Until the 1960s, Japan was an amazing place to live. One did not have to lock one’s house, car, or bicycle, as nobody was going to steal anything. Theft, burglary, and cheating were virtually non-existent in the Japanese society of those days. Imagine how much resources this saved, as Japanese did not have to employ guards, they did not have to install alarm systems, they even did not need to buy locks.
Moreover, they needed less police and prisons, and Japanese firms did not have to install complex control mechanisms for making sure that employees did n...
ISET Economist Blog
A blog about economics in the South Caucasus.
Mar
24
Mar
14
In a 2012 article that was published on the ISET Economist Blog, Yaroslava Babych did justice to what lately has been a theme of scientific gossip and backstage talk, which I have personally often encountered among socially (albeit not exclusively) inclined economists about the alarming sex ratio at birth (SRB) statistics in Georgia and its neighboring countries. Yaroslava Babych presented numbers showing that SRB—the ratio of boys to girls in a baby population— of Georgia is topped just by China, Azerbaijan, and Armenia.
Judging from the number of comme...
Mar
10
Assume you have lent your brother 1000 laris, and because he is a close family member, you do not charge interest from him. One day you get a phone call from your brother, and he offers you to pay back the debt either today or in one year from now. What would you choose? If you act in line with standard economic theory, you would choose to get the money back today. You are driven by what economists call time preference, a kind of “psychological interest rate” with which you discount future payoffs.
There are a couple of reasons why it makes sense for hum...
Feb
24
Last week, we argued that political decision makers have a tendency to overregulate a society, as new laws, even useless or harmful ones, create the impression that politicians are addressing problems in a society. Moreover, we outlined the theory of a military historian who claims that the Red Army was an “overregulated army”, explaining the disproportionate death toll of the Red Army in the Second World War. In today’s article, we will first look at the advantages of regulation, and we will then propose a set of tools called “Regulatory Impact Analysis...
Feb
17
Regulations apparently address problems of a society in a quick and uncomplicated way, and the call for regulations therefore is one of the most effective weapons in the arsenal of populists. Whether or not a regulation will help to solve the problem, in any case it creates the impression that politicians are doing something. As regulations are so popular among political decision makers, the US Code of Federal Regulations, not including regulations on state level, in 2009 had 163,333 pages.
In this article we discuss the cost of regulations, an aspect th...
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