What is Economic History?

Economic history is the study of economic events in the past. A series of different methods are used to analyze these events including statistical and historical methods. Here is an example of an extremely controversial “historical” account on economic events of the recent past:

 

Development of economic history science

” In Germany in the late 19th century, scholars in a number of universities, led by Gustav von Schmoller, developed the historical school of economic history. It ignored quantitative and mathematical approaches. Historical approach dominated German and French scholarship for most of the 20th century. The approach was spread to Great Britain by William Ashley, 1860–1927, and dominated British economic history for much of the 20th century. Britain’s first professor in the subject was George Unwin at the University of Manchester). In France, economic history was heavily influenced by the Annales School from the early 20th century to the present. It exerts a worldwide influence through its Journal Annales. Histoire, Sciences Sociales.

Treating economic history as a discrete academic discipline has been a contentious issue for many years. Academics at the London School of Economics and the University of Cambridge had numerous disputes over the separation of economics and economic history in the interwar era. Cambridge economists believed that pure economics involved a component of economic history and that the two were inseparably entangled. Those at the LSE believed that economic history warranted its own courses, research agenda, and academic chair separated from mainstream economics.

In the initial period of the subject’s development, the LSE position of separating economic history from economics won out. Many universities in the UK developed independent programmes in economic history rooted in the LSE model. Indeed, the Economic History Society had its inauguration at LSE in 1926 and the University of Cambridge eventually established its own economic history programme. However, the past twenty years have witnessed the widespread closure of these separate programmes in the UK and the integration of the discipline into either history or economics departments. Only the LSE retains a separate economic history department and stand-alone undergraduate and graduate programme in economic history. Cambridge, Glasgow, the LSE, and Oxford together train the vast majority of economic historians coming through the British higher education system today.

United States

Meanwhile, in the US, the field of economic history has in recent decades been largely subsumed into other fields of economics and is seen as a form of applied economics. As a consequence, there are no specialist economic history graduate programs at any universities anywhere in the country. Economic history remains as a special field component of regular economics or history Ph.D. programs in universities including at University of California, Berkeley, Harvard University, Northwestern University and Yale University.” Source: https://en.wikipedia.org/wiki/Economic_history

What is Economic Geography?

Economic Geography is the study of the distribution of economic activities it is a sub field of geography. It also does the location of industries, economic agglomerations and even the culture environment interaction and globalization is studied by this science.

History

” Some of the first traces of the study of spatial aspects of economic activities can be found in seven Chinese maps of the State of Qin dating to the 4th century BC. Ancient writings can be attributed to the Greek geographer Strabo’s Geographika compiled almost 2000 years ago. As the science of cartography developed, geographers illuminated many aspects used today in the field; maps created by different European powers described the resources likely to be found in American, African, and Asian territories. The earliest travel journals included descriptions of the native peoples, the climate, the landscape, and the productivity of various locations. These early accounts encouraged the development of transcontinental trade patterns and ushered in the era of mercantilism.

World War II contributed to the popularization of geographical knowledge generally, and post-war economic recovery and development contributed to the growth of economic geography as a discipline. During environmental determinism’s time of popularity, Ellsworth Huntington and his theory of climatic determinism, while later greatly criticized, notably influenced the field. Valuable contributions also came from location theorists such as Johann Heinrich von Thünen or Alfred Weber. Other influential theories include Walter Christaller’s Central place theory, the theory of core and periphery.

Fred K. Schaefer’s article “Exceptionalism in geography: A Methodological Examination”, published in the American journal Annals of the Association of American Geographers, and his critique of regionalism, made a large impact on the field: the article became a rallying point for the younger generation of economic geographers who were intent on reinventing the discipline as a science, and quantitative methods began to prevail in research. Well-known economic geographers of this period include William Garrison, Brian Berry, Waldo Tobler, Peter Haggett and William Bunge.

Contemporary economic geographers tend to specialize in areas such as location theory and spatial analysis (with the help of geographic information systems), market research, geography of transportation, real estate price evaluation, regional and global development, planning, Internet geography, innovation, social networks.” Source: https://en.wikipedia.org/wiki/Economic_geography

What are Consumer Economics?

Consumer economics  analyses microeconomic behaviors of individuals, families and consumers. In the past it was known as home economics.

