The Behavioral Economics Manifesto Gets Revised : Planet Money - NPR

Nudge: The Final Edition Richard Thaler

Richard Thaler

Sure, the book Nudge may have become a cultural phenomenon that ended up selling millions of copies. And, okay, it resulted in hundreds of governments and countless companies around the world adopting its concepts and methods. And, yeah, its co-author Richard Thaler went on to win the Nobel Prize and appear in an Oscar-winning movie starring Brad Pitt, Christian Bale, and Ryan Gosling. But, Thaler says, when they were trying to sell the book back in the mid-2000s, he and co-author Cass Sunstein had a hard time finding someone to publish it.

"Basically, all publishers rejected it," Thaler says. "So it was originally published by an academic press." It was only when the book was set to become a paperback that a commercial publisher saw its potential and bought the rights. Maybe it took off because the 2008 financial crisis sent society searching for alternative economic ideas. Or maybe it took off because the book had a catchy title and good artwork. Whatever the reason, Nudge caught fire and finally brought behavioral economics into the mainstream.

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STOCKHOLM, SWEDEN - DECEMBER 10: Richard H. Thaler, laureate of the Sveriges Riksbank Prize in economic sciences in memory of Alfred Nobel receives his Nobel Prize from King Carl XVI Gustaf of Sweden during the Nobel Prize Awards Ceremony at Concert Hall on December 10, 2017 in Stockholm, Sweden. (Photo by Pascal Le Segretain/Getty Images) Pascal Le Segretain/Getty Images

Pascal Le Segretain/Getty Images

Thaler is a professor at University of Chicago's Booth School of Business and one of the founding fathers of behavioral economics. Before Nudge was published, he had spent years mostly in the Ivory Tower, scolding fellow economists for dogmatically clinging to an unrealistic portrayal of human behavior. The dominant model in economics was a cartoon that painted humans as supernaturally rational creatures, with the power to always make optimal decisions with laser-like focus and discipline. These creatures were free of cognitive flaws and emotions. They had perfect self-control and clarity of judgement. And while they did face constraints like a fixed budget or limited information, they were always able to make choices that did them the most good.

Thaler insisted the dominant economic model was a poor representation of reality and that wholeheartedly embracing this model had ugly consequences for people and markets. Nudge became his manifesto. He and Sunstein not only offered evidence and theories for why people often fail to make good decisions, they offered small, practical solutions — "nudges" — to help people make better decisions. For example, they began the book with the modest example of a school administrator rearranging the display of food at the cafeteria, increasing the likelihood that kids choose a healthier lunch.

A decade-plus later, Thaler and Sunstein are publishing Nudge: The Final Edition. Thaler says they put a lot of work into the revision, and their "final edition" subtitle is their way of nudging themselves into never having to revise the book again. It's kind of a perfect, meta-proclamation of their own limitations as human beings and the creative ways we can push ourselves to achieve our goals.

This version of the book is chock-full of new ideas. My favorite is probably the concept of "sludge." One way to nudge people to do something is to make it easy to do. Sludge is like its sinister opposite: when institutions try to prevent people from doing something by making it hard to do. Think limiting the number of polling stations and causing big lines as a way to discourage voting. Sure, you can still vote, but good luck actually doing it.

Thaler was inspired to develop the idea of sludge when his memoir, Misbehaving, was released a few years ago. His editor told him that the first review was published in a London newspaper, and Thaler wanted to read it. But the article was behind a paywall. To get past the paywall, there was a promotion. It cost one British pound to sign up for a one-month trial subscription. Then he started digging deeper and learned that to cancel his subscription, he'd have to give two weeks notice. And in order to do that, he'd have to actually call the newspaper's headquarters — during London business hours! This is a company using sludge to make it harder for people to cancel their subscriptions.

Another egregious example of sludge: the U.S. tax system. It's incredibly time intensive and unnecessarily complicated to file taxes. In Sweden, Thaler says, most taxpayers can file their taxes in a few minutes with the simple push of a button on their smartphone. Thaler's colleague, Austan Goolsbee, has proposed we allow the IRS to pre-populate people's tax forms and make our tax experience easy, like it is for the Swedes. Congress has considered adopting such a proposal. But tax preparation companies love sludge. It creates a lucrative business where people need tax help. And they've spent years lobbying the government to prevent reforms that would make tax preparation simple and free. Ideas like Goolsbee's haven't only been shot down, they've been forbidden. "The IRS is not allowed to send you a completed tax return," Thaler says. "So that's one example of sludge that I hope this version of the book can help get rid of."

