Ask an Economist
Would the transition be better if I pursued pure mathematics instead, because my experiences has been lately in proof making? What can I look forward to? How and what should I be looking into, to start off, if economics is a good choice? I am a highly curious person. Plus, I have worked hard, I have been doing pure mathematics on my own since 2004 until presently; but, it has been slow going; so, I thought that by going into something that has a better return in investments of my intellectual energy, I should try microeconomics?
The prospect of a mid-life career change would be daunting for anyone. In the end, you’ll have to make that difficult decision on your own. But I can give you a few tips on how you might begin to explore whether a career in economics...
After about a month when the commodity has less than 2 weeks of shelf life it may be sold at .69/lb and then discarded after another week.
1) Why would the store not further discount these items at let's say .30/lb to clear the complete stock? ( I understand it is so as not to let the global/US prices of the commodity go down.)
2) Is wasting better for the store than to sell it at a discount?
3) Even if customers stop buying fresh commodity and start to wait until the price goes down to .30/lb. Isn't it economically profitable to the store to actually sell it than waste it ?
Thanks
Food waste arises from preferences, incentives, and constraints. Retailers have time and other resource constraints which implies that it simply will not be worth it to sell every last item of food in every instance. It can be said that there is...
Okay, so this is going to be a really stupid question but I need to know the answer to this. There is a message board about collecting video games and we got into a argument about the definition of the word "rarity." With these games, we all know the exact amount of copies printed for each title. Say Game A has 2000 copies printed and Game B has 5000 copies printed. Assuming that no copies are lost or destroyed, Game A will always be rarer, correct? Someone else is arguing that the availability of copies on the secondary market changes this.
If Game A has 20 copies available on the marketplace right now and Game B only has 2 copies, would Game B be considered to be rarer overall? At that moment in time, sure, but overall, I would say no. Is either of us correct? Would the monetary value of the game on the secondary market change the definition of rarity? Thanks for your time!
In the strictest (or standard) sense of the word, you would be correct that game A is “rarer,” given that there are fewer of these in existence than game B. However, the other person is not totally wrong because, in the words of economists, the “...
Imagine two trades. The first is between a millionaire and a barista at Starbucks. The millionaire pays $4 for a latte. The producer surplus is $4 and the millionaire's consumer surplus is $0, because he's just not that into coffee. Now imagine a second trade between a pauper and the grocery store. The pauper pays the grocery store $3 for some rice which he will use to halt his near-starvation. The grocer's producer surplus is $3, and because the pauper has only exactly $3 (and is therefore only willing and able to make a trade for a maximum of $3), the pauper's consumer surplus is $0. There are no externalities: the hunger isn't going to make the pauper less efficient at work and he is not going to die of starvation, there's nothing wrong with the global supply chain of coffee in this world, and there are no witnesses who might benefit from some weird intangible altruistic benefits or something like that.
If you had to wave a magic wand and make one of these trades impossible (for example, by making either the millionaire or the pauper forget his wallet right before the store closes), which would you choose to preserve to maximize utility in the economy?
My (very limited) understanding of classical economics is that $4>$3, so the latte should be preserved. This strikes me as completely ridiculous. I find it hard to believe that given the choice between a latte you don't want all that much and the extreme disutility of near-starvation, that anybody would choose the latte. I think a rational actor forced to weigh contradictory evidence (between a supply and demand graph that says $4>$3, and any empirical observation of the utility of lattes and disutility of near-starvation) will choose to preserve the rice trade.
Do I have this wrong? Am I mistaken as to what an actual economist would argue here?
If utility isn't exactly equal and linear for everybody, how can we make decisions like "should we tax group A to pay for a service for group B?" If utility is irregular, is it predictably irregular? Do we over-measure the utility of the rich and under-measure the utility of the poor?
I'm fascinated by these problems, and I'm looking for good sources to learn more. Can you point me in a good direction?
The concept of utility was introduced to represent decision makers' ordinal preferences. That is, if I like alternative A better than alternative B, I can represent this ordinal preference by assigning utility values to alternative A and...
There are two ways to think about this question, one straightforward and one more interesting. To address the former, we can think of the “robots” as simply additional humans who add to the economy in the same way as a normal person: they save...
I am not familiar with the report you mention, but conceptually it is possible to construct and measure GDP by specific demographic groups, say by educational levels, race/ethnicity, gender, or age. The precision of those indicators would depend...
I am wondering how I would go about finding the underlying data. Any help or guidance is appreciated.
There are several sources of publically available data on swine production costs and returns.
The Iowa State University Estimated Livestock Returns (http://www2.econ.iastate.edu/...
