ItemList
number of items: 20
total items: 2599
item list element: Our Economies Prioritise Male Interests. They Must Be Changed
item list element: The Case for Income Tax Reform in the US and UK
item list element: COVID-19 Strengthens the Case for UBI
item list element: Will China Become the World’s Largest Economic Superpower Because of Coronavirus?
item list element: The Best Books on Environmental Economics
item list element: Perfect Competition
item list element: Price Ceiling
item list element: How COVID-19 Could Change the Role of Government
item list element: Price Discrimination
item list element: Covid-19 and the Seizure of Power
item list element: Edgeworth Box
item list element: Cobb-Douglas Production Function
item list element: The best video games for economists
item list element: How best to study at home
item list element: The Case for Wealth Taxation
item list element: Top fiction books for economists
item list element: What Impact Has the Coronavirus Had on Higher Education?
item list element: The Case to End Fossil Fuel Subsidies
item list element: INOMICS unveils its A-Z of economics terms
item list element: Utility Maximization
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Our Economies Prioritise Male Interests. They Must Be Changed
type: Article
title: Our Economies Prioritise Male Interests. They Must Be Changed
description: Many operate at the highest levels of governance, where economists comprise an integral cog within the policy-making machine. From this lofty position, their male experience, along with that of their political counterparts, permeates the legislative process, and consequently, male interests - intentionally or otherwise - are formally prioritised and coded into the law. For despite claims to the contrary, no economic decision can be gender neutral; the diverging roles men and women play in the economy make it impossible. And herein lies the problem: fair economic policy is predicated on recognition of this fact. Disappointingly, few policymakers seem capable of doing this, and more disturbingly, some actually seem unwilling. As a result, discriminatory economic policy continues to be passed. Whether tax breaks that benefit rich, property-owning men, or public service cuts that encumber single mothers, the pattern of prejudice is clear: when it comes to the economy, women tend to lose. The sexism of austerity Austerity politics, implemented across much of Europe following the Great Recession of 2008, embodied this bias in its most brazen and destructive form. Borrowing from the same phrasebook, governments justified its rolling out using cynically collective language. ‘Everybody must live within their means’, they implored, warning that ‘the pinch would be felt by all’. These attempts to engender a sense of national unity, an all-in-it-together camaraderie, masked the grim reality that women would shoulder most of the financial burden. Irish reduction of child benefits; Portuguese slashing of family allowance; Montenegrin cuts to family assistance - they would do so everywhere. <11an>limit:2;categories:jobs;disciplines:Economic Thought & Methodology (JEL B)|Labor and Demographic Economics (JEL J)</11an> In the UK, where austerity was rigorously imposed, the House of Commons Library found that 86% of the financial burden between 2010-2017 fell on women, and cuts were e…
disambiguating description: In the collective consciousness, the economist exists as a middle-aged man, bespectacled and clad in a suit, whose unhealthy pallor betrays a hermit-like lifestyle led in the confines of a library. Of course, this image isn’t a particularly fair reflection of the discipline, or its practitioners. Some, for instance, will be aware that in the last few years a number of economists have experimented with contact lenses. Nevertheless, the stereotype remains instructive: the large majority of economists are men, and given the positions they hold, and influence they exert, such homogeneity is a cause for concern.
date posted: 2020-05-26T12:02:01Z
date modified: 2026-07-07T09:53:50Z
employment type: onsite
language: en
keywords: gender
keywords: William Pearse
keywords: austerity
keywords: sexism
keywords: economy
type: blog
disciplines: politics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: socialscience
disciplines: labordemographiceconomics
disciplines: healtheducationwelfareeconomics
discipline labels: Politics
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Labor and Demographic Economics (JEL J)
discipline labels: Health, Education, and Welfare (JEL I)

The Case for Income Tax Reform in the US and UK
type: Article
title: The Case for Income Tax Reform in the US and UK
description: Always one of the key issues between left and right, the debate over higher tax rates has again seen some action over the last few years in both the UK and the US. The Labour Party in the United Kingdom proposed in 2017 a 50% tax rate for those earning over £123,000 and a 45% for those earning over £80,000, with the plan that the top 5% of earners pay a little more to fund the country and relieve the burden on the poor. Currently there are four brackets in the UK, including one for personal allowance. From £12,501 to £50,000 you pay 20%, from £50,001 to £150,000 you’ll pay 40%, and anything above that 45%. Their relatively moderate proposals resulted in a barrage of arguments for and against. And the issue blew up in America at the beginning of 2019, too, when Alexandria Ocasio-Cortez suggested that a 70% income tax rate on incomes over $10 million rate might not be too bad an idea. As might be expected, conservative politicians pushed back hard against the idea, Rep. Steve Scalise, for example, tweeting that the Democrats would ‘take away 70% of your income and give it to leftist fantasy programs’. Grover Norquist, head of Americans for Tax Reform, compared it to slavery, tweeting ‘Slavery is when your owner takes 100% of your production... Ocasio-Cortez wants 70%... What is the word for 70% expropriation?’ <11an>limit:2;categories:jobs|courses|conferences;countries:Italy|United Kingdom|United States;disciplines:Financial Economics (JEL G)</11an> On the surface these tweets show either a total misunderstanding, or worse, a deliberate misrepresentation, of how marginal taxation works. Ocasio-Cortez’s proposed tax, for example, would only tax 70% on every dollar a person earns over $10 million, which is not exactly the majority of Americans. And less than four percent of Britons earn over £100,000, meaning very few would be liable for Labour’s proposed tax bracket increase. This is how progressive tax brackets work: you pay more tax only on money earned that falls wi…
disambiguating description: Whether someone believes in higher rates of tax or not can tell you a lot about their political views. As a general rule, conservative politicians - at least since the 80s - have favoured fewer tax brackets and relatively lower rates of tax. The argument goes that this encourages people to work harder because they keep more of their money, which means more money remains in the economy; eventually it will trickle down to those not so rich. On the other end of the spectrum, more left-wing politicians argue that higher taxes on top earners are an effective way of raising government revenue for public services which help out those who need support, and that a few more dollars or pounds taken off of someone who earns astronomical sums already is a drop in the ocean.
date posted: 2020-05-19T07:49:54Z
date modified: 2026-07-07T09:57:55Z
employment type: onsite
language: en
keywords: James Matthew Alston
keywords: United States
keywords: United Kingdom
keywords: tax
keywords: economy
type: blog
disciplines: politics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: macroeconomicsmonetary
disciplines: socialscience
discipline labels: Politics
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Macroeconomics and Monetary Economics (JEL E)
discipline labels: Economics and Social Sciences