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In addition to new things in the new version of the book, there are old things from the original version that are gone. That includes the research of the former Cornell professor Brian Wansink, a behavioral scientist who got caught producing shoddy research that fudged numbers and misled the public about his empirical findings. Wansink's work is one of the more dramatic examples of a broader "replication crisis" that has plagued psychology in recent years. Researchers have been re-doing studies published in some prominent psychology journals, and, in many instances, they've found that their findings couldn't be replicated.

Thaler is cheering on the social scientists probing academic literature to suss out what can be proven and what can't. "That's healthy science," he says. Part of Thaler's whole mission with behavioral economics is to make economics overall a healthier science with an evidence-based view of human behavior. While there is a reckoning happening in psychology, he says, behavioral economics rests on an empirical foundation that has proven to be replicated again and again.

"The basics of behavioral economics are really sound because they're kind of obvious," Thaler says. It's obvious, he says, that people aren't perfectly rational. It's obvious that they suffer from self-control problems and have all kinds of emotions and biases that affect their behavior. The oddities of human behavior are very real and demonstrable — and economists and policymakers, he says, need to take that into account.

That said, there are now hundreds and hundreds of public and private institutions nudging people around the world. Will every nudge shown to have an effect in a particular setting be replicated again and again? No, Thaler says. And we shouldn't expect this. Behavioral economists will continue to work to figure out what works and what doesn't. Some nudges prove to be more successful than others, like nudges that push people to institutionalize some change or stick with a default option that's good for them.

Of all the nudges that have reshaped our world, Thaler says their most significant contribution is probably pushing governments and companies to recognize the power of defaults and automatically enroll newly hired employees in retirement saving plans, rather than asking them to opt in. For a long time, new hires were confronted with a daunting set of options for 401k and other retirement plans. And humans (being humans) suffered from problems with delayed gratification and cognitive overload with too many choices. They failed to voluntarily select savings rates and investment plans that would leave them with a solid nest egg for retirement.

Thaler, equipped with the insight that people tend to stick with the default option given to them, pushed organizations to automatically enroll people in sensible retirement plans. Research from Vanguard finds that participation rates in retirement plans more than triple when companies automatically enroll new hires — with 91% of new hires participating in a retirement plan when they're automatically signed up, versus only 28% participating when they have to put in the effort to sign up themselves. If people were super rational, such a nudge wouldn't be necessary — but these huge effects prove why behavioral economics is so important.

Behavioral Economics vs The Pandemic

Since the pandemic began, governments and companies around the world have had to think creatively about how to nudge people to wear masks, socially distance, and get vaccinated. And we've seen a lot of creative campaigns that adopt strategies outlined in Nudge.

An example is appealing to people's identities when promoting a desired behavior. I saw a great example of this last year when I was in a small town in Wyoming, "The Cowboy State." I went into a Subway to get a sandwich, and I saw an image of a Cowboy with a mask that made him look like a badass bandit. "Mask Up Wyoming," the sign said.

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I took this picture in Wyoming Greg Rosalsky/NPR

Greg Rosalsky/NPR

Another idea found in Nudge is to use lotteries to encourage people to do stuff. People, despite the extreme odds against winning anything, love them. And we've seen a number of states using vaccination as the entry ticket to potentially win lotteries. Governors in those states have been declaring the strategy to be a resounding success.

Thaler says he thinks many governments and companies have done a good job of using nudge strategies to get people vaccinated. But over 40% of Americans remain unjabbed. The idea behind a nudge is to encourage people to do something without forcing or coercing or penalizing them. And while Thaler thinks we haven't exhausted the nudge playbook yet, he thinks we may have to start — figuratively speaking — shoving people to get to herd immunity.

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The Behavioral Economics Manifesto Gets Revised : Planet Money - NPR
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The changing map of economics - Brookings Institution

The International Economic Association’s triennial World Congress has long been one of the most important global gatherings of economists, owing to its success in bringing together researchers and policymakers from the poorest to the wealthiest corners of the world. The 19th edition of the event earlier this month, albeit held via Zoom instead of in person, was no exception.

One recurring theme of this year’s Congress was that the global economy and capitalism are at a crossroads. While the COVID-19 crisis was the immediate impetus for this view, other major shifts—from climate change and the rise of digital technology to the changing nature of labor markets—have been increasingly salient. The pandemic has merely accelerated these shifts or thrown them into sharper relief.