History

” The traditional economists had little interest in analyzing family units. When economic theory was insufficient to explain the phenomenon of women starting to enter the labor force “en masse”, consumer economics both gained attention and received important contributions from economic theorists. Major theoretical cornerstones include Gary Becker’s Household Production Model, time allocation models and Stigler’s information search theory.

Consumer economics concludes the family-unit economists were strongly influenced by the most recent “consumer era”; which was the “Modern Consumer Movement” of the 1970s. The connection between Consumer Economics and consumer-related politics has been overt, although the strength of the connection varies between Universities and individuals.

Many facets of consumer economics are measured regularly by the Federal Reserve System and the Bureau of Economic Analysis and are available for the public. A number of indicators are published regularly from these and other academic sources, such as personal income, total household debt, and the Consumer Leverage Ratio.

The effect of consumer economics on the economy is another field of study in economics. It is called the “consumer economy”, a term known from Hazlitt’s Economics in One Lesson.” https://en.wikipedia.org/wiki/Consumer_economics

What a find of a video!!

Computational Economics? Quick Summary.

Computational economics is a discipline that is related to computer science, economics and management. Computational models are developed to predict and understand economic dynamics.

” Computational economics uses computer-based economic modeling for the solution of analytically and statistically formulated economic problems. A research program, to that end, is agent-based computational economics (ACE), the computational study of economic processes, including whole economies, as dynamic systems of interacting agents. As such, it is an economic adaptation of the complex adaptive systems paradigm. Here the “agent” refers to “computational objects modeled as interacting according to rules,” not real people. Agents can represent social, biological, and/or physical entities. The theoretical assumption of mathematical optimization by agents in equilibrium is replaced by the less restrictive postulate of agents with bounded rationality adapting to market forces, including game-theoretical contexts. Starting from initial conditions determined by the modeler, an ACE model develops forward through time has driven solely by agent interactions. The ultimate scientific objective of the method is “to … test theoretical findings against real-world data in ways that permit empirically supported theories to cumulate over time, with each researcher’s work building appropriately on the work that has gone before.”

Computational solution tools include for example software for carrying out various matrix operations (e.g. matrix inversion) and for solving systems of linear and nonlinear equations. For a repository of public-domain computational solution tools.

The following journals specialize in computational economics: ACM Transactions on Economics and ComputationComputational EconomicsJournal of Applied EconometricsJournal of Economic Dynamics and Control, and the Journal of Economic Interaction and Coordination.”  Source: https://en.wikipedia.org/wiki/Computational_economics

What is Complexity Economics?

Complexity economics is basically the application of complexity science to economics. It sees economics not as a system in equilibrium but one that is under constant construction.

Measures used in Complexity Economics

Economic complexity index

Harvard economist Ricardo Hausmann and MIT physicist Cesar A. Hidalgo introduced a spectral method to measure the complexity of a country’s economy by inferring it from the structure of the network connecting countries to the products that they export. The measure combines information of a country’s diversity, which is positively correlated with a country’s productive knowledge, with measures of a product ubiquity (number of countries that produce or export the product). This concept, known as the “Product Space”, has been further developed by MIT’s Observatory of Economic Complexity, and in The Atlas of Economic Complexity in 2011.

Relevance

The economic complexity index (ECI) introduced by Hausmann and Hidalgo is highly predictive of future GDP per capita growth. In Hausmann, Hidalgo et al., the authors show that the List of countries by future GDP (based on ECI) estimates ability of the ECI to predict future GDP per capita growth is between 5 times and 20 times larger than the World Bank’s measure of governance, the World Economic Forum’s (WEF) Global Competitiveness Index (GCI) and standard measures of human capital, such as years of schooling and cognitive ability.

Metrics for country fitness and product complexity

Pietronero and collaborators have recently proposed a different approach. These metrics are defined as the fixed point of the non-linear iterative map. Differently, from the linear algorithm giving rise to the ECI, this non-linearity is a key point to properly deal with the nested structure of the data. The authors of this alternative formula claim it has several advantages:

  • Consistency with the empirical evidence from the export country-product matrix that diversification plays a crucial role in the assessment of the competitiveness of countries. The metrics for countries proposed by Pietronero is indeed extensive with respect to the number of products.
  • Non-linear coupling between fitness and complexity required by the nested structure of the country-product matrix. The nested structure implies that the information on the complexity of a product must be bounded by the producers with the lowest fitness.
  • Broad and Pareto-like distribution of the metrics.
  • Each iteration of the method refines information, does not change the meaning of the iterated variables and does not shrink information.

