Different types of competition affect prices differently Not all competition is created equal. Perfect competition, which features prices that drop to the point where firms are barely covering their costs, is the ideal of economic efficiency. It’s easy to see this in action in certain industries — petrol stations and grocery stores come to mind. Petrol (or gas) stations typically post their prices on large, easy-to-read signs. If you drive around town long enough, you’ll notice that the price of fuel at these stations tends to move in tandem. When one price falls, so do the others, and vice versa. Gas is a commodity — a good with little differentiation — so consumers tend to seek the lowest price, and firms have little ability to price it above their costs. This means that inefficient firms (i.e.: with high costs) are forced out of business as the most efficient firms (i.e.: low costs) set their prices near their low costs. Customers flock to the efficient firms, the inefficient firms shut down, and prices stay low. Budget-friendly grocers like the German chains Lidl and Aldi and the US chain Walmart are comparable. At these types of grocers, food prices tend to be quite low. And, it’s not uncommon to see promises of price matching among their aisles. You can even witness competition lowering prices yourself in some grocery stores. In the UK, Sainsbury’s is a grocery chain with a price match guarantee for Aldi. If a customer finds a good at Aldi that’s cheaper than it is at Sainsbury’s, the grocer will lower the price to match Aldi’s. This is a clear example of how perfect competition works — rather than lose a customer, a firm will lower its prices to match its rival’s. This perfect competition ideal is common, and it does genuinely lower prices, but it’s far from the only way that markets operate in the real world. Economists have identified several other types of competition where prices are set differently. Imperfect competition Many of the markets in today’s economy operate under “imperfect competition”, a state where goods are technically substitutes, but consumers do not view them as interchangeable. Tech is a great example of this. Both Dell and Apple manufacture computers, but hardly anybody would be perfectly indifferent between a Dell PC and an Apple Mac. Likewise for iPhones and Androids, Playstations and Xboxes, and all kinds of other gadgets. Imperfect competition still pressures prices downwards, just not as much as perfect competition would. This is because consumers will still respond to price changes, just not as intensely (in other words, their price elasticity of demand is less elastic). An iPhone lover is probably willing to pay a premium (say, $200) to purchase a new iPhone over a new Android smartphone. But there are limits to how high this price difference can go before most people would reconsider. If a new iPhone cost $1000 and a new Android cost $800, many iPhone users would happily buy the iPhone over the Android. But what if that price comparison was $1400 to $800? Or $2000 to $800? Many people would begin to buy Androids instead. This demonstrates something about imperfect competition: firms are able to charge higher prices than they could under perfect competition, due to their brand strength, their unique product offerings, etc., but they still can’t charge whatever price they want. Imperfect competition thus lowers prices, but less than perfect competition does. In other words, imperfectly competitive firms have some market power, which brings us to a very important discussion… High prices (can) come from market power The most classic example of a high-market-power firm is the monopolist. A monopoly is the only firm producing a good in the market, which means they can freely set prices and consumers must either pay those high prices or live without the product. This is precisely why monopolies are typically considered bad for consumers: usually, monopoly prices are inefficiently high and monopoly production is inefficiently low. We can use market power as a sort of measure of how effectively competition is working. Or, we could consider market power to be the opposite of competition: market power raises prices while competition lowers them. In perfect competition, firms have essentially zero market power, which is why we often call them “price-takers”. They simply accept the market price and work out how to make a (marginal) profit with that limitation. In imperfect competition, meanwhile, firms have some market power, and can set prices higher. Monopoly (or a very well-coordinated oligopoly) has the most market power, wherein a firm maximizes its own profit at the expense of consumers. Still, not all monopolies are bad. For example, it’s often best for public utilities to become regulated monopolies, because of start-up costs. It takes a ton of investment to set up water pipes and plumbing, for instance, and it would be inefficient to have a half-dozen utility companies tearing up roads and sidewalks to install their own proprietary water pipes. Instead, the government typically awards a company a monopoly and sets price controls while subsidizing the market with tax dollars. This achieves a balance of high quantity delivered, low prices for consumers, and a guaranteed competition-free profit for the utility company. And, of course, there are many other reasons prices can be high. Negative supply shocks, increases in demand, changing laws, etc. – all can influence prices. Still, in a vacuum, how low competition will push prices depends on how much market power the firms have. How do firms achieve market power? Firms are incentivized to make as much profit as possible, which means they aim to compete as little as possible with other firms… or, in other words, they aim to gain as much market power as they can. A surprisingly large amount of corporate strategy boils down to this. Consider marketing. The author of this piece has been receiving a torrent of ads for laundry detergent and dish soap while watching Netflix lately. These goods are both good examples of commodities – is one dish soap brand really better than another? Generally, no… but the marketing departments of dish soap companies work very hard to convince you that this is indeed the case. That’s because, if consumers believe one firm’s product is superior, they’ve just given that firm market power! Even with dish soap, if consumers (en masse) became loyal to one brand, that brand would be able to price at a premium. This would cause the dish soap market to look like the Apple vs. Android smartphone market: the products are seen as differentiated, and people develop strong brand loyalty. Marketing isn’t the only way firms try to wrangle market power out of otherwise competitive markets. Loyalty programs, for example, are common in coffee shops and cafes, as well as grocery stores, movie theaters, and more. These programs typically offer free handouts to consumers who make enough trips to the store in question. This makes it slightly harder for consumers to justify going to a different place; if you can earn a free latte at Starbucks (say, every seventh time you order a coffee there), why bother going to a different coffee shop? Firms can also achieve a measure of market power by being the first to innovate or enter a new market. This is called a “first-mover advantage” in economics (and can be represented by Stackelberg competition). Microsoft’s Windows became the default operating system because it was able to partner with IBM and Intel at crucial moments in the early PC industry, and allowed other manufacturers to use Windows on their computers (while Apple’s macOS is only usable on their computers). This made it very accessible for myriad companies during the PC boom, and subsequently made it hard for companies to justify trying to use a different operating system. And of course, the fewer firms in a market, the more market power they’ll have. Monopolies have the most market power; duopolies or cartels that can coordinate have a high degree of market power (and may operate under a form of Cournot competition); perfectly competitive (or firms locked in Bertrand competition) have a low degree of market power. What does research say? These theories are well-represented in the real world. A high degree of competition tends to lower prices for consumers, and vice versa. Even so, economists are a curious bunch, and some have set out to analyze this issue even further. Certain papers have found niche scenarios where increased competition can increase prices. Although these are theoretical papers, they add nuance to the mechanisms by which competition affects prices. These papers include Satterthwaite (1979), Chen and Riordan (2007), and Mangin (2024). In general, these papers use mathematical models to study cases where prices can rise due to competition if certain conditions are met. For example, Mangin (2024) finds, in their model, that the expected price markup of a good is increasing as the number of firms increases. This result holds locally, not globally, and requires a specific condition to be met: that the elasticity of marginal utility is less than the elasticity of demand. This means that marginal utility would change less than demand when prices changed. Even though it seems clear that competition lowers prices, it’s still important for economists to push the limits of commonly accepted and widely-proven theories. Much the same as any other science, the exceptions often cause us to learn more than the general case! Curious readers ought to look into the research themselves, and can use any of these reference papers as places to start. Still, for the rest of us, the answer is clear: when it comes to low prices, competition is certainly our friend. References: Satterthwaite (1979): Consumer Information, Equilibrium Industry Price, and the Number of Sellers. https://doi.org/10.2307/3003348 Chen and Riordan (2007): Price and Variety in the Spokes Model*. https://doi.org/10.1111/j.1468-0297.2007.02063.x Mangin (2024): When is competition price-increasing? The impact of expected competition on prices https://doi.org/10.1111/1756-2171.12487 Image Credit: Freepik via Magnific (license: Free for commercial use WITH ATTRIBUTION license)
Competition is one of the foundational concepts in economics. We’re taught in intro courses that competition lowers prices, because it allows markets to allocate resources efficiently. This is an example of Adam Smith’s “invisible hand” in action, a cornerstone of economic theory. But does competition always lower prices? The answer is, yes, sort of — it just depends on the degree of competition. Since that answer probably doesn’t satisfy anybody, let’s dig deeper.
Public Economics & Economic Policy (JEL H)
Macroeconomics and Monetary Economics (JEL E)
The Future of Work in Developing Countries Edited by: Akbar Noman, Joseph E. Stiglitz, Arjun Jayadev Part of the series: "Initiative for Policy Dialogue at Columbia: Challenges in Development and Globalization" Published: March 6, 2026 Description: One of the most pressing issues in development today is the employment challenge in low- and middle-income countries. As more young people enter the labor force―and as structural transformation unfolds amid deindustrialization, technological disruption, and global competition―the question of how to create sufficient decent jobs has become central to the economic future of the Global South. Although this is a shared challenge across developing regions, it is particularly acute in Africa, where rapid demographic change and urbanization are colliding with limited industrial expansion. Bringing together leading international scholars, The Future of Work in Developing Countries examines the employment problem from multiple perspectives. By combining rigorous theoretical analysis with grounded empirical research, this book demonstrates that employment creation is not an automatic byproduct of growth but a political and institutional project. It offers fresh insights for scholars of development, political economy, and economic history, as well as for policy makers seeking strategies to promote inclusive transformation in Africa and beyond. Ladder or Lottery: Economic Promises and the Reality of Who Gets Ahead by Gary A. Hoover Published: February 17, 2026 Description: This book asks the reader a simple question: Is our economy a ladder or a lottery? Are people able to control their position on the economic spectrum by their actions? Some argue that, in our market-based economy, if you play by certain rules and make certain choices, you'll achieve upward mobility no matter what economic position you were born into. Drawing on his vast economic expertise, prominent economist Gary A. Hoover explores what this "social contract" requires of its citizens, and what it offers in return. Hoover shows how civil unrest is often directly related to broken society-level promises, exploring protest movements such as Occupy Wall Street, the Tea Party, the Arab Spring, and student debt forgiveness as case studies. He also predicts where future protests can be expected if results promised are not results delivered. This insightful and data-driven book tackles challenging issues around income inequality, health care, and artificial intelligence, and ultimately equips readers to answer these pressing questions: Is our social contract a ladder to higher economic standing, accessible to all no matter where they start? Or rather a lottery in which many will buy a ticket but only a few will find success? And how can we best align social promises with our lived economic realities? Hard at Work: Job Quality, Wellbeing, and the Global Economy by Francis Green Published: December 24, 2025 Description: More than three billion people are at work across the globe, and it takes up a huge chunk of the time humans spend on this planet. Policymakers say they want to see "more and better jobs" or "decent work for all" but are good jobs expanding, and if so for whom? Or are bad jobs taking over? In Hard at Work, Economics Professor Francis Green (University College London) presents a new, up-to-date account of job quality to understand the immense variety and range of jobs, as well as the evolution of these jobs in the twenty-first century. Drawing on economics, industrial relations, sociology, psychology, and ergonomics, as well as new data sources from countries around the world, Green constructs a unified and interdisciplinary conceptual framework that illustrates the impacts of job quality on our health and wellbeing. He finds that while some work environments can be meaningful, well-paced, safe, well-paid, and supportive, others can be tightly controlled, low-paid, dangerous, insecure, and fast-paced. With this broad picture of job quality, Green turns to various issues that impact workers--the failure to improve job quality and workers' wellbeing at work despite long-term economic growth, the declining share of labor income, the general increase in work demands, and the prospects for job quality in the new automated world of work. Original and authoritative, Hard at Work provides a global and comprehensive understanding of job quality that raises important questions for this emerging field. This is an open access title available under the terms of a CC BY-NC-ND 4.0 International license. It is free to read on the Oxford Academic platform and offered as a free PDF download from OUP and selected open access locations. A hardcover or ebook version is available for purchase. Introduction to Quantitative Economics by Jesse M. Shapiro Published: February 24, 2026 Description: A paradigm-shifting textbook that teaches graduate students in economics how to use economic models to interpret data. Offering a new pedagogical paradigm, this textbook delivers a ready-made economics course covering the general concepts that unify different approaches to bringing economic models to data. Jesse Shapiro presents core ideas in quantitative economics as an abstract, cohesive whole and introduces canonical models that can be used across a wide range of applications. This course-in-a-book exposes students to stylized applications of these models that illuminate their foundations as well as recent research articles demonstrating the models’ broad applicability. Expectations Matter: The New Causal Macroeconomics of Surveys and Experiments by Olivier Coibion, Yuriy Gorodnichenko Published: March 24, 2026 Description: How do expectations about the future influence economic behavior? For decades, economists have known that beliefs play a central role—from how much households spend, to how firms set prices, to how central banks design policy. But figuring out exactly how expectations affect decisions has been one of the field’s most persistent empirical challenges. In this book, Olivier Coibion and Yuriy Gorodnichenko present a fresh empirical approach: using randomized controlled trials (RCTs) to study the causal impact of expectations. Drawing on more than a decade of their research, they show how targeted information treatments can generate experimental variation in beliefs—making it possible to measure how those beliefs influence real-world decisions. Along the way, they reassess the limits of the traditional rational expectations framework and offer a richer, evidence-based picture of how people form and act on their views about the economy. King Dollar: The Past and Future of the World's Dominant Currency by Paul Blustein Published: March 18, 2025 Description: Prophecies that the dollar will lose its status as the world’s dominant currency have echoed for decades—and are increasing in volume. Cryptocurrency enthusiasts claim that Bitcoin or other blockchain-based monetary units will replace the dollar. Foreign policy hawks warn that China’s renminbi poses a lethal threat to the greenback. And sound money zealots predict that mounting US debt and inflation will surely erode the dollar’s value to the point of irrelevancy. Contra the doomsayers, Paul Blustein shows that the dollar’s standing atop the world’s currency pyramid is impregnable, barring catastrophic policy missteps by the US government. Recounting how the United States has wielded the dollar to impose devastating sanctions against adversaries, Blustein explains that although targets such as Russia have found ways to limit the damage, Washington’s financial weaponry will retain potency long into the future. His message, however, is that America must not be complacent about the dollar; the great power that its supremacy confers comes with commensurate responsibility. Swiftynomics: How Women Mastermind and Redefine Our Economy by Misty L. Heggeness Published: January 27, 2026 Description: Taylor Swift isn't just a pop megastar. She is a working woman whose astounding accomplishments defy patriarchal norms. And while not all women can be Beyoncé or Dolly Parton or Reese Witherspoon, the successes of these trailblazing stars help us understand the central role of women in today's economy. Swiftynomics assesses the complex economic lives of everyday American women through the stories of groundbreakers like Taylor Swift. Prominent economist Misty L. Heggeness, currently associate professor of economics at Kansas University, digs into the data, revealing women's hidden contributions and aspirations―the unexamined value they create by pursuing their own ambitions. She highlights the abundance of productive activity in their daily lives and acknowledges the barriers they still face. Exploring critical reforms regarding caregiving and gendered labor, this book offers advice for women to thrive in an economy that was not built for them. AI Economics: How Technology Transforms Jobs, Markets, Life, & Our Future by Benjamin Shiller Published: February 6, 2026 Description: Through vivid, often surreal stories, AI Economics reveals how technology is reshaping our world. You will discover: - The "Weirdness Wage Premium": Why the strangest jobs may soon command the highest pay. - The Kangaroo Lesson: What marsupials can teach us about modern job security. - Secondhand Privacy: Why someone else’s data might be more dangerous to you than secondhand smoke. - The Green Mountain Mystery: Why Chinese officials once spray-painted an entire mountainside green, and why new technology finally made them stop. In AI Economics, Benjamin Shiller, associate professor of economics at Brandeis University, draws on decades of research (and yes, AI tools to help research and draft the book!) to reveal how these forces are reshaping our world, and offers a practical map for what comes next. If you have more suggestions, share them in the comments below or contact us at info@inomics.com. Image Credits: sevim karakoç from Pexels via Canva / Ali Haider from Pexels via Canva / Yusuph Mbwambo from Pexels via Canva - All images published under Canva Pro License INOMICS is an Amazon Associate, meaning we are a part of their affiliate program. This means that we earn money if a user clicks through to an affiliate link and makes a qualifying purchase.
Here at INOMICS we are always on the lookout for a good econ read. Here is a selection of new economics book releases from the first quarter of 2026 (okay, one from the very end of 2025!). Our selection includes three new works on labour economics, with a focus on social welfare and economic development. Additionally we highlight two new books relevant for economic methodology, including a major new textbook for students on microeconomics, as well as a new book bridging the gap between behavioral economics and empirical methods. The final three books in our round-up include an eclectic mix of focuses, from an analysis of the status of the dollar as the primary reserve currency in the international economy, an analysis of the role of women in the international economy through prominent case studies like Taylor Swift, through to a new work looking at AI in Economics. Whether you are a student of economics or you are simply interested in economic topics, we wish you happy reading.
