Against the Gods: The Remarkable Story of Risk by
Peter L. Bernstein Given what has been happening in the economy recently, this book (written ten years ago) provides an excellent foundation for understanding how we ended up here. In telling the story of risk, Bernstein focuses on how much people believe the past determines the future. The more we believe we understand the past, the more certain we are of what will happen in the future. Quantifying the past helps enormously in bringing certainty to the future. But risk lurks in the shadows surrounding certainty and underestimating it because of our blind faith in numbers and computers can lead, he says, to disaster. But what makes this book a wonderful read is that it really does tell a story stretching back millennia and is populated with exotic places and interesting characters. For someone interested in this topic it is time well spent.
Posted by: Rajan Sambandam in Economics on
Sep 28, 2008
This question has been asked for millennia and before any research was done there were three possible answers: yes, no, maybe so. After some research was done in the 70's, we had what was called as the Easterlin paradox which seemed to show that money and happiness were not related. More recent research from the Wharton School at the University of Pennsylvania with data from many countries around the globe seems to indicate that people with more money are, in fact, happier.
Posted by: Rajan Sambandam in Economics on
Jul 16, 2008
Does movie violence increase crime? Does Fox News have an impact on voting? Do people pay not to go the gym? Are companies correct in expecting that investors pay less attention to information released on Friday? These and other interesting questions are asked and answered by Stefano DellaVigna, an Associate Professor of Economics at the University of California at Berkeley. To study movie violence, he and his colleagues looked at actual crime statistics surrounding movie releases, rather than run lab experiments.
In Mark Twain's classic novel Tom Sawyer is white washing a fence because his aunt told him to do it. In other words, it's work. But Tom soon convinces his friends that whitewashing the fence is a privilege and even gets them to pay him for a chance to try their hand at it. Twain makes the larger point that whether something is work or not is based on whether one gets paid for it. In this case work becomes a privilege when the worker has to pay to take part, as opposed to being paid for it. Based on this principle, two researchers have developed the idea of two markets: social and monetary. When you help a friend move with no mention of money it is a social market. When you get paid to mow someone's lawn it is a monetary market. Where do you expend more effort and does anything change the level of effort?
Posted by: Rajan Sambandam in Economics on
Jun 09, 2008
Emily Oster is an Assistant Professor of Economics in the University of Chicago. Her research reaches outside the traditional boundaries of economics to larger health and policy questions. Her claim to fame is her disputing the Nobel winner Amartya Sen's contention from two decades ago that there were 100 million "missing" women, quite possibly because of misogynistic attitudes in developing countries.
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