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  • Reply to: Spending on bling: What explains the demand for status goods?   3 weeks 23 hours ago

    Dear Rajeev,

     

    Thank you for your question – you raise a very interesting and important point! It is indeed true that banks have often been accused of strategically exploiting the behavioral biases of their customers. This is an issue that has gotten a lot of attention since the global financial crisis, and has led to much new thinking and increased efforts to improve transparency and financial consumer protection. That’s where our research comes in: we very much believe that to devise smart regulation that effectively protects consumers, we first need to understand the basic economic and non-economic factors that drive consumer behavior. We attempt to do this here for the case of status-seeking behavior, a fairly common phenomenon that affects all sorts of consumption choices, using the specific case of the market for credit cards.

  • Reply to: Fredo or Michael? Parents play favorites among siblings   3 weeks 6 days ago

    Great point Asif. Son preference was very much on our minds as we wrote this blog. Explicitly including the idea of 'insurance' would have been a nice touch.

  • Reply to: Fredo or Michael? Parents play favorites among siblings   4 weeks 2 hours ago

    Dosn't the gender of the child matter?

    Son preference literature suggests parents act as an investment banker as well as an insurance company--they invest in the education of sons to get a share of their income and to guarantee retirement benefits.

  • Reply to: Spending on bling: What explains the demand for status goods?   4 weeks 1 day ago

    Why is it important to understand the role of self esteem on consumption choices? Is it to help companies and vendors to figure out how to increase their sales or charge a premium pricing for their goods ?

  • Reply to: Seven ways to think like a 21st-century economist   3 months 5 days ago

    Thank you, Phil, for nicely summarizing the Kate Raworth’s seminar. You have captured both the spirit and content of her talk in a very elegant and eloquent manner. I have two observations for those who may be concerned by Raworth’s view of econ 101.

    1. The economics discipline has expanded beyond mathematics and statistics to include many other disciplines such as agriculture, environment, health, education, behavioral sciences (psychology and sociology), gender, peace, and development. The good news is that there are more econ graduates coming out of graduate schools specialized in these topics (aka applied economics) compared to graduate students in pure basic economics. Development economists have shied away from Chicago school ideals and Adam Smith’s invisible hand when dealing with sticky economic problems in developing countries. Having said this, I do agree with Raworth’s argument that econ 101 should have a broader foundation and larger context.

    2. There are more women economists emerging out of graduate schools than ever before. This may have a profound impact on the profession in two possible ways. First, women and men think and analyze development issues differently. Women often think in relative terms, while men often think in absolute terms. While men focus on profit maximization, women consider profit maximization as only a necessary condition and not a sufficient condition. As Raworth rightly argues, profit at the cost of humanity is worthless. Doughnut economics is perhaps more appealing to women than it is to men. Second, women are less likely to be dogmatic. A less dogmatic approach allows economists to accommodate alternate views as well as different disciplines in the analysis and make the results more practical.

    So there is hope, either way. Those who missed the seminar may want to watch her TED Talk: https://www.youtube.com/watch?v=1BHOflzxPjI