COVID-19 Strengthens the Case for UBI
type: Article
title: COVID-19 Strengthens the Case for UBI
description: It’s not enough However, despite such pledges, the panoply of bailouts, furlough schemes, and loans are failing to reach all those in need. It’s a familiar story: the effects of the crisis are driving a wedge into societies’ already pronounced divisions, entrenching and exacerbating them - they will soon be untenable. In the US, it’s ‘women, particularly women of color, communities of color, and impoverished Americans…[that] are bearing the brunt of the economic downturn’, according to data from Vox. In spite of the largest relief package in history, the so-called ‘left-behind’ are being cut further adrift. Research from the International Labour Organisation (ILO) makes for similarly depressing reading. They have estimated that the ‘lost labour income [as a result of the virus] will result in an increase in relative poverty for informal workers and their families… of almost 52 [percentage] points in high-income countries and 56 points in lower and low-income countries’, confirming the unequal distribution of the economic fallout. Over 2 billion people work informally worldwide and if they, and other vulnerable demographics, are to be protected, more is needed, more invention is due. Without additional support, societies will destabilise, leading to, as Kanni Wignaraja, UN Assistant Secretary-General, has warned, ‘a heightened risk of societal conflict’. Introducing UBI ‘This may be time for a universal basic wage’, contemplated Pope Francis in his Easter Address in April, observing the economic destruction around him. And the Pontiff may be right. No longer fringe, the case for UBI is as strong as it’s been, its popularity soaring. A 2018 poll of 28 European countries showed that 68% of Europeans are in favour of direct no-strings-attached cash payments to citizens. Since coronavirus has cruelly exposed the precarity that underpins so many people’s lives, the harsh hand-to-mouth reality, one would now expect that figure to be even higher. And this really is UBI’s gr…
disambiguating description: Necessity is the mother of invention, so the old proverb goes. And with coronavirus spreading through countries, deep economic recession clambering at its coattails, the collective need has rarely been higher. In just four months, almost 300,000 lives have been taken worldwide, and lockdown, in its various forms, is threatening untold livelihoods - as of May 9th, 33 million jobs have been lost in the US alone. True to the saying, some invention has been forthcoming as incumbents have scrambled to protect their citizens and economies. The UK’s Chancellor, Rishi Sunak, for instance, has shown great ideological flexibility, committing to stimulus packages so large they’d make the most ardent of socialists blush. And similar developments can be seen across the world.
date posted: 2020-05-14T13:52:39Z
date modified: 2026-07-07T09:59:07Z
employment type: onsite
language: en
keywords: William Pearse
keywords: coronavirus
keywords: covid-19
keywords: universal basic income
type: blog
disciplines: politics
disciplines: microeconomics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: macroeconomicsmonetary
disciplines: financialeconomics
disciplines: socialscience
disciplines: healtheducationwelfareeconomics
discipline labels: Politics
discipline labels: Microeconomics (JEL D)
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Macroeconomics and Monetary Economics (JEL E)
discipline labels: Financial Economics (JEL G)
discipline labels: Economics and Social Sciences
discipline labels: Health, Education, and Welfare (JEL I)

Will China Become the World’s Largest Economic Superpower Because of Coronavirus?
type: Article
title: Will China Become the World’s Largest Economic Superpower Because of Coronavirus?
description: China’s bid to become the world’s economic superpower has been a long time coming. Following the economic stagnation and isolationism of Chairman Mao’s leadership fifty years ago, China has developed a sophisticated high-tech economy that is the envy of many in the Western world. A key part of this was a massive infrastructure drive: China owns more high-speed rail than the rest of the world put together, and has the busiest, largest ports and container storages on the planet. Middle-class growth is also tangible with home ownership on the rise, and in recent years, statistics from McKinsey show that Chinese tourists were the world’s highest spenders per single trip. Concerning the virus’ impact on the global economy, what is certainly not lacking from commentary is the price fluctuations of oil, decreased agricultural output, decreasing exports, and unemployment figures. From this, one may well form the opinion that the coronavirus pandemic has also negatively affected China’s prospects of taking pole position in the economic race. In reality we may be on the cusp of a reordering of economic superpowers. Despite China supposedly losing the recent trade wars against the US, the COVID-19 pandemic could be the final big push that catapults the Chinese economy ahead in the world order. Click here to browse our economics job listings Chinese economy recovers ahead of other countries The economic ramifications of lockdown are clear even to the layman. Fiscal packages and bailouts have been the most common ways Western countries have responded to the crisis, while, China’s strict reaction to the pandemic, which has succeeded in controlling the spread of the virus, lies in its ability to firmly curtail people’s freedoms and, as a result, the economy. Its centralised government has a capacity that extends beyond most western democracies, enabling it to act swiftly and enforce measures well. It has capitalised on both. Since March, 33 million people have lost their jobs in A…
disambiguating description: The ascension of the Chinese economy to global preeminence is not without precedent. China was, after all, one of the largest economies in the world from the Song Dynasty (c.900 CE) until the 19th century’s ‘Great Divergence’, when European industrialisation facilitated the long period of Western economic dominance that generations alive today know all too well.
date posted: 2020-05-12T13:01:40Z
date modified: 2026-07-07T10:00:08Z
employment type: onsite
language: en
keywords: COVID-19
keywords: China
keywords: America
keywords: geopolitics
keywords: coronavirus
type: blog
disciplines: politics
disciplines: internationaleconomics
disciplines: economics
disciplines: socialscience
disciplines: economicdevelopmentgrowth
discipline labels: Politics
discipline labels: International Economics (JEL F)
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Economic Development, Innovation and Growth (JEL O)