The metrics for country fitness and product complexity have been used in a report of the Boston Consulting Group on Sweden growth and development perspectives.” Source: https://en.wikipedia.org/wiki/Complexity_economics

What are Behavioral Economics?

Behavioral economics studies the effects that emotional, social and cognitive factors cause in the economy. They change variables in different scenes in order to determine generally how these factors affect the economy.

” Behavioral economics is primarily concerned with the bounds of rationality of economic agents. Behavioral models typically integrate insights from psychology, neuroscience, and microeconomic theory; in so doing, these behavioral models cover a range of concepts, methods, and fields.

The study of behavioral economics includes how market decisions are made and the mechanisms that drive public choice. The use of the term “behavioral economics” in U.S. scholarly papers has increased in the past few years, as shown by a recent study.

In 2017, economist Richard Thaler was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to behavioral economics and his pioneering work in establishing that people are predictably irrational in ways that defy economic theory.

Three prevalent themes in behavioral finances:

  • Heuristics: Humans make 95% of their decisions using mental shortcuts or rules of thumb.
  • Framing: The collection of anecdotes and stereotypes that make up the mental emotional filters individuals rely on to understand and respond to events.
  • Market inefficiencies: These include mispricings and non-rational decision making.” Source: https://en.wikipedia.org/wiki/Behavioral_economics.

Summary of Applied Economics

Applied economics is the application of economic theory and econometrics in certain settings. The ample range of theories where they can be applied is demographic economics, business economics, industrial organization, education economics and monetary economics.

How did the term applied economics originated?

“The origin and meanings of Applied Economics have a long history going back to the writing of Say and Mill. Say wrote about “applying” the “general principles of political economy” to “ascertain the rule of action of any combination of circumstances presented to us.” The full title of Mill’s (1848) work is Principles of Political Economy with Some of Their Applications to Social Philosophy.

J. Keynes discussion

John Neville Keynes was perhaps the first to use the phrase “applied economics”. He noted that the “English School” (John Stuart Mill, John Elliott Cairnes, and Nassau William Senior) believed that political economy was a positive, abstract, deductive science; and that this school made a clear distinction “between political economy itself and its applications to practice” (1917, 12). This School thought that a general body of theory could be established through abstract reasoning – not relying on a wide knowledge of economic facts. From this point of view applying this theory involved making allowances for some of the factors ignored in building the abstract theories. Keynes wrote about applying the political economies hypothetical laws to interpreting and explaining of “concrete industrial facts.” The issue of conceptual distinction between political economy as a science (involving formulating laws which govern the production and distribution of wealth) and political economy as an art (using the laws to tackle practical problems).

Whilst noting the rival view of the historical economists, who believed that the goals being pursued by policy makers and the means to pursue them were an integral part of the science of economics, J.N Keynes believed in the desirability of the “English School’s” distinction between the discovery of principles and their application (1917, 54).

Indeed, it was he who proposed using the phrase “applied economics” instead of “the art of political economy”. Keynes further discussed the uses of the phrases applied political economy and applied economics noting three different uses:

  1. in the sense suggested in the text [in association with the art of political economy];
  2. to designate the application of economic theory to the interpretation and explanation of particular economic phenomena, without any necessary reference however, to the solution of practical questions;
  3. to mark off the more concrete and specialized portions of economic doctrine from those more abstract doctrines that are held to pervade all economic reasoning. (1917, 58–59) and applying theories of the economy on what we have in reality to get a healthy enterprise and business prosperity.” Source: https://en.wikipedia.org/wiki/Applied_economics

 

What is Anarchist Economics?

Anarchist economics is a set of theories and practices of economics. Anarchists are anti-capitalism which means they believe that capitalism promotes an oppressive system collecting rents and private property, taking profit in exchanges.

Historical items on anarchist economics

“The early English anarchist William Godwin’s views on economics could be summarized as follows: “he envisages the possibility of specialization in the various crafts, which would lead to a man’s following the task for which he had the greatest aptitude, and distributing his surplus products to whoever may need them, receiving what he himself needs other things from the surplus produced by his neighbours, but always on the basis of free distribution, not of exchange. It is evident that, despite his speculations on the future of machinery, Godwin’s ideal society is based on the economics of handcrafts and cultivation.

