Models

Economic Rules: The Rights and Wrongs of the Dismal Science

Reading notesEconomic Rules, The Rights and Wrongs of the Dismal Science by Dani Rodrik
Quotes that could give us some ideas and opinions about the economic models used by economists and why not, to motivate you to get more insights in this regard by reading a good book.

Real-world markets are imperfect, unlike those envisioned in economic models. Economic models assume the participation of rational actors, but people do not behave in a rational manner.

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Economics is a science because it employs the use of models. Economic models identify probabilities, regularities and tendencies.

“Economics is a social science, and society does not have fundamental laws – at least, not in quite the same way that nature does.”

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Emergence of the culture. Lesson to Moldova

Or how the culture interacts …

Axelrod’s Model

Similar regions emerge, but then you get multiple cultures, and then the boundaries between those cultures are thick. The reason they are thick is that if were not thick, people would interact across those cultures and they would become similar.

So, thick boundaries: people near each other will either be exactly the same or differ by a lot.

If the people interact across these cultures the boundaries disappear.

How Culture Varies and where Moldova is?!

The research is made by The World Values Survey which is a global research project that explores people’s values and beliefs, how they change over time and what social and political impact they have.

There are two major dimensions of cross cultural variation in the world:
1) Traditional values versus Secular-rational values and
2) Survival values versus Self-expression values.

Traditional values emphasize the importance of religion, parent-child ties, deference to authority and traditional family values. People who embrace these values also reject divorce, abortion, euthanasia and suicide. These societies have high levels of national pride and a nationalistic outlook.
Secular-rational values have the opposite preferences to the traditional values. These societies place less emphasis on religion, traditional family values and authority. Divorce, abortion, euthanasia and suicide are seen as relatively acceptable. Industrialization tends to bring a shift from traditional values to secular-rational ones.
Survival values place emphasis on economic and physical security. It is linked with a relatively ethnocentric outlook and low levels of trust and tolerance.
Self-expression values give high priority to environmental protection, growing tolerance of foreigners, gays and lesbians and gender equality, and rising demands for participation in decision-making in economic and political life.

Life satisfaction and GDP? sau Aduc banii fericirea?

Cum influenţează banii fericirea? Influenţează creşterea economică sau un PIB mai mare fericirea?

Higher GDP, higher growth give us happines?

Life satisfaction

Odată ce ridici oamenii de sub nivelul sărăcii, aceasta îi face fericiţi.

Odată ce sunt bogaţi, mai bogaţi nu are acelaşi efect.

Lifting people out of poverty, clearly makes the people happy.

When you already rich, a little more doesn’t make you happy so much.

Collective is irrational !

Condorcet Paradox = Agregation of preferences.

Each person is rational. But Collective not. Collective is irrational. At the macro level there is a logic inconsistency. That’s why social world is very different of the parts that comprise it.

Preference Aggregation-Model Thinking-Scott E. Page