The Best Books on Environmental Economics
type: Article
title: The Best Books on Environmental Economics
description: However, the problem is far from solved, and how to balance the economy with climate change policies is a question that still awaits an answer. At the very least, most people currently have a lot of time to read; and what better issue to read about than the most pressing of our time? INOMICS is an Amazon Associate, meaning we are a part of their affiliate program. This article contains affiliate links, which means we may earn money through any qualifying purchases made after you click through. However, this is not a sponsored post. 1. Stephen Smith - Environmental Economics: A Very Short Introduction Another in the excellent bite-size series from Oxford University Press, this edition focuses on giving a brief overview of the field and asking some important questions to get you thinking about the topic. Designed (as the title suggests) as an introduction into the topic, Smith outlines pollution control, environmental damage and its reduction, and global climate change policies, giving some answers as to how governments should balance their economic duties with the responsibility to protect the environment. Including questions like whether the economic costs of controlling environmental damage are viable, whether some environmental damages are necessary and even desired, and how we can assess the impact environmental damage has on humans, this book offers a great (and very short) springboard into the topic of environmental economics. 2. Frank Ackerman and Lisa Heinzerling - Priceless: On Knowing the Price of Everything and the Value of Nothing Can you assign a monetary value to things like the environment and health? Many economists have tried to do this and, while it sounds rather cold and calculated, it’s often how governments decide what’s important to them. The problem is, our moral compasses are often ignored when numbers are the way we try and solve the problems we face. In Priceless, Ackerman and Heinzerling argue that the cost-benefit analysis which defines ho…
disambiguating description: In our current state of isolation, it’s important not to forget about some of the other issues which still beset the human race, not least climate change. Due to the fact that so fewer people are travelling both around the world and domestically each day, the levels of greenhouse gases being emitted are far lower than they have been in recent years.
date posted: 2020-05-06T10:30:40Z
date modified: 2026-07-07T10:01:43Z
employment type: onsite
language: en
keywords: James Matthew Alston
keywords: books
keywords: economics books
keywords: environmental economics
type: blog
disciplines: economics
disciplines: socialscience
disciplines: agriculturalenvironmentaleconomics
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Agricultural and Environmental Economics (JEL Q)

Perfect Competition
type: CreativeWork
title: Perfect Competition
description: A market is said to be perfectly competitive if (among some other conditions) the following assumptions are satisfied: Homogeneous good The good which is being traded in a perfectly competitive market is a homogeneous good. This means that all units of the good are identical from the perspective of the consumers independently of who sells the good and where. In other words, consumers do not care from whom they buy the good. The goods sold by two competing sellers are the same in the eyes of the consumers. This has the important implication that consumers will always buy the good from the seller offering the good at a lower price. Examples of homogeneous goods may include gasoline or bottled drinking water. Many buyers and sellers Another requirement for competition to be perfect is the number of sellers and buyers in the market. In a perfectly competitive market, there are many sellers interested in selling the (homogeneous) good and many buyers interested in buying the good. Price-taking In a perfectly competitive market both buyers and sellers are price-takers. No individual seller or buyer can influence the price at which the good is being traded. Let us have closer look at why this is true: Suppose all sellers sell the good at the same price (the market price), e.g. suppose all gasoline stations sell 1 liter of gasoline for €1. What will happen to a seller who charges a higher price, say €1.1? In a perfectly competitive market he or she will not sell anything. If consumers can choose to fuel their car at €1 per liter or at €1.1 per liter, naturally everyone will go to the cheaper gasoline station. As long as there are enough sellers to satisfy the entire market demand, a single seller who unilaterally decides to charge a higher price will not be able to sell anything. A similar reasoning applies to individual buyers, who are not willing to pay the market price and ask for a lower price. In a perfectly competitive market, a buyer can decide whether he or she want…
disambiguating description: Perfect competition describes a market structure in which many sellers and buyers exchange a homogeneous good and no individual can influence the market price, i.e., buyers and sellers are price takers. In a perfectly competitive market total welfare (that is, the sum of consumer and producer surplus) is maximal. As there is no deadweight loss, the equilibrium allocation in perfect competition usually serves as a benchmark to measure the welfare loss associated with market structures that are not perfectly competitive (e.g. because one side of the market has market power).
date posted: 2020-05-11T14:14:53Z
date modified: 2023-07-31T18:57:02Z
language: en
keywords: Perfect Competition
keywords: Mirjam Sarah Salish
type: terms
disciplines: microeconomics
disciplines: economics
disciplines: socialscience
disciplines: businesseconomics
disciplines: industrialorganization
discipline labels: Microeconomics (JEL D)
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Business Economics (JEL M)
discipline labels: Industrial Organization (JEL L)

Price Ceiling
type: CreativeWork
title: Price Ceiling
description: It is an instrument of market regulation that governments may use to ensure that firms do not abuse their market power by charging consumers excessively high prices. Particularly for goods that are considered a necessity (such as utilities like water and electricity) the government may establish price ceilings to protect consumers. In cases like water and electricity, society may not be efficiently served if these utilities were left to a competitive market, so price controls can help. Price ceilings are also sometimes used temporarily in exceptional situations such as during times of war or famine. For example, during the COVID-19 pandemic some countries established price ceilings for hand sanitizer after observing extreme increases in the price for this product. What is the impact of a price ceiling on consumers and producers? Let us consider a perfectly competitive market where market demand is given by \(q_{D}=10-p\) and market supply is \(q_{S}=2p-2\). The market price in this unregulated market is equal to 4. Now suppose that the government fixes a price ceiling at \(\bar{p}<4\). As this price is lower than the market price, some customers who were not able to buy at the market price would now likely buy the good. The quantity demanded increases to 8. The quantity supplied, on the other hand, decreases, because at a price of 2 it is less profitable to sell the good. Quantity supplied decreases to 2 units. As the quantity demanded now exceeds the quantity supplied, there is excess demand. This scenario is illustrated in the figure below. In the case of a price ceiling below the market's equilibrium price, producer surplus decreases (in the figure: the triangle described by the area below \(\bar{p}\) and above the supply curve). Consumer surplus may increase or decrease depending on the demand function and the height of the price ceiling. Total welfare decreases, due to the decrease in the quantity exchanged. The shaded orange area is the deadweight loss that ca…
disambiguating description: A price ceiling, also called price cap, is the maximum price that a seller is allowed to charge for a particular good or service by law.
date posted: 2020-05-05T09:53:35Z
date modified: 2026-06-29T10:21:07Z
language: en
keywords: price ceiling
keywords: Mirjam Sarah Salish
type: terms
disciplines: politics
disciplines: microeconomics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: socialscience
disciplines: laweconomics
disciplines: businesseconomics
discipline labels: Politics
discipline labels: Microeconomics (JEL D)
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Law and Economics (JEL K)
discipline labels: Business Economics (JEL M)