COVID-19 has forced us into one kind of “learning by doing,” an idea that the Nobel laureate economist Kenneth J. Arrow, who emphasized that much learning “is the product of experience,” developed in the abstract a long time ago. We have learned to give lectures and hold conferences by Zoom, and to make complex decisions in meetings conducted via Webex. People have suddenly realized that they had been spending more time than necessary in the office, and that they can do much of their work from home. And we have learned to shop at home, too, via digital platforms.

Economists and society as a whole must confront profound intellectual and moral challenges in order to come to grips with the changing world.

As a result, demand for office and retail space will fall, even after the pandemic. And because more people will have the freedom to work remotely, property prices will gradually rise where they were previously low and fall where they were high, leading to greater leveling.

On the other hand, salary disparities will increase, because the labor market will tend to be more of a common pool with heightened competition for talent. Most important, globalization, after some initial stumbles, will accelerate, with rapid growth in cross-country outsourcing. This is likely to have a significant effect on labor markets, national politics, and the nature of conflict.

Understanding this new world will require major breakthroughs in economic thinking. Economics normally proceeds by contesting the explicit assumptions and axioms on which theory is built. But all scientific disciplines also have hidden assumptions that are so deeply embedded that we do not state them explicitly and often forget they exist. In their celebrated research in the 1950s that provided a formal structure for understanding Adam Smith’s idea of the “invisible hand,” for example, Arrow and fellow Nobel laureate Gérard Debreu showed the many assumptions that were needed for Smith’s conjecture to be valid.

There were other assumptions that were taken for granted—simply part of the woodwork of economics—including the symmetry of knowledge among buyers and sellers. One of the biggest breakthroughs of modern economics was the insight that knowledge is often asymmetric, and that this asymmetry can shatter the invisible hand. This breakthrough earned Joseph E. Stiglitz, George Akerlof, and Michael Spence the 2001 Nobel prize in economics, and led to new forms of regulation that made the modern economy possible. We owe many of our regulations concerning quality control and product standards to this breakthrough, which showed definitively that the market’s invisible hand cannot ensure standards when information is asymmetric.

It remains to be seen what form the economics profession’s new intellectual discoveries will take and what regulations we will need to apply them. What is clear is that the strain humanity has imposed on the environment means growth as we currently know it cannot be sustained. But that does not mean we have to learn to live with lower growth. In fact, I believe future growth will be faster than we have seen thus far.

The lower-growth camp’s mistake stems from a common misunderstanding of GDP or national income. A higher GDP is often taken to indicate more wasteful consumption and consumerism of the kind we are indulging in now. But that need not—and now must not—be the case.

The consumption of more art, music, and learning, as well as better health and greater longevity, are all components of GDP, and are, or can be, environmentally friendly. Reforming our regulatory system can foster rapid GDP growth—but with the content of GDP changing dramatically, and with a disproportionate amount of human labor directed to creative activities. The nature of reform for the new world is a big topic, but policymakers will need to focus on curricula that nurture creativity, because routine work will increasingly be automated; shift consumption away from environmentally wasteful goods; and redistribute wealth radically to lessen inequalities.

My recent research on group morality, however, highlights a caveat that we must address. When discussing matters like climate change and current global inequities, we urge people to be other-regarding. In other words, they should not be concerned solely about their own well-being but also consider the welfare of the current poor and future generations who will be affected by our decisions.

But as moral philosophers have long known, group morality is a problematic concept. I have recently tried to address the “Samaritan’s Curse,” whereby a future generation can end up being hurt when all individuals today take its well-being into consideration. This problem, like the prisoner’s dilemma but in the moral domain, can potentially defeat our best intentions.

So, the road ahead will not be easy. Economists and society as a whole must confront profound intellectual and moral challenges in order to come to grips with the changing world. But humans have done it before. One can only hope that our intelligence and resolve enable us to do it again.

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The changing map of economics - Brookings Institution
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The changing map of economics as a challenging future beckons - Mint

The International Economic Association’s triennial World Congress has long been one of the most important global gatherings of economists, owing to its success in bringing together researchers and policymakers from the poorest to the wealthiest corners of the world. The 19th edition of the event held earlier this month, albeit via Zoom instead of in person, was no exception.

One recurring theme of this year’s Congress was that the global economy and capitalism are at a crossroads. While the covid crisis was the immediate impetus for this view, other major shifts—from climate change and the rise of digital technology to the changing nature of labour markets—have been increasingly salient. The pandemic has merely accelerated these shifts or thrown them into sharper relief.