In Europe, an early anarchist communist was Joseph Déjacque, the first person to describe himself as “libertarian”. Unlike and against Proudhon, he argued that “it is not the product of his or her labor that the worker has a right to, but to the satisfaction of his or her needs, whatever may be their nature.”Returning to New York he was able to serialize his book in his periodical Le Libertaire, Journal du Mouvement social. Published in 27 issues from June 9, 1858, to February 4, 1861, Le Libertaire was the first anarcho-communist journal published in the United States. ” Source:https://en.wikipedia.org/wiki/Anarchist_economics

What is Agricultural Economics?

Agricultural economics is one of the applied areas of economics which is focused on optimizing production and distribution of food. Land usage is also a theme that agriculture economics is concerned about its study.

“Agricultural economists have made substantial contributions to research in economics, econometrics, development economics, and environmental economics. Agricultural economics influences food policy, agricultural policy, and environmental policy.

Origins of agricultural economics

” Economics has been defined as the study of resource allocation under scarcity. Agricultural economics, or the application of economic methods to optimizing the decisions made by agricultural producers, grew to prominence around the turn of the 20th century. The field of agricultural economics can be traced out to works on land economics. Henry Charles Taylor was the greatest contributor to the establishment of the Department of Agricultural Economics at Wisconsin in 1909.

Another contributor, 1979 Nobel Economics Prize winner Theodore Schultz, was among the first to examine development economics as a problem related directly to agriculture. Schultz was also instrumental in establishing econometrics as a tool for use in analyzing agricultural economics empirically; he noted in his landmark 1956 article that agricultural supply analysis is rooted in “shifting sand”, implying that it was and is simply not being done correctly.

One scholar summarizes the development of agricultural economics as follows:

“Agricultural economics arose in the late 19th century, combined the theory of the firm with marketing and organization theory, and developed throughout the 20th century largely as an empirical branch of general economics. The discipline was closely linked to empirical applications of mathematical statistics and made early and significant contributions to econometric methods. In the 1960s and afterward, as agricultural sectors in the OECD countries contracted, agricultural economists were drawn to the development problems of poor countries, to the trade and macroeconomic policy implications of agriculture in rich countries, and to a variety of production, consumption, and environmental and resource problems.” Source: https://en.wikipedia.org/wiki/Agricultural_economics

Who is Gary A. Klein?

Insights are unexpected shifts in the way we understand how something works, and how to make it work better. Gary’s talk examines two mysteries. First, where do insights come from? This talk presents a new account of the nature of insights. Second, how can we trigger more insights? Gary describes a strategy for adopting an insight mindset.

Gary Klein, Ph.D., is known for the cognitive models, such as the Recognition-Primed Decision (RPD) model, the Data/Frame model of sensemaking, the Management By Discovery model of planning in complex settings, and the Triple Path model of insight, the methods he developed, including techniques for Cognitive Task Analysis, the PreMortem method of risk assessment, and the ShadowBox training approach, and the movement he helped to found in 1989 — Naturalistic Decision Making. The company he started in 1978, Klein Associates, grew to 37 employees by the time he sold it in 2005. He formed his new company, ShadowBox LLC, in 2014 and is the author of five books. Source: https://www.youtube.com/watch?v=n5OO9L67jL4

Who is Daniel Kahneman?

Daniel Kahneman, the recipient of the Nobel Prize in Economic Sciences for his seminal work in psychology that challenged the rational model of judgment and decision making, is one of our most important thinkers. His ideas have had a profound and widely regarded impact on many fields—including economics, medicine, and politics—but until now, he has never brought together his many years of research and thinking in one book.

In the highly anticipated Thinking, Fast and Slow, Kahneman takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. Kahneman exposes the extraordinary capabilities—and also the faults and biases—of fast thinking, and reveals the pervasive influence of intuitive impressions on our thoughts and behavior. The impact of loss aversion and overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the challenges of properly framing risks at work and at home, the profound effect of cognitive biases on everything from playing the stock market to planning the next vacation—each of these can be understood only by knowing how the two systems work together to shape our judgments and decisions.