How COVID-19 Could Change the Role of Government
type: Article
title: How COVID-19 Could Change the Role of Government
description: Countries have implemented ‘war-like’ economic measures, requested ‘war-like’ solidarity, and Emmanuel Macron has even declared France ‘at war’. Its rallying qualities aside, the analogy touches on something salient: wars change the role of government, sometimes, in the case of the post-war consensus, radically. COVID-19 could do the same. Responses to the pandemic have shown that nothing is permanent about the current distribution of resources. To the contrary, things can be overhauled, and fast. Just turn on the news: state power is serially showcased, and it’s changing the way we perceive government. With the extent of its capacity laid bare, what can we expect - or even demand - of the governments of tomorrow? Governments prove their might The remarkable has become the routine. Across the world, legislation previously dismissed as profligate, pie-in-the-sky politics is being rolled out, unopposed, often at record speed. In one preventative measure, the city of London effectively ended rough sleeping by providing hotel rooms for the next 12 weeks to all those in need. When unveiling the initiative, London Mayor, Sadiq Khan, magnanimously explained ‘rough sleepers already face difficult and uncertain lives and I'm determined to do all I can to ensure they, along with all Londoners, are given the best protection possible.’ While the intervention itself is a good one, one may have doubts about Khan’s framing. Where exactly was the ‘best protection’ before? The number of those sleeping on the streets in the capital has quadrupled in the last ten years, and the Office for National Statistics (ONS) reported that in 2019, 726 people died without shelter (a rise on the previous year) in England and Wales, a fifth of them in London. A month ago, the issue was too expensive to solve. Today, the problem doesn’t exist. The resources were found and distributed accordingly. In 12 weeks time, if containment is achieved, will those same resources be withdrawn? A common retort is…
disambiguating description: As COVID-19 has spread globally, access to the outside world has shrunk, made increasingly off-limits by government lock-down, observable now only through glass. Our digital lives have expanded to fill the void, evenings previously spent with friends now passed plugged into laptops, obsessing over the latest figures, bailouts and newly-imposed restrictions - time blurs. Amid the chorus of leaders justifying ever more draconian measures, one thing has been hard to miss: the invocations of war.
date posted: 2020-04-27T12:23:14Z
date modified: 2026-07-07T10:03:56Z
employment type: onsite
language: en
keywords: COVID-19
keywords: economics
keywords: government
keywords: William Pearse
type: blog
disciplines: economichistory
disciplines: politics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: socialscience
discipline labels: Economic History (JEL N)
discipline labels: Politics
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Economics and Social Sciences

Price Discrimination
type: CreativeWork
title: Price Discrimination
description: If and how a firm can successfully price discriminate depends crucially on the information that the firm has about its customers and on the possibilities of the consumers to engage in arbitrage. Note that it is not price discrimination if price differences reflect differences in the costs of serving those consumers. Price discrimination is usually studied in a monopoly, though oligopolies and even regular markets often exhibit price discrimination as well. We distinguish between three different types of price discrimination: First degree price discrimination First degree price discrimination is also called perfect price discrimination. From the perspective of the firm this type of price discrimination yields the highest possible profit. To perform first degree price discrimination the monopolist needs to know the exact willingness-to-pay or demand function of each of its consumers and it has to be able to perfectly distinguish the customers from each other (i.e. no customer can lie about his true willingness-to-pay). If these conditions are true, the monopolist can charge each consumer exactly their maximum willingness-to-pay for the good. Remember from the demand curve that each consumer has a different willingness to pay, or preference, for goods. Clearly, if the monopolist charges every consumer their exact willingness-to-pay, individual consumers will be worse off than without price discrimination because consumer surplus in this case is zero. That is, by perfectly price discriminating, the monopolist captures the entire surplus. But, this is still a Pareto efficient outcome even though consumers are worse off individually. The quantity exchanged will be the same as in perfect competition which means that there is no efficiency loss or deadweight loss if a monopolist can perfectly price discriminate. Certain consumers end up paying more than they would have under perfect competition, and the surplus they would have enjoyed goes to the monopolist instead. But, to…
disambiguating description: Price discrimination is a pricing strategy in which firms charge different prices for the same physical good or service to different consumers or to the same consumer. By doing so, firms can increase their profits compared to selling each unit of the good at the same price.
date posted: 2020-04-28T11:32:52Z
date modified: 2023-04-05T14:51:34Z
language: en
keywords: Mirjam Sarah Salish
keywords: Price Discrimination
type: terms
disciplines: microeconomics
disciplines: economics
disciplines: financialeconomics
disciplines: socialscience
disciplines: laweconomics
disciplines: businesseconomics
discipline labels: Microeconomics (JEL D)
discipline labels: Economics
discipline labels: Financial Economics (JEL G)
discipline labels: Economics and Social Sciences
discipline labels: Law and Economics (JEL K)
discipline labels: Business Economics (JEL M)

Covid-19 and the Seizure of Power
type: Article
title: Covid-19 and the Seizure of Power
description: But are we too generous with our trust? Recent developments in places as far-flung as Hungary and the Philippines remind us that there’s a second history, running parallel to improving approval ratings, of governments using crises to enhance and consolidate their power. It’s a darker history, and one we would do well learning from. Alas, there are concerning signs it’s set to repeat itself. Tailored to tyrants In many ways, the current moment is primed for exploitation. If health systems are to withstand COVID-19, it’s essential that strict restrictions are placed on public life, civil liberties reduced, and, to enforce it all, state power extended. In concert, this is music to the authoritarian’s ear; a description of an idealised society. It's a world in which power-grabs can be carried out publicly, legitimised by rousing cries of unity, and all anxious voices comforted by the knowledge that everything is in the ‘national interest’. It's, above all, an opportunity. Indeed, short of war, no other emergency comes close to matching the ubiquity of COVID-19’s fallout. Consider, for example, terrorism. Terrorist attacks can scar populations and cause great economic damage, but in scale, they pale in comparison. They tend only to hit a contained area which limits the economic impact, and, despite being designed to scare, the panic created is also less widespread. A pandemic, on the other hand, knows no boundaries, equalising the terror and economic damage it wreaks, the village dweller suffering in similar ways to the city-based socialite. And this is key: while fearing for health or financial well-being, people are at their most compliant, their most likely to surrender their freedom. What further sets COVID-19 apart is that the consensus response is to stay indoors. In other emergencies - during war, after a natural disaster, or following a terrorist attack - agency can be claimed by citizens, armies can be joined, humanitarian aid contributed, or marches defiantly a…
disambiguating description: As the world is ravaged by COVID-19, governments everywhere are enjoying burgeoning support. A glance at approval ratings finds presidents, prime ministers, even autocrats, overwhelmingly popular, in some instances irrespective of their actual performance. Of course, this is unsurprising: there’s long been a history of populations coalescing around established leaders in times of crisis. Amid uncertainty, we find their increased visibility reassuring. Speaking to the nation they look competent and confident; we feel inclined to trust them, and more often than not, we do.
date posted: 2020-04-20T13:04:58Z
date modified: 2026-07-07T10:05:02Z
employment type: onsite
language: en
keywords: government
keywords: William Pearse
keywords: coronavirus
keywords: covid-19
type: blog
disciplines: politics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: socialscience
disciplines: economicdevelopmentgrowth
disciplines: healtheducationwelfareeconomics
discipline labels: Politics
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Economic Development, Innovation and Growth (JEL O)
discipline labels: Health, Education, and Welfare (JEL I)