The Intuition Behind Regression Analysis
It’s all about the variance The basic question behind many regression analyses is: how much does x affect y? Or, stated another way: when x changes, how much does y change as a result? This is a great way to think about what a regression is attempting to do. In essence, a regression measures how much of y’s variation results from x varying, ignoring the variation in other regressors (the Frisch-Waugh Theorem illustrates how a regression can isolate the effect of a single variable on y, but that’s beyond the scope of this article). The regression attributes whatever variation in y that x explains to a coefficient (usually denoted by a lower case beta symbol: 𝛽), and whatever variation x can’t explain to a term we call the “error”. Finally, statistics are computed that tell us how unlikely it is that the effect of x on y is due to random chance — if it’s very unlikely, we call it a “statistically significant” result. An example: Let’s consider high-end TV sales as our y variable, and “income of consumers” as the x variable. How should consumer income affect the sales of high-end TVs? Clearly, the wealthier people are, the more likely they are to spend money on a nice TV — or even multiple TVs. Therefore we’d expect a positive relationship between x and y. After gathering TV sales data and running our regression, if more TVs seem to be sold when consumers in the area have higher incomes (or after their incomes increase), we have some good evidence to support our hypothesis. The 𝛽 coefficient on the x variable “consumer income” might be statistically significant, and it can indicate by how much exactly an increase in income is expected to affect TV sales. This might sound straightforward, but much is happening “under the hood”. Before diving into some more complex scenarios, let’s draw a picture so we can visualize what’s happening when a regression is run. The geometry of regression analysis You’ve seen plenty of graphs in math classes before, with y on the vertical axis and x on the horizontal axis. Most regressions cannot easily be depicted in this way, for one simple reason. Most regressions include far more than two variables! When we collect data to run a regression, we end up having a series of y values (a vector), and several series of x values (a matrix). To compare the variation in y and x, we “project” y onto the “space” of x. Figure 1 below depicts this. Figure 1: The Geometry of Regression Analysis In Figure 1, we can see the vector of y data we’ve collected, which appears as the hypotenuse of the triangle. Let’s break this image down to understand all of its pieces, and how they’re represented by the tables of numbers a computer will give us. Suppose that the y vector is a paper airplane you’re launching, and the x “space” contains the forces of wind, gravity, and your own muscle power. You throw your paper airplane and record its flight. Your muscles launch the paper airplane forward, gravity pulls it downward, and the wind blows it around wildly. Similar to this scenario, the regression of y on x measures how much the x variables “pull” y in the direction it’s going, as the y vector “flies” over the space of x. If y is TV sales and x is income, the regression measures how much the force of “income gravity” changes the direction of the “TV sales airplane”’s flight, for example. Consider the space of x in Figure 1, which appears to be a 2-dimensional-looking plane. If x has absolutely zero power to affect y, then the y vector will be perfectly vertical. Why? Because as the y vector takes flight, the x space has no power to change its trajectory. This would be as if you threw a paper airplane straight up into the air and both gravity and the wind turned off at the same time. But if the x space does influence y, then as x works or changes, y’s trajectory is changed too. So, in Figure 1, we can see that x has some power over y. How much power? One way to measure it is by looking at the “base” of the triangle. This measures the exact horizontal distance that y has traveled as it’s moved through the x space. This quantity is called the projection of y onto x; it is the portion of x that explains y’s trajectory. This is also what gives us the model’s predicted values of y. Another way to measure this explanatory power is by looking at the vertical distance between y and the space of x in Figure 1. This distance represents the portion of y’s trajectory that x does not explain at all. This is the “error” term! The best model is typically the one that minimizes this distance, or in other words, minimizes the sum of the error (which we usually measure using squared values, so that negative and positive errors don’t cancel each other out). This picture hides a bit of math that’s going on under the hood. When you run a regression, the computer predicts an estimate of y for every set of x data points you have (the base of the triangle), then computes the resulting error (the vertical line) by subtracting this estimate from the actual y data point (the hypotenuse). In other words, together the error term and the projection constitute y. In order to figure out where y’s position is, we must know both the projection and the error — the explained and unexplained portions of y’s variance. This is easy to see from the formal regression equation Y = X𝛽 + ε. The first term, X𝛽, is the data times the coefficient our regression calculated for it; it creates the prediction of y based solely on the data, which is the base of the triangle. The error term is what’s left over, denoted by ε, which is again the vertical line in the triangle. Finally, we can use the ratio of these projection and error vectors to compute a very important statistic known as R2. This is a number that measures how much variation in y is explained by your regression. It’s one of the first things that students of statistics learn about regression analysis, and while it has problems (data scientists now typically use transformed versions of R2 that account for factors like scale and over-fitting), it’s a great window into what your regression’s version of Figure 1 probably looks like. High values of R2 indicate a good fit, which indicates that the model is useful for inference or prediction (one of which is usually the end goal of the analysis). In search of unknowable truths Figure 1 might make a regression seem very powerful, but unfortunately, a regression does not yield a certain answer. In other words, we can never learn the 100% precise answer to our research question for certain. This might be a surprising statement, but it’s true! This is a very important point to realize about regression analysis. We can admittedly get very, very close to a certain answer, but the actual real-world “true” answer is usually impossible to know for certain. In most of the sciences, including economics and data science, these “true” values are called “population parameters”, and our regression analysis gives us estimates of them. This is due to myriad real-world factors — like the difficulty of gathering fully comprehensive data, a limit to available computing power, and the imprecision of measurements we take. In science, it simply is not possible to have 100.00% certainty about things the majority of the time. This is one of the reasons why having a solid theoretical reasoning behind a regression model is important. The statistical evidence can only point us in the right direction. After the dust settles, it’s up to the data scientist, economist or biologist, etc. to correctly interpret the results and their real-world implication(s). This brings up another fascinating point, that an astute reader might have already wondered by now. What if we’re already confident that we know something about y before running our regression? Consider, for example, a macroeconomic model that attempts to explain inflation. This is something that’s been studied often before, and we’ve generated a lot of knowledge about it already. Can we account for that knowledge when running a new regression using new data? The answer is yes! But, it can seem a little complicated at first… Using our existing knowledge in scientific ways Bayesian regression methods include techniques that allow us to incorporate existing knowledge — or even just a good guess — into a regression analysis. This is done by using probability distributions. Before progressing further, it’s helpful to define what a non-Bayesian method is. We refer to them as “frequentist” methods. Introductory statistics courses (and this whole article so far) discuss frequentist methods and techniques. In essence, these are the “default” setting for regression analysis. Frequentists have a research question, and start to answer it by gathering data. In contrast, the Bayesian statistician doesn’t begin with the data, (s)he begins with a probability distribution that comes from their existing knowledge. What do we know about TV sales before collecting data on income? It’s very likely that more TVs are sold in wealthier areas, and when incomes of consumers increase. This information isn’t very controversial, but if we ignore it before running our regression, we’re essentially saying that we know nothing about TV sales at all before running the regression. This can be inefficient. Why throw away existing information when trying to answer a question? So, the Bayesian statistician takes a probability distribution that they believe is accurate, which we call a “prior” distribution. Then, they collect data and set up a regression as the frequentist did before, and run a regression in mostly the same way. This results in a “posterior” distribution that the data has created. The frequentist relies entirely on this posterior; the Bayesian merges the prior and the posterior together before deciding if there’s evidence for statistical significance or not. This Bayesian practice might seem arbitrary and unscientific, even blasphemous! How can we be allowed to insert our own beliefs into a scientific process? Fortunately, there are a few things keeping Bayesian methods “in check”. First, many frequentist statistics and test methods are secretly Bayesian methods in disguise. In many cases it’s possible to show that by using specific priors, the frequentist and Bayesian methods are the same. We can think of it in this simple way: frequentist methods simply use the “default” priors, while Bayesian methods are akin to an expert going and changing the default settings for a specific purpose. Second, if a data scientist, economist etc. uses a bad prior without sufficient justification, peer reviewers will point it out, and reputable journals might refuse to publish the work. Peer review is a cornerstone of science, after all, and statistical interpretation is not immune to its effects. It’s important to note too that frequentist methods are far from perfect. Consider that the rule of thumb for a statistically significant result is 5% (in words, “this result is 95% likely to be due to a true relationship between x and y, and 5% likely to be due to random chance”)*. This means that there’s a chance that we get the wrong result even though we did nothing wrong during the regression analysis. In some cases, this can even mean that a frequentist regression leads us to conclude something crazy that a Bayesian regression wouldn’t — like that the sun has exploded, when common sense would tell us that it clearly has not. For a beautiful and hilarious illustration of this exact scenario, look at the linked xkcd comic. *This is a reason why the standards for natural sciences, or medical science, are often more strict than for economics or data science. When human lives are at stake, a 5% error rate might be considered unacceptably imprecise. Both frequentist and Bayesian methods help us uncover the true relationships at work in the world around us. At the same time, there are many factors working against us… Setting up a regression can be tricky Regardless of which statistical techniques you employ, a regression really only measures how much y and x vary together, and uses that to estimate the strength of the relationship between x and y. But reality is so complicated that it can disrupt or obfuscate the true link between the variables, or even mislead us into thinking that a relationship exists when it truly doesn’t. Consider, for example, the determinants of high salaries. What factors probably contribute to having a higher salary? Talent, work experience, education, and charisma immediately come to mind. Other factors might include location, the type of industry, workplace politics, labor market factors, and even luck. All of these factors could be x variables that we gather data on before running a regression on y, which in this case is a vector of observed salaries. But there’s no obvious way to measure many of these variables. How do we measure talent or charisma, for instance? There’s no correct answer to this, although there are surely many wrong answers! Even for more obvious factors, how to measure them can still be a tricky thing. Work experience can be approximated by age, for example. But age might not be a good measure of experience if a worker has switched jobs often. We could use the measure “years working in the same industry” instead, but this still isn’t perfect, as the definitions of industries themselves can be arbitrary. If someone worked as a marketer for Apple, and later got a job in the marketing team at PepsiCo, are they working in the same industry? From this quick example, it’s clear that a solid theory should undergird any regression, and clear justifications need to be made for how exactly the practitioner gathers and prepares the data and sets up the regression equation. But there’s much more; we haven’t yet touched the mathematics of this subject. Warning: not everything is as it may seem! Mathematically, there are many ways that reality complicates the relationship between x and y. These include, but are not limited to: cases where x and y affect each other; cases where x affects both y and the error term; cases where x, y or both trend over time; and cases where the error term has patterns or isn’t expected to be zero. These types of issues occur commonly in real-world data, particularly economic data (that is very seldom experimental**). For example, consider using a regression to investigate the effect of an increase in government taxes on GDP growth. **So much so that the economists who popularized randomized controlled trials (RCTs) in economics won the 2019 Nobel Prize for their work, a stark contrast to fields like biology and psychology that use RCTs all the time. It might seem obvious that increasing taxes lowers GDP. However, if the government uses the net-new tax revenue to buy goods or services (for instance, construction projects), the true effect is much less clear. Recall that the aggregate demand equation is GDP = C + I + G + NX, where G is government spending. Higher taxes probably lower GDP, but increase G, since taxes fund government spending. But G increases GDP. So…what is the true effect? Were we to run a regression including GDP and G without accounting for this feedback loop, we would likely reach an incorrect conclusion. The previous example was a case where x and y affect each other. Let’s briefly examine the other cases mentioned above. We can return to our salary example to examine a case where x affects both y and the error term. Consider using “years of education” as an x variable to predict salaries. We’d have to account for the fact that as years of education increase, the variance of earnings increases. That’s because, all else equal, individuals with few years of education tend to have low earnings, while highly-educated workers tend to experience a wider range of earnings. Thus, the error term increases as x increases. When data trends over time — due to seasonality (think sales of ice cream) or simply the passage of time (macroeconomic variables like GDP and population tend to grow over time), it can be hard to disentangle the true effect of x on y, because that effect is hidden among the time trend that affects both variables. Finally, consider a case where the error term has a pattern. This is very often the case with financial data, for instance predicted stock market returns. Financial assets often fluctuate partially based on their previous values. This may be because people assess their future worth based on their current price, and because people have expectations that an asset will continue to perform similarly to how it’s currently performing. Either way, the error term in a regression of financial asset value is likely to vary in a pattern, which will obfuscate the true effect of x on y. Regression is an art and a science Running a good regression can be the cornerstone of an excellent research paper or the key reason for a new business strategy, but they’re far from simple or easy to execute well in many real-world cases. Understanding the issues at play, and figuring out how best to untangle the relationship between y and x, is a bit of an artful science. It requires a thorough understanding of the theory underlying the analysis, and running better regressions is a skill that comes with time. Hopefully, this article has offered a helpful glimpse into the machinery behind this ubiquitous tool in the data scientist’s arsenal, and will aid you the next time you begin to gather data for your own analysis! Image Credit: Generated with Canva AI Image generator (Prompt: Regression)
Regression analysis is a key topic in economics, data science, and computer science, but its roots go further back than these disciplines. Sir Francis Galton is credited with the term, after studying the heights of parents and their children, and noticing that those heights tended to “regress” back towards the mean. That name became associated with this type of analysis, and has stuck, even though a more accurate name might have been something like “variance analysis”. We’ve written previously about what a regression analysis is. If you’re completely new to the idea of a regression, that’s a good place to start. In this article, we’ll look more closely at this tool in the data scientist’s, economist’s and statistician’s toolbox, to understand exactly what’s happening when we run one.
Econometrics, Statistics and Quantitative Methods (JEL C)
If you are looking for a good read for yourself, or a present for a loved one, this is INOMICS pick of new Finance books published in 2025. Whether you are a student of finance, a professional in the field, or a lay-person looking to make good investment decisions, our selection contains something for everyone: from books diving into global financial systems, to personal finance guides, financial history books, and finance textbooks. New Books on Global Financial Systems and Financial Psychology 2025 Fixed: Why Personal Finance Is Broken and How to Make It Work for Everyone by John Y. Campbell & Tarun Ramadorai October 21, 2025 Two leading economists reveal why today’s personal finance markets are rigged against us and offer practical steps to fix them John Campbell and Tarun Ramadorai diagnose the ills of today’s personal finance markets in the United States and across the globe, looking at everything from short-term saving and borrowing to loans for education and housing, financial products for retirement, and insurance. They show how the system is “fixed” to benefit those who are wealthy and more educated while encouraging financial mistakes by those who aren’t, making it difficult for regular consumers to make sound financial decisions and disadvantaging them in some of the most consequential economic transactions of their lives. Campbell and Ramadorai describe how some even opt out of the financial system altogether, relying on unregulated and often shady mechanisms to implement necessary financial functions, with dire consequences for individuals, families, and the economy more broadly. With the explosive growth of the global middle class, longer lifespans, and greater numbers of seniors managing their money alone, the pitfalls of personal finance now affect billions of people around the world. Fixed proposes concrete solutions that harness the expertise of economists, the power of government, and the speed of technology to restore fairness and trust in our broken system and make it work better for ordinary people. How The American Economic Machine Works: Understand How Money Is Made And How The Economy Works by Daniel Bulmez Published: July 9, 2025 The economy can feel abstract and intimidating—yet its effects on your everyday life couldn't be clearer. How the American Economic Machine Works demystifies the invisible engine powering your daily experience, connecting historical events to your paycheck, explaining financial markets in plain English, and empowering you to finally understand what's happening around you—and why it matters. From the roaring twenties and the Great Depression, to the 2008 financial crisis and the COVID-19 recession, you'll uncover powerful insights through vivid storytelling and relatable examples that reveal why the economy isn't a distant abstraction but an integral part of your daily reality. Recommended for readers seeking clear, jargon-free explanations of the economy, students of economics, history, or business who need practical insights, or anyone looking to confidently navigate financial news and policy discussions. The Psychology of Money: Timeless lessons on wealth, greed, and happiness by Morgan Housel Published: September 16, 2025 (first edition published in 2020) Deluxe hardback edition of The Psychology of Money with sprayed edges and additional bonus chapter content from Morgan Housel, the New York Times bestselling author. Money – investing, personal finance, and business decisions – is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don't make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In short: Doing well with money isn't necessarily about what you know. It's about how you behave. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life's most important topics. New Books in 2025 Introducing Finance to Young Adults and Kids ESSENTIALS OF BANKING, MONEY AND FINANCIAL MARKET: From Vaults to Value—Understand It All by Olaniyi Akanmu Published: October 31, 2025 Offers an insightful journey through the core principles of Banking & Finance. Provides readers with a clear understanding of how financial institutions operate and influence global economies. Perfect for students, entrepreneurs, or anyone curious about how economies really function, this textbook blends theory with real world examples from Nigeria & beyond. A Kid’s Introduction To Personal Finance: Understanding How To Earn, Save and Invest Money (Wonder Books: A Kid's Introduction To) by Sam Wonder Published: November 4, 2025 "A Kid's Introduction to Personal Finance" is specifically designed for ages 8-14 and transforms money from a confusing, frustrating topic into an exciting adventure your child can actually understand and use. This isn't just another boring money book. It's a step-by-step guide that shows kids how to earn, save, and grow money starting RIGHT NOW, not when they're adults. Through the relatable story of Alex - a kid who starts with just $50 and a $400 goal - your child will discover that they have far more financial power than they ever imagined. This, like other books in the series, is written to be about 5-10 minutes per chapter, perfect for a short read before bedtime. Includes many "Did you know?" stories that you're likely to hear about at your next family dinner and includes suggestions at the end of the book for more ways that you can explore the topic Not a Boring Finance Book for Teens: Understand the Money Machine (for adults too, shhh!) by J.P. Finnegan Published: September 26, 2025 This entertainingly and accessibly written book helps teens (and adults) see how the parts of money work together—how earning, spending, saving, and investing all connect like a Money Machine to build real financial freedom. Inside, you’ll discover essential money skills and learn how to: - Earn and create value — by developing your own talents and ideas (that you can actually get paid for). - Save wisely — and understand why it’s the key to freedom, not restriction. - Spend with purpose — so you can cover your needs, enjoy your wants, and still have money left to invest. - Invest (and do it well) — so your money can start growing instead of shrinking. - Avoid the debt spiral — by mastering credit before it masters you. New Personal Finance & Investing Guide Books 2025 The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by J L Collins Published: May 20, 2025 Revised and Expanded 2025 Edition. New edition includes: updated data, FAQ, a Simple Path to Wealth Punchlist, Resources & Tools. Drawing from fifty years of investing experience, and born out of a series of letters the author wrote to his daughter, The Simple Path to Wealth has become foundational to the FIRE (Financial Independence, Retire Early) movement, inspiring hundreds of thousands of readers to reimagine their relationship with money and freedom. The real-world success of Collins' approach is documented in Pathfinders, his collection of stories from readers who have transformed their financial lives using his method. This comprehensive guide covers everything from debt elimination to optimizing retirement accounts, all while exposing the marketing myths and investment industry practices that keep most people from building real wealth. Collins shares specific, actionable strategies for both wealth-building and wealth-preservation phases, with a straightforward approach to asset allocation that anyone can implement. Collins' direct, often irreverent style makes complex financial concepts crystal clear, giving readers the tools and confidence to take control of their financial future. How to Make Money in Any Market by James J. Cramer (Author) Published: September 30, 2025 Renowned personal finance expert, bestselling author, host of CNBC’s Mad Money, and cohost of Squawk on the Street Jim Cramer returns with how to make money in any market for every investor. Except for the one percent of the one percent, nobody learns how to make your money grow in the stock market. Jim Cramer has spent his career determined to change that. Now a household name after twenty seasons of Mad Money with Jim Cramer, cohost of Squawk on the Street, and host of CNBC’s Investing Club, Cramer shows you how to get rich by understanding the market and investing in the right growth and income stocks—ones that he can help you identify. How to Make Money in Any Market is your guide to overcoming your fear about investing, to be able to make bigger money with what you have, no matter how small—in any market. New Financial History Books 2025 The History of Money: A Story of Humanity by David McWilliams, with an introduction by Michael Lewis Published: November 11, 2025 "Learned, lively and often irreverent, David McWilliams’s The History of Money is rich with surprising details about currency, then and now." ―The New York Times In this fresh, eye-opening global history, economist David McWilliams charts the relationship between humans and money―from clay tablets in Mesopotamia to cryptocurrency in Silicon Valley. The story of humanity is inextricable from that of money. No innovation has defined our own evolution so thoroughly and changed the direction of our planet’s history so dramatically. And yet despite money’s primacy, most of us don’t truly understand it. In The History of Money, McWilliams takes us across the world, from the birthplace of money in ancient Babylon to the beginning of trade along the Silk Road, from Marrakech markets to Wall Street. Along the way, we meet a host of innovators, emperors, frauds, and speculators, who have disrupted society and transformed the way we live. Filled with memorable anecdotes, and with a foreword by Michael Lewis, The History of Money is an essential, extremely readable history of humanity’s most consequential invention. 1929: Inside the Greatest Crash in Wall Street History - and How It Shattered a Nation by Andrew Ross Sorkin Published: October 14, 2025 #1 NEW YORK TIMES BESTSELLER From the bestselling author of Too Big to Fail, “the definitive history of the 2008 banking crisis,” (The Atlantic) comes a riveting narrative of the most infamous stock market crash in history—one with ripple effects that still shape our society today. In 1929, the world watched in shock as the unstoppable Wall Street bull market went into a freefall, wiping out fortunes and igniting a depression that would reshape a generation. But behind the flashing ticker tapes and panicked traders, another drama unfolded—one of visionaries and fraudsters, titans and dreamers, euphoria and ruin. This is not just a story about money. 1929 is a tale of power, psychology, and the seductive illusion that this time is different. It’s about disregarded alarm bells, financiers who fell from grace, and skeptics who saw the crash coming—only to be dismissed until it was too late. Hailed as a landmark book, Too Big to Fail reimagined how financial crises are told. Now, with 1929, Sorkin delivers an immersive, electrifying account of the most pivotal market collapse of all time—with lessons that remain as urgent as ever. More than just a history, 1929 is a crucial blueprint for understanding the cycles of speculation, the forces that drive financial upheaval, and the warning signs we ignore at our peril. New Finance Textbooks 2025 Perhaps not such natural stocking-fillers, but for students of finance these newest textbooks offer cutting edge insight and the latest real-world examples. Principles of Finance by Zvi Bodie, Robert C. Merton & Richard T. Thakor Published: February 13, 2025 Written for the MBA or undergraduate first course in finance, as well as follow-on courses, this textbook provides a clear, accessible, and thorough explanation of the principles of finance; how they connect to real-world practice and how they are used to solve problems. Structured around ten unifying principles representing the core tenets of the science, this book imparts basic financial concepts irrespective of the institutional framework, ensuring that students learn about finance in a way that is applicable both now and into the future. Pedagogical features include learning objectives and major takeaways, applications in the world of business, numerous worked examples, key equation boxes highlighting the most important financial equations, quick check questions with solutions, key finance terms with a detailed glossary, and more than 380 homework problems. Online resources include a solutions manual, detailed instructor manual to adapt the book to your course, lectures slides and an 800 question test bank for instructors. Mastering Corporate Finance: Key Concepts, Exercises & Case Studies by Stefan Rosset Published: October 15, 2025 Mastering Corporate Finance is your complete guide to mastering the fundamentals of corporate finance - from accounting and financial statements to capital structure, valuation, and value creation. This book makes complex concepts accessible, combining academic rigor with real-world insights. Key Features: Core Principles of Corporate Finance – Learn how firms finance themselves, allocate capital, and balance risk and return. Accounting & Financial analysis – Understand balance sheets, income statements, cash flow statements, and the key metrics that drive financial analysis. Debt & Equity Financing – Explore the instruments, trade-offs, and strategies behind corporate financing decisions. Valuation Techniques – Master DCF, multiples, and other valuation methods with clear explanations and examples. Governance & Value Creation – See how boards, shareholders, and managers interact to shape corporate outcomes. Equity Financing & IPOs – Discover the fundamentals of going public and the dynamics of shareholder returns. 100+ Practical Questions & Exercises – Apply what you learn through hands-on practice inspired by real-world finance. Whether you’re a student building a foundation in finance, a professional preparing for interviews, or a manager seeking to sharpen your decision-making, Mastering Corporate Finance gives you the essential knowledge and tools to understand, analyze, and apply corporate finance with confidence. Clear, structured, and practice-oriented, this book bridges accounting, finance theory, and real-world applications into one accessible guide. If you have more suggestions, share them in the comments below or contact us at info@inomics.com. Happy Reading! INOMICS is an Amazon Associate, meaning we are a part of their affiliate program. This means that we earn money if a user clicks through to an affiliate link and makes a qualifying purchase. Image Credit: Karola G via Pexels (License: Free to Use)
As 2025 draws to a close, we round up some of the new book releases in the field of finance.
