if you believe scientists, if you build up 3% of the Sahara desert with solar panels, then this will be enough to provide energy for the whole world. The climate of Oman and the climate of the Sahara are very similar. If someone talks about global warming, then believe me, guys: these people do not need global warming.
This question tormented me for so long that I even entered the NES magistracy for the program “Economics and Energy”. Of course, it was possible to google, but we are not looking for easy ways. As you can see, in Russia the situation is little better. At the same time, we all understand that we want to leave to our children the beautiful planet on which we now live. But somehow some countries – such as the European Union, in the States … everything is arranged – they change their energy system in a more environmentally friendly way, rebuild, build a lot of renewable energy, introduce very serious criteria for selection. And we somehow do not do this. And let’s see why this happens?
The matter is that even now RES projects do not pay off at all. Such energy is much more expensive than traditional energy – as, for example, from coal or gas power plants. In Russia, this is especially true, because we have very low prices for gas and coal. In addition, we do not have such technologies yet, and it is quite expensive to build and erect it. I say this to the fact that without additional investment this industry will die.
Let me tell you very quickly and by analogy, why this is happening. Imagine now that you are performing in a circus troupe. You make a living by building a living pyramid, like the one shown on the slide. You have been working for a long time. Without you, not a single circus show goes by, and everything seems to be going well. Your number is sharpened to automatism, and everything is very cool. But over time, the public, as a very capricious lady, changes some of their ideas. She says: “We are bored! We want something new. ” And the one who now stands on your side is very old. He’s bald, fat, old, clumsy and very boring. In general, the audience does not want to see it every time.
But there is a new promising, progressive artist. But at the same time he is very unstable. It is unclear what to expect from it. And you can not calculate his next actions. However, the public says: “We are willing to pay extra to see him at least sometimes in performances!”. You have nothing to do, you agree to these conditions. But, as I said, it’s impossible to predict what will happen to this star. So, something has changed, only you now live in a terrible nerve. Performances must pass every day. But at the same time the star may appear, or it may not appear! And whether the artist will appear, you will know only after the curtain is opened. And thus, you live in two states: in 30% of cases the star appears, and everything is fine. And in 70% on the scene comes your old friend, who worked before – and continues to work. But at the same time look: the star is very expensive, he needs to pay this money. And your old acquaintance also needs to pay extra, otherwise without him the whole system will collapse.
And now replace the star with renewable energy, and the old friend with “old” thermal electricity. And then you get the principle and the basics of how the electricity market works now. The question is: who needs such a headache? At the moment, what will happen with RES further in Russia, is solved by a very small group of market players. And the support system that exists now, honestly, will end after some time. And what will happen next is completely incomprehensible.
My task as a researcher is to determine in what possible direction this industry will move. What decisions can or can not these market participants take? This is an applied work. I use the already approved methodology, adapted to the Russian market. In my model there are about 30 players. Each of these players has its own positions, opinions, interests. And most importantly, that there is a weight for decision-making. The approximate picture you see on this slide. Imagine an elephant is a state. He is very large and slow. From him a lot that depends. And he tries to not cause a chain reaction by his actions, so he takes a neutral position more or less. My algorithm calculates how the positions of these players change over time, depending on the position of the other participants. As a result, they either converge or diverge, and therefore decisions are made or not taken, depending on whether they converge or not. I guide my animals in 5 directions. Each of these areas is a separate way of supporting RES. I hope you can see these names, because to be honest, I’m not going to tell you very deeply about what it is (or what’s behind it). But I’ll tell you now one thing – without the support of consumers, without realizing that we need these technologies … for example, the introduction of “green” certificates or an online trading platform for electricity exchange will not work.
So, probably, the main idea of my presentation today is that we can believe or not believe in global warming. We can believe or not believe in anthropogenic impact on the environment. Well, it’s a personal matter for each of us. But in my opinion, RES are technologies that are similar to exploring the cosmos. Perhaps someday a person will find his only right decision in these technologies.
Therefore, going back to the main issue of my presentation, I can ask the question: who needs renewable energy in Russia? And most likely, I will answer that to all of us. Maybe not now, then. But in no case should we forget that this must be done, it needs to be developed. In general, such cases. Thank you for attention!
Marina ZAVALINA, a student at the New Economic School:
Today seems to be such a nice weather outside the window, right? Spring has already come! Spring is the time for change, preparation for the summer. You probably want to somehow change life. We need to start running! It’s time to stop smoking! We must start eating right, stop going to McDonalds. Or maybe it would be a good idea to take a course on the history of Russia, for example? Or learn how to type blindly: in general, this greatly speeds up your life. Well, and this is vital for students – probably, you already wrote your diploma, he lies and dusts on the shelf? And you are waiting for everything: “Well, when will I take it to him, I’ll finally deliver it and tell it?”. Because you planned everything in advance, prepared and all that. And in general: “From Monday I will start a new life! So that”.