Edgeworth Box
type: CreativeWork
title: Edgeworth Box
description: The advantage of depicting an economy in this way is to allow comparisons of different allocations and to determine their relative efficiency. Consider the following example of an economy with two individuals, Adam and Eve, and two items, dates and milk. The total number of dates in the economy is represented by the horizontal length of the box; the total amount of milk is measured by its vertical length. In the bottom-left corner \(o\), Adam has nothing while Eve owns/consumes all of the dates and milk. In the opposite top-right corner \(o'\), Adam possesses everything in the economy while Eve has nothing. The indifference curves \(A_{1}\), \(A_{2}\) and \(A_{3}\) represent Adam’s preferences over dates and milk, with higher utility on \(A_{3}\) than \(A_{1}\); analogously, indifference curves \(E_{1}\), \(E_{2}\) and \(E_{3}\) represent Eve’s preferences over dates and milk, with higher utility on \(E_{3}\) than \(E_{1}\). Figure 1: Edgeworth Box example The points \(X_{1}\), \(X_{2}\) and \(X_{3}\) show three different allocations of dates and milk between Adam and Eve. At \(X_{1}\) Adam is on his indifference curve \(A_{1}\) while Eve is on her indifference curve \(E_{3}\). However this allocation is not Pareto-efficient because both Adam and Eve could be made better off (achieve higher utility) with another allocation anywhere within the grey shaded area bounded by indifference curves \(A_{1}\) and \(E_{3}\). In contrast, the allocation at \(X_{3}\) where indifference curves \(A_{3}\) and \(E_{1}\) touch tangentially is Pareto-efficient because neither Adam nor Eve can achieve higher utility through a different allocation without reducing the other’s utility. Note however that at \(X_{3}\) Adam has significantly more dates and milk than Eve while the converse is true at \(X_{1}\). The fact that \(X_{3}\) is an efficient allocation says nothing about its fairness. Indeed, a point closer to the middle of the Edgeworth box, such as the allocation at \(X_{2}\), may…
disambiguating description: An Edgeworth box (named after Irish philosopher and economist Francis Ysidro Edgeworth, 1881) is a two-dimensional representation of a simple, closed economy consisting of two individuals and two items (or resources) that are finite in supply. Any feasible allocation of the items between the individuals is included as a dot in the box; the individuals’ preferences over the items are represented through indifference curves.
date posted: 2020-04-21T07:14:21Z
date modified: 2026-06-29T08:37:22Z
employment type: onsite
language: en
keywords: Edgeworth box
keywords: Tom McKenzie
type: terms
disciplines: microeconomics
disciplines: economics
disciplines: socialscience
discipline labels: Microeconomics (JEL D)
discipline labels: Economics
discipline labels: Economics and Social Sciences

Cobb-Douglas Production Function
type: CreativeWork
title: Cobb-Douglas Production Function
description: The application of this functional form in measuring production is owed to the mathematician Charles Cobb and the economist Paul Douglas, after whom it is named. They originally used it to consider the relative importance of the two main input factors, labor and capital, in manufacturing output in the USA from 1899 to 1922. The general form of a Cobb-Douglas production function for a set of \(n\) inputs is \[Y=f\left(x_{1},x_{2},...,x_{n}\right)=\gamma\prod^{n}_{i=1}x^{\alpha_{i}}_{i}\] In this formula \(Y\) stands for output (as measured by, for example, GDP), and \(x_{i}\) for input \(i\). Meanwhile \(\gamma\) and \(\alpha_{i}\) are parameters determining the overall efficiency of production and how output responds to changes in the input quantities. In their original model, Cobb and Douglas restrict the output-elasticity parameters \(\alpha_{1}\) and \(\alpha_{2}\) to the range \(\alpha_{i}\in\left(0,1\right)\) and to sum to one, which implies constant returns to scale. Reading the above equation might be challenging for new students of economics. For help interpreting economic formulae, see the linked article “A quick guide to math symbols in economics”. Reading this equation is straightforward once the symbols are all identified; the Cobb-Douglas function is the product of multiple xi (specifically n of these xi), each raised to the αi power, and the resulting product is multiplied by the parameter 𝛾. Applying Cobb and Douglas’s model to the production of a two-factor economy (using inputs x1 and x2) simplifies the above expression. The resulting function becomes \[Y=\gamma x^{\alpha_{1}}_{1}x^{1-\alpha_{1}}_{2}\] where \(x_{1}\) and \(x_{2}\) stand for labor and capital, respectively. Note that the two exponents simplify to α1 and (1 - α1) because Cobb and Douglas assumed they must add to one (again, showing constant returns to scale). Another common representation of this formula that macroeconomics students may see is: \begin{equation*}\mathit{Y} = \mathit{A…
disambiguating description: A Cobb-Douglas production function models the relationship between output and production inputs (also known as factor inputs). It is used to calculate ratios of inputs to one another for efficient production, and to estimate technological change in production methods. It’s a commonly used economic model that is very flexible, and as such is often one of the first models students of macroeconomics will learn (though it’s also used in microeconomics, too).
date posted: 2020-04-15T12:24:46Z
date modified: 2026-06-25T11:55:58Z
employment type: onsite
language: en
keywords: Cobb-Douglas Production Function
keywords: Tom McKenzie
type: terms
disciplines: microeconomics
disciplines: economics
disciplines: macroeconomicsmonetary
disciplines: socialscience
disciplines: econometricsstatisticsquantitative
disciplines: economicthoughtmethodology
discipline labels: Microeconomics (JEL D)
discipline labels: Economics
discipline labels: Macroeconomics and Monetary Economics (JEL E)
discipline labels: Economics and Social Sciences
discipline labels: Econometrics, Statistics and Quantitative Methods (JEL C)
discipline labels: Economic Thought & Methodology (JEL B)