Engaging the reader in a lively conversation about how we think, Kahneman reveals where we can and cannot trust our intuitions and how we can tap into the benefits of slow thinking. He offers practical and enlightening insights into how choices are made in both our business and our personal lives—and how we can use different techniques to guard against the mental glitches that often get us into trouble. Thinking, Fast and Slow will transform the way you think about thinking.
Source: https://www.youtube.com/watch?v=CjVQJdIrDJ0

What Interesting Facts Does Money Have?

Surprising and interesting facts about money, it is in our purse or wallet every time and has we ever asked ourselves about its color, origin and how many bacteria can a dollar bill have? Read on and learn more about this important green papers that are so useful to obtain what we need.

Americans and Debt
If you have $10 in your pocket and no debts, you are wealthier than 25% of Americans. Last year, Credit Suisse released a report revealing just how poor people are, especially in the United States where debt runs rampant. Mostly, it’s young people who are deep in debt because they graduate from college with massive student loans. And there’s a disturbing trend of buying things people can’t afford just to impress other people.
As if this weren’t nerve-racking enough: 6 members of the Walton family, who own the Walmart fortune, are wealthier than 30% of Americans today. That means that these 6 people have more money to them than all the money combined with approximately 94.2 million people in the US today.

Why Green?
In 1861 the federal government began issuing paper money to help finance the American Civil War. These new bills became known as greenbacks because the back side was printed in green ink. It was a way to prevent people with cameras from counterfeiting black and white bills. In 1929 it was made official. Bills would be green! The green pigment was readily available in large quantities and the color was very resistant to chemical and physical changes. People also tend to psychologically identify the color green with the strong and stable credit of the Government. Since then, other colors have been added to US currency to make it more difficult to counterfeit.

Only 8% of the world’s currency is actual physical money.
Our world is becoming more and more digital by the day. Only 8% of all money around the world is actual physical cash. The rest is digital money that exists only on computers. Money is only a representation of value so it’s easy for money to be nothing but a series of ones and zeroes, used online or transferred via online accounts. How often have you bought something on Amazon and never actually touched the cash you used in the exchange? This digital existence of currency makes up the vast majority of all money around the world today.

94% of bills are contaminated with bacteria.
In 2002 researchers at the Wright-Patterson Air Force Base in Ohio found that 94% of bills they tested were contaminated with bacteria. Most of it benign. However, before you breathe a sigh of relief, they found that 7% harbored dangerous pathogens that could cause pneumonia, strep throat, and skin and other infections. Other experiments have found the fecal bacteria E. Coli. Eww.
It should also be noted that the flu virus, which can normally survive outside the human body for a period of only 48 hours, can actually live on a dollar bill for over 10 days. (1 subtitle) Remember that the next time someone sniffling hands you a dollar.

 Slug Repellent
Pennies act as a mild repellent for slugs. For those of you that are facing this problem, apparently copper is toxic to slugs and they actually receive electric shocks from touching copper and zinc. Modern pennies are mostly zinc with a thin copper coating. Experiments involving copper and slugs found that the slugs chose to avoid the copper whenever they could. If the slug really, if it really wanted to cross the copper barrier it would. I’m not sure how scientific this is or what would make a slug really, really want to do something or not, but now you know what to do with all those pennies you find laying around….

Dancing Liberty Bell
The blue ribbon woven through the new $100 dollar bill contains 650,000 micro lenses that create an illusion of a dancing, 3D Liberty Bell appear. This was done to make duplication difficult, verification easier, and to discourage counterfeiters in general.
Another safety measure in the new bill was Nano Ink in the blue ribbon. Nano Ink, owned by the same company that supplies the Federal Reserve with the paper to make our currency, was used to the idea that counterfeiters would have a hard time getting it. Unfortunately, anyone can look up the patent for Nano Ink and learn how to make it themselves… a flaw counterfeiter Arthur J. Williams Jr. was happy to point out when asked what he thought about the
redesigned bill.

Why Coins Have Edges
According to the US Mint, There is a reason why coins have edges. When American coins were first made, the quarter, dime, dollar, and half-dollar were made partially from precious metals like silver and gold. A special reeded edge was added to the coins to protect them. Before the new edges, people who needed money would file down the sides of coins to try to collect bits of the precious metal inside.