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🔗 Economics

Baumol's cost disease (or the Baumol effect) is the rise of salaries in jobs that have experienced no or low increase of labor productivity, in response to rising salaries in other jobs that have experienced higher labor productivity growth. This pattern seemingly goes against the theory in classical economics in which real wage growth is closely tied to labor productivity changes. The phenomenon was described by William J. Baumol and William G. Bowen in the 1960s.

The rise of wages in jobs without productivity gains is from the requirement to compete for employees with jobs that have experienced gains and so can naturally pay higher salaries, just as classical economics predicts. For instance, if the retail sector pays its managers 19th-century-style salaries, the managers may decide to quit to get a job at an automobile factory, where salaries are higher because of high labor productivity. Thus, managers' salaries are increased not by labor productivity increases in the retail sector but by productivity and corresponding wage increases in other industries.

🔗 Economics 🔗 Lists

This is a list of some of the major unsolved problems, puzzles, or questions in economics. Some of these are theoretical in origin and some of them concern the inability of orthodox economic theory to explain an empirical observation.

🔗 Finance & Investment 🔗 Economics 🔗 India 🔗 Arab world

Hawala or hewala (Arabic: حِوالة‎ ḥawāla, meaning transfer or sometimes trust), also known as havaleh in Persian, and xawala or xawilaad in Somali, is a popular and informal value transfer system based not on the movement of cash, or on telegraph or computer network wire transfers between banks, but instead on the performance and honour of a huge network of money brokers (known as hawaladars). While hawaladars are spread throughout the world, they are primarily located in the Middle East, North Africa, the Horn of Africa, and the Indian subcontinent, operating outside of, or parallel to, traditional banking, financial channels, and remittance systems. Hawala follows Islamic traditions but its use is not limited to Muslims.

🔗 Economics 🔗 Sociology

The Lindy effect is a theory that the future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy. Where the Lindy effect applies, mortality rate decreases with time.

🔗 Economics 🔗 Philosophy 🔗 Politics 🔗 Philosophy/Social and political philosophy 🔗 Philosophy/Philosophy of religion 🔗 Cooperatives 🔗 Catholicism

Distributism is an economic theory asserting that the world's productive assets should be widely owned rather than concentrated.

Developed in Europe in the late 19th and early 20th centuries, distributism was based upon the principles of Catholic social teaching, especially the teachings of Pope Leo XIII in his encyclical Rerum novarum (1891) and Pope Pius XI in Quadragesimo anno (1931). It views both capitalism and socialism as equally flawed and exploitative, and it favors economic mechanisms such as cooperatives and member-owned mutual organizations as well as small businesses, and large-scale antitrust regulations.

Some Christian democratic political parties have advocated distributism in their economic policies.

🔗 Economics 🔗 Psychology 🔗 Marketing & Advertising 🔗 Retailing

In decision making and psychology, decision fatigue refers to the deteriorating quality of decisions made by an individual after a long session of decision making. It is now understood as one of the causes of irrational trade-offs in decision making. Decision fatigue may also lead to consumers making poor choices with their purchases.

There is a paradox in that "people who lack choices seem to want them and often will fight for them", yet at the same time, "people find that making many choices can be [psychologically] aversive."

For example, major politicians and businessmen such as former United States President Barack Obama, Steve Jobs, and Mark Zuckerberg have been known to reduce their everyday clothing down to one or two outfits in order to limit the number of decisions they make in a day.

🔗 Economics 🔗 Books

Men Without Work: America's Invisible Crisis is a 2016 book by the American political economist Nicholas Eberstadt discussing the phenomenon of American men in their prime leaving the workforce. Statistically, the labor force involvement for men twenty and older fell from 86% to 68% between 1948 and 2015. The book discusses the history, causes, and implications of the phenomenon, as well as possible solutions.

🔗 Economics 🔗 Statistics

The St. Petersburg paradox or St. Petersburg lottery is a paradox related to probability and decision theory in economics. It is based on a particular (theoretical) lottery game that leads to a random variable with infinite expected value (i.e., infinite expected payoff) but nevertheless seems to be worth only a very small amount to the participants. The St. Petersburg paradox is a situation where a naive decision criterion which takes only the expected value into account predicts a course of action that presumably no actual person would be willing to take. Several resolutions are possible.

The paradox takes its name from its resolution by Daniel Bernoulli, one-time resident of the eponymous Russian city, who published his arguments in the Commentaries of the Imperial Academy of Science of Saint Petersburg (Bernoulli 1738). However, the problem was invented by Daniel's cousin, Nicolas Bernoulli, who first stated it in a letter to Pierre Raymond de Montmort on September 9, 1713 (de Montmort 1713).

🔗 Economics

Eagle Cash (stylized as EagleCash), and sister program EZpay, are cash management applications that use stored-value card technology to process financial transactions in "closed-loop" operating environments. The United States Department of the Treasury sponsors the programs for the U.S. Armed Forces. The Federal Reserve Bank of Boston administers the programs for the Treasury, and they are in use at approved U.S. military facilities inside and outside the continental United States. The systems use a plastic payment card, similar to a credit or debit card, which has an embedded microchip that tracks the card's balance and interfaces with encrypted card readers. This method allows soldiers to purchase goods and services at U.S. military posts and canteens, without carrying cash, or manage their personal bank accounts while on deployment or in training. The program reduces the amount of American currency required overseas, reduces theft, saves thousands of man-hours in labor, helps reduce the risk of transporting cash in combat environments, and increases security and convenience for service members. It helped reduce or eliminate the need for cash and money orders.

🔗 Economics

A Minsky moment is a sudden, major collapse of asset values which marks the end of the growth phase of a cycle in credit markets or business activity.