The best video games for economists
type: Article
title: The best video games for economists
description: INOMICS is a member of the Amazon Associates affiliate program and the Apple affiliate program. This article contains affiliate links, which means we may earn money through any qualifying purchases made after you click through. However, this is not a sponsored post. Business Simulators 1. Capitalism This classic business simulation game and its well-reviewed sequel Capitalism II allow you to live out your wildest dream: running the most successful business in the world. As CEO, you’ll have to avoid bankruptcy, fight off competition, and make sure you don’t get bought out. But don’t expect this journey to be easy - Capitalism has been ranked as one of the most difficult games ever. While the game’s beginning is not the most realistic for most of us - you can start your journey with capital of two hundred million dollars if you want - it offers an insight into how one could start a new company, providing semi-real simulations of markets and the cutthroat world of business. At the game’s outset, you can either start totally from scratch or "inherit" a business such as an agricultural company. Typically, your goal will be to dominate a certain percentage of market share within a certain time period. An expansion named Capitalism Plus released in 1996, introduced random events such as riots and technological breakthroughs, making the already-complicated game even more difficult to play. So have fun failing at your first business - thankfully, at no risk whatsoever. 2. Virtonomics Virtonomics an economics video game that is used in schools and on university campuses to help students learn the ins and outs of business markets. Both entertaining and educational, this massively multiplayer online game is similar to Capitalism in that it simulates the processes of building a business in a competitive environment. With totally open-ended gameplay and the ability to play forever if you want to (though we don’t necessarily recommend that), the turn-based game allows players to c…
disambiguating description: So you’ve decided it’s time to take a break from all the hard studying you’re doing during your economics Master’s or PhD program. Why not spend time playing a video game which will help you accrue business acumen, improve your real-world economics knowledge, or reflect economics concepts in its gameplay? Sound too good to be true? Thankfully, there are some games which offer just that.
date posted: 2020-04-08T13:33:29Z
date modified: 2026-07-07T10:06:11Z
employment type: onsite
language: en
keywords: James Matthew Alston
keywords: economics video games
keywords: learn
keywords: games
keywords: Sean McClung
keywords: video games
type: blog
disciplines: economics
disciplines: socialscience
disciplines: business
disciplines: management
disciplines: generaleconomics
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Business
discipline labels: Management
discipline labels: General Economics (JEL A)

How best to study at home
type: Article
title: How best to study at home
description: Picture the scenario. You begin the day rolling out of bed in the afternoon, throwing on some casualwear, saying to yourself “today I will finish that, read this and write up this”. Three hours later, however, what has happened? Social media is updated with your latest thoughts, the coffee cup has been refilled twice, and the dusty bookshelf has been reorganised colour coded. Staring out the window with an empty notebook, you ask yourself, ‘where did I go wrong’? Don’t worry - we’ve all been there. Follow this step by step guide, and you’ll be a star study-at-home student in no time! Check out our Advice section for more helpful tips for economists 1. Start good routines It’s super important to set yourself a time to wake up, eat a healthy breakfast and start to study. It’s tempting to wear pyjamas all day if you’re not leaving the house for anything except to pick up emergency Oreos. But you’ll feel much better if you take care of yourself with a normal clean-cut routine at home. Shower, get dressed, brush your hair and you’ll feel a million times more motivated every day. Easy. Studying from home also gives you the opportunity to work whenever you want. Every student has their own peak time when they concentrate best. Some people are night owls, while most are early birds. Make the routine work for you, pick when you are most productive, and work when your brain is most alert, so that you’re able to process and retain the information you are studying. 2. Study space The bed is not the best option. It may beckon you with comfy pillows, but rest assured, it never works out. Reading flashcards from the duvet isn’t going to associate the space with the right activity. Sitting at a table in a good chair can make or break your productivity. How can you stay focused on that tough statistics problem if you’re distracted by your aching back? Working in bed promotes bad posture, which not only decreases concentration but can also give you back pain in the long term. Pick a …
disambiguating description: With the coronavirus making studying from home the new norm, it’s imperative we look beyond the frustrations of no longer having face-to-face contact and find a routine to keep our brains alert, and educational progress on track. Yes, it’s a difficult time, but INOMICS is here to help.
date posted: 2020-03-30T14:18:33Z
date modified: 2026-07-06T14:01:26Z
employment type: onsite
language: en
keywords: study from home
keywords: home studying
keywords: corona
type: advice
disciplines: economics
disciplines: socialscience
disciplines: business
disciplines: management
disciplines: generaleconomics
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Business
discipline labels: Management
discipline labels: General Economics (JEL A)

The Case for Wealth Taxation
type: Article
title: The Case for Wealth Taxation
description: Whether America will see a wealth tax in the foreseeable future is moot - certainly, vested interests will leave no stone unturned in its attempt to thwart it. Nevertheless, it’s now part of the conversation, and its growing popularity among the public suggests it’s here to stay. But why now? How do we explain the ‘resurgence of interest in tax policy research’ that wealth taxation proposals have helped spark, and the American Economic Association (AEA) has so excitedly observed? Gaining popularity In many ways, its popularisation is surprising in how slow it’s been, for extreme wealth inequality, which it explicitly targets, has long been a sad fact of American life - and current trends offer little reason for future optimism. Over a decade ago, President Obama described it as ‘the defining challenge of our time’, hoping, implicitly, that his tackling of it would become his defining success. Despite these aspirations his administration did little to affect the underlying economic factors that contributed to its spread. That’s not to say no progress was made; it's rather to recognise that tweaking income tax rates and gently increasing tax subsidies for low-wage workers, while praiseworthy, were insufficient to reverse the effects of decades of regressive tax policies and deregulation. Consider: between 1995 and 2016 the net worth of the top one percent almost tripled, the middle class’s barely budged, and the bottom ten percent - those most vulnerable - saw theirs shrink. Clearly, the social mobility that Americans hold so dear, and upon which their collective sense of self rests, has ground to a halt - and conservative adjustments to taxation have failed to reanimate it. Wealth taxation presents a bolder approach; it's found appeal for that reason. <11an>limit:2;categories:jobs|courses|programs;disciplines:Financial Economics (JEL G)|Public Economics & Economic Policy (JEL H)</11an> Its champions Building on the work of Thomas Piketty, who catapulted the idea of w…
disambiguating description: The emergence of Joe Biden as the unassailable front-runner in the Democratic Primary belies a contest that at various turns broke new ground. From its unprecedented field, larger and more representative than ever (save the brief participation of two billionaires), to the remarkable resuscitation of one moribund campaign, the departure from custom was clear. Nowhere was this more obvious than in policy, where the inclusion of senators, Elizabeth Warren and Bernie Sanders, dragged the conversation leftwards into distinctly uncharted territory. While all candidates acknowledged America’s extreme inequality and the need for better healthcare, social security, etc., divergence came in the prescribed means of redistribution, and unusually discussion extended beyond familiar calls to raise income tax for the rich. Most liberal of the proposals was a wealth tax: an annual tax on everything an individual owns. Its mere suggestion confirmed an improbable rise of a policy that until recently was dismissed as fringe and anti-aspirational.
date posted: 2020-03-25T13:37:13Z
date modified: 2026-07-07T10:07:05Z
employment type: onsite
language: en
keywords: inequality
keywords: William Pearse
keywords: wealth tax
keywords: taxation
type: blog
disciplines: politics
disciplines: microeconomics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: socialscience
disciplines: healtheducationwelfareeconomics
discipline labels: Politics
discipline labels: Microeconomics (JEL D)
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Health, Education, and Welfare (JEL I)