Covid has forced us into one kind of ‘learning by doing’, an idea that the Nobel laureate economist Kenneth J. Arrow, who emphasized that much learning “is the product of experience", developed in the abstract a long time ago. We have learnt to give lectures and hold conferences by Zoom, and to make complex decisions in meetings conducted via Webex. People have suddenly realized that they had been spending more time than necessary in the office, and that they can do much of their work from home. And we have learned to shop at home, too, via digital platforms.

As a result, demand for office and retail space will fall, even after the pandemic. And because more people will have the freedom to work remotely, property prices will gradually rise where they were previously low and fall where they were high, leading to greater levelling.

On the other hand, salary disparities will increase, because the labour market will tend to be more of a common pool with heightened competition for talent. Most important, globalization, after some initial stumbles, will accelerate, with rapid growth in cross-country outsourcing. This is likely to have a significant effect on labour markets, national politics, and the nature of conflict.

Understanding this new world will require major breakthroughs in economic thinking. Economics normally proceeds by contesting the explicit assumptions and axioms on which theory is built. But all scientific disciplines also have hidden assumptions that are so deeply embedded that we do not state them explicitly and often forget they exist. In their celebrated research in the 1950s that provided a formal structure for understanding Adam Smith’s idea of the ‘invisible hand’, for example, Arrow and fellow Nobel laureate Gérard Debreu showed the many assumptions that were needed for Smith’s conjecture to be valid.

There were other assumptions that were taken for granted—simply part of the woodwork of economics—including the symmetry of knowledge among buyers and sellers. One of the biggest breakthroughs of modern economics was the insight that knowledge is often asymmetric, and that this asymmetry can shatter the invisible hand. This breakthrough earned Joseph E. Stiglitz, George Akerlof, and Michael Spence the 2001 Nobel prize in economics, and led to new forms of regulation that made the modern economy possible. We owe many of our regulations concerning quality control and product standards to this breakthrough, which showed definitively that the market’s invisible hand cannot ensure standards when information is asymmetric.

It remains to be seen what form the economics profession’s new intellectual discoveries will take and what regulations we will need to apply them. What is clear is that the strain humanity has imposed on the environment means growth as we currently know it cannot be sustained. But that does not mean we have to learn to live with lower growth. In fact, I believe future growth will be faster than we have seen thus far.

The lower-growth camp’s mistake stems from a common misunderstanding of gross domestic product (GDP) or national income. A higher GDP is often taken to indicate more wasteful consumption and consumerism of the kind we’re indulging in now. But that need not—and now must not—be the case. The consumption of more art, music and learning, as well as better health and greater longevity, are all components of GDP, and are, or can be, environmentally friendly. Reforming our regulatory system can foster rapid GDP growth—but with the content of GDP changing dramatically, and with a disproportionate amount of human labour directed to creative activities. The nature of reform for the new world is a big topic, but policymakers will need to focus on curricula that help nurture creativity, because routine work will increasingly be automated; shift consumption away from environmentally wasteful goods; and redistribute wealth radically to lessen inequalities.

My recent research on group morality, however, highlights a caveat that we must address. When discussing matters like climate change and current global inequities, we urge people to be other-regarding. In other words, they should not be concerned solely about their own well-being but also consider the welfare of the current poor and future generations who will be affected by our decisions. But as moral philosophers have long known, group morality is a problematic concept. I have recently tried to address the ‘Samaritan’s Curse’, whereby a future generation can end up being hurt when all individuals today take its well-being into consideration. This problem, like the prisoner’s dilemma but in the moral domain, can potentially defeat our best intentions.

So, the road ahead will not be easy. Economists and society as a whole must confront profound intellectual and moral challenges in order to come to grips with the changing world. But humans have done it before. One can only hope that our intelligence and resolve enable us to do it again. ©2021/Project Syndicate

Kaushik Basu is a former chief economist of the World Bank and chief economic adviser to the Government of India, and professor of economics at Cornell University

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New Report by Oxford Economics Shows Concerts and Live Entertainment Industry an Economic Engine in United States - PRNewswire

WASHINGTON, July 26, 2021 /PRNewswire/ -- Today Oxford Economics released an economic report entitled "The Concerts and Live Entertainment Industry: A Significant Economic Engine," that highlights the industry's contributions to the U.S. economy. The report, commissioned by Live Nation Entertainment, was conducted by Oxford Economics to better understand this important industry's contributions to the U.S. economy nationally and at the state and local levels.  
 