I know lots of top economists say high inequality is bad but those are usually in the US or UK and not in developing countries. I thought maybe an initial 'spurt' of inequality may boost growth? I know Deng Xiaoping created some inequality in China, which eventually led to rapid growth. A similar thing happened in India. I also thought that maybe inequality shouldn't be looked down upon as maybe it reflects a higher standard of living in countries. Assuming migration laws stay relaxed, countries with higher standards of living should have higher inequality as poor people flock to them, right? South Africa has a high GINI whereas Malawi has one way lower. Paul Collier also says that developing countries should develop market economies to catch up with the rest of the world but this will further increase inequality, right?
But the evidence suggests the complete opposite of what I think. Africa as a continent is the second most unequal continent in the world and the poorest. Why do you think that is? Do you think decreasing inequality will benefit the region? A Kuznets curve suggests that a country may have to go through mass inequality before reaching a stable level, but the African continent defies this as it's highly unequal yet still underdeveloped. What do you think causes this?
Income is the return of factors, such as labor, human capital and physical capital, that you own and exchange with other agents in the economy. Income inequality in different countries may arise for different reasons and thus it is difficult...
1) money velocity is low but inflation will soon come when the economy opens up
2) CPI and PCE are broken and are not good measures of inflation. Inflation is already here but reflected in housing, healthcare, and equities instead of milk and eggs.
3) QE actually leads to deflation
1) I thought that perhaps the lack of significant inflation is due to the low money velocity (https://fred.stlouisfed.org/series/M2V). Perhaps once the economy opens up, people will spend more leading to an increase in money velocity, which finally leads to inflation. I have heard that people are saving more since restaurants are closed and travel is dead (https://fred.stlouisfed.org/series/PSAVERT) (https://fred.stlouisfed.org/series/PSAVE). I have also heard that the drastic rise in equities and real estate are due to people spending more on assets. However, if it is assumed that people are saving more, how can net savings as a percentage of national gross income be negative? (https://fred.stlouisfed.org/series/W207RC1Q156SBEA)
2) Perhaps CPI and PCE are broken measures of inflation. At least in California, food is slightly more expensive, housing (whether renting or owning) is very much expensive, and healthcare is stratospherically expensive. Perhaps there already is inflation and everyone is looking at the wrong measurements?
3) Is it possible that QE actually leads to deflation? The rise in equities and real estate has benefited those who already own these assets to begin with (i.e. rich people) and the bottom 90% of people are living off credit, stimulus, and savings. Rich people save more than they spend and thus have a negligible effect on money velocity. Poor and middle-class people spend more and make up 90% of the population; so if they had money to spend, they would spend it, thus increasing money velocity. Is it possible that the bulk of QE is going to rich people who just throw it at equities and real estate while the other 90% gain little from QE. Overall, aggregate demand would decrease for consumer goods. And as stuff that actually matters such as healthcare and housing continue their upward rise, the 90% would have even less to spend on consumer goods, further decreasing aggregate demand. I imagine this is the so-called K recovery. This theory would also explain why net savings as a percentage of GNI is negative. Assuming GNI is still positive (https://fred.stlouisfed.org/series/MKTGNIUSA646NWDB) (the latest data is from 2019), this would mean that net savings is negative and most of the U.S. population is surviving off credit. I imagine that the drastic increase in wealth of the top 10% skews personal savings and personal savings rate, though I have no idea how these are calculated on a national scale.
It is impossible to predict the future, but I would like to hear from an economic perspective why any or all of these theories are wrong.
Inflation is the rate of change of the price level (i.e., the “cost of living” as measured in dollars). The standard framework economists use to understand price changes is supply versus demand. For example, if supply of an item (i.e...
Currencies that are fully pegged to USD will continue to buy the same amount of US dollars. So a peg, by definition, keeps the exchange rate fixed against the base currency, which in this case is USD.
Now USD has depreciated (went down as...
This is an interesting question with a complicated answer. The short answer is that in the long run unbundling parking would probably 1) benefit landlords, 2) benefit tenants without cars, 3) increase costs for tenants with cars, and 4) lead to...
Similar to the response of your AP Micro teacher -- part (potentially a large part) of the gender wage gap can be accounted for by the differences in the fields and positions that working men and women hold in the workforce. This study <...
The RR is one instrument the Fed uses to control money supply or the amount of money in circulation. The Fed deems that the other instruments, such as open market operations, are better. One reason the Fed discontinued reliance on the RR is that...
To my knowledge, there is no requirement that new regulations be first subject to a cost-benefit analysis in the State of Iowa. This is in contrast to the federal government which under Executive Order 12866[1]...
Healthcare and healthcare insurance in the United States have been the focus of much research by hundreds of health economics in the last several decades. There are many complex economic issues involved. As a first step, I recommend you take a...