Please raise those of you who at least once in your life have promised something to me. Yes, I am with you, really! Now raise your hands to those of you who have fulfilled at least half of what he promised. Well, the ranks have thinned out! It’s a familiar feeling.
So, one American economist Richard Tyler said in his interview: “Traditional economics suggests that people are very rational. Super-rational and dispassionate. They can make decisions like computers, and do not have problems with self-control. They never overeat. They will never get drunk in a bar. They postpone each month the necessary amount of money. But real people are not like that! “. Economists have noticed this for a long time and began to investigate. So there was a new field in this science called “behavioral economics”. For the contribution to which, by the way, Richard Tyler received the Nobel Prize in economics last year. That’s why he’s so pleased in this photo!
Let me show you on a concrete example, in what is this model of irrational behavior of people? All of you, probably, remember the experiment with children and marshmallows. There was such video on YouTube: before the children put a marshmallow and said – “You can wait one minute, and I’ll bring you a second marshmallow.” Then the subjects were left alone with this sweet little white marshmallow.
And then there were very funny, funny actions from the children. They tried to smell her, to lick a little – this is not considered for what he ate? Or just hypnotized her with a look. Of course, there were children who suffered in a minute and eventually, like a girl on the slide to the left, received the second and were extremely pleased. She, in general, rationally acted: two marshmallows are better than one. But some children could not resist and half-eaten the first marshmallow, and then looked enviously at other, happier children.
Why does it work this way? Because we value “today” more than “tomorrow”. And tomorrow and all other days – about the same. And in the end, if we have any business (like, for example, those about which I spoke at the beginning of my speech), then we think: “Well, I will do it tomorrow, because today I already do a lot of work. I’m tired – I came home from work! Here tomorrow I will begin 100% ». And you are postponing it for tomorrow. However, tomorrow you are absolutely in the same situation as today, and again postpone for another day. So in the end it does not lead to anything.
In general, something like this happened with my diploma. I very long postponed the decision on the choice of the topic, I deliberated what I should do about it until eventually I came across one interesting question from the population monitoring. It sounded like this: “What will you do if the prices for cigarettes grow 2 times?”. The question was asked to smokers, as you guessed. And I was interested! There were several answers, but I was interested in the option “I’ll quit smoking,” of course.
It so happened that at the same time my friend decided to quit smoking. Well, we argued with him for 500 rubles. It seems that money is small. However, when you have a whole scholarship of 1,500 rubles, this is a considerable amount. It all coincided – an interesting question, a dispute with a friend and the economic methods that I studied for so many years. As a result, I began my research.
So, we have people who promised to quit smoking in 2010, if prices rise by 2 times. From 2010 to 2015, prices have risen about 2 times, taking into account inflation. So I took this period for consideration. What happened? It turned out that only 30% of people kept their promise and really quit smoking.
On the one hand, these people know something about themselves, because on average smokers are less likely to quit smoking than in 30% of cases. But on the other hand, is it worth believing their promises after that? Perhaps worth it. There is a chance that they have had some changes in their life during these 5 years. That is, shocks, unpredictable factors – they did not expect them.
But it turned out that such shocks did not influence whether people kept their promise or not. What did I do next? I realized that all these people are points in a multidimensional space. And each coordinate is some kind of characteristic of a person: for example, sex, age or income. There were many of them. Further in this multidimensional space, I divided all people and projected on a plane so that you would understand. Well, even if you do not understand, I’ll explain. As a result, several groups of people have turned out – namely, 10 is drawn here. Each group has its own color. Inside each of them you can see the dots and the plus signs. Let me tell you what groups I had.
For example, here is one of them – people who live together, but have not officially registered their relationship (are not married). Of these people only 10% kept their promise. Look, the promise to quit, the promise to get married – see, is there any connection? I’m not going to say which one. But you think about it! The second group of people are girls, divorced, with children. They were not very happy with their life, their financial situation – but, nevertheless, 40% of them quit smoking. And the last interesting group are such men in the prime of their life, for 50 years, who no longer work, drink, are satisfied with life and smoke cheap cigarettes. Of these, strangely enough, about half quit smoking. I guess they started to watch their health; all the same age!
As you probably guessed, my friend did not belong to any of these groups. He belonged to this blue group number 3 (I’ll show you now!), Namely, to people who are young, they have a small income, they have never been married, and they have no children. But they are young, full of life. It turned out that 30% of these people quit smoking – as an average for the population. It would seem that this should help me in a dispute with a friend! However, as you remember, here people gave the promise to quit smoking in case prices rise by 2 times. And my friend had a stronger incentive: a dispute with me. So, I think he really will quit smoking. Moreover, he is now every day in Instagram lays out the following image: “I do not smoke for three hours, support your likes, reposts! I am strong!”.
And I, in turn, will continue my research and see what I do with these groups of people. Namely – what can the government do to encourage them to quit smoking?