"Beyond its important cultural contributions, the concert and live entertainment industry generates massive economic upside, supporting the livelihoods of nearly a million people in the US and sustaining public services with nearly $18 billion in taxes generated in 2019," said Adam Sacks, President of Tourism Economics, an Oxford Economics company. "The US needs a flourishing concert and live entertainment industry to achieve full economic recovery." 

The report's key findings revealed that:   

• The industry's total nationwide economic impact of $132.6 billion supported 913,000 total jobs with associated labor income of approximately $42.2 billion in 2019. 
• The industry generated a direct impact of $55.2 billion in 2019, which included local operational spending by live events venues and off-site spending by out-of-town live event attendees.   
• Overall, the live events industry generated a total fiscal impact of $17.5 billion in 2019, including nearly $9.3 billion in federal tax revenues and $8.3 billion in state and local tax revenues  

While the national impact of the live event industry is significant, live's impact starts locally. Concerts and live entertainment events generate significant economic impacts at the state and local level as its venues spend money in local economies to sustain daily operations, including spending on payroll, marketing costs, legal services, and professional services. And, the economic impact of live events extends beyond the jobs, event, and venue itself to local restaurants, hotels, bars, retailers, and small businesses. For example, If an out-of-town attendee were to spend $100.00 on a concert ticket, the local economy would benefit from an additional $334.92 in spending, resulting in a total spending impact of $434.92.  

Live events also contribute to the overall quality of life in a region that helps to attract and retain businesses and talent and helps to create the sense of community so many crave after this year of isolation caused by COVID-19. Beyond the cultural loss involved, the US economy has incurred massive losses in GDP, employment, household income, and tax revenue due to the shutdown of live events during the pandemic. Due to this, the report examined 2019 data to ensure a complete analysis could be conducted that is in line with regular performance of the industry.

As local government officials are providing approved health and safety guidelines, concerts, festivals, and live events are beginning to return to communities around the country. After a year of isolation, many crave getting back to enjoying memorable live experiences safely in 2021 and into the 2022 and 2023 seasons. This renewed enthusiasm for live positions the industry for growth in the coming years as long as safety measures and vaccinations continue across the country.  

To read the full report, click here.  

The Concerts and Live Entertainment Industry, as defined by this report, includes all live musical performances, such as festivals and concerts, and comedy shows held in amphitheaters, clubs, theaters, arenas, stadiums, and other venues. Not included in this analysis are theater, Broadway, sporting events, and family shows. 

About Oxford Economics 

Oxford Economics is a leader in global forecasting and quantitative analysis. Our worldwide client base comprises more than 2,000 international corporations, financial institutions, government organizations, and universities. Headquartered in Oxford, with offices around the world, we employ 400 staff, including 250 economists and analysts. Our best-in-class global economic and industry models and analytical tools give us an unmatched ability to forecast external market trends and assess their economic, social and business impact. 

SOURCE Oxford Economics

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Olympic Economics in a COVID-19 World - Institutional Investor

By Scott Bauer, for CME Group

AT A GLANCE

• Tokyo’s once-anticipated economic boom from the Olympic Games could be a bust as the city prepares to host in a COVID-19 bubble with a complete ban on spectators
• The Nikkei is at its lowest level since May 17, as a state of emergency declaration for Tokyo ahead of the Olympics has accelerated a risk aversion sell-off

Every two years, cities from around the world submit bids to host the Olympic Games. This occurs seven years prior to the respective Olympics, with the winning city meeting extensive criteria to be selected for the prestigious honor. On the most fundamental and basic level, city authorities must prove to the International Olympic Committee that hosting the Olympics is logistically possible. This means presenting existing stadiums, as well as designs for new ones, to host events. But it also means demonstrating plans for other infrastructure – including transportation, hospitality and accommodation, and security – plus everything else that goes into hosting a competition that, on average, has sold over 5 million tickets each of the past five Summer Games.

When a city is selected to host the Olympics, the honor and prestige is not the only incentive granted to them. In the seven years leading up to the Games, millions of jobs are created to meet the demand in labor needed to pull off hosting the Olympics. And then, during the Games, the average 6 million plus attendees, combined with thousands of athletes, generates billions of dollars in revenue for the city. The economic gain from increased labor and tourism is a major reason cities compete to host the Olympics.