I'm running a Dungeons & Dragons campaign, and my players found such a magical cup. I want their spending sprees to create a major conflict, but I want it to slowly unfold.
An interesting question that I’m not sure there’s a precise answer to, especially given my limited knowledge of Dungeons & Dragons, so I’ll try to unpack some of intuition around money supply.
I’ll start with some assumptions and what...
This is a very interesting question and one I'm sure a lot of people are seeking an answer to. Admittedly, the 7.6% interest rate is pretty high and it adds up to a significant amount of money over the course of six years.
Achieving...
I came to economics not knowing anything about the job. I had an economics class in high school and I enjoyed it, and since I don't have any real passion or am very good at any other thing, I decided to follow it and entered one of the best universities in the country. I'm not the best student, nor the most hardworking (although I try to be more productive). I'm failing Calculus I right now, but I'm excelling in Microeconomics I. It's not that I'm bad at math, I actually got a good score on my final exam in high school, but I tend to perform badly in math/calculus evaluations even though I usually knew more than my friends/colleagues and helped them with homework and that stuff. What I'm trying to say is that I'm good at and like microeconomics and am average at math (haven't studied macro yet).
I've tried to understand what an economist does, and what I got from it was analyzing graphs and writing about them (?). I'm a bit lost on the topic. I like it, I find it interesting, I just need some direction.
Now to the final and most important topic, I wanted to ask, as an economics student, what should I do outside of my basic studies? Should I learn how to code? Learn about politics? Do I need to read any specific books? I know in a certain way degrees are losing value, and it's more about what we do outside of our professional/academic life, and I really need to improve that area. I want to leave Portugal after my studies because, even though I love my country and culture, salaries and quality of life aren't the best, and I know for that I need a good curriculum and abilities.
In conclusion, what advice do you have for an economics student who wants to make it but is a bit lost and in crucial need of direction?
You have asked several important questions. As with many areas of advanced study, getting a full understanding of economics requires some time and the effort of building solid foundations, and sometimes it's hard to see where these early studies...
Q: Are these people in Texas living so far beyond their means that they have to go to a food bank because of the pandemic or are they taking advantage of the free food or ...? I just don't understand the fancy cars at a food bank--it doesn't make sense!
This is a very difficult question to answer but certainly an important one! Unfortunately, the pandemic has had some very sudden and very negative effects on our economy. Keep in mind that COVID was/is a very large shock that was also very...
The question of Africa uniting is not a theoretical one; indeed, there are ongoing efforts toward regional integration and economic cooperation. The African Union (AU), through its eight...
Some of the highest paid pro athletes today are paid $30-40 million per year. For example, Lebron James (NBA) just signed a two-year extension with the Lakers at over $40 million/year. Just based on the 'time value of money' concept alone, if one...
There are many reasons a student might choose to study economics, and consequently many different types of extra-curricular activities you might want to pursue. Economics is, at its base, a study of how individuals and societies make choices...
Is this in your opinion a negative externality I could charge the city for at year end? If this was just my home and I had to clean up the city's leaves I would not have a problem. Is there a threshold of a financial burden that may be achieved before a lawsuit can be considered viable?
A negative externality often describes a situation where a power plant or a farmer's production led to pollution and lost ecosystem services. In this case, it might be tricky to argue that these leaves are a result of the city's "production" or "...
Increases in the minimum wage tend to cause firms to raise wages for those whose wages were initially above the new minimum in order to maintain the former pay hierarchy. The biggest effect is on workers closest to the minimum wage. There is also...
Yet, we are not currently under normal market conditions. I believe it is unlikely that our economy will be very far along in recovery from the economic fallout of the pandemic as the increases go into effect. Given the additional pressures of increased costs in goods, materials, and additional sanitization practices and equipment, coupled with uncertainty and reduced spending in most categories leading to numerous businesses of all sizes already reducing staff or failing completely, will mandating this at this time lead to even more job losses, business closures, and their related losses to the tax base?
While I recognize how stagnant wages have been and the crunch of the resulting loss in buying power as the costs of goods have increased (made even worse by the pandemic), I am concerned that voting to approve this measure at this moment will lead to cascading failure. Of course, I want to fight for people to make a fair wage. Though, if there aren't going to be enough jobs left from which to earn, it becomes a poisoned chalice. Furthermore, this will have an unbalanced impact in less metropolitan areas with a lower median wage versus areas that already have a higher median wage and can absorb it more easily.
Florida is putting a minimum wage to a referendum of voters. The proposed minimum wage policy would raise the minimum wage from its current $8.86 to $10.00 per hour effective September 30th, 2021. Each September 30th thereafter, the minimum wage...
Pages