Top fiction books for economists
type: Article
title: Top fiction books for economists
description: Fiction might not be the first place you turn to to get your hit of economics, but it can be surprisingly revealing, especially in helping one consider how economics overlaps with other issues in the real world, like politics, family, technology, and ideology. And what better way to spend your time while in coronavirus isolation than reading a load of great fiction from the world's most famous authors, and getting your daily dose of economics to boot? Check out our Advice section for more helpful tips for economists INOMICS and our parent company 11 Academia Networks are Amazon Associates, meaning we are a part of their affiliate program. This article contains affiliate links, which means we may earn money through any qualifying purchases made after you click through. However, this is not a sponsored post. 1. Jane Austen - Pride and Prejudice Forward-thinking for its time and still with enough humour to keep it entertaining today, Austen’s classic weighed up the economic pressures of nineteenth-century society against the importance of marrying for love. Its opening line, since extremely famous (‘It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife’), sets up the plot for the rest of the book: that Mr Bennet must marry off one of his five daughters in order that his inheritance be passed on to his children, helping them avoid destitution. Economists will appreciate the importance money plays in the novel, as well as the touching moral that love should and will overcome all. 2. George Orwell - Keep the Aspidistra Flying Orwell’s searing critique of the middle- and upper-classes, and treatise on socialism and its many hypocritical followers holds weight to the present day. Keep the Aspidistra Flying catalogues the woes of a man failing to rebel against a monetary culture that seems to suck in all around him. Based on Orwell’s own experiences of working in bookshops and purposefully living on the streets t…
disambiguating description: There are plenty of books which are important for economists to read in the non-fiction department, from the very popular to the extremely academic. But what of fiction books - novels, plays, and the like? It's important not to forget that even stories which aren't 'true' in the dictionary definition sense of the word can tell us a lot about the realities of the world.
date posted: 2020-03-23T14:00:16Z
date modified: 2026-07-06T14:02:24Z
employment type: onsite
language: en
keywords: James Matthew Alston
keywords: books
keywords: fiction
keywords: economics books
type: advice
disciplines: economics
disciplines: socialscience
disciplines: business
disciplines: management
disciplines: generaleconomics
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Business
discipline labels: Management
discipline labels: General Economics (JEL A)

What Impact Has the Coronavirus Had on Higher Education?
type: Article
title: What Impact Has the Coronavirus Had on Higher Education?
description: Similarly, universities have begun shutting up shop, not willing to risk large swathes of students being affected by the virus. So what does this mean for students who are unable to study, and what are some of the potential workarounds? Universities close their doors Across many countries, universities and importantly their libraries have been shut down. In Berlin, for example, all Freie Universität libraries shut down officially on the 16/03/20 for an indeterminate period, some having already closed during the week before. In Italy, universities have already been closed for some time, as have major universities in the USA. It is surely only a matter of time before this happens broadly across most of the world, assuming the virus isn’t brought under control soon. Currently, many universities are on study break, meaning a few weeks during which there are no seminars, lectures or tutorials, allowing students to write their essays or do exams. With libraries shut, leaving students unable to find the research materials they need, deadlines for essays and exams will have to be pushed back to allow time for these students to still do their research. Moreover, with universities closed, many students who need to speak to their professors and tutors for help with their essays won’t be able to, at least, not in person! This causes problems for students who need to talk through their ideas with their supervisors, like, for example, those writing Bachelor’s or Master’s theses. With nobody to turn to for advice, many will cease to write until they are able to talk to the people advising them on their chosen topic. The economics of the virus There is an economic impact of the coronavirus on institutions, too. At the beginning of February when Australia began closing its borders, many Chinese students had gone back to their home country for the semester break, which over this period lasts around three months. Due to the travel ban that was put in place, many of these students were…
disambiguating description: As the spread of the coronavirus continues across the world, many questions remain unanswered, not least what is going to happen to those thousands of students whose universities have also been affected by the pandemic. Schools, offices, museums, restaurants and bars are being closed across the world, and curfews are in place in particularly affected countries.
date posted: 2020-03-17T12:48:50Z
date modified: 2026-07-07T10:08:15Z
employment type: onsite
language: en
keywords: study online
keywords: James Matthew Alston
keywords: study abroad
keywords: coronavirus
keywords: coronavirus covid-19
type: blog
disciplines: economics
disciplines: socialscience
disciplines: business
disciplines: management
disciplines: healtheducationwelfareeconomics
disciplines: generaleconomics
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Business
discipline labels: Management
discipline labels: Health, Education, and Welfare (JEL I)
discipline labels: General Economics (JEL A)

