Bits of Economics: From US to Japan

I will be publishing a series of links weekly to articles that I think are interesting or useful for A-level economics students.

Political bipartisanship in the US is masking the economic consensus? 

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The other book written by Adam Smith

Before he wrote The Wealth of Nations, Adam Smith in fact studied happiness in detail and published a book called The Theory of Moral Sentiments. Anyway, how I found out about that is through this rather dated report on happiness published by a British investment bank. Here’s a link to it. Not the usual report you see from an investment bank but still it is a pretty interesting read. I am not sure how much of the research is done using statistically valid methods, but I will leave you to judge if the conclusions make sense.

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Should we discard the assumption of rationality?

Ever since I was introduced to economics, I was always troubled by one of its fundamental assumptions – the notion of rationality. Many bestselling economics books, such as Dan Ariely’s Predictably Irrational, and my once-favourite (yes, I finally found a new favourite!) book Freakonomics deal with this assumption. They discuss how restrictive and unrealistic it is, and how behavioural models provide much more accurate representation of human behaviour. To some extent, I agree with their conclusion, but in this post, I am going to argue that the rationality assumption is not as useless as many, especially A-level students, perceive it to be.

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