In the last two decades, happiness has moved into the focus of economic inquiry. Frey and Stutzer (“What can Economists Learn from Happiness Research”, Journal of Economic Literature 20, 2002, pp. 402-435) argue convincingly that gross domestic product (GDP), unemployment, inflation, and many other indicators of economic performance are primarily interesting because they are correlated with the well-being of people. Without the assumption that these parameters are proxies for happiness, there would be no reason to pursue economic policies that maximize i...
ISET Economist Blog
A blog about economics in the South Caucasus.
Sep
06
Jun
13
WHO BOASTS, AND WHY?
As argued by Omer Moav and Zvika Neeman in a 2012 paper (Moav taught at ISET in the past), boasting is a way to pretend that one has hidden income (“Saving Rates and Poverty: The Role of Conspicuous Consumption and Human Capital”, Economic Journal 122, pp. 933-956). While people may have a rough idea of the incomes of their neighbors, colleagues, friends, and other people they interact with, they usually do not know exactly how much they make. Hence, there is some wiggle room for speculation, and if one sees a colleague coming to wor...
Jun
06
When half a year ago, I predicted in my article “Georgia Exporting Crime” that the visa liberalization would be stalled in the last moment, I was called a grumbler and alarmist. Unfortunately, usually the pessimists get it right.
This week, a whole bunch of European politicians, primarily from Germany, expressed their rejection of the visa liberalization for Georgian citizens. As Joachim Hermann, Minster of the Interior of the province of Bavaria, stated bluntly: “I can only advise against visa liberalization with Ukraine, Georgia, and the Kosovo”. ...
May
22
One of the most fundamental assumptions in mainstream economics is the rationality of humans. Yet, as argued by Timothy A. Pychyl, professor of psychology at Carleton University in Canada, frequently observed procrastinating behavior, i.e. the “needless voluntary delay” (Pychyl), cannot be reconciled with the rational man paradigm.
Pychyl claims in his book The Procrastinator’s Digest that procrastinators violate a most fundamental axiom of rationality, namely the so-called transitivity of preferences. If a person prefers dogs to cats and cats to h...
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