The Case to End Fossil Fuel Subsidies
type: Article
title: The Case to End Fossil Fuel Subsidies
description: The empty promises began in 1997 when the Kyoto Protocol demanded governments stop subsidizing all ‘greenhouse-gas-emitting sectors’. Posturing world leaders dutifully queued up to pay lip service, establishing a now familiar tradition. While attending various climate summits, each would (re)commit to the eradication of fossil fuel subsidies, implore others to follow suit, and then, as if nice sounding words were all it took to cleanse the world of greenhouse gases, return home and do nothing. President Obama claimed in 2012 that a hundred years of subsidies to the oil companies was over - he lied. In 2020, annual global subsidies to the fossil fuel industry were estimated at $500 billion, and following a blip between 2013-16, are on the rise again. But why? How did governments, whose raison d'être is to keep their citizens safe, come to prop up an industry that puts lives at risk? And how great a threat does it pose? It began so well... Once upon a time it actually made sense. Indeed, when fossil fuel subsidies were first implemented they were endorsed by progressives for their equalising influence. Whether direct financial transfer, preferential tax treatment, or government infrastructure spending, it didn’t matter, they did what all subsidies do: reduced prices, in this case, the price of energy. By doing so, they gave those mired in poverty access to electricity, heating, and ultimately the components needed for a dignified life. There was also the added benefit of securing national energy supplies, as supporting indigenous production reduces dependency on foreign imports, which cannot always be guaranteed. Securing the energy supply was securing the country’s future - another easy sell. Noble-sounding as these justifications may be, the refining of green technologies mean they hold diminishing credibility, especially in the developed world where 80% of all historical carbon emissions have been emitted. A recent report by the International Renewable Energy Agenc…
disambiguating description: The continued existence of fossil fuel subsidies in a time of their almost universal condemnation reveals something about the governments that rule us, something pernicious, but also something all-too-predictable. Like no other area, they expose a gulf between rhetoric and action, a disconnect so stark that, if the risks it posed were less catastrophic, would almost be comical. Back in reality, though, the cognitive dissonance, cynicism, or whatever its cause, serves only to warm our planet and threaten all life.
date posted: 2020-03-16T14:35:12Z
date modified: 2026-07-07T10:10:08Z
employment type: onsite
language: en
keywords: fossil fuels
keywords: economics
keywords: William Pearse
keywords: environmental economics
keywords: green energy
type: blog
disciplines: politics
disciplines: publiceconomicspolicy
disciplines: economics
disciplines: macroeconomicsmonetary
disciplines: socialscience
disciplines: agriculturalenvironmentaleconomics
disciplines: industrialorganization
discipline labels: Politics
discipline labels: Public Economics & Economic Policy (JEL H)
discipline labels: Economics
discipline labels: Macroeconomics and Monetary Economics (JEL E)
discipline labels: Economics and Social Sciences
discipline labels: Agricultural and Environmental Economics (JEL Q)
discipline labels: Industrial Organization (JEL L)

INOMICS unveils its A-Z of economics terms
type: Article
title: INOMICS unveils its A-Z of economics terms
description: But there’s always more we can do, and we felt the time was ripe to expand our help section to try and give even more value to young economists who are just starting out in the game. So without further ado, we’re proud to unveil our new A-Z of economics terms. Our A-Z is simple - we have professional economists write accessible but in-depth overviews of some of the most important economic terms that you will need for your studies. Starting out, we are focusing on microeconomics terms, but soon we will be expanding to macroeconomics, environmental economics, and every other type of economics you can think of. They aim to offer an insight into exactly what the term means, put it into context to make it easy to understand, and give a brief insight into where the term has been used and where you can find more academic information on the concept. First, head to inomics.com and take a glance at our header navigation. Hover your mouse of the section ‘Insights’ and you’ll see a drop down menu with the option listed ‘Economics Terms A-Z’. Give that a click and you’ll be taken to our list of all economic terms, handily listed by the first letter of the term, making it easier to find exactly what it is you’re looking for. And if you go further and click on an actual term, you’ll be able to see all the information about that term, including links through to any related definitions which we think help explain certain concepts which have been referred to. Let’s have a look at one example, adverse selection (long picture incoming): As you can see, this definition of adverse selection includes a brief, one or two sentence definition at the top, followed by a longer, more in depth definition with examples. Then some further reading is recommended which can help to expand your knowledge even more, and finally, a ‘Good to Know’ section which offers tips on how to avoid common potholes when using a term and explains some of the more tricky aspects a definition may have. Right at the bo…
disambiguating description: Here at INOMICS, we’ve always been dedicated to trying to help you, the economist (fledgling or otherwise) get the most out of your education and career. Whether that be offering you the best new courses and conferences, nudging you towards the perfect university degree, or helping you apply to jobs once you’re done studying, we’re there to give advice and present opportunities you may not have otherwise found.
date posted: 2020-03-12T14:21:51Z
date modified: 2026-07-07T12:54:52Z
employment type: onsite
language: en
keywords: James Matthew Alston
keywords: economic term
keywords: economic terms
keywords: definitions
type: advice
disciplines: economics
disciplines: socialscience
disciplines: business
disciplines: management
disciplines: generaleconomics
disciplines: economicthoughtmethodology
discipline labels: Economics
discipline labels: Economics and Social Sciences
discipline labels: Business
discipline labels: Management
discipline labels: General Economics (JEL A)
discipline labels: Economic Thought & Methodology (JEL B)

Utility Maximization
type: CreativeWork
title: Utility Maximization
description: The assumption that individuals maximize utility is a cornerstone of microeconomics. It is used as a basis to explain market behavior and to predict how people act and react in particular situations. Individuals are assumed to be perfectly rational, capable of calculating how much utility they will obtain from any combination of goods and services, and choosing a combination where utility is maximized, subject to their budget constraint. In most economic modeling, an individual’s utility is described as a continuous, monotonic, and concave function of consumption. That is, the utility function U(X), where U stands for utility and X for consumption (X can be a vector of goods and services consumed), is continuous over the space of X. Its first derivative with respect to X is positive (“more is better”) and its second derivative with respect to X negative, representing the law of diminishing marginal utility. The individual will, in most cases, be limited in consumption by their income such that spending on goods and services X cannot exceed a maximum level M. The individual’s maximization problem can be posed as \begin{gather*} \max_{X}U\left(X\right)\\ \text{s.t.: }XP\leq M \end{gather*} where P is the corresponding vector of prices for the goods and services X. Figure 1 depicts a simple two-dimensional case where the individual chooses between combinations of items X1 and X2 (item X2 might also represent “all other items” in order to study the individual’s choices of X1 compared to alternatives). The items’ prices P1 and P2 and the budget M determine the set of choices the individual can make. They could devote their entire budget to X1, purchasing QX1 at a cost of P1QX1 = M, or they could do the same for X2, purchasing QX2 at a cost of P2QX2 = M. All affordable combinations of X1 and X2 are found in the grey shaded triangle which is limited by the budget line P1X1 + P2X2 = M running between the points (QX1,0) and (0,QX2). A set of indifference curves is drawn in t…
disambiguating description: Utility in economics refers to the level of happiness or satisfaction of individuals. Individuals derive utility from the consumption of goods and services, and seek to maximize their utility under any given budget.
date posted: 2020-03-10T09:28:06Z
date modified: 2026-06-29T11:06:42Z
employment type: onsite
language: en
keywords: Utility maximisation
keywords: Tom McKenzie
type: terms
disciplines: microeconomics
disciplines: economics
disciplines: socialscience
discipline labels: Microeconomics (JEL D)
discipline labels: Economics
discipline labels: Economics and Social Sciences