Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 22 of 36 – Frontiers of Microeconomics Section 16 of 18 … The topics of chapter 22 1- the economics of asymmetric information 2- political economy 3- behavioral economics ·a· people aren't always rational ·b· people care about fairness ·c· people are inconsistent over time … 3- Behavioral Economics ·c· People are inconsistent over time Consider some unpleasant task, such as doing laundry, shoveling snow, or filling income tax forms. 1-Would you (A) prefer to spend 50 minutes doing the task now, or (B) spend 60 minutes doing the task tomorrow? 2-Would you (A) prefer to spend 50 minutes doing the task 90 days later, or (B) spend 60 minutes doing the task 91 days later? Many people, for Question -1- choose B Question -2- choose A With Question -1- people faced with the choice of doing the task immediately or later often choose to put off doing the task. With Question -2-
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From article Dems Fret over Turnout of Black Voters They’ve Failed for 60 Years. John Nolte. October 25, 2022. Democrats contend black Americans are upset with Democrats because they are just not left-wing enough. Yeah, that’s the problem. Democrats are losing black voters because, for 60 years, DEMOCRATS HAVE FAILED BLACK VOTERS, AND BLACK VOTERS ARE STARTING TO COME TO TERMS WITH THAT FACT. … Democrat-run cities — predominantly black cities like Baltimore, Chicago, Detroit, Oakland, Jackson, St. Louis, Milwaukee, that have been run exclusively by Democrats with no Republican opposition for decades — are failures. The municipal services, the schools, the exploding crime and homeless rates that chase off businesses, the job situation, the housing situation, Democrats have had 60 years to keep their promises to improve the lives of black people, but BLACK PEOPLE AND EVERYONE ELSE WHO LIVES IN THESE CITIES HAVE ONLY SEEN THEIR LIVES WORSEN. … There is an awakening, but not just with bl
How does federal government deficits and debt hurt the economy? First, watch this short video: Deficits & Debts: Crash Course Economics: https://www.youtube.com/watch?v=3sUCSGVYzI0 … A budget deficit is the amount government spends more than tax revenue for a given year. Debt is the total amount of deficits not yet repaid. Year 1 deficit, government spending minus tax revenues = $50 Year 2 deficit = $100 Sum of the two deficits $50 + $100 = $150 government debt. .... A government deficit hurts the economy in two ways: 1-reduces private investment 2-reduces government services and/or increases taxes including to pay down the debt ... 1-Per Figure 1, from Mankiw Government borrowing to finance the deficit reduces the supply of loanable funds for others, government is getting the money not businesses and consumers. The increased demand for money causes the interest rate to rise from 5% to 6%. The higher interest rate reduces, “crowds out,” business and household investments. The hig
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 22 of 36 Frontiers of Microeconomics Section 15 of 18 … Another human behavior insight is shown with the ultimatum game. In the ultimatum game two volunteers who are strangers are told they are going to play a game and could win a total of $100. The game begins with a coin toss to designate player A and B. Player A then must propose a division of the $100 prize between the two. After player A makes his proposal, player B accepts or rejects it. If player B accepts player A’s proposal, both players are paid as proposed by A. If player B rejects, both players get nothing. Either way, the game ends. … Economic theory assumes people are rational wealth-maximizers. This assumption leads to this prediction: · player A should propose he gets $99 and player B gets $1 · player B should accept the proposal · player B is better off accepting since he gets something Because player A k
From How Will Capitalism End? Wolfgang Streeck. 2016. Kindle online sample. Section 1. From introduction: After years of ill health, capitalism is now in a critical condition. Growth has given way to stagnation, INEQUALITY IS LEADING TO INSTABILITY, and confidence in the money economy has all but evaporated. In How Will Capitalism End?, the acclaimed analyst of contemporary politics and economics Wolfgang Streeck argues the world is about to change. … The marriage between democracy and capitalism, ill-suited partners brought together in the shadow of World War II, is coming to an end. THE REGULATORY INSTITUTIONS THAT ONCE RESTRAINED THE FINANCIAL SECTOR’S EXCESSES HAVE COLLAPSED and, after the final victory of capitalism at the end of the Cold War, there is no political agency capable of rolling back the liberalization of the markets. … Ours has become a world defined by declining growth, oligarchic rule, a shrinking public sphere, INSTITUTIONAL CORRUPTION AND INTERNATIONAL ANARCHY, AN
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 22 of 36 Frontiers of Microeconomics Section 14 of 18 … A strongly debated issue in economics is whether deviations from rationality are important for understanding economic phenomena. One example is from study of 401k plans, the retirement savings accounts firms often offer their workers. In some firms workers can choose to enroll in the plan by filling out a simple form. In other firms workers are automatically enrolled, and can opt out by filling out a simple form. It has been found many more workers participate in a 401k plan when it is the second case, when automatically enrolled, than in the first. If workers were perfectly rational maximizers they would choose to participate in a 401k plan regardless of whether or not their employer automatically enrolled them. … Understanding behavior is easier once we don’t assume people always act rationally. Why is economics bu
From article Liz Cheney’s Plan To Divide The Republican Party Has Failed. Mollie Hemmingway. October 24, 2022. Separating Republican officials from their growing coalition of voters and the issues they care about has been the D.C. establishment’s goal for years — but it’s not working. … Separating Republican officials from their growing coalition of voters and the issues they care about has been the Washington establishment’s goal for several years now. THE “DIVIDE AND CONQUER” PLAN IS BEING RUN BY THE DEMOCRAT PARTY, ITS PROPAGANDA PRESS, AND FORMER LEADERS OF THE REPUBLICAN PARTY such as Liz Cheney, who see how the GOP’s new composition and approach has threatened or destroyed their hold on power. … The D.C. partnership has worked overtime to try to marginalize, demonize, and MAKE TOXIC THOSE REPUBLICANS WHO DON’T FOLLOW THE ESTABLISHMENT’S RULES for how supposedly good Republicans, like Mitt Romney, act. They have been running the Jan. 6 show trial and warning Republicans in offic
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 7 Topics for Further Study Chapter 22 of 36 Frontiers of Microeconomics Section 13 of 18 … Studies of human decision-making have identified systematic mistakes people make. People can be overconfident. Imagine you were asked some numerical question about the number of African countries in the United Nations or the height of the tallest mountain in North America. Instead of being asked for a single estimate you were asked to give a 90 percent confidence interval a range you were 90 percent confident the true number falls within. For example, you answer “I’m 90 percent confident the tallest mountain in North America is between two and three miles high.” When psychologists run experiments like this they find most people give too-small ranges. The true number falls within their intervals far less than 90 percent of the time. A conclusion is most people are too confident of their abilities. … People give too mu