So, what would the Olympic Games be like in a bubble with a ban on spectators? Due to the ongoing COVID-19 crisis in Japan, we need not wait long to find out, as the (delayed) 2021 Tokyo Olympics will be held exactly like that: in a COVID-19 bubble with no spectators and heavy restrictions.

Japan Outlook

The confluence of heavy media coverage and no fans has never happened for the Olympics. As such, it’s useful to look at some of Japan’s market gauges to estimate the toll an absence of fans might take.

The Nikkei finished lower for a third day in a row as the state of emergency declaration for Tokyo ahead of the Olympics has accelerated the risk aversion sell-off. The Nikkei now stands at its lowest point since May 17; however, losses may be somewhat capped due to the recent weakness of the Yen.

Additionally, the Olympics may be considered a negative for the market. But if it is managed to be held successfully without further adding to the spread of COVID-19, this may actually be a positive moving forward. It will be interesting to see the impact on Olympic sponsors as many are now running out of opportunities to recoup their Olympic investments. Expectations of Olympic revenues have been downgraded since organizers decided in March to exclude spectators from overseas, but may now see further downgrades as the complete spectator ban has now been set in place.

Missed Tourist Revenue

In 2013, Tokyo was selected by the International Olympic Committee to host the 2020 (now 2021) Summer Olympics. Coinciding with the selection was the Japanese government’s decision to relax immigration rules and welcome tourists to the country. According to a 2013 projection by the Tokyo 2020 Olympic and Paralympic Bid Committee, an estimated 920,000 spectators per day were expected to visit Tokyo during the Olympic Games. For an economy that shrank in Q1 2021, the tourist foot traffic would have been a much-welcomed source of extra revenue. It is estimated that tourists generated £2.1bn in revenue during the London 2012 Olympics. Missing out on tourist revenue will hamper Japan’s economic growth expectations, but on the bright side, the country did not have to spend as much of their budget on infrastructure as host cities normally do.

According to Statista, when Tokyo hosted the Olympic Games in 1964, Japan invested ¥1 trillion into infrastructure and development of the city. At the time, that investment translated into 3.4% of their GDP. Due to the economic growth of Japan since then, and the existing infrastructure throughout the country, Japan will have spent an estimated ¥8-10 trillion, or 1.5%-1.8% of their GDP on the 2021 Olympic Games.

Hosting the Olympic Games not only drives tourism and economy for the duration of the event, but also long after. One of the best examples of the Olympics having positive effects on a host city is with Barcelona, which had been partially closed to the rest of the world before hosting the 1992 Olympics. According to Statista, in 1990, 1.37 million tourists stayed in hotels in Barcelona. By 2000, that number had reached 3.14 million, and in 2019, 9.47 million tourists stayed in the city’s hotels.

By bringing in visitors and also being internationally televised, people from around the world learn information about the city, culture and country itself that they might not have otherwise. For a country that has seen low, and even negative, growth the last few years, hosting a fan-filled Olympics would have been a much-needed jolt to the Japanese economy.

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Olympic Economics in a COVID-19 World - Institutional Investor
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Indonesia's Easing of COVID-19 Curbs Seen Driven by Economics - U.S. News & World Report

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Indonesia's Easing of COVID-19 Curbs Seen Driven by Economics  U.S. News & World Report
Indonesia's Easing of COVID-19 Curbs Seen Driven by Economics - U.S. News & World Report
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BOJ appoints PhD economist to head policy planning division - Reuters

TOKYO, July 26 (Reuters) - The Bank of Japan on Monday appointed one of its most prominent economists to head a division drafting monetary policy, as the fallout from the coronavirus pandemic complicates policymakers' efforts to predict the economic outlook.

Takuji Kawamoto, a career central banker with a PhD in economics, will head the BOJ's policy planning division, a post predominantly held by staff with law degrees given its emphasis on speech writing and monetary policy drafting.

Kawamoto, who previously headed a team conducting economic research, has written numerous reports analysing Japan's economic trends and theories behind the BOJ's policies, including one in 2017 explaining why Japan failed to hit the central bank's 2% inflation target.

The appointment, which takes effect on Monday, comes at a time when many central banks face the delicate task of navigating their economies through a pandemic-driven transition, while seeking to broaden their roles into uncharted territory such as climate change.

The BOJ's policy planning division, which is part of its monetary affairs department, is charged with preparing speech drafts and monetary policy ideas for deliberation and approval by the central bank's nine-member, decision-making board.

Reporting by Leika Kihara; Editing by Jacqueline Wong

Our Standards: The Thomson Reuters Trust Principles.

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