It will soon be a year since Lehman Brothers filed for bankruptcy. And two years since the queues began to form outside branches of Northern Rock. The Financial Times felt obliged to pen a defence of markets, before soliciting views on the future of capitalism.

Now that we are no longer staring over the precipice, wasn’t this all just a little excitable? Perhaps not. New research suggests that the crisis may shape the psyche of a generation, even if the crisis now passes quickly.

The evidence comes from economists, Paola Giuliano of UCLA Anderson School of Management and Antonio Spilimbergo of the International Monetary Fund. Giuliano and Spilimbergo rely on answers to the General Social Survey, which has been conducted in the US almost every year since 1972. Because each survey participant has an identified home region, Giuliano and Spilimbergo can compare survey answers with the economic performance of the region in question. (The regions are large: the US is divided into nine.) Regional economic performance can be choppy, so the researchers looked for outliers: when regional growth fell into the bottom 5 per cent of all regions and all years in the sample, the researchers counted this as a severe regional recession. This turned out to be a year in which the regional economy shrank by 3.8 per cent or more.

The remainder of the article can be read here. Please post comments below.

I read that supermarkets are abandoning the 99p price point in favour of a “round pound” as this makes the products appear cheaper and reflects a more honest business practice.
I wonder if pricing psychology played any part in this decision – or is it just a cynical cash grab? After all, if they make an extra penny on every product they sell this year, it will mean tens of millions of pounds in extra profits.
S.C.

Dear S.C.,

This particular pricing decision involves three very different sets of costs and benefits, none of which the article you sent me sets out clearly.

The first is to do with the physical task of giving change. This is time-consuming for staff and shopper alike. However, because it requires that the transaction be registered, it also makes it harder for staff to divert money from the till into their own pockets.

The second is psychological. Do “round pound” prices or those ending in 99p seem cheaper? The article cites the same “expert” supporting both views.

The third is simple price-sensitivity. In classic economic theory, when the price goes up, revenues per item rise but sales fall. This is a straightforward trade-off and it is up to individual companies to find the sweet spot.

But your own theory is almost as confused. You seem to think supermarkets have offered customers a penny discount because they were run by kind people. This season the kind people are no longer in charge – and prices have risen.

I would dismiss your thesis out of hand if … I had a better one myself. Our discussion suggests several reasons for retailers using 99p endings, and several reasons for them using round numbers. It is not at all clear, though, what has changed. If you want my guess: some marketing bright spark tried “round pound” pricing and was surprised to find that it worked.

Questions to economist@ft.com

My husband and I are following a tight budget, whereby he is using an Excel spreadsheet to plan our gas usage, spending of store card loyalty points, and so on. (I name just two of the 12 columns.) He has also plotted our petrol use on a graph. However, I became somewhat concerned when I lost a glove and its value was inputted into the “deficit” column – aptly titled column 13 – of the spreadsheet. I challenged this, as the glove was singular and therefore half the cost. It was also actually a gift – or two gifts. Are we down £15 (the approximate price of the pair of gloves), down £7.50, up £7.50, or quids in? This has become a sensitive issue in our marriage.
Mrs, soon to be Miss

Dear soon-to-be-Miss,

That the gloves were a gift is no longer important: the question is whether you are worse off for having lost them. And you are.

Nor are you worse off by a mere half-pair of gloves. Your gloves are, in the jargon, perfect or near-perfect complements. This means that the odd glove is worth little, unless you are holding down a career as a Michael Jackson impersonator. Just as important, the missing glove will be difficult to replace. Your husband is therefore quite right to claim that you have, in effect, lost the full pair of gloves.

But your husband’s competence ends there. His “deficit” column makes no sense in a spreadsheet designed to track expenditure. If you buy a replacement pair of gloves (or a single glove – good luck with that) then that is the moment to make a note in your spreadsheet, not before. You may not feel the need to replace them; it is August, after all.

Let’s be honest, though. This isn’t about the gloves, is it? It’s about your husband’s infuriating attempt to control you through a spreadsheet. Tell him either to put it away, or to add column 14: divorce expenses.

Questions to economist@ft.com

The electric toaster seems a humble thing. It was invented in 1893, not long after the light bulb and long before the microchip and the laser. This century-old technology is now a household staple, and reliable, efficient toasters are available for a few pounds. Nevertheless, Thomas Thwaites, a postgraduate design student at the Royal College of Arts in London, discovered just what an astonishing achievement the toaster is when he embarked on what he called “The Toaster Project”. Quite simply, Thwaites wanted to build a toaster from scratch.

The difficulty of the task began to become clear. To obtain the iron ore, Thwaites had to travel to a former mine in Wales that now serves as a museum. His first attempt to smelt the iron using 15th-century technology failed dismally. His second attempt was something of a cheat, using a recently patented smelting method and a microwave oven – the microwave oven was a casualty of the process – to produce a coin-size lump of iron.

Further short cuts were to follow. Plastic comes from oil, but despite launching a charm offensive against BP, he never did make it out to an oil rig. His attempts to make plastic from potato starch were foiled by hungry snails. He settled for scavenging plastic from a local dump, melting it and moulding it into a toaster casing.

The remainder of the article can be read here. Please post comments below.

My 15-year-old is disinclined to work for her GCSEs, saying her time is better spent preening herself in preparation for assignations with her delightful, diligent, privately educated, moneyed boyfriend. She insists the money spent on nail-painting, hair-colouring and the like is an investment and will be more than repaid when he marries her. Is she deluding herself?
A curious mother

Dear Curious Mother,

Surprising as this may seem in the 21st century, your daughter’s strategy is not unusual. Evidence on speed-dating gathered by the economists Michèle Belot and Marco Francesconi shows that women are attracted by rich men, while men focus more on a woman’s physical appearance. Lena Edlund, another economist, has found that in the areas of her native Sweden where the wealthiest men live, women of prime marriageable age are over-represented.

However, your daughter is only 15; for Edlund, “prime marriageable age” is 25-44. Your daughter is either going to have to get her hooks into this chap unusually early, or she is going to have to keep him on the boil for another decade – a lot of nail-painting.

Not only is she concentrating her investments into a single asset by abandoning her education, but she may even be making her main goal harder to achieve. Belot and Francesconi discovered that a strong social trend towards “assortative mating” means that although educated, high-achieving men are not interested in marrying a rich woman, they do like educated high-achieving women, rather than shallow girls with shiny nails.

Your daughter should learn to work hard and look good at the same time. Not only will it advance her immediate goals, it will also – sadly – stand her in good stead for the rest of her life.

Questions to economist@ft.com

Here is the speech, here is William Wallis’s report in the FT, and here’s what Bill Easterly and Chris Blattman think of it. Recommended.

I’m presenting Radio 4’s Analysis this week, and asking: “Given that so many people think the government should encourage low-carbon technologies, what should the government actually do?” We talk to Professor Sir David King, Suzanne Scotchmer, Eric Beinhocker, James Cameron, Mark Williamson, David Rooney and Cameron Hepburn. Also, there are Spitfires and John Harrison’s clock. I learned a few things…

The program is tonight on BBC Radio 4 at 8.30pm BST, repeated on Sunday evening, and should also be downloadable here for a week.