This is INOMICS pick of new books published from the end of 2024 and in 2025. Grouped into Political/Economic Commentaries, Economic Histories, and Introductions to Economics. Whether for yourself or as a gift, the selection below has something for everyone! 1) Political / Economic Commentaries Exploring political, environmental and social challenges from an economics perspective, these new books are up-to-date and relevant for issues facing global society. Often critical of political elites and economic structures, these new releases provide a provocative yet informed and academically sound basis to approach current affairs. Abundance by Ezra Klein & Derek Thompson Published: March 18, 2025 Description: #1 NEW YORK TIMES BESTSELLER • ONE OF BARACK OBAMA’S FAVORITE BOOKS OF 2025 From bestselling authors and journalistic titans Ezra Klein and Derek Thompson, Abundance is a once-in-a-generation, paradigm-shifting call to renew a politics of plenty, face up to the failures of liberal governance, and abandon the chosen scarcities that have deformed American life. To trace the history of the twenty-first century so far is to trace a history of unaffordability and shortage. After years of refusing to build sufficient housing, America has a national housing crisis. After years of limiting immigration, we don’t have enough workers. Despite decades of being warned about the consequences of climate change, we haven’t built anything close to the clean-energy infrastructure we need. Ambitious public projects are finished late and over budget—if they are ever finished at all. The crisis that’s clicking into focus now has been building for decades—because we haven’t been building enough. Abundance explains that our problems today are not the results of yesteryear’s villains. Rather, one generation’s solutions have become the next gener­ation’s problems. Rules and regulations designed to solve the problems of the 1970s often prevent urban-density and green-energy projects that would help solve the problems of the 2020s. Laws meant to ensure that government considers the consequences of its actions have made it too difficult for government to act consequentially. In the last few decades, our capacity to see problems has sharpened while our ability to solve them has diminished. Progress requires facing up to the institutions in life that are not working as they need to. It means, for liberals, recognizing when the government is failing. It means, for conservatives, recognizing when the government is needed. In a book exploring how we can move from a liberalism that not only protects and pre­serves but also builds, Klein and Thompson trace the political, economic, and cultural barriers to progress and propose a path toward a politics of abundance. At a time when movements of scarcity are gaining power in country after country, this is an answer that meets the challenges of the moment while grappling honestly with the fury so many rightfully feel. The Growth Story of the 21st Century: The Economics and Opportunity of Climate Action by Nicholas Stern Published: November 5, 2025 Description: The world stands at a crossroads. The next decade will determine whether we avoid climate, biodiversity, and economic catastrophe - or unlock a new era of sustainable, resilient, and inclusive growth. The Growth Story of the 21st Century challenges the outdated idea that we must choose between climate action and development. Instead, it presents a compelling case for a transformation that delivers both prosperity and a healthier planet. Drawing on economics, finance, policy, politics, and behavioural science, Nicholas Stern explores why this transformation is essential, what it entails, and how we can achieve it. He revisits the insights of the Stern Review two decades on and sets out a new research agenda for economics and the social sciences. This is a story of optimism - about how rapid technological advances, including digitisation and AI, can drive change at scale. But it does not shy away from the immense challenges ahead. With clear and practical strategies for national and international action, this book is a call to leaders, businesses, and individuals alike: the future is in our hands, and delay is the riskiest option of all. Breakneck: China's Quest to Engineer the Future by Dan Wang Published: August 26, 2025 Description: For close to a decade, technology analyst Dan Wang―“a gifted observer of contemporary China” (Ross Douthat)―has been living through the country’s astonishing, messy progress. China’s towering bridges, gleaming railways, and sprawling factories have improved economic outcomes in record time. But rapid change has also sent ripples of pain throughout the society. This reality―political repression and astonishing growth―is not a paradox, but rather a feature of China’s engineering mindset. In Breakneck, Wang blends political, economic, and philosophical analysis with reportage to reveal a provocative new framework for understanding China―one that helps us see America more clearly, too. While China is an engineering state, relentlessly pursuing megaprojects, the United States has stalled. America has transformed into a lawyerly society, reflexively blocking everything, good and bad Blending razor-sharp analysis with immersive storytelling, Wang offers a gripping portrait of a nation in flux. Breakneck traverses metropolises like Shanghai, Chongqing, and Shenzhen, where the engineering state has created not only dazzling infrastructure but also a sense of optimism. The book also exposes the downsides of social engineering, including the surveillance of ethnic minorities, political suppression, and the traumas of the one-child policy and zero-Covid. In an era of animosity and mistrust, Wang unmasks the shocking similarities between the United States and China. Breakneck reveals how each country points toward a better path for the other: Chinese citizens would be better off if their government could learn to value individual liberties, while Americans would be better off if their government could learn to embrace engineering―and to produce better outcomes for the many, not just the few. Kaput: The End of the German Miracle By Wolfgang Munchau Published: 27 Mar. 2025 Description Until recently, Germany appeared to be a paragon of economic and political success. But recent events – from Germany’s dependence on Russian gas to its car industry’s delays in the race to electric – have undermined this view. In Kaput, Wolfgang Münchau argues that the weaknesses of Germany’s economy have, in fact, been brewing for decades. The close connections between the country’s industrial and political elite have left Germany technologically behind, over-reliant on authoritarian Russia and China, and with little sign of being able to adapt to the digital realities of the twenty-first century. It is an essential read for anyone interested in the future of Europe’s most important economy. Why Nothing Works: Who Killed Progress―and How to Bring It Back by Marc J. Dunkelman Published: February 18, 2025 Description: A provocative exploration about the architecture of power, the forces that stifle us from getting things done, and how we can restore confidence in democratically elected government—“the best book to date on the biggest political issue that nobody is talking about” (Matthew Yglesias) America was once a country that did big things—we built the world’s greatest rail network, a vast electrical grid, interstate highways, abundant housing, the Social Security system, the Tennessee Valley Authority, and more. But today, even while facing a host of pressing challenges—a housing shortage, a climate crisis, a dilapidated infrastructure—we feel stuck, unable to move the needle. Why? America is today the victim of a vetocracy that allows nearly anyone to stifle progress. While conservatives deserve some blame, progressives have overlooked an unlikely culprit: their own fears of “The Establishment.” A half-century ago, progressivism’s designs on getting stuff done were eclipsed by a desire to box in government. Reformers put speaking truth to power ahead of exercising that power for good. The ensuing gridlock has pummeled faith in public institutions of all sorts, stifled the movement’s ability to deliver on its promises, and, most perversely, opened the door for MAGA-style populism. A century ago, Americans were similarly frustrated—and progressivism pointed the way out. The same can happen again. Marc J. Dunkelman vividly illustrates what progressives must do if they are going to break through today’s paralysis and restore, once again, confidence in democratically elected government. To get there, reformers will need to acknowledge where they’ve gone wrong. Progressivism’s success moving forward hinges on the movement’s willingness to rediscover its roots. Stuck: How the Privileged and the Propertied Broke the Engine of American Opportunity by Yoni Appelbaum Published: February 18, 2025 Description: How did America cease to be the land of opportunity? We take it for granted that good neighborhoods—with good schools and good housing—are only accessible to the wealthy. But in America, this wasn’t always the case. Though for most of world history, your prospects were tied to where you were born, Americans came up with a revolutionary idea: If you didn’t like your lot in life, you could find a better location and reinvent yourself there. Americans moved to new places with unprecedented frequency, and, for two hundred years, that remarkable mobility was the linchpin of American economic and social opportunity. In this illuminating debut, Yoni Appelbaum, historian and journalist for The Atlantic, shows us that this idea has been under attack since reformers first developed zoning laws to ghettoize Chinese Americans in nineteenth-century Modesto, California. The century of legal segregation that ensued—from the zoning laws enacted to force Jewish workers back into New York’s Lower East Side to the private-sector discrimination and racist public policy that trapped Black families in Flint, Michigan to Jane Jacobs’ efforts to protect her vision of the West Village—has raised housing prices, deepened political divides, emboldened bigots, and trapped generations of people in poverty. Appelbaum shows us that these problems have a common explanation: people can’t move as readily as they used to. They are, in a word, stuck. Cutting through more than a century of mythmaking, Stuck tells a vivid, surprising story of the people and ideas that caused our economic and social sclerosis and lays out common-sense ways to get Americans moving again. 2. Economic History Books Histories of the Wall Street crash and an overview of the global economy in the last hundred years - both offer compelling reading to anyone interested in economics and political economy. 1929: Inside the Greatest Crash in Wall Street History--and How It Shattered a Nation by Andrew Ross Sorkin Published: October 14, 2025 Description: From the bestselling author of Too Big to Fail, “the definitive history of the 2008 banking crisis,” (The Atlantic) comes a riveting narrative of the most infamous stock market crash in history—one with ripple effects that still shape our society today. In 1929, the world watched in shock as the unstoppable Wall Street bull market went into a freefall, wiping out fortunes and igniting a depression that would reshape a generation. But behind the flashing ticker tapes and panicked traders, another drama unfolded—one of visionaries and fraudsters, titans and dreamers, euphoria and ruin. With unparalleled access to historical records and newly uncovered documents, New York Times bestselling author Andrew Ross Sorkin takes readers inside the chaos of the crash, behind the scenes of a raging battle between Wall Street and Washington and the larger-than-life characters whose ambition and naïveté in an endless boom led to disaster. The dizzying highs and brutal lows of this era eerily mirror today’s world—where markets soar, political tensions mount, and the fight over financial influence plays out once again. This is not just a story about money. 1929 is a tale of power, psychology, and the seductive illusion that this time is different. It’s about disregarded alarm bells, financiers who fell from grace, and skeptics who saw the crash coming—only to be dismissed until it was too late. Hailed as a landmark book, Too Big to Fail reimagined how financial crises are told. Now, with 1929, Sorkin delivers an immersive, electrifying account of the most pivotal market collapse of all time—with lessons that remain as urgent as ever. More than just a history, 1929 is a crucial blueprint for understanding the cycles of speculation, the forces that drive financial upheaval, and the warning signs we ignore at our peril. The Economic Government of the World: 1933-2025 by Martin Daunton Published: 18 Sept. 2025 Description: From a leading UK economic historian, this is the history of the institutions and individuals who have managed the global economy, from the World Monetary and Economic Conference in the wake of the Great Depression to the present Since the Second World War, organisations created at Bretton Woods - the International Monetary Fund and the International Bank of Reconstruction and Development - and afterwards - the General Agreement on Trade and Tariffs and the Organisation for Economic Co-operation and Development - have left an indelible mark on our contemporary world. Martin Daunton examines the swings of the pendulum over ninety years between the forces of democracy, national determination and globalization. He shows that the structures of economic government have been overwhelmingly shaped by 'first world' powers, often to the dismay of developing countries. He argues that whilst structures cannot be separated from the politics of and between the biggest economies, future global recovery rests on the reduction of inequality and that multilateral institutions are fundamental in fostering inclusive growth. 3. Introductions to Economics for non (or not-yet) Economists Finally, here are two new books for not-yet-economists who are interested in the field. If you are an economist,buy them as a gift to share your love of economics with your loved ones. Perfect to encourage more stimulating conversations over Christmas, and ever after, with relatives and friends who, up to know, have never really understood what you do... The Economics Book: Big Ideas Simply Explained by DK Published: November 26, 2024 Description: Explore the key milestones in the field of economics broken down clearly and simply with The Economics Book. Learn about economics in this overview guide to the subject, which is brilliant for novices looking to learn more and experts wishing to refresh their knowledge. Part of the fascinating Big Ideas series, this book tackles tricky topics and themes in a simple and easy-to-follow format. The Economics Book brings a fresh, vibrant take on the topic, breaking it down in a visual way through images and diagrams. This book will broaden your understanding of Economics with: Some of the greatest ideas in economics Facts, charts, timelines, and graphs to help explain core concepts A visual approach to big subjects with illustrations and graphics throughout Easy-to-follow text, making topics accessible for people at any level of understanding The Economics Book is a captivating introduction to historically important and emerging ideas in a field of science that often confuses newcomers. It is aimed at adults with an interest in the subject and students wanting to gain more of an overview. Discover some of the greatest ideas, from the earliest development of private property to the cutting-edge development of modern game theory. Economics: The Economist Guide by Philip Coggan Published: November 4, 2025 Description: From its humble beginnings in Ancient Greece to today's mammoth global system, economics is all around us. Getting to grips with what it means is crucial to understanding how the world works: it's never been more important to know your macro from your micro and your fiscal from your monetary policy. In this invaluable guide, Philip Coggan lifts the veil with an entertaining, no-nonsense overview of the development and scope of the field, and breaks down the jargon with an all-new A-Z of key economics concepts and terms. Crisp, sophisticated and often surprising, this is the complete companion to what economics is - and why it matters. If you have more suggestions, share them in the comments below or contact us at info@inomics.com. Happy Reading! INOMICS is an Amazon Associate, meaning we are a part of their affiliate program. This means that we earn money if a user clicks through to an affiliate link and makes a qualifying purchase. Image Credit: Lubos Houska from Pixabay (Free use license)
As 2025 draws to a close, we round up some of the new book releases in the field of economics.
The Economics of Holiday Feasts: From Turkey to Tamales and more
1. The United Kingdom: Turkeys and the Supply Chain In the UK, the traditional Christmas centrepiece is the humble turkey, a staple popularised by Charles Dickens’s A Christmas Carol where Scrooge famously sends a boy to buy “the prize turkey.”1 Today, turkey consumption skyrockets by 400% during the holiday season, with millions of households featuring it in their festive feasts.2 This annual demand surge creates a ripple effect throughout the food industry, influencing prices and availability. Christmas food pricing is a balancing act between seasonal demand and retailer strategy. As the holidays approach, prices for staples such as turkey, ham, mince pies, and winter vegetables often rise due to supply chain pressures and increased consumer demand. However, supermarkets frequently position turkeys as “loss leaders,” selling them at heavily discounted prices—or even below cost—to attract shoppers.3 This strategy, while shielding consumers from steeper price hikes, intensifies competition among retailers and adds complexity to pricing dynamics. On average, UK households spend £8254 at Christmas, though only 12% of this goes to food. Recent challenges, including Brexit-related staffing shortages and rising production costs,5 have further strained turkey supplies, increasing prices and making affordable birds harder to find. For example, Brexit has significantly increased staffing costs in the poultry industry,6 leading to reduced turkey breeding and higher retail prices. Beyond turkeys, holiday demand has driven notable price hikes, such as mince pies costing an additional £2 last year and winter vegetable prices increasing by a staggering 27%.7 These pressures raise questions about whether traditional Christmas dinners will remain the go-to option for British households this year. As retailers and consumers navigate these challenges, the economic dynamics of festive food provide a fascinating lens through which to view broader market forces at play during the holiday season. 2. Mexico: The Tamale Economy In Mexico, tamales are a quintessential Christmas dish, made with corn masa and stuffed with meats, cheeses, or sweet fillings. The prominence of tamales during Christmas also ties to their symbolic nature in Mexican culture. Corn, a sacred crop to Mesoamerican8 civilisations, represents sustenance and abundance. Preparing tamales for holidays reflects gratitude and is a way to mark special occasions with a food deeply tied to ancestral traditions.9 Typically Mexican families spend slightly more than in the UK with an average of $1055 being spent around the holiday season, with 16% ($167) going on food.4 During the holiday season, tamale sales experienced a significant surge, with some vendors reporting up to a 60-80% increase compared to other times of the year.10 This spike drives higher demand for key ingredients like masa and corn husks, often leading to temporary price increases. For instance, masa prices may rise by 10-15% during the peak tamale-making period as families stock up for traditional "tamaladas" (tamale-making gatherings). However, production faces notable challenges. Suppliers often struggle with logistical issues, such as shortages of high-quality corn husks and the increased cost of corn due to supply chain constraints or weather-related agricultural disruptions.11 Additionally, small-scale tamale producers frequently face labour shortages, as the preparation process is labour-intensive and time-sensitive. These challenges highlight the delicate balance between preserving a cherished tradition and navigating economic pressures during the festive season. Tamales have also crossed borders, becoming a holiday staple in U.S. regions12 with large Mexican communities, further extending their economic reach. 3. Germany: Christmas Feasts and Markets Germany is well known for its authentic Christmas markets (Weihnachstsmärkte) that date back to the late Middle Ages. These festive markets are typically held outdoors in town squares and offer a charming atmosphere filled with lights, decorations, and the aroma of seasonal foods. Visitors can also enjoy live music, entertainment, and sometimes even ice skating or carousel rides. These markets draw millions of tourists each year (Cologne attracting 4 million 13 and Frankfurt drawing in 3 million14 ) providing a magical experience and making it a significant economic driver, generating millions in revenue annually. These markets attract tourists, boosting local economies by increasing demand for accommodations, food, and retail goods. They create seasonal jobs, benefiting vendors, entertainers, and local businesses. The main culinary contributions to the Christmas table include roast goose, stollen, and mulled wine, each with its own economic story. Roasted Goose Tradition: Goose farms experience a seasonal boom, particularly in regions like Lower Saxony. Local farms supply domestic markets, while exports of 18,200 tons of goose meat being imported from neighbouring European countries15 further boost the industry. However, in the last few years rising energy, food costs and bird flu have had a huge impact on festive enjoyment. For example, In the Munich Hofbräukeller, a portion of goose with red cabbage and dumplings currently costs €26.50 16 however, in 2021 it was still €18.90, an increase of over 40%. Stollen, a festive German fruitcake, originated in Dresden and dates back to the 14th century. Originally a simple bread made during Advent, it evolved into a richer, sweeter cake filled with dried fruits, nuts, and marzipan, dusted with powdered sugar. The most famous variety is the Dresdner Christstollen, protected by a geographical indication (GI), ensuring authenticity. Historically, ingredients like butter and sugar were restricted during Advent fasting periods, but the "Butter Letter" from Pope Innocent VIII in 1490 allowed their use, giving rise to the modern version of the cake.17 Glühwein, a traditional German mulled wine, has origins tied to medieval spiced wine recipes. It became popular during the cold winter months, especially at Christmas markets, as a way to warm up while enjoying festive celebrations. The economics of Glühwein are driven by its popularity at German Christmas markets, where it serves as a major revenue generator for vendors. Typically priced at €3-€5 per cup, it has high profit margins due to its simple ingredients (wine, spices, and sugar) and bulk preparation. Its demand supports local wine producers and spice suppliers, boosting related industries. Seasonal increases in wine prices are often observed due to the high demand for Glühwein production. P.S. Fun fact 50 million liters are drunk per year in Germany alone.18 4. The Philippines: A Sweet and Savory Christmas In the Philippines, the holiday season is the longest in the world, starting as early as September. Food is central to this extended celebration, with dishes like lechón(roast pig) and desserts such as bibingka (rice cakes) taking centre stage. People in the Philippines spend on average $614 per household during the festive season with a whopping 60% going towards food, one of the highest percentages of spending on food worldwide.4 Lechon is always a centrepiece of Noche Buena, the traditional Christmas Eve feast. The preparation and purchase of lechon created a significant economic impact,19 particularly for small-scale pig farmers, lechoneros (specialised roasters) and vendors. This also drives secondary industries, such as charcoal production and catering services. In 2024, the market price of a lechon ranges from ‘PHP 120 to PHP 150 per kilogram.20’With an average pig being 25-kilogram, it would cost locals between PHP 3,000 to PHP 3,750 and then with the added costs of transport, fuel, labour, and feed etc the cost of one pig can add up to PHP 13,900, roughly $240 which is incredibly high considering the minimum wage is PHP 7,161 ($128) per month. The economics of traditional Filipino Christmas desserts like bibingka (rice cake) revolve around the use of locally sourced ingredients such as rice, coconut, and banana leaves. These key ingredients support rural economies by providing steady demand for small-scale farmers and producers during the holiday season. The primary ingredient is rice which boosts the livelihood of farmers in regions where rice cultivation is prevalent. Increased demand during Christmas generates higher sales for local rice millers and distributors; however, this demand also leads to an increase in cost for consumers and a lack of supply if demand isn't kept up. Coconut milk and grated coconut are essential components of bibingka, supporting coconut farmers and processors. The Philippines, being a top global coconut producer, sees a localized economic boost from the seasonal surge in consumption. The production of bibingka and lechon preserves traditional farming and culinary methods. They are often sold by street vendors or small bakeries, creating additional seasonal income for micro-businesses. The popularity of these delicacies at community events and Christmas gatherings enhances local economic activity. Overall, the production and consumption of these delicacies during Christmas celebrates Filipino culture and contributes to sustaining rural economies and traditional industries. 5. Global Food Traditions and Trade Christmas feasts reflect local cultures and use local ingredients; however, it is not uncommon for them to incorporate global ingredients to highlight the global interconnectedness of holiday traditions. Germany is the leading mulled wine producer, but the spices used - cinnamon, cloves and nutmeg are imported from countries such as India and Indonesia. It started with the rise of trade during the Roman Empire when these ingredients flooded Europe and improved food and drink.21 Pineapples, bananas, oranges, passionfruit, and other tropical fruits are imported from Latin America and Africa to provide for the rise in demand across European countries during the holidays. They are key ingredients to some of the most popular European Christmas dishes including English Christmas Pudding that requires candied pineapple and sultanas, Italian Panettone that includes candied orange and lemon peel, German Stollen that also includes candied orange and lemon peel and French Buche de Noel where some variations include passionfruit or mango for filling and decoration.22 Countries like Norway and Japan experience an increase in seafood demand, as countries like Italy, Portugal, and Australia consume prawns, salmon,23cod, and shellfish around this time of year, driving fish industries and export markets. 6. Sustainability Challenges The intense demand for traditional holiday foods can strain resources and raise sustainability concerns. Large-scale production of turkeys, geese and other forms can have significant environmental footprints, prompting calls for more sustainable farming practices such as plant-based alternatives or supporting local and ethical producers. Holiday feasts also often result in increased food waste. Often people have leftovers for the next few days but a more sustainable, but often forgotten option for huge amounts of leftovers is to keep them for months, rather than days, in the freezer. Wastage has led governments and organisations to promote awareness campaigns and encourage mindful consumption. For example, in the UK Love Food Hate Waste encourages meal planning and proper storage to minimise waste, and Australia's Fight Food Waste Cooperative promotes awareness of over-purchasing during festive seasons. Conclusion From turkey farms in the UK to tamale vendors in Mexico and stollen bakers in Germany, the holiday season is a boon for global food industries. These festive traditions not only bring people together but also stimulate economies, support local producers, and drive international trade. However, balancing this seasonal abundance with sustainable practices will be key to ensuring that the economic benefits of holiday feasts endure for generations to come. Works Cited Hendry, Caroline. “Why do we eat turkey at Christmas? The long-standing tradition explained.” SquareMeal, 24 September 2024, https://www.squaremeal.co.uk/christmas-parties/christmas-party-ideas/why-do-we-eat-turkey-at-christmas_10022. Accessed 26 November 2024. Javed, Saman. “Sales of frozen Christmas turkeys quadruple amid fears of shortages.” The Independent, 2021, https://www.independent.co.uk/life-style/food-and-drink/christmas-turkey-sales-increase-shortages-b1931783.html. Degraba, Patrick. “The loss leader is a turkey: Targeted discounts from multi-product competitors.” Research Gate, 2006, https://www.researchgate.net/publication/4956074_The_loss_leader_is_a_turkey_Targeted_discounts_from_multi-product_competitors. Zepz. “Cost of Christmas around the world in 2023.” World Remit, 2023, https://www.worldremit.com/en/cost-of-christmas. Horn, Tom. “This is why your Christmas turkey costs more this year.” Big Issue, 17 November 2024, https://www.bigissue.com/life/food/christmas-turkey-cost-price/. Accessed 26 November 2024. Wood, Zoe. “Not enough turkeys for Christmas due to Brexit, poultry producers warn.” The Guardian, 2021, https://www.theguardian.com/environment/2021/aug/19/chicken-producers-brexit-staff-supply-shortages-uk-immigration-jobs-eu. Calcea, Nicu, et al. “How much will your Christmas dinner cost this year?” BBC, 2023, https://www.bbc.com/news/business-67716356. Kotula. “La Tamaleada! A Christmas Tradition from Central America.” Clark Kotula, 2018, https://www.clarkkotula.com/blog/2019/12/17/tamaleada-a-mesoamerican-christmas-tradition. Mack, Lauren. “Christmas Tamales Tradition Explained.” Gold Belly, 2024, https://blog.goldbelly.com/christmas-tamales/. Meza, Flower. “Tamale sales increase by 60 to 80% for “Candlemas Day.”” El Dictamen, 2024, https://www.eldictamen.mx/venta-tamales-incrementa-un-60-dia-candelaria/. Garcia, Jocelyn. “Mexico’s corn imports surge amid production challenges.” Fast Markets, 2024, https://www.fastmarkets.com/insights/mexicos-corn-imports-surge-amid-production-challenges/. Mason, Dave. “Tamales play big role in winter holidays in California.” Yahoo, 2024, https://www.yahoo.com/lifestyle/tamales-play-big-role-winter-155854241.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANQj-zus2Gw3_Yz54WaFhybGzH7CSYtC9pxVrIucUjqZ_XokyjC149xIoyhpk9GKwWmf3-ckY3zRewI4-WDj7mFMlIUPfylbXWI. Logan, Olivia. “12 best Christmas markets in Germany.” I am Expat, 2024, https://www.iamexpat.de/lifestyle/lifestyle-news/best-christmas-markets-germany. Pettit, Sophie. “The best Christmas markets in Germany in 2024.” Expatica for Internationals, 2024, https://www.expatica.com/de/lifestyle/holidays/christmas-markets-in-germany-105201/. Burkart, Jürgen. “The perfect Christmas goose with Convotherm.” Welbilt, 2023, https://www.welbiltde.com/newsroom/kulinarische-trends/2022-12/Christmas-recipe?lang=en-us#:~:text=But%20this%20year%2C%20rising%20energy,recently%20become%20significantly%20more%20expensive. Menu. “Unsere Spezialitäten - auch zum Mitnehmen.” Hofbräukeller, https://www.hofbraeukeller.de/speisekarte. Accessed 28 November 2024. “Dresdner Christstollen / Dresdner Stollen / Dresdner Weihnachtsstollen PGI.” European Commission, 2024, https://agriculture.ec.europa.eu/farming/geographical-indications-and-quality-schemes/geographical-indications-food-and-drink/dresdner-christsollen-pgi_en. Martin, Katrin. “7 facts about mulled wine and a recipe.” Hanglage: Das Weinregal, 2020, https://hanglage.com/en/blogs/news/7-fakten-uber-gluhwein-und-ein-gluhweinrezept. Zaldarriaga, Joe. “Christmas and consumer spending.” Phillipine News Agency, 2023, https://www.pna.gov.ph/opinion/pieces/799-christmas-and-consumer-spending. Buenaflor, Chad. “The Economics of Lechon: How Much Does It Cost to Produce?” Teryos Lechon, 2024, https://teryoslechon.com/2024/06/29/the-economics-of-lechon-how-much-does-it-cost-to-produce/. Berry, Camille. “The History of Mulled Wine.” thebacklabel, https://www.thebacklabel.com/the-history-of-mulled-wine/. Accessed 11 December 2024. “Christmas Stollen: The German Sweet Bread for Christ.” Yummy Bazaar, https://yummybazaar.com/blogs/blog/what-is-german-christmas-stollen-bread. Holmyard, Nicki. “Europe celebrates Christmas with smoked salmon, luxury seafood.” Seafood Source, 2014, https://www.seafoodsource.com/features/europe-celebrates-christmas-with-smoked-salmon-luxury-seafood. Additional Sources “What do Europeans Eat for Christmas? 27 EU Countries 27 Desserts.” Yummy Bazaar, 2022, https://yummybazaar.com/blogs/blog/christmas-treats-across-european-union. B, Anuradha. “Corn Masa Flour Market Analysis, Opportunities & Trends 2032.” Growth Market Reports, 2024, https://growthmarketreports.com/report/corn-masa-flour-market. Infographics: ‘Cost of Christmas around the World in 2023’ World Remit, 2023, https://www.worldremit.com/en/cost-of-christmas
Food lies at the heart of Christmas celebrations around the globe. Whether it’s tamales steaming in Mexican kitchens, turkey roasting in American ovens, or spiced mulled wine warming hands in Germany, the holiday season sparks a global surge in demand for traditional foods. This demand doesn’t just shape family traditions—it drives agriculture, small businesses, and supply chains worldwide. Let’s explore how festive feasts influence the economies of countries like the UK, Mexico, Germany, and more.
The Best Christmas Gift Ideas for an Economist
If you have an economist in your life, but are struggling to come up with economics gift ideas, fear not. We're here with some fun ideas to help you find the best Christmas gifts for economists. INOMICS is a member of the Amazon Associates affiliate program and the Apple affiliate program. This article contains affiliate links from them and other partners, which means we may earn money through any qualifying purchases made after you click through. However, this is not a sponsored post. 1. Buy an Economics Bestseller: Empathy Economics or Disorder There is a rich history of books published about economics and by economists. Two economics bestsellers that you might consider are Empathy Economics and Disorder: Hard Times in the 21st Century. The first is a biography of Janet Yellen, the first female secretary of the US Treasury and the first female chair of the US Federal Reserve. In the second book, political economist Helen Thompson examines how energy economics and historic politics come together to affect the challenges facing western democracies today. 2. Arbitrage or The Informant! on DVD Two Hollywood films with economics themes, these are fun movies for specialists and everyone else too. Arbitrage stars Richard Gere as a hedge-fund magnate who has been cooking the books, who must go to extraordinary lengths to protect his secret after a chance accident. The Informant! stars Matt Damon as a corporate whistle-blower who reports his employer to the FBI for price fixing. Based on a true story, it's a funny and snappy movie about the ethics of big businesses. 3. A digital download of Too Big To Fail This documentary covers the financial crisis of 2008, based on the book Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System--and Themselves. Exploring the crisis from the point of view of the inside players as they try to prevent a global economic meltdown, this informative film will be of interest to everyone involved in finance. Frankly, it is reassuring to remind ourselves that not every person working in finance and big business is a greedy, self-interested maniac... 4. A Marx Mug or other humourous left-wing T-Shirt, Mug or Bag It's a statement, for sure, and it looks cool. Rock up to your next seminar on market economics with this Karl Marx mug. After all, you have nothing to lose but your value chains! Or why not go for a jokey Trickle Down Economics T-Shirt. 5. Board Games Board games have experienced an increase in popularity in the past few years, and can make for great economics presents. Many innovative games include economic themes and have strategy elements that economists will enjoy sinking their teeth into. Some great options include: Agricola – build and manage your farm’s resources better than everyone else Viticulture – grow your winery more efficiently than others Settlers of Catan – build your island economy faster than everyone else. Also check out our blog post on the economics of Catan. Camel Up – progressively bet on the outcomes of a statistically zany horse race (but with camels!) Wingspan – manage your resources wisely to attract exotic birds to your habitats, earning you more points than your competitors (and awakening your inner ornithologist!) …and even A Game of Thrones: the Board Game – balance capturing territory with maintaining supplies while managing politics to strive towards victory. 6. The Economist Desk Diary A classy, leather-bound desk diary for the new year, perfect for keeping track of all your important appointments and deadlines. Includes an information and map section of economic, statistical and political facts and street plans for a variety of world cities. Particularly good for busybodies, it is the ideal gift for keeping hectic and on-the-go lives in order. 7. Economists do it with Models T-Shirt Economists who were working in or studying economics from around 2010 may remember the hype around Jodi Begg's YouTube channel, at the time groundbreaking in that she shared her classes online and had a great name for her channel. Been there, seen that? Now you can get the T-Shirt. 8. Can You Outsmart an Economist? - Puzzle Book Do you know an economist who can't resist a challenge (i.e. probably any economist)? Then give them this econ-flavored puzzle book. 9. Get them a novel with economic themes Reading a novel – for fun! – is an enjoyable hobby for many people, economists included. In fact, it can be downright bliss for a hard-working economist to set aside their graphs, theorems, and economic histories to enjoy some inspired fiction. Consider the following books for the economist in your life who likes to read: The Grapes of Wrath by John Steinbeck: A classic novel for good reason, this book explores the economics of poverty and immigration in the United States during the Great Depression – very relevant topics for an economist. Red Plenty by Francis Spufford: a semi-fiction novel that contains a heavy amount of economic theory, perfect for the economist in your life. It details the rise and fall of the Soviet economy, despite all the best efforts of brilliant minds to create a successful planned economy that would rival the capitalists. Brave New World by Aldous Huxley: a novel detailing a future “utopia”, where humans are made in factories, the World State government is obsessed with inducing consumerism for unlimited economic growth, and society has eliminated art, religion, and other elements of culture. This classic novel explores many economic themes and shows how a utopia can be anything but. Bleak House by Charles Dickens: Although not as well-known as Dickens’ other works, Bleak House is sometimes regarded as his best. It follows the story of a family in Victorian England who await the payout from a lawsuit that is supposed to grant them a fortune, but that has become delayed and stymied in the legal system. It also features one of the earliest protagonists working as a detective, which may have fueled the rise of famous works like Sherlock Holmes. The Witcher: The Last Wish by Andrzej Sapkowski: a fantasy novel that follows the life of Geralt of Rivia, a monster hunter for hire. One of Geralt’s main worries is finding enough work to feed himself, as he notes that his profession is designed to put itself out of business forever. A great novel with many sequels for an economist who enjoys fantasy settings, complex characters, and economic themes. As an added fun fact, Andrzej Sapkowski – who originally wrote as a hobby – is actually a trained economist who studied at the University of Łódź. But he is much more well-known as the author of The Witcher novel series, which has spawned massively successful video games and a Netflix series. In fact, he’s not the only economist with a penchant for another hobby… 10. Support their hobby Many famous economists have had interesting hobbies aside from their careers. For example, 2023 Nobel Prize in Economics winner Claudia Goldin and her husband, economist Lawrence Katz, are said to enjoy bird watching together; John Maynard Keynes was known to collect paintings and became a patron of the arts after earning his fortune; and US Federal Reserve Chairman Janet Yellen learned to cook Indian cuisine after the pandemic closed many restaurants. If you’re familiar with your economists’ interests, there will be ample opportunities to support them. 11. Cash According to behavioral economists themselves, the very best gift per dollar spent you could give an economist is cold, hard cash. Giving cash guarantees that the recipient can get exactly the high quality gift that they want, thus eliminating the deadweight loss of Christmas presents. It might not really keep with the spirit of the season, but it is the subject of much debate in economics. You'll just have to argue this one out with your economist friends! 12. The Economics Book Tired of your family and friends not understanding what you do? This handy guide serves as an accessible introduction to the field of economics, covering topics ranging from property, to trade, to game theory. The perfect gift to spark conversations with relatives over Christmas time, and forever after! Best of luck with your gift buying, and from all of us at INOMICS happy holidays! Image Credit: Pixabay (free for use under the pixabay content license)
The holiday season is coming and Christmas is just around the corner. If you want to avoid buying presents for the holidays in a panic, you had better get to planning the gifts you'll be giving.
A Closer Look at the Research That Won the 2025 Economics Nobel Prize
As was recently announced by the Nobel committee, economists Joel Mokyr, Philippe Aghion, and Peter Howitt won the 2025 Nobel Prize in Economics for their contributions in uncovering how technology-driven growth occurs. In this article, we’ll dive deeper into the specific research that won these luminaries the Prize, and what it means for the field. The Nobel laureates’ research asked and began to answer a very important question: what’s the secret behind such unprecedented, sustained, and world-changing economic growth? Let’s find out! Joel Mokyr Economic historian Joel Mokyr described how continual economic growth has its foundations in knowledge as well as the ability to make use of that knowledge. Specifically, he defined two different types of knowledge — propositional knowledge (which reflects advancements in theory) and prescriptive knowledge (which includes practical formulas, recipes, or etc. for use in industry or everyday life), and stated that sustained economic growth results when entrepreneurs, inventors, and other businesspeople are able to make use of them to produce new goods and services. By Mokyr’s theory, for most of human history these two kinds of knowledge seldom interacted. Artisans and builders knew how to make things, but didn’t always understand why the fundamental properties of their crafts worked. Meanwhile, scientists and philosophers deepened our understanding of the natural world, but were seldom able to connect their discoveries to practical, everyday uses. But scientists during the Enlightenment began to emphasize the importance of controlled experiments and repetition in the scientific process, which helped to bring their discoveries closer to the everyday working world. Further, Mokyr noted that Britain had a strong system of apprenticeship and commerce at the time, which resulted in a large class of workers with the “mechanical competence” to make use of new knowledge. Learning why things worked, and showing how natural relationships could be exploited or repeated, enabled these profit-minded entrepreneurs to turn scientific insights into practical innovations that resulted in new products and industries. Shortly thereafter, the Industrial Revolution exploded onto the scene in Britain, and sustained economic growth began to take off around the world. Yet another of Mokyr’s key observations was that only having the advancement of so-called “useful knowledge” wasn’t enough for sustained economic growth. Society additionally needed to be receptive to new ideas and innovations, and allow them to flourish, even at the expense of existing industries — because innovations tend to create both “winners” and “losers”. In fact, this point is related to other research by past Nobel prize winners (including 2024 Nobel Prize in Economics winners Daron Acemoglu and James A. Robinson) about how society’s institutions strongly influence its economic trajectory. If society is willing to accept the sometimes uncomfortable process of change, it is better able to harness technology-driven economic growth. In this sense, Mokyr identified a combination of factors needed for sustained economic growth: a feedback channel between theoretical and practical knowledge, a certain mechanical competence to continue the development and production of an innovative idea, and finally an openness in a society’s institutions that reduce resistance to change and so enable innovation to flourish and growth to occur, even if it causes initial disruption and discomfort. Philippe Aghion & Peter Howitt Aghion and Howitt contributed to the discussion by creating a model of the economy where firms can patent their innovations. Patents allow firms to legally form temporary monopolies if they invent something useful, and thereby extract profit from an otherwise competitive market. Aghion and Howitt’s model showed how this monopoly profit motive spurs innovation: firms are incentivized to fund research and development (R&D) so that they can acquire a patent and create monopoly profit conditions for themselves. But if one firm succeeds in this endeavor, other firms are then incentivized to innovate such that they can unseat the quasi-monopolist, steal their market share, and become the market leader themselves. Clearly, this very process spurs technological development that increasingly builds off of earlier innovations and increases overall productivity. This is also a good summary of the process that economists call creative destruction (a term that is attributed to Joseph Schumpeter). This creative destruction process in Aghion and Howitt’s model creates a sort of R&D “arms race”: companies that spend more on R&D will tend to remain in a profit-making position longer, and thus the entire field of competitors is incentivized to spend more on R&D than they would have in the absence of competition. Because Aghion and Howitt’s model is a general equilibrium model (i.e., it linked together major economic variables such as firm profits, household savings, economy-wide production, R&D, etc.) they were able to answer questions like “what is the optimal amount of R&D for society?”. As it turns out, market competition isn’t enough to guarantee the optimal amount of R&D for society, for two reasons. First, firms’ incentives to unseat and “steal” the market from one another can push R&D expenses too high relative to what’s optimal. Thus, it’s possible for firms to overspend on R&D. Second, individual firms’ incentives only take into account their future profits, but innovations have benefits for the whole of society and future innovators as well. In other words, research has positive externalities; therefore, it’s also possible for firms to underspend on R&D. Aghion and Howitt studied these forces in a range of markets and model parameters, and as their 1992 general equilibrium model was the first of its kind to be published, they inspired many more papers and much further discussion. The most important question in macroeconomics These economists’ work on the most important question in macroeconomics — “what are the causes of sustained economic growth” — earned them the 2025 Nobel Prize, and for good reason. Today, economic growth and the various factors that affect it, both for rich and for poor nations, is a constant topic of study for macroeconomists around the world. And, a sizeable portion of it builds off of the work of these three economists. Image Credit: nobelprize.org
Technology-driven growth — the topic that won three economists the 2025 Nobel Prize — is a big deal! Throughout the vast majority of human history, living standards and per capita income were relatively unchanged, even despite breakthrough inventions and discoveries like fire, agriculture, and the printing press. Only in the late 1700s and early 1800s did sustained economic growth begin to occur, and economists have shown that most of this sustained growth happens purely because of increases in productivity.
Economic Development, Innovation and Growth (JEL O)
Academic Horror Stories – 5 Real Life Worst Nightmares for Halloween
Here at INOMICS we like to focus on the positive sides of academia – the great economics jobs, programs and other opportunities we encounter every day, and the many successful people taking advantage of them. In the spirit of the season, however, we’ve decided to take a look at the other side of things – scouring the depths of the internet for tales of mishaps, betrayal, embarrassing and outrageous experiences that all happened within the walls of the ivory tower. In this special Halloween blog post, we aim to give you chills and keep you on the edge of your seat with these blood-curdling academic nightmares. While we of course hope that you’ve never had such dreadful encounters, we would love it if you add your stories to our post on Facebook or Instagram! Share your spooky, panic-stricken or downright terrifying tales of academic horror, and offer your fellow academics a vicarious thrill. 1. Trivialized conclusions – A PhD candidate’s horror story This tale comes from the Academic Water Cooler blog. AWC writes that a star PhD candidate was just rounding the corner into the conclusions section of her pre-dissertation defense “brown bag” seminar when a young professor piped up with “Since you haven’t developed a theoretical basis for any substantive hypothesis, aren’t any of your conclusions therefore trivial?” Although the star PhD candidate was already teaching full-time and had numerous publications in the works, such a harsh blow – met with utter silence from everyone else in the room – knocked her off track so fully that shortly after the presentation she simply packed up her belongings, left the office and was never heard from again. An absolute nightmare! Browse jobs for PhD candidates 2. A rescinded offer – A new professor’s horror story This story is taken from a series of posts by The Professor Is In about rescinded job offers. The guest writer for this post tells of how she was in the midst of a postdoc at a large research university when she applied for a tenure track position in a related department. Following an in person interview she was offered the position by the department chair and told to return a few days later with a proposal for her starting package. After working enthusiastically on said package, the postdoc met once again with the chair, only to be told that the dean had reconsidered and a firm offer had already been made to another candidate for the job. Since the postdoc was still employed by the university, her nightmare continued as she had to hear about the negotiations with the new hire and receive muddled sympathy from colleagues. Browse jobs for professors 3. Poisoned research – A scientist’s horror story This is an ongoing story about a Yale graduate student who is now suing her former mentor and the university itself for their inadequate response after a fellow student tampered with her research. The grad student was conducting a study using zebra fish eggs, which kept mysteriously dying despite all signs showing that they should be healthy. After leaving some eggs in the marked container that she had been using and putting others in a separate unmarked container, the student caught a fellow Yale researcher on camera poisoning her fish and thus sabotaging her research. Rather than providing support in the face of this nightmarish sabotage, the grad student’s advisor criticized her work ethic and character and left her out of an awaited co-authorship. The horror story has an open end, as the results of the lawsuit remain unknown. Browse jobs for researchers 4. A blundered interview – An engineer’s horror story An electrical engineer posted this job interview horror story to Reddit not too long ago. During an interview for a job dealing with power systems his interviewer asked to draw a transformer on the white board and explain how it works. Before thinking about it he quipped, “Okay, do you want Optimus Prime or Megatron?” The elderly interviewer clearly had no idea what he was talking about and simply didn’t respond. After blushing a deep red, the engineer proceeded to draw a transformer then stumbled through the rest of the interview. Needless to say, he was not offered the job. 5. Plagiarism and failure – A political science student’s horror story This story was told a few years back in the Huffington Post blog, referencing something that had happened to an acquaintance of the author. When the friend was a senior in college he wrote a term paper on the British Cabinet for a class on the British Political System. The evening prior to the course’s final exam he received word that he was charged with plagiarism, which upset him so much that he bombed the final exam. Believing that he was wrongly accused, the student fought back and the case was brought to a hearing. The professor charged that the student had listed the ten functions of the British Cabinet without a source. Shocked, the student argued that such knowledge was considered general and thus did not need a citation – yet despite the grey area such a case falls in, the horror story ended with the full academic board backing up the professor and the student being charged with full plagiarism. Browse job listings for economists here Image Credit: Harmony Lawrence from Pixabay
In this special Halloween blog post, we aim to give you chills and keep you on the edge of your seat with these blood-curdling academic nightmares.
There are two general opinions about tariffs that the public tends to hold. On the one hand, many people believe that tariffs are a good thing, as they can help boost the domestic economy by protecting domestic producers from foreign competition. It’s believed that this will result in more jobs for locals, and more money circulating amongst domestic hands. On the other hand, many people believe that tariffs are always a bad idea, because they make the prices of goods more expensive for everyday consumers regardless of whether those goods were imported or not. As with many things in life and economics, both of these perspectives have quite a bit of truth to them, but neither paints the whole picture. In order to answer our simple question, then, we’ll need to dive deeper into these perspectives and the use cases of tariffs. Tariffs make goods more expensive, create deadweight loss, and drive up prices Tariffs are a form of trade barrier, where a domestic government “artificially” increases the prices of foreign goods. We’ve already written about trade barriers and detailed how they can lower overall welfare (by creating deadweight loss), increase the costs of goods, prop up inefficient firms, and prevent economies from utilizing their comparative advantage. Thus tariffs are, from an economic perspective, inefficient for a number of reasons. An artificial price increase means that the market is forced away from its competitive equilibrium to one that has a higher price. Therefore, fewer consumers will participate in the market, and overall surplus to both producers and consumers is reduced. The deadweight loss created depends on how many consumers were pushed out of the market, which represents how many transactions were lost due to the government-induced price increase. Let’s consider this from another angle. If foreign producers can make a specific product, ship it to a different economy, and still sell it for a lower price than the domestic producers can, then (almost certainly) those foreign producers are more efficient than domestic producers in producing that product. From a pure efficiency standpoint, those foreign producers should be tasked with producing those items, and domestic labor and capital should be redirected into more efficient areas. This would increase overall welfare in a scenario where countries can trade with each other. In fact, the idea of comparative advantage goes further by stating that countries should specialize in producing the goods that they are relatively more efficient at producing, not just absolutely. But, if tariffs are imposed such that the price of foreign goods increases, it supports the relative inefficiency of domestic producers. Overall, both the foreign and domestic economies would be more productive and better off if domestic consumers could buy the cheaper foreign goods. Further, even the domestic economy would benefit (at least in the medium-to-long term) from more income if domestic labor and capital were redirected into a more efficient industry, where they could earn more than they would from producing goods that could be more cheaply imported. But the tariff prevents the “invisible hand” from correcting this misalignment. Overall welfare is reduced. These economic outcomes are purely negative. As such, most economists would probably agree that tariffs are a net negative on an economy in most situations. However, real life is seldom as simple as theory, and real economic policy may differ from what’s theoretically optimal. Tariffs are not a new invention — they’ve existed since ancient times — and nearly every country maintains a robust set of tariffs on foreign goods, even sometimes with close trading partners. This begs the question: if tariffs lower economic prosperity, why do nations and the economists that advise them continue to implement tariffs? The use cases of tariffs (and other trade barriers) Before we proceed, consider that today, almost every single country in the world implements a tariff on foreign goods. Most countries’ average tariff on imported goods falls between 3-5%, though some may have much higher average tariff rates, and specific products or industries often have higher or lower tariffs. The World Bank and the World Trade Organization publish data on worldwide average tariffs in a few places: for example, in the World Bank’s World Development Indicators DataBank and the World Trade Organization’s World Tariff Profiles reports. These can be helpful places to learn about the typical size and scope of tariffs in modern society. Even a cursory glance at this data confirms the fact that tariffs are very widespread. The fact that tariffs tend to lower economic prosperity, and the fact that (nearly) every nation implements them anyway, hints at an important truth: tariffs serve important functions that simple economic models of trade do not account for. Let’s review several of the major reasons why a tariff can, in fact, be justified. National security First, trade barriers can help maintain national security. A nation might find it very much in their interest to limit their dependencies on critical goods that are connected to their rivals or enemies. Adam Smith himself points this out in the Wealth of Nations: “If any particular manufacture was necessary, indeed, for the defence of the society, it might not always be prudent to depend upon our neighbours for the supply; and if such manufacture could not otherwise be supported at home, it might not be unreasonable that all the other branches of industry should be taxed in order to support it.” For example, in late May 2025, the European Union approved new tariffs against Russian and Belarussan agricultural goods, in part due to the ongoing conflict in Ukraine. The EU had the following justification when announcing these new trade barriers: “Imports into the EU of urea and nitrogen-based fertilisers from Russia…reflect a situation of economic dependence on Russia. If left unchecked, the situation could harm EU food security and, in the case of fertilisers in particular, leave the Union vulnerable to possible coercive measures by Russia.” Clearly, the EU currently views dependence on Russian agricultural goods as a potential security threat. While a tariff on these goods will lower EU consumers’ welfare, it will also reduce the EU’s vulnerability to potential threats. In this case, the EU seems to have decided that accepting some deadweight loss is worth the added security. Protecting domestic industries Often, the public may believe that having domestic producers of a good is better than importing those goods from foreigners. After all, domestic industries hire domestic workers, and invest in domestic areas, so implementing tariffs to protect domestic industries ought to grow the economy. But this train of logic misses an important concept: tariffs not only insulate domestic firms from foreign firms, they also insulate domestic firms from competition. Unfortunately, limiting competition reduces efficiency and can often result in increased prices, reduced consumer choices, or inferior product quality. It’s well-known that, given the right market conditions, perfect competition produces a Pareto efficient outcome (in fact, this is the “First Welfare Theorem” of economics) — and in a global economy, perfect competition requires open trade. Therefore, protecting a company from the force of competition is very often not recommended. There can be times when protecting a domestic industry is a justified decision, as was seen in the EU example above. But protecting domestic industries is not, in itself, a good enough justification for tariffs as it will reduce economic prosperity. It’s true that domestic jobs might be saved, and money might remain in domestic hands, but these “benefits” come at the cost of lower prosperity overall. Garnering political support Nevertheless, politicians who hope to garner support among voters (particularly those connected to specific industries) often promise to increase protection of domestic firms from foreign competition. This promise is usually seen as a positive thing by voters, and it can be difficult for the public to draw the connection between protectionism and the reduced prosperity that it often brings. The success of Donald Trump’s “America First” slogan among US-American voters is a recent example of this sort of promise, and how powerfully it can resonate with the voting public. It also hints at an underlying truth: whether or not a policy makes strict economic sense or is economically justified is not always the main issue that voters and politicians are concerned with. This doesn’t necessarily mean that voters are always behaving irrationally — it merely suggests that certain hard-to-measure attributes, like a sense of nationalism, may sometimes be more important to the public than the cold calculus of economics. Levelling the playing field Sometimes tariffs may be justified by governments on the basis that other countries are producing a good more cheaply than the free market would normally allow. For example, if a foreign government is subsidising one of their industries through direct subsidies, tax breaks, or other benefits, that support will enable cheaper production and therefore cheaper products. This could allow those foreign producers to (unfairly) undercut prices in other countries. In this scenario, the foreign product is more competitive in a domestic market to which it is imported. Allowing a domestic market to be flooded by foreign-subsidised goods may result in cheaper goods in the short term, but if it results in the disappearance of domestic or foreign producers who are, in fact, more efficient when subsidies are taken out of the equation, then in the long term competition will be (unfairly) removed and the remaining (previously subsidised) foreign firms will be able to set higher prices. In order to level the field, a domestic government may impose tariffs to offset the advantage the foreign producer gains from subsidies from their own government. Protecting human rights Sometimes, trade barriers are implemented on moral or safety grounds. If a country abuses human rights, other countries often impose strict sanctions until those rights are restored. For example, North Korea currently exists as a pariah state — very many countries and economic organizations around the world have levied significant sanctions on North Korea, with the aim of limiting its economic prosperity. This situation is due to a mix of factors, including North Korea’s authoritarian government and lack of cooperativeness with other nations. But human rights abuses contribute significantly to this status. Unfortunately, although it is one of the most impoverished nations in the world (partly due to these trade barriers), North Korea has stayed its course. Still, there’s little doubt that the country would be more prosperous if it had acquiesced to the demands of neighboring countries and restored further human rights to its people. While it might otherwise be possible for consumers to purchase certain products made in North Korea, for most nations preventing this trade as much as possible is an acceptable cost in order to maintain pressure on the North Korean government. Accounting for externalities In a simplified trade model, some factors that have value for an economy may not be accounted for. An example of this could include the benefit to the climate from importing fewer fossil fuels and subsidizing cleaner forms of energy instead. Climate deterioration is a negative externality, and markets that degrade the environment often don’t properly account for the full cost of their production because of this. Therefore, a tariff or other trade barrier in those markets (such as the market for oil) could be justified. There may also be positive externalities to a specific community for having a local industry that the community was historically built around. For example, the city of High Point, North Carolina, USA is known as the “furniture capital of the world”. This small city reportedly produced 60% of all furniture made across the entire USA by the 1950s. But High Point’s prosperity did not last forever; it’s now surrounded by vacant lots where furniture manufacturers packed up and left after cheaper, more efficient foreign competition eroded its grip on the industry. Furniture is a source of pride for residents of High Point and neighboring areas. Even for residents of North Carolina who have never been to High Point, the fact that a city in N.C. was the furniture capital of the world can provide its own sort of pride. It may very well be that a local or even national government decides that the history and sense of community that a situation like this provides is worth a trade barrier in favor of the community’s industry. In High Point’s case, the city has successfully pivoted from being a center of furniture production to one of furniture showcasing, which has allowed the city to retain some of its furniture pride and allowed it to remain relevant in the eyes of the furniture industry, even without major subsidies or trade barriers to help it remain (artificially) competitive. While it may seem rather silly to implement a trade barrier just to support local pride, these and similar scenarios are increasingly drawing the interest of economists. Happiness is sometimes thought of as the ultimate goal of economic growth, and if local pride is a significant source of it, perhaps it’s worth protecting (or at least studying). Further, there may be tangible benefits to protecting a specific community’s major industry, such as a lower crime rate than there would be otherwise. Geopolitical retaliation and game theory In game theory, an infinitely repeated game is one where players interact strategically forever; there is not an end to the game. The system of international trade can be viewed as a game in this way, where in each period (say, every year) nations choose a production mix and choose amounts to trade with one another. Each nation’s goal is to maximize their own economic outcomes, and free trade is necessary to achieve the greatest prosperity possible. So, if one country decides to impose tariffs on another — or causes an offense in some other manner — then other countries may decide to punish that country by retaliating, imposing their own tariffs with the sole purpose of damaging the offending country. This damage isn’t merely punishment for the sake of punishment: it’s intended to incentivize that country to return to their “good behavior”, to the benefit of their neighbors. For the sake of illustration, suppose that ancient Sparta chose to impose tariffs on ancient Athens. Athens, and other neighboring city-states, may then have imposed tariffs on Sparta as punishment. They’d likely have explicitly warned Sparta to remove their tariffs, or face worse backlash. This type of punishment ensures that it’s in Sparta’s best interest to remove its tariffs on Athens and continue to give Athenian commerce free access into Spartan markets. In game theory (particularly with infinitely repeated games) this is known as a “tit-for-tat” strategy, and it has been shown to be very effective at incentivizing the “correct” behavior in other players. In fact, this very situation can be likened to the mechanism of how Bertrand Competition results in a perfectly competitive market outcome. Thus, tariffs may be used simply as a threat or retaliatory punishment that aims to induce another country to cooperate. In this case, tariffs would theoretically be removed as soon as the offending party corrected their bad behavior, allowing everyone to benefit from free trade once again. Conclusion: tariffs have their place Let’s return to our simple question: are tariffs good or bad for an economy, and the people within it? Tariffs worsen market outcomes and introduce deadweight loss, making everyone worse off on average. But, sometimes, this loss can be worth the value that reducing trade in a certain good (or with a certain trading partner) can bring. Since nearly every nation in the world from ancient times until today has utilized tariffs, and have continued to do so through generations of great leaders and brilliant economists, it seems quite likely that tariffs have value that a cursory appeal to efficiency doesn’t appreciate. Still, in general, tariffs are hardly a panacea for societal problems, and they should not be levied carelessly — they do cause deadweight loss, after all. The simple answer to our simple question, then, is clearly “it depends”. While this answer isn’t a very snappy sound bite or headline, it does show that often — in both life and economics — there is a significant amount of nuance that must be considered before universally praising or condemning a concept such as the humble tariff. Image Credits: Getty/Canva
The first half of 2025 brought with it a renewed focus on global trade wars, particularly as the United States government began to (again) question many long-standing global trade agreements — whether formally inked or traditionally observed. As a result, discourse about tariffs reached a fever pitch in the news and across social media. So, let’s ask a simple question: are tariffs good or bad for an economy, and the people within it?
The Path to Tenure - In Discussion with Victoria Vanasco
CN: You received tenure in 2023 at CREI, having worked there for around five years previously as a Junior Researcher. When did you decide that a tenured position was a career goal? VV: Most research positions are of the tenure-track form, but this is not a promise of tenure, and typically if you do not get tenure by a given date you have to leave. For most people working in Academia, tenure is a career goal, as without it we have to leave the institution where we are (and sometimes the city or country), when our tenure is denied. Ideally, you get tenure at a place you like. I was lucky to get tenure at a place I REALLY like. The question was then ¨when to go up for tenure¨, and when professional activities started demanding a lot of my time (referee reports, participation in scientific committees, conference organization, seminar invitations, etc), I felt it was time. "Fate was involved in the decision, as I did not get some jobs I would have found very attractive." Victoria Vanasco CN: You grew up in Argentina, before looking abroad to continue your academic journey. Was this a tough step to make? VV: It was hard to decide whether I wanted to pursue the PhD abroad vs look for a good job locally. Fate was involved in the decision, as I did not get some jobs I would have found very attractive. I decided to take it step by step. First, what do I need to do now to apply for a PhD in a year? A Masters in Economics, so I started with that. In the meantime, I got a job as a Junior Professional Associate at the World Bank in the Buenos Aires office. This position lasted only two years, as the World Bank encourages juniors to pursue their academic endeavours. That really helped. By the time I was done with my Masters and with my two years at the World Bank I was excited about pursuing a PhD. It was also hard to leave Argentina, but once again, step by step. I could always come back if I did not like it. I liked it so much, I never came back. CN: What factors influenced your decision to continue your career in Spain, rather than the USA or Argentina, where you also have professional experience? VV: In academia, at least in economics, for most of us, our job offers determine where we will live. My husband and I are both in academia, we work on related topics, and Barcelona was a place where we were both happy to live and where both of us have fulfilling job opportunities. CN: Having progressed from an undergraduate to postgraduate, and through researcher and assistant professor positions, which stage(s) of your education and career stand out in your memory as the most challenging? VV: Academia is tough, and I was lucky enough to have only one really challenging moment in my career, which was the third year of the PhD. I was good at taking classes and exams, and then that was over, and I had to do research. How did you do research? I knew I liked theory, but how do you write a model? How do you choose an interesting question that you can actually answer? It was a lonely process: in my office, lots of frustration and staring at a white empty board. But then it happened, who knows how. In the middle of my fourth year I was already excited about what I was doing, somewhat knew what I was doing, and it has been exciting since then (disclaimer: doing research is always challenging, a strange mixture of frustration and excitement). CN: ...And which stage was the most enjoyable? VV: The most enjoyable was probably my job market, where I could present my research to a lot of people who were actually interested! I learned how nice it was to discuss the things you thought about in your office with the profession. It was really nice to know other people also found the problems I addressed interesting. Nothing is as intense as the job market in terms of visibility, but since then, the part I enjoy the most is being in my office alone thinking about the questions I care about, and then discussing my research with other researchers in the field (seminar, conferences, etc) CN: Between 2013 and 2021 you were awarded no less than 7 prizes and 7 scholarships. To what extent do you think these recognitions of your skill have helped you advance your career? VV: Wow, when you put it like that … I was not aware of this! I was extremely lucky to have my first job at the Stanford Graduate School of Business, where I was an Assistant Professor. This of course made a great impact in my career through two channels. First, it increased my visibility in the profession, and that is important when you are a young researcher (for example, it increases the chances of receiving awards). Second, and most importantly, I was able to spend the first four years of my career surrounded by the best academics working in my field, and I learned immensely from them. "My advice would be to pursue creative research, not prizes." Victoria Vanasco CN: …so how strongly would you advise students and young people just starting out in their career to pursue prizes? VV: I never pursued prizes, and I do not think that is something you can do. Also, prizes do not really change much in your career; you feel good when receiving them, but in the end, in our profession, you are judged by the quality of the research you do. So my advice would be to pursue creative research, not prizes. CN: In recent years, there has been a lot of discussion about the pressure on young academics to secure funding for their research, and by extension the insecurity around many junior academic positions. Did you experience this pressure? And what would your advice be to young scholars who are facing this? VV: I never had to struggle for funding, mainly because I have never been at institutions that struggle for funding. Here in Europe grant applications are a central part of our academic life, so we learn how to apply to them, and some work and some don’t. Also, as I work on applied theory, all I need is pen and paper, so research funding is not a determinant of the research I can do (while it is for other types of research or fields of study). CN: Thank you for your time! Victoria Vanasco - Short Biography (from CREI webpage): Victoria Vanasco is a Researcher at the Centre de Recerca en Economia International (CREi). Before joining CREi, she was an Assistant Professor of Finance at the Stanford Graduate School of Business. She earned her PhD in Economics from UC Berkeley in 2014, and she has a Masters in Finance and a B.A. in Economics from Universidad Torcuato Di Tella, in Argentina, where she is from. Before earning her PhD, she spent two years as a Junior Professional Associate at the World Bank. Her research has been published in top peer-reviewed journals, such as the Journal of Finance, Review of Financial Studies and the Journal of Financial Economics. Among other awards and grants, Victoria is the recipient of the 2018 Junior Prize in Monetary Economics and Finance awarded by Banque de France and Toulouse School of Economics, and of an ERC-Starting Grant for the period 2021-2026 for her project “INFOMAK: Information, Markets, and the Macroeconomy”. She is also a Research Fellow at CEPR, an Affiliated Professor at the Barcelona School of Economics (BSE) and at Universitat Pompeu Fabra (UPF), an Associate Editor at the Review of Financial Studies and the Journal of Financial Intermediation, and a member of the Editorial Board at The Review of Economic Studies. She also serves in the governing bodies of the European Finance Association, the European Economic Association, the Spanish Finance Association, and the Finance Theory Group Her research focuses on topics related to information asymmetries and their impact on financial markets and the real economy. She studies factors that lead to information and belief heterogeneity, and how these factors impact the incentives of market players to screen and monitor assets, with a focus on understanding how regulatory policies can increase liquidity and discipline in markets. Image Credit: CREI / Aksonsat Uanthoeng from Pexels
Victoria Vanasco is a Senior Researcher at CREI (Centre de Recerca en Economia Internacional) in Barcelona, Spain, as well as Adjunct Professor at Universitat Pompeu Fabra (UPF) and and Affiliated Professor at Barcelona School of Economics. As a newly tenured economist, she talks to Christopher Nash, Managing Director of INOMICS, about her career path. For readers currently working in academia with an ambition to achieve tenure, her experience offers valuable insight.
Why I Didn’t Use AI for my PhD Application
However, as a member of INOMICS’ editorial board, I found that AI tools back then lacked the ability to write a thorough, in-depth, and engaging article about economics topics such as how corruption can affect economic growth or the pros and cons of focusing on “mesoeconomics”. We decided to not use AI tools in our article-writing or editing process. Similarly, I decided not to use AI tools at all when I was applying for PhD programs. That’s not to say that I think these models can’t ever be helpful – I’ve found that AI LLM models are very helpful for one thing in particular: generating ideas. However, I’m serious about becoming a PhD economist, and was determined to submit the very best of my own writing for my applications. Further, there’s always a concern that using AI tools would be considered a form of plagiarism. I think not using AI tools at all for my application was the right choice, and I think it’ll be the right choice for you, too. What’s more, even if AI models become incredibly capable “economists” on their own, I think eschewing them will still be the right choice for your application process. Without further ado, let’s explore the reasons why. First: hallucination adds extra work, and relying on AI delays you from building your own expertise AI models are known to hallucinate. That means, when using them for an important purpose, checking the AI’s output for accuracy is critically important – but that adds work that I didn’t feel was worth it for my application. I felt that the effort I’d have needed to spend studying each aspect of the AI model’s output (to ensure it was accurate) would have been inefficient. Instead, I spent time reading the economics literature myself, seeing what interested me, and reading about how other economists in the space structured their research. This was very helpful, especially as I began to outline my own phd research proposal. Think of it this way: if you want to be a successful PhD student, you’ll need to understand a large portion of the literature in your subfield anyway. You may as well get started during the application process! This will greatly help you with any research proposal you must write, and with any conversations (or admissions interviews!) you have with potential supervisors. Rather than take an AI model’s potentially erroneous output and start from there, I searched Google Scholar and RePEc myself. I read the literature to see if there was a gap that my ideas could fill. I put together a methodology that I knew was sound, using econometric methods that I was confident I understood. I also found public datasets that I knew were accessible and relevant, to ensure that realistically usable data was available – and to show that on my application. Finally, I wrote my own ideas for future research, and studied the research interests of the faculty at the institutions I was applying to. Sometimes, doing something the “hard way” really is the best in the long run. After all, there are no free lunches. Second: personal essays require a personal touch Some schools require specific essay questions or have topics they want you to broach in your personal statement. For this reason, it’s highly advisable to double-check each institution’s expectations for your personal statement (if they do, this is usually found or referenced in the school’s online portal where you upload the statement). I had to write several different personal statements, as each school had slightly different needs. Clearly, these statements require a personal touch. If you outsource the work to a machine, you’re preventing the admissions committee from hearing your voice, and from reading your story as you would tell it. This clashes with the entire point of a personal statement: in your application, you must show the admissions committee who you are and why you wish to study for an economics PhD. This may sound like a “fluffy” or silly concern, but the truth is that admissions committees get many applications from very qualified students. Sometimes, deciding who to give an offer to can come down to less measurable factors, such as how well the committee can picture you succeeding at their institution or fitting into their faculty’s research interests. A good personal statement will help you convince them that you’re a good candidate and pursuing a PhD for the right reasons. Apart from this, many admissions officers can, or at least claim that they can, identify work written by an AI. Whether it is an overuse of stock phrases, an inconsistent register, or a “genericness” in the style or argumentation, ultimately if an admissions officer or potential supervisor suspects that a submission is AI written, at best they will treat your application with scepticism, or at worst discard it. Overall, you ought to give the admissions team as much of a sense of who you are as you can. Express your personality, show them your enthusiasm. AI simply can’t do that as well as you. Third: AI output is not your work, and this limits your growth Different people may feel differently about whether or not, or to what extent, using AI tools constitutes plagiarism. Whichever camp you personally fall into, though, the following statement is true: an AI model produces output that you did not write yourself. And this is a problem if you aim to be the best economist you can be. This is related to the first point about the hallucination problem, but goes deeper. AI tools offer a cognitive shortcut. However, if you’re always taking a shortcut, even if only to kick off ideas and begin your work, you’re robbing yourself of the ability to learn how to start a research process well, which can make future research tasks harder for you. I know this would likely be true for me, because I’d noticed this tendency in myself long before the advent of popular AI models. Allow me to explain. When learning math in grad school, I often felt very confident that I understood the teacher’s example as they worked it in class. Yet, as soon as they stepped away from the chalkboard and asked me to solve a similar problem on my own, my mind would often blank. Suddenly, recalling the right steps to take – and understanding exactly what they meant – was much harder. I think this is a relatable experience for many, and I believe that over-relying on AI tools is just the same as relying on a teacher to begin solving a math problem for you. It seems innocuous when you still have the aid of the teacher. A limit or integral — or the beginning of an econometric theorem — all seem very straightforward when your teacher sets them up for you. But when the aid is removed, suddenly, our brains may panic because they haven’t actually learned how to properly get started. Remember, your brain is an expert in finding shortcuts, and that sometimes means you don’t learn as well as you think you did! Aside from this, research has shown that if you over-rely on AI tools you may – even subconsciously – become worse at detecting hallucinations, and stop thinking as much about serious issues like plagiarism. As Zhai, Wibowo, and Li put it in a 2023 paper1: “Despite the undeniable advantages of AI dialogue systems in streamlining research processes and enhancing academic efficiency, our analysis reveals a concerning trend: the potential erosion of critical cognitive skills due to ethical challenges such as misinformation, algorithmic biases, plagiarism, privacy breaches, and transparency issues.” Thus, I’m confident that over-relying on AI tools to begin – say – your research proposal literature review also limits your growth as an economist, even if you don’t realize it. If you don’t take the time to actually read and process the papers in economics yourself, you are missing out on a great deal of knowledge. Even simple meta-knowledge about what exists in the body of economics literature can be important for your career. It’s potentially embarrassing to not know of a famous or seminal paper in economics, and it certainly wouldn’t look good if you aren’t aware of the literature in your own niche subfield. Fourth: AI can’t output work up to the same quality as you or I can Truthfully, the thought of using AI on my PhD application never seriously crossed my mind. That’s because, through my time writing and editing for INOMICS, I’ve continually tested new AI models to see how good they are at writing thoughtful economics articles. I have yet to find an AI model that can write a helpful, informative, and analytic article the way that Hanna Sakhno, Dr. Sahar Milani, Dr. Tom McKenzie, Dr. Gómez-Pineda, or I can. AI models have yet to demonstrate the ability to go beyond presenting common discourse about a topic and teach the reader something new, or present things in a new light. And I know that if AI models aren’t up to my standards for what we post on the INOMICS website, it will not be up to an admissions committee’s standards for a PhD application essay or research proposal, either. I’m confident that someone seriously interested in pursuing an economics PhD is much brighter than even our most advanced LLMs or neural networks today. Perhaps that will change one day in the future – but even if it does, doing the work yourself will develop you into a much better economist than relying on AI output ever would. Conclusion I learned a lot throughout the process of applying for my economics PhD. I gained a solid preliminary understanding of my topic area that will help me immensely when I begin to write my first publishable paper. Further, after combing through the literature myself, I’m confident that the research I want to pursue would be advancing the field in a way that hasn’t been done before, which is exciting. I don’t think AI had a place in that process. And, at the end of the day, my hard work landed me a very generous offer of admission at an excellent university that I’m excited about. So, my fellow economist hopefuls, take it from me: don’t rely on AI models to write your applications for you. You owe it to yourself to do the hard work. After all, there are no free lunches in economics or in life. References: 1: Zhai, C., Wibowo, S. & Li, L.D. The effects of over-reliance on AI dialogue systems on students' cognitive abilities: a systematic review. Smart Learn. Environ. 11, 28 (2024). https://doi.org/10.1186/s40561-024-00316-7 A note on AI usage at INOMICS Here at INOMICS, we’re not against using new technology. On the contrary: on our website, you’ll find helpful AI tools – such as a feature that generates questions (and answers) for our Economics Terms A-Z articles, or an AI Summary button for our article pages. But, when it comes to producing articles and resources, quality and accuracy are our highest priority. So while we sometimes use AI tools to help us brainstorm ideas, suggest phrasing, translate existing text, or generate interesting header images for articles (like the one on this page!), when we have experimented using AI to produce longer articles, we have always found the results to be lacking, not to mention sharing many of the concerns expressed in this article. As such we do not (yet) publish Advice articles, Blog posts or economics terms/lessons that were partially or wholly written using AI. Image Credit: INOMICS, using Canva Magic Studio AI Image Generator
AI tools have become widespread since news of ChatGPT-3.5 prompted me, in early 2023, to make an OpenAI account. I remember sitting in a coffee shop, sipping on a latte, and holding a half-dozen “conversations” with the newly released model. I asked it a series of math questions. I asked it about politics and about poetry. I asked it to write me a short story. I even asked it questions about niche topics like Settlers of Catan to see if it “understood” strategy in the context of a game. And, of course, I asked it about economics.
Agricultural and Environmental Economics (JEL Q)
Urban, Rural and Transportation Economics (JEL R)
The Price of Love - A Valentine’s Day Look at the Cost of Romance
Valentine's Day spending reflects the economic climate, with key factors affecting consumer confidence, inflation and jobs affecting people's spending2. When the economy is doing well, unsurprisingly, people spend more, buying bigger gifts and planning grand celebrations. So let's get into the economics of Valentine's Day a bit more. The Rising Costs of Valentine’s Day Valentine’s Day has evolved into a multi-billion-dollar industry, with spending trends rising each year. Many would argue that it has become a commercialised celebration driven by consumerism, where businesses capitalise on romantic expectations to boost sales. Social media has magnified these romantic expectations, where individuals often showcase their gifts and experiences, creating a culture of comparison and competition. The desire to "outperform" others in demonstrating love and affection further fuels consumer spending. The costs associated with celebrating love include: Gifts and Flowers: The price of roses often surges in February due to increased demand, demonstrating classic supply and demand principles. Florists and retailers anticipate this spike, adjusting prices to maximise profits during this peak season. Dining Out: Restaurants capitalize on the holiday by offering special (and often pricier) Valentine’s menus. Many establishments introduce fixed-price dinners with curated courses, which are marketed as exclusive experiences, thereby justifying higher prices. Jewellery and Luxury Items: Retailers view Valentine’s Day as a peak sales period, aggressively marketing high-end gifts as ultimate expressions of love. Campaigns often emphasize that nothing says "I love you" like a sparkling diamond or luxury watch, reinforcing the association between material value and emotional significance. Spending statistics reveal the staggering scale of Valentine’s Day as an economic event. The US tops the chart by a significant margin for average spending per person, with an astonishing $192.50. According to Statista, it is predicted that in the U.S. alone, consumers will spend approximately $6.5 billion on jewellery, $5.4 billion on a night out, $5.4 billion on flowers and candy, and “only” $1.4 billion on cards3. These figures highlight how the holiday drives substantial revenue across multiple industries, from florists to fine dining to luxury retailers. In comparison, the United Kingdom ranks second, with average spending per person significantly lower at a predicted $52-$70 for 2025, less than half the amount spent by the average American 4. This stark contrast underscores the cultural and economic differences in how Valentine’s Day is celebrated across countries. Behavioural Economics and Romantic Spending Behavioural economics and psychology offer profound insights into why individuals often spend more than they intend on Valentine’s Day. This can be attributed to a complex interplay of cognitive biases, emotional drivers, and social influences that shape consumer behaviour in subtle yet powerful ways. One of the most significant factors is the influence of social norms and peer pressure. Valentine’s Day is culturally framed as a time to express love and affection through material gifts and special experiences. Societal expectations often create an implicit standard of what constitutes an appropriate display of affection, leading individuals to feel obligated to spend money to meet these norms. The fear of social judgment or being perceived as less committed can drive people to purchase extravagant gifts, not necessarily out of personal desire but to conform to the expectations set by their social circles and media portrayals. Loss aversion, a key concept in behavioural economics, further amplifies this tendency. According to this principle, people experience the pain of loss more intensely than the pleasure of an equivalent gain. In the context of Valentine’s Day, the potential “loss” is emotional—the fear of disappointing a partner, causing relational strain or appearing neglectful5. This fear can motivate individuals to overspend, as they aim to avoid the negative emotional consequences associated with perceived inadequacy or failure to meet their partner's expectations. The halo effect6 also plays a pivotal role in Valentine’s Day spending. This cognitive bias causes people to associate the quality of a gift with the depth of the giver’s affection. Expensive gifts are often perceived as indicators of greater love and commitment, leading consumers to equate higher spending with stronger emotional expression. This misconception can pressure individuals to choose costly items, believing that their monetary value will enhance the perceived sincerity of their sentiments. Another influential bias is anchoring7 where initial exposure to a price sets a mental benchmark that influences subsequent purchasing decisions. High-end advertisements and luxury brand promotions prevalent during the Valentine’s season establish these anchors, making moderately priced items seem more reasonable or affordable by comparison. This effect can subtly nudge consumers towards spending more than they initially planned, as their perception of value has been skewed by earlier price exposures. The scarcity principle8 adds yet another layer to the dynamics of Valentine’s Day spending. Limited-time offers, exclusive deals, and seasonal products create a sense of urgency and exclusivity. This scarcity effect taps into the fear of missing out (FOMO), compelling consumers to make impulsive purchases to secure what they perceive as rare or fleeting opportunities. Retailers strategically exploit this bias through marketing tactics that highlight the limited availability of certain products, thereby driving up demand and, consequently, consumer spending. Cultural Variations in Valentine's Day Celebrations Valentine's Day is celebrated differently around the world, reflecting diverse cultural norms and traditions. In Japan, for example, women typically give chocolates to men on February 14, with men reciprocating a month later on White Day9. In South Korea, the celebration extends even further, with couples marking the 14th of every month as a special occasion, such as Kiss Day and Rose Day10. In Finland and Estonia, Valentine's Day is more about celebrating friendship rather than romantic love, known as Friend's Day11. In contrast, countries like France and Italy emphasise romantic gestures steeped in historical traditions, such as exchanging love letters and symbolic gifts. These cultural variations influence how people spend money on the holiday, with local customs shaping the types of gifts, experiences, and economic behaviours associated with Valentine's Day. Conclusion: Balancing Love and Economics While love is priceless, the way we celebrate it comes with financial implications. Recognising the behavioural and economic factors behind romantic spending can help individuals navigate Valentine’s Day with both their hearts and wallets in mind. Perhaps the best investment is not in expensive gifts but in meaningful, lasting experiences that strengthen relationships without breaking the bank. Works Cited “The untold truth about Valentine's Day: From violence to modern-day romance.” NBC Washington, 2025, https://www.nbcwashington.com/entertainment/holidays/history-behind-valentines-day/3824661/. “The Cost of Valentine's Day in the US vs Other Countries.” Remitly, 2025, https://blog.remitly.com/lifestyle-culture/cost-of-valentines-day/. “Valentine's Day total expected spending on selected gifts in the United States in 2025, by category.” Statista, 2025, https://www.statista.com/statistics/285034/us-valentine-s-day-sales-by-category/. Barber, Sophie. “Valentine’s Day statistics 2025: What is the average spend? Source: https://www.finder.com/uk/credit-cards/best-credit-cards/valentines-day-statistics Analysis conducted by finder.com.” Finder, 2025, https://www.finder.com/uk/credit-cards/best-credit-cards/valentines-day-statistics. Tsipursky, Gleb. “Valentine’s Day Gift Giving with a Purpose: How to Make a Difference Together.” Intentional Insights, 2024, https://intentionalinsights.org/valentines-day-gift-giving-with-a-purpose-how-to-make-a-difference-together/. “Why do positive impressions produced in one area positively influence our opinions in another area?” The Decision Lab, https://thedecisionlab.com/biases/halo-effect. “Anchoring (heuristic).” Behavioural Economics .com, https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/anchoring-heuristic/. Chen, James. “Scarcity Principle: Definition, Importance, and Example.” Investopedia, 2024, https://www.investopedia.com/terms/s/scarcity-principle.asp. “White Day.” About Japan: A Teachers Resource, 2025, https://aboutjapan.japansociety.org/white_day#sthash.tsPqtrVT.dpbs. “Why the 14th day of each month in Korea is special.” Korea.net, 2021, https://www.korea.net/NewsFocus/HonoraryReporters/view?articleId=200941. Godin, Melissa. “Why Valentine’s Day in These European Countries Is All About Friendship.” The Times, 2020, https://time.com/5778265/valentines-day-finland-estonia/.
With Valentine’s Day approaching, it's intriguing to explore the economics of love—how much we spend, why we do it, and whether it’s worth the investment. Romance, like any market, operates on supply, demand and consumer behaviour with prices fluctuating based on cultural expectations and economic conditions. Valentine’s Day traces its origins to ancient Rome, where the festival of Lupercalia on Feb 13-15 celebrated fertility and matchmaking. Later, it was linked to Saint Valentine, a priest who secretly performed marriages against Emperor Claudius II’s orders and was executed on February 14, 269 AD. By the 14th century, poets like Geoffrey Chaucer romanticised the day, associating it with courtship. By the 19th century, mass-produced Valentine’s cards became popular, evolving into today’s global celebration of love, marked by gifts, flowers, and heartfelt gestures1.
The Rise of Digital Nomadism and Its Economic Implications
The Evolution of Work and the Rise of Digital Nomadism Office work has come a long way—from the rigidity of the nine-to-five office cubicle to the freedom of remote setups. The rise of cloud computing, tools like Slack and Zoom, and platforms like Upwork have enabled professionals to work from anywhere. The pandemic supercharged this shift, with 35% of US employees working remotely in 2023, up from 24% in 2019 (3). According to a 2023 study, over half the digital nomads surveyed worldwide were aged 30-39, with roughly 22% being aged under 30 (4) and working in fields like tech, software media, business and mathematical/data professions, that have embraced this lifestyle the most (5). Destinations like Lisbon, Bali, and Medellín have emerged as hotspots, offering a mix of affordability and strong infrastructure, as well as an appealing climate. Governments are also jumping on board, creating digital nomad visas to attract these workers while boosting local economies. Estonia, Croatia, and Barbados are just a few examples of countries that are making it easier than ever to work and travel. Macroeconomic Implications of Digital Nomadism Digital nomads bring foreign income into the communities they (temporarily) call home. Popular hubs like Bali and Lisbon see increased demand for co-working spaces, short-term rentals, and hospitality services. For instance, digital nomads contribute millions annually to Bali’s economy through tourism and service consumption (6). In Lisbon, thriving cafés, co-working hubs, and housing rentals cater to remote workers, reshaping local businesses. However, this boom comes with challenges. In popular hubs, living costs often rise, creating income inequality between nomads and locals. For example, in Lisbon, long-term residents have faced housing shortages as properties convert to short-term rentals for nomads and tourists. Carvalho a well-respected Professor of Economics at the University of Porto is hoping the Portuguese government can find a balance between attracting new entrepreneurs and ensuring the stability of the locals. It’s important to have an overview of the impact on Portuguese society, including ensuring local citizens aren’t priced out of their housing market (7). The strain on local infrastructure, such as transportation and utilities, also becomes an issue. Governments are responding with innovative policies, such as New Zealand easing visa rules to attract digital nomads as part of their post-COVID tourism recovery strategy (8). However, taxation remains a tricky issue, with challenges like double taxation and lost revenue for nomads’ home countries (9). Balancing the benefits and challenges of digital nomadism is a growing priority for policymakers worldwide. Microeconomic Implications for Individuals Digital nomadism presents unique microeconomic considerations for individuals, as it requires careful evaluation of budget constraints, opportunity costs, and utility maximisation. Nomads must balance the marginal benefits of travel and flexible work arrangements against expenses like accommodation, coworking spaces, and fluctuating living costs in different countries. Price elasticity is also a factor, as digital nomads adjust their spending based on income variability and local cost of living. The decision for nomads to live and work abroad is often about maximising income while minimising expenses. Relocating to low-cost destinations like Chiang Mai or Medellín can help nomads get more out of their budgets compared to living in high-cost cities like New York or London (10). For instance, a software developer earning $60,000 annually can enjoy a significantly higher quality of life in Bali, where rent and daily expenses are far lower. Additionally, the concept of consumer surplus applies, with individuals deriving varying levels of satisfaction from experiences depending on personal preferences and the perceived value of mobility and cultural exposure relative to their costs. Understanding these dynamics can help digital nomads make financially sustainable lifestyle choices while maximising their overall well-being. Broader Implications for Education and Skill Development To thrive as a digital nomad, certain skills are in high demand—both at the top for 2023 and on the rise are analytical thinking and creative thinking. Technological literacy is on the rise, perhaps because of the trend to work remotely (11). Although, yes, these skills are often looked for in ‘regular’ working environments, they enable digital nomads to thrive because of the ease and efficiency of being able to deliver remotely. Employers increasingly value professionals who can navigate remote work challenges and analyse opportunities in global markets. Analytical skills are especially in demand, which is good news for economists and data scientists, as this should be a core part of their skill sets. Online education platforms like Coursera, Udemy and DataCamp are stepping up to meet this demand. These MOOCs (Massive Open Online Courses) offer flexibility, affordability, and globally accessible skill development options. Platforms like INOMICS also collect online and on-site learning opportunities relevant to economics, data science and finance. According to Statista, the global e-learning market is projected to grow by 10% annually, reflecting the rising demand for tech-focused and skill-specific courses (12). For digital nomads, these platforms are essential tools for staying competitive in a fast-evolving global workforce. Data Science and Economic Research Opportunities Digital nomadism presents exciting opportunities for data-driven analysis. Researchers and analysts can use tools like web scraping from platforms such as Nomad List to study trends in population growth and geographic preferences. Geospatial data combined with income distribution metrics could assess the economic impacts of nomads on local economies. Predictive analytics can also uncover emerging hotspots for digital nomads by analyzing variables like cost of living, internet speed, and visa policies. A study done by the National Bureau of Economic Research serves as an example of an academic analysis of remote work using a data-science approach. Applying a similar methodology could offer valuable insights into trends and patterns surrounding digital nomadism (13). Conclusion Digital nomadism is more than just a trend—it’s a transformative shift in how work and economies function. From its roots in technological innovation to its ripple effects on local and global markets, this lifestyle is reshaping the modern workforce. As technology continues to advance, the sustainability of digital nomadism will hinge on balancing economic opportunities with policy frameworks that address its challenges. Cultural shifts and new tools are likely to make this lifestyle even more accessible. For students and young professionals in economics and data science, digital nomadism presents an exciting opportunity to shape the future of work. By analysing labour markets, designing policies, or developing predictive tools, you could play a vital role in this evolving landscape. Ready to dive deeper into the world of digital nomadism? Explore research opportunities, upskill through online courses, or analyse trends to predict its growth. The future of work is being written—why not be part of the story? Works Cited “Upwork Study Finds 22% of American Workforce Will Be Remote by 2025.” Upwork, https://www.upwork.com/press/releases/upwork-study-finds-22-of-american-workforce-will-be-remote-by-2025. “State Of Remote Work 2023.” Buffer, https://buffer.com/state-of-remote-work/2023?. Accessed 27 January 2025. Cohen, Mikaela. “The percentage of employees working remotely is dropping, but experts say it’s unlikely to reach pre-pandemic levels.” HR BREW, 2024, https://www.hr-brew.com/stories/2024/08/12/the-percentage-of-employees-working-remotely-is-dropping-but-experts-say-it-s-unlikely-to-reach-pre-pandemic-levels. “Share of digital nomads worldwide in 2023, by age.” Statista, 2023, https://www.statista.com/statistics/1298807/digital-nomads-by-age-worldwide/. “Top 5 Industries with the Most Remote and Hybrid Work.” Linkedin, 2024, https://www.linkedin.com/pulse/top-5-industries-most-remote-hybrid-work-ioptimizerealty-fbqmc/. Noviarini, Nurina, and Palupi Lindiasari Samputra. “Digital Nomad and Analysis of Regional Economic Resilience of Tourism Sector in Bali Province After Covid-19 Pandemic.” Jurnal Indonesia Sosial Teknologi. Researchgate, https://www.researchgate.net/publication/380893593_Digital_Nomad_and_Analysis_of_Regional_Economic_Resilience_of_Tourism_Sector_in_Bali_Province_After_Covid-19_Pandemic. Chamberlin, Victoria. “What Portugal got right about work-life balance.” Vox, 30 September 2024, https://www.vox.com/future-of-work/374273/portugal-remote-digital-nomad-work-life-balance Accessed 28 January 2025. “Tax policies for a new generation.” European Parliament, 2022, https://www.europarl.europa.eu/RegData/etudes/ATAG/2022/733697/EPRS_ATA(2022)733697_EN.pdf. Hausberger, Yasmin. “Learning from Multinational Enterprises: International Tax Strategies for Digital Nomads.” University Wein, Masters Thesis, https://services.phaidra.univie.ac.at/api/object/o:1787699/get. Cohen, Randolph B. “Unprecedented: Remote Work and the Strange Economy of 2023.” 2023. Harvard Business Review, https://www.hbs.edu/faculty/Pages/item.aspx?num=64685. “Future of jobs: These are the most in-demand skills in 2023 - and beyond.” The World Economic Forum, 1 May 2023, https://www.weforum.org/stories/2023/05/future-of-jobs-2023-skills/. Accessed 28 January 2025. “Market size of the global corporate e-learning industry in 2023.” Statista, 2023, https://www.statista.com/statistics/1232427/global-corporate-e-learning-market-size/#:~:text=The%20market%20size%20of%20the,billion%20U.S.%20dollars%20by%202030. Stephen Hansen, et al. “Remote Work across Jobs, Companies, and Space.” 2023. National Burea of Economic Research, https://www.nber.org/papers/w31007. “Global Labor Market Trends in Remote Work.” World Bank Group - International Development, Poverty and Sustainability, https://www.worldbank.org/ext/en/home. Accessed 28 January 2025. Cost of Living.” Numbeo, 2024, https://www.numbeo.com/cost-of-living/. “Tourism Policy 2024.” OECD Tourism Trends and Policies 2024, 2024, https://www.oecd.org/content/dam/oecd/en/publications/support-materials/2024/07/oecd-tourism-trends-and-policies-2024_17ff33a3/Tourism-Policy-Highlights-2024.pdf?. Accessed 28 January 2025.
Imagine waking up to a sunrise in Bali, working from a café in Lisbon, and closing your laptop for a hike in Medellín—all in the same year. Welcome to the life of a digital nomad. Digital nomadism is more than a lifestyle; it’s a transformative shift in how people approach work. Digital nomads are professionals who leverage technology to work remotely while travelling the globe, free from the constraints of a fixed office. This trend has gained massive momentum, driven by advances in communication tools, globalisation, and the COVID-19 pandemic, which normalised remote work across industries. The numbers back this up. According to Upwork, 36.2 million Americans will be working remotely by 2025—a staggering 87% increase from pre-pandemic levels(1). Buffer’s 2023 State of Remote Work report revealed that 91% of respondents have a positive experience with working remotely with 1% being dissatisfied and 8% feeling neutral. 98% of remote workers would recommend it to others (2). These trends show that technology and shifting work-life balance priorities are reshaping what it means to “have a job.”
Women in Economics: Influential Voices and Rising Stars
Influential Female Voices in Economics Esther Duflo A Nobel laureate and professor at MIT, Esther Duflo has revolutionised development economics with her work on poverty alleviation. Duflo’s research employs randomised control trials to identify effective interventions in areas such as health, education, and agriculture. Her insights have influenced policies around the world, proving instrumental in the design of practical solutions to poverty. Alongside her contributions, Duflo co-founded the Abdul Latif Jameel Poverty Action Lab (J-PAL), a network aimed at reducing poverty through evidence-based research. You can follow her on X or read one of her Books ‘Poor Economics’ and ‘Good Economics for Hard Times’. Read our in-depth blog about her here. Janet Yellen Currently serving as the U.S. Secretary of the Treasury, Janet Yellen has been a pivotal figure in shaping modern economic policy. With a distinguished career that includes chairing the Federal Reserve, Yellen’s expertise in labour economics and monetary policy has been critical in guiding the U.S. through economic crises. Her approach to inclusive economic growth, as well as her emphasis on reducing economic inequality, continues to impact policy decisions at the highest level of government. You can follow her on X (@SecYellen) or read about her in recent articles from Forbes and The Financial Times. Claudia Goldin Renowned for her groundbreaking work on gender economics, Claudia Goldin has explored the evolution of women’s roles in the labour market, unveiling insights into wage gaps, labour force participation, and education. As a professor at Harvard University, Goldin’s contributions provide a deeper understanding of the economic forces shaping gender disparities, and her work has become a cornerstone of labour economics and social policy. You can read about her Nobel Prize Work or read one of her many books ‘Family and Career’ and ‘Understanding the Gender Gap’. Carmen Reinhart A distinguished economist specializing in international finance and macroeconomics, Carmen Reinhart currently serves as Vice President and Chief Economist at the World Bank. Her research on financial crises and sovereign debt has been instrumental in understanding economic stability. Reinhart’s influential book, ‘This Time Is Different’, co-authored with Kenneth Rogoff, remains a vital reference for analyzing financial crises and their historical context. Follow her on Linkedin, X and Instagram or read one of her many books ‘This Time Is Different’ and ‘The Decade of Debt’ Rising Female Stars Making Waves in Economics Alice Evans Alice Evans, a lecturer at King’s College London, focuses on the sociology and economics of gender equality. Her work delves into how social norms evolve and the impact of cultural shifts on gender dynamics, particularly in developing economies. Evans has become a voice of authority on the influence of social norms on economic outcomes, making significant strides in gender economics through her research and public engagement. Follow her on YouTube, Linkedin and X, or find some of her many scholarly articles. Stefanie Stantcheva A professor at Harvard University, Stefanie Stantcheva’s research examines taxation and its effects on inequality, innovation, and education. Known for her work on social economics, Stantcheva brings an empirical approach to understanding how tax policies influence economic behaviour and social mobility. Her insights are not only shaping economic theory but also influencing policy debates on equitable taxation and welfare. Follow her on Linkedin and X or read her contributions to scholarly articles. Harvard also has her biography and research published. Ulrike Malmendier An economist at UC Berkeley, Ulrike Malmendier combines behavioural economics with corporate finance, investigating how psychological factors influence economic decision-making. Her research, including the concept of the “experience effect,” explores how past economic environments shape individuals' financial choices. Malmendier’s contributions provide a deeper understanding of economic behaviour and have practical implications for both policy design and corporate strategies. Follow her on Linkedin and X or read her contributions to scholarly articles. Victoria Vanasco An emerging scholar in finance and macroeconomics, Victoria Vanasco is an assistant professor at Stanford Graduate School of Business. Her work centres on financial intermediation, systemic risk, and information asymmetry in markets. Vanasco’s research on financial institutions’ vulnerabilities and economic stability offers valuable insights into how information shapes market behaviour, making her an important voice in economic stability and financial regulation. Follow her on Linkedin, X and Facebook. Kyla Scanlon Kyla blends traditional economic insights with modern-day storytelling through her digital platforms. With a unique ability to simplify complex economic concepts, she has gained a significant following for her accessible, creative, and often humorous approach to economic education. She is also a strong advocate for financial literacy, particularly among younger audiences, making her an influential voice in engaging the next generation of economists and data-savvy individuals. Find her on Instagram, TikTok, X and YouTube or read her newly released book ‘’In This Economy? How Money and Markets Really Work’’. Tanya Van Court A visionary entrepreneur and advocate for financial literacy, particularly among children and families. As the founder and CEO of Goalsetter, a financial education platform, she has revolutionized the way young people learn about saving, budgeting, and investing. Tanya’s mission is to close the wealth gap by equipping the next generation with the tools and knowledge needed to make informed financial decisions. Her work combines elements of behavioural economics with technology, empowering families to build healthy financial habits early on. Find her on Instagram, and Linkedin or find out more about her in this Forbes article. The Importance of Diversity in Economics The contributions of these women exemplify the importance of diverse voices in economics. They have introduced broader perspectives and new areas of inquiry that perhaps are less likely to have developed within the confines of the old-school “men’s club” mentality that typified many economics departments in the past. Gender diversity among economists enhances the relevance and applicability of economic research, bringing in varied approaches to understanding issues such as inequality, poverty, and behavioural dynamics. As the field continues to evolve, fostering inclusive spaces within academia and policy institutions remains essential, not only for advancing women economists but also for enriching economic thought for all. Encouraging Future Generations The achievements of these trailblazing women in economics inspire future generations to pursue impactful careers in the field. By highlighting their contributions, we emphasize the critical role women play in advancing research, shaping policy, and fostering a more inclusive and innovative discipline. Their work serves as a powerful reminder of the value of gender diversity in driving progress across global economies and financial systems. Check out our other blog 'Does Economics have a Problem with Women?' for an interesting insight on this topic.
Men have long dominated economics, but female economists have made remarkable contributions in recent decades. The work of female economists, together with that of their male counterparts, has redefined academic and policy landscapes and paved the way for greater inclusivity within the discipline. Women continue to bring diverse perspectives that enrich our understanding of global financial systems, economic growth, labour dynamics, and policy interventions. These women are not only changing the economic landscape but inspiring future generations to follow in their footsteps. Here are some of the voices we should all be listening to.
Planet Money Produced by NPR, Planet Money is a must-listen for anyone wanting to understand complex economic issues. This podcast covers topics like global trade, market changes, personal finance, and economic policies. It presents these subjects through engaging stories. Planet Money simplifies intricate concepts into relatable narratives, making it accessible to listeners of all backgrounds. Whether you're commuting, exercising, or just unwinding, it's an excellent way to stay informed without feeling overwhelmed. Check out a recent edition of Planet Money, following the re-election of Donald Trump as US President), about what markets bet President Trump will do (8 November 2024) : Your browser doesn't support embedded audio. Please follow the link above. 2. Freakonomics Radio Hosted by Stephen Dubner, Freakonomics explores the “hidden side of everything.” It uses economic theory to look at many unusual topics. This podcast looks at the economics of drug dealing and the effects of cheating on society. It encourages listeners to think differently about everyday events. They offer unique perspectives that push the boundaries of traditional economic discussions, making them intellectually stimulating and highly engaging. Check out a recent edition of the Freakonomics Radio Podcast asking whether Screen Time is as poisonous as we think (11 September 2024): <source src="https://stitcher.simplecastaudio.com/2be48404-a43c-4fa8-a32c-760a3216272e/episodes/6642f1c7-8948-4da0-8eb8-46dc5a073647/audio/128/default.mp3/default.mp3_ywr3ahjkcgo_114a0aa095f67f75ca66a9b698e66bc6_38865205.mp3?awCollectionId=2be48404-a43c-4fa8-a32c-760a3216272e&awEpisodeId=6642f1c7-8948-4da0-8eb8-46dc5a073647&nocache&hash_redirect=1&x-total-bytes=38865205&x-ais-classified=unclassified&listeningSessionID=0CD_382_336__c0b7a1ea2e25b39bfc1110e0ef9f7a882a4a5e43" type="audio/mpeg"> Your browser doesn't support embedded audio. Please follow the link above. 3. The Indicator A spinoff of Planet Money, The Indicator offers quick updates on work, business, and the economy. Each episode is short and easy to understand. Great for busy people, each 9-minute episode gives you a quick look at the latest economic trends and data. To stay informed without long episodes, The Indicator is perfect for daily updates. It keeps you in the loop with little time needed. Check out a recent edition of the Indicator Podcast about how Donald Trumps tariffs might work (2nd December 2024): Your browser doesn't support embedded audio. Please follow the link above. 4. The Economics of Everyday Things Journalist Zachary Crockett looks at ‘’quotidian things and finds amazing stories’’. This podcast is a spinoff from Freakonomics. It offers quick and insightful updates on everyday topics. It demonstrates how economics influences everything. Who decides where our coffee comes from every morning? How much is an oak tree worth and why? How did Girl Scout Cookies become a billion-dollar business? If you want to stay informed without long episodes, this podcast is perfect for short, daily episodes. Check out a recent edition of the "Economics of Everyday Things" Podcast about a resurgence in the popularity of sending greeting cards: <source src="https://stitcher.simplecastaudio.com/51058430-d98f-4830-b949-5d9a371523ce/episodes/fb5b1c52-706a-40fd-ae75-93a9d5cb917e/audio/128/default.mp3/default.mp3_ywr3ahjkcgo_0107875b1f12c0afa9298bb0b58aea6a_14916786.mp3?awCollectionId=51058430-d98f-4830-b949-5d9a371523ce&awEpisodeId=fb5b1c52-706a-40fd-ae75-93a9d5cb917e&nocache&hash_redirect=1&x-total-bytes=14916786&x-ais-classified=unclassified&listeningSessionID=0CD_382_336__971d8aafaa830770a2c8fec1516a5de779bec703" type="audio/mpeg"> Your browser doesn't support embedded audio. Please follow the link above. 5. Macro Voices Bloomberg-owned with weekly market commentary by Hedge Fund Manager Erik Townsend, Macro Voices is focused on macroeconomic trends. It includes interviews with leading financial experts and policymakers. They discuss global economic issues and offer expert insights. Their insights help listeners understand the bigger picture. Macro Voices is for those already with knowledge in Economics. Perfect for professionals and enthusiasts seeking expert insights into global economic developments and their implications. Check out a recent edition of Macro Voices (27 November 2024) discussing the markets after Trumps election victory, and energy/natural resource markets Your browser doesn't support embedded audio. Please follow the link above. 6. The Economist Podcasts From the renowned publication, ‘The Economist’ Podcasts cover a wide range of economic and political topics. Featuring interviews with journalists and experts, these podcasts offer high-quality and comprehensive coverage of current events. They post every weekday. Their global network of correspondents helps make sense of stories beneath the headlines. They share surprising trends and tales from around the world. Most of the podcasts require a subscription, but each week a selection of Economist podcasts are available for general access. 7. Odd Lots Joe Weisenthal and Tracy Alloway from Bloomberg host a show called Odd Lots. The show explores unique and interesting aspects of economics, finance, and the markets. The podcast delves into intriguing stories and features expert interviews, making complex topics both engaging and understandable. Odd Lots combines expert insights with fascinating narratives, offering a fresh take on economic and financial subjects. Check out a recent edition of Odd Lots about the demand for Chicken Sandwiches Your browser doesn't support embedded audio. Please follow the link above. 8. Capitalisn't Capitalisn’t offers a critical perspective on capitalism, exploring its impacts and alternatives through interviews and discussions. The podcast examines the strengths and weaknesses of various economic systems to compare with capitalism's effects in today's world. For listeners interested in a more nuanced discussion of economic systems, Capitalisn't present thoughtful critiques and explores potential alternatives to capitalism. Check out a recent edition of Capitalisn't (21 November 2024) about the fertility crisis, with guest Niall Ferguson Your browser doesn't support embedded audio. Please follow the link above. 9. EconTalk Hosted by Russ Roberts from the Hoover Institution, EconTalk features deep talks with economists and thinkers. They discuss many economic issues. The podcast is known for its thoughtful and comprehensive discussions on economic theory and practice. EconTalk is perfect for people who enjoy deep and thoughtful discussions. It explores important economic ideas and how they apply in real life. Check out a recent edition of EconTalk (21 October 2024) about why housing is artificially expensive, and what can be done about it Your browser doesn't support embedded audio. Please follow the link above. Conclusion Podcasts are an invaluable resource for anyone looking to stay informed about economic trends and theories. The podcasts shared here mix expert analysis, engaging stories, and deep discussions. They cater to many interests and skill levels. By listening to these shows, you will understand the changing economy better. This knowledge will help you make smart choices and stay ahead in your field. Image Credit: Pixabay (Free for use under the Pixabay Content License)
In an ever-evolving global economy, staying informed is more crucial than ever. Whether you are an economics student, a finance professional, or just curious, podcasts are a great way to learn. They help you understand economic trends, theories, and real-world applications easily and engagingly. So, we’ve assembled a list of some top economic podcasts you ought to have a listen to. You can find all these podcasts on Amazon, Spotify, and Apple Music. For your convenience, we’ve linked their web pages below. Happy listening!
Distribution effects in a perpetual Bitcoin bull market: Who really pays for the Lamborghini
1. Introduction The debate over Bitcoin’s utility and sustainability dates back to Nakamoto’s 2008 white paper. Many economists see Bitcoin as a speculative bubble that will eventually burst, causing social damage through high energy use and illicit payments (Rogoff 2017, Roubini 2018, Avoca 2021, Taleb 2021). Many Bitcoin supporters, however, have changed their primary interest in Bitcoin as they see it as an investment asset with the potential for everlasting capital gains, encouraging even latecomers to invest and assuming no harm to those staying out. Our paper explores both Bitcoin’s original promise as a payment system and its current role as an investment asset. We argue that Nakamoto's (2008) understanding of retail payments was inaccurate and that this explains why Bitcoin has never been significantly used in legal e-commerce. Likewise, Bitcoin lacks the traits of financial assets: It does not generate any cash flow like real estate, interest like bonds or dividends like stocks, and it cannot be used productively like commodities (Bindseil, Papsdorf and Schaaf 2022). <o:p></o:p> In fact, many supporters now dispense with any reference to economic justifications as to why the Bitcoin price should rise or reach a specific level. They simply take further price increases for granted and promote the idea of Bitcoin as a pure investment asset. The list of those in favour of this financial situation without “reason” ranges from politicians and financial giants to sportsmen and Hollywood stars (Hoffman 2024, Bent 2024, Coindesk 2021, Gerard 2024, Bitfinex 2024, CNN 2024).<o:p></o:p> We therefore conclude that Bitcoin’s appeal is based on self-fulfilling beliefs in its rising value, fuelled by new investments (van Oordt 2024), but not supported by economic fundamentals or legal social utility, which also implies that Bitcoin has no impact on the economy's production potential. This means that the wealth gained by early adopters comes at the expense of latecomers. It’s like filling a big barrel by draining water from many buckets. 2. Technology shocks, the increase of the production potential and wealth effects New technologies are key to economic growth and social welfare. The rapid rise in market capitalization of tech companies (Google, Tesla, Amazon, Apple, Nvidia) is seen as reflecting both the future production potential of the economy and their expected profitability. An aligned increase of equity wealth and production potential allows the wealth effect on consumption to be matched with a greater supply of goods and services without inflation. There are however cases without such a match. Increased competition from technology can reduce equity market cap despite higher production potential, and some firms may see equity values rise sharply from breakthrough technologies long before the economy benefits. Sometimes, expectations are wrong, leading to a tech equity bubble burst. Phenomena like Bitcoin, which don't enhance the production potential at all, may still aim for high market caps. In these cases, the neutral level of nominal interest rates and therefore monetary policy are likely affected. Tightening might become necessary when wealth effects outpace production growth, as with Bitcoin. If the central bank optimally tightens policy, it can prevent wealth-effect driven inflation and macroeconomic instability. In our simulation of Bitcoin’s redistributive effects, we assume the central bank successfully manages this. We also simplify by assuming a steady rise in Bitcoin prices and corresponding policy responses, ignoring short-term shifts between consumption and real investment. 3. The mechanics of redistribution We examine the redistributive effects of Bitcoin in a theoretical, Bitcoin-friendly scenario, in which the price of Bitcoin rises continuously and no “bubble burst” occurs. Since investing in Bitcoin doesn’t boost production, this consumption crowds out other spending or investment, potentially harming non-Bitcoin holders. Early investors, or ”Early Birds”, increase their consumption by selling Bitcoin to “Latecomers” - in our simplified model, society consists only of these two types. Early Birds sell Bitcoin to Latecomers, who fund these purchases by liquidating real assets and reducing their consumption. This transfer raises Early Birds’ consumption and wealth over time. We illustrate the simple model with specific parameter values, assuming for example 10% annual appreciation and 2% of Bitcoin being transferred each year, with one-half of this being financed by Latecomers’ reduced consumption and the other half by the transfer of real asset wealth. Under the assumption of unchanged investments, early adopters increase their real wealth and consumption at the expense of the real wealth and consumption of goods and services of those who invest in it only at a later stage. Initially, Early Birds dominated both Bitcoin and real assets, but over time, Latecomers’ share of Bitcoin increased, although Early Birds still hold more real assets. The simulations show that while Bitcoin ownership eventually converges, Early Birds maintain higher consumption due to their asset accumulation. Overall, even if Bitcoin prices were to continue to rise, wealth gains for early adopters come entirely at the expense of latecomers, leading to significant redistribution. Early holders’ wealth and consumption grow, while others become poorer. When Bitcoin converges to an equal distribution across the population, further price increases become neutral in every respect. Unsurprisingly, in the absence of positive effects on the production potential, proportionally distributed Bitcoin wealth increases cannot lead to an expansion of consumption. On the way to this state, the Lamborghini, Rolex, villa, and additional equity portfolio bought by early Bitcoin investors are financed by diminishing consumption and real wealth losses of those who initially do not hold Bitcoin, but only jump later the bandwagon. This means that Bitcoin’s redistribution effects go beyond the implications of good or bad timing of purchases and sales by investors amid a volatile price, or the risk of financial losses in case the Bitcoin bubble would eventually burst as predicted by many (e.g. Krugman 2013, Rogoff 2017, Roubini 2018). This redistribution bears the risk of destabilizing society. Latecomers, even if unable to pinpoint the cause [1], will feel frustration as their purchasing power erodes. It is important that current non-holders recognize that Bitcoin’s rise is driven by wealth redistribution at their expense, posing a threat to societal cohesion. 4. Bitcoin and the US election In the US, the crypto industry is celebrating itself as the real winner of the presidential election, as the new administration promises a more crypto-friendly policy. According to Strobel (2024), FairShake, the industry's largest super political action committee (PAC), won 48 out of 48 races in which it supported a candidate (with Fairshake supporting crypto-friendly candidates regardless their political camps). Interestingly, many of the ads didn't even mention crypto, technology or tech regulation. Rather, they were aimed at discrediting supposedly crypto-critical candidates (White 2024). No wonder markets are euphorically bullish in anticipation of rosy times: Since the US presidential election on 5 November, the Bitcoin price has risen by over 30% from USD 68,000 to above USD 90,000. What looks like good news for investors at first glance is a bleak outlook for social fairness and ultimately cohesion. With a market capitalization of Bitcoin having grown to above USD 1.8 trillion (as of 18 November 2024), the economic interests to continue the bull run and the financial fire power of the industry to spread the narrative of Bitcoin as an ideal investment asset are higher than ever before. Authors’ note: The views expressed in this column are the ones of the authors and not necessarily the ones of the ECB. We would like to thank Klaus Adam, Charles-Enguerrand Coste, Troy Cross, Kelvin Low, Omid Malekan, George Pantelopoulos, Dirk Schumacher, Bob Seeman, Oreste Tristani, Mika Tujula, Anton van der Kraaij,for useful comments. All remaining errors are ours. This blog post is an abridged summary of a full article, available here. About the Authors Ulrich Bindseil is Director General of Market Infrastructure and Payments (DG-MIP) at the European Central Bank. Mr Bindseil started working in the field of central banking in 1994 in the Economics Department of the Deutsche Bundesbank. He worked as an economist at the European Monetary Institute as of 1997 and was later on responsible for the Directorate General Market Operations at the ECB. Mr Bindseil received a PhD in economics at the University of Saarbrücken. Jürgen Schaaf is advisor to the Senior Management of the Market Infrastructure and payments business area of the ECB. In previous occupations he was Counsellor to the Executive Board of the ECB, Personal Adviser to the Governor of Banque centrale du Luxembourg (BCL), worked as ECB watcher at Börsen-Zeitung and as a Senior Economist at Deutsche Bank. He studied Economics in Marburg and Canterbury (Kent, UK), and received his PhD in Economics from the University of Marburg. References Avoca (2021), “Bitcoin: a trojan horse”, 14 October 2024.<o:p></o:p> Bent, M (2024), “Pensions are doomed without Bitcoin”, Marty’s Bent, 19 March 2024.<o:p></o:p> Bindseil, U, P Papsdorf and J Schaaf (2022), “Bitcoin – the encrypted threat”, SUERF policy note, issue 262, 7 January 2024.<o:p></o:p> Bitfinex (2024), “Where do US Presidential Candidates Stand on Crypto Policy?“.<o:p></o:p> Chernoff, A and J Jagtiani (2024), “Beneath the Crypto Currents - The Hidden Effect of Crypto “Whales””, Federal Reserve Bank of Philadelphia, Working Paper 24-14, August 2024.<o:p></o:p> CNN (2024), “RFK Jr. suspends presidential campaign and endorses Trump”, 23 August 2024.<o:p></o:p> Coindesk (2021), “Tom Brady Says He’s a ‘Big Believer’”, Crypto, 28 May 2024.<o:p></o:p> Gerard, D (2024), “Trump’s Crypto Turnaround Heralds an Economic Nightmare - The former president is pitching a new grift”, Foreign Policy, 30 July 2024.<o:p></o:p> Hoffman, N (2024), “BlackRock CEO Larry Fink says Bitcoin ‘Is An Asset Class That Protects You’”, Bitcoin Magazine, 12 January 2024.<o:p></o:p> Krugman, P (2013), “Bitcoin Is Evil.”, The New York Times, 28 December 2024.<o:p></o:p> Nakamoto, Satoshi (2008), “Bitcoin: A peer-to-peer electronic cash system”.<o:p></o:p> Rogoff, K (2017), “Bitcoin’s Price Bubble Will Burst under Government Pressure””, The Guardian, 9 October 2024.<o:p></o:p> Roubini, N (2018), “Crypto is the Mother of All Scams and (Now Busted) Bubbles”; Testimony for the Hearing of the US Senate Committee on Banking, Housing and Community Affairs On “Exploring the Cryptocurrency and Blockchain Ecosystem”; October 2024.<o:p></o:p> Strobel, Aubrey, “The many ways crypto won in this election”, CoinDesk, 15 November 2024. , <o:p></o:p> Taleb, N (2021), “Bitcoin, currencies, and fragility”, 22 July 2024.<o:p></o:p> van Oordt, M R C (2024), “On Bubbles in Cryptocurrency Prices”, 1 August 2024. <o:p></o:p> White, M (2024), “Cryptocurrency companies have raised over $135 million to influence US elections this cycle, and they’re just getting started, Citation Needed, Newsletter, 30 May 2024. <o:p></o:p>[1] Indeed, recent research confirms that cryptocurrency markets are often characterized by market manipulation or, at the very least, by a sharp distinction between large and sophisticated investors and small retail investors (Chernoff and Jagtiani 2024). <o:p></o:p>
We examine the redistributive effects of Bitcoin in a theoretical scenario where its price continuously appreciates. Early adopters benefit from rising consumption and asset accumulation at the expense of later investors, who fund Bitcoin purchases by liquidating real assets and reducing their consumption. The analysis reveals that even in the absence of a crash, Bitcoin causes wealth redistribution that enriches early investors while reducing the real wealth and purchasing power of non-holders and latecomers. This dynamic, if unaddressed, risks eroding societal cohesion. Amid a record high market capitalization of USD 1.8 trillion following the 2024 election in the USA, this risk is higher than ever.
2024 Nobel Prize in Economics- The Winners
The Research That Was Awarded the Prize The 2024 Nobel Prize in Economics recognised the transformative work of economists Daron Acemoglu, Simon Johnson, and James Robinson on the role of institutions in economic development. Their work explores how political and economic institutions influence a country’s success or poverty. Through their research, they argue that the legacy of colonial institutions has had long-lasting effects, shaping economic disparities worldwide. Nations where settlers established stable political institutions tend to have more successful economies, whereas countries where colonial powers primarily engaged in resource extraction often face economic struggles to this day. Their research has introduced a more nuanced perspective on economic development, highlighting the necessity for political and institutional reforms to address global inequalities. Their findings emphasize how inclusive institutions - those that allow broad access to resources and economic opportunities - are foundational to building stable and thriving economies. Detailing the Formation of Institutions and the Effect on Their Prosperity One of the core concepts of the combined work of this year’s prize winners is that of Extractive institutions versus Inclusive institutions. Extractive Institutions tend to centralize power and wealth in the hands of a few. They limit opportunities for the wider population and lead to slower economic growth and higher inequality in the longer term. Inclusive Institutions on the other hand allow a broad participation in the economy, protect individual rights and enable people to benefit more directly from their work. This leads to higher investor confidence and innovation and is associated with longer-term economic growth and prosperity. This builds on previous work by scholars working in the field of Institutional Economics. The 2024 winners expanded on this to explore how colonial history impacts today’s economies. A key aspect of the research was the identification of a link between the attractiveness of the environment for colonial settlers, and by extension the health of colonial settlers, and the types of institutions that developed. Empirically, Acemoglu, Robinson and Johnson identify areas that experienced lower “settler mortality”, for example North America, as more hospitable regions, whereas areas with higher settler mortality, typically due to environmental and health factors like higher disease prevalence (e.g. Malaria), were identified as less hospitable for colonial settlers, for example South America, parts of Africa and parts of Asia. They identified that in those places with a more hospitable environment, defined by lower settler mortality rates, institutions tended to develop as more inclusive and stable, promoting long-term prosperity for the settlers. In contrast, in those areas with higher settler mortality rates, assumed to be, broadly speaking, less attractive for (mostly European) colonizers in the longer-term, the colonizing nations tended to establish more extractive, resource (including labor) focused institutions, allowing for a faster short-term exploitation of local resources, but at the expense of the short-term and long-term inclusion and well-being of the local population. A final element of the research agenda is the legacy of these institutions, the forms in which they have persisted today, and how they have shaped, and continue to shape, economic patterns even generations after their establishment. Debate and Criticism As befits groundbreaking and fundamental economic research, the work is not without its critics. One point of controversy relates to methodology and data issues. Specifically, some experts argue that the prize winners’ use of “settler mortality” data may not fully capture the complexities of different historical situations. Further, emphasizing the state of institutions as a legacy of colonial times to explain the current challenges in certain countries and regions, while undoubtedly providing a useful framework, may risk glossing over other factors unique to a country or region. For example the impact of the Atlantic slave trade, the colonial exploitation of natural resources, and the economic and cultural trauma resulting from these that, many would argue, lasts to this day, surely played a role too. It should be noted that the prize winners do not argue that institutional legacy is the only explanation for levels of poverty today. As such, the “criticism” in this sense would perhaps more accurately be that the prominence given to the role of institutions by the winners, and more broadly by New Institutional Economics (NIE) as a subfield of economics, can divert from other (typically more qualitative social and political) factors. This prominence is of course increased by the Nobel Prize award, but is perhaps better viewed as a correction of too much emphasis on broader social, economic and political explanations, and a long-standing underemphasis of the role of institutions. In summary, as long as researchers and policy makers consider the institutional approach in context, without neglecting other factors, then it can of course contribute extensively to a more complete picture and, one hopes, better research and policy in future. Another criticism is that the approach is not entirely new. New Institutional Economics as a subfield developed in the 1960s and 1970s (the term is attributed to Oliver Williamson, himself a Nobel Prize winner from 2009). Its application to help explain the prosperity or poverty of national economies was arguably pioneered by economists like Douglass North, who died in 2015 and had already been awarded a Nobel Prize for his work in 1993. While he focused on the importance of institutions in the development of market economies, rather than making a correlation between institutions and poverty per-se, his work no doubt contributed enormously to the recognition of the importance of New Institutional Economics as a field, and of the role of institutions in national economic success. But again, this is not a criticism as such of the 2024 prize winners and their research. Between them, the new insight they have brought has strengthened the field and our understanding of the importance of historical institutional development in modern-day prosperity. Indeed, supporters highlight how the work of Acemoglu, Johnson and Robinson provides clear ideas on how countries can reform institutions for economic development, especially relevant for today’s emerging economies. The Winners' Biographies Daron Acemoglu specializes in economic growth, political economy, and institutions, he was born in 1967 in Istanbul, Turkey. He received his BA in economics from the University of York, UK, in 1989, thereafter receiving an MSc in econometrics and mathematical economics at the London School of Economics in 1990, and a PhD in economics in 1992. Later Acemoglu moved to the US and joined MIT in 1993 as an assistant professor where he worked his way up to full professor by 2000. His work focuses on how political decisions shape economic outcomes, analyzing issues like inequality, economic power, and the impact of technology on labor markets. He is highly regarded for his publications, including ‘Why Nations Fail’ co-authored with James Robinson, and ‘Power and Progress’, a recent book co-written with Simon Johnson. Acemoglu's research has gained attention from both academic and policy circles, establishing him as a significant figure in economic thought and reform advocacy. Simon Johnson, also a professor at MIT, is renowned for his expertise in macroeconomics and development economics. He was born in 1963 in Sheffield, UK, and received a first from Oxford University in 1984, and a Master's in economics from the University of Manchester before doing his PhD at MIT. Johnson’s career took off with a Chief Economist position at the International Monetary Fund (IMF). His research often explores the intersection of economic policies, institutional development, and global markets, frequently addressing how institutions can drive or hinder economic progress. In addition to his academic contributions, Johnson co-authored ‘Power and Progress’ with Acemoglu, a work that examines the effects of technology on economic growth and democracy. James Robinson is a British-American political scientist and economist who currently teaches at the University of Chicago. He received a BSc in Economics from LSE in 1982 and a Doctor of Philosophy in economic theory and labor relations from Yale University in 1993. His research primarily focuses on political institutions and their impact on economic and social outcomes, particularly in developing regions. Robinson has an extensive research background in Latin America and Africa, which has shaped his understanding of institutional dynamics in diverse socio-political contexts. His collaborative work with Acemoglu, including ‘Why Nations Fail’ , explores the historical and institutional roots of economic disparity, emphasizing how inclusive institutions are vital for fostering stable and prosperous societies. Together, Acemoglu, Johnson, and Robinson have built a significant body of work that not only advances economic theory but also provides practical frameworks for understanding—and potentially remedying—the institutional causes of global economic inequality. Their combined efforts continue to influence both the academic field and real-world policies. Works Cited Acemoglu, Daron, and Simon Johnson. Power and Progress: Our Thousand-year Struggle Over Technology and Prosperity. Basic Books, 2023. Acemoglu, Daron, and James A. Robinson. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Crown, 2012. North, Douglass. “Theory of Institutions: Lessons for Law and Development.” Hague Journal on the Rule of Law, vol. 8, no. -, 2016, pp. 373-419. Springer Nature Link, https://link.springer.com/article/10.1007/s40803-016-0028-8. Ricciuti, Roberto. “All Nobel Prizes 2024 - NobelPrize.org.” Nobel Prize, 2024, https://www.nobelprize.org/all-nobel-prizes-2024/. Accessed 7 November 2024. Header Image Credit: ScandinavianStories via Pixabay (Free for use under the Pixabay Content License)
The 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, more commonly known as the Nobel Prize in Economics, has been awarded to three influential economists this year - Daron Acemoglu, Simon Johnson, and James Robinson. The prize – worth 11 million Swedish crowns, or about $1 million or roughly €950,000 – was awarded by the Royal Swedish Academy of Sciences for their ‘studies of how institutions are formed and affect prosperity’ (Ricciuti), providing critical insights into why some countries achieve higher per capita incomes and others struggle with persistent economic challenges. Their work also emphasizes the importance of establishing robust institutions to support sustainable economic growth and social stability.
The Top Economics Blogs to Follow in 2025
At INOMICS, we believe economics blogs offer a treasure trove of interesting, informative, and often unique perspectives. That’s why we’ve curated this list of our favorite blogs and podcasts to follow in 2025. Whether you're looking for real-time economic insights or a deep dive into economic theory, this list covers it all. Check out our top picks below and explore them for yourself! Staying informed and gaining new perspectives is important. It can give valuable insights into current economic trends, policy talks, and new research. Economic bloggers come in many types. 1. Marginal Revolution Written by George Mason University professors Tyler Cowen and Alex Tabarrok, Marginal Revolution is a top source for interesting ideas about economics. This covers policy discussions and cultural insights, making it essential for those interested in current economic topics. Their ability to connect economic theory to real-world applications makes this blog a crucial resource. 2. The Grumpy Economist John H. Cochrane is a Senior Fellow at the Hoover Institution. He provides clear and smart insights on economics, finance, and public policy. This blog is known for detailed data analysis and valuable discussions about financial and economic policies. He challenges conventional wisdom and encourages critical thinking. His clear, accessible writing style makes complex economic concepts coherent to a broad audience. 3. Calculated Risk Bill McBride’s "Calculated Risk" is a trusted source for understanding real estate, housing trends, and the economy. His detailed and data-focused approach helps readers, professionals, and academics grasp the complexities of the economy. This makes it a valuable resource for anyone interested in real estate economics. 4. Econ Log EconLog, run by the Library of Economics and Liberty, includes various contributors sharing ideas on economic theory, public policy, and classical liberal views. This blog offers a place for lively debate and different opinions. 5. VoxEU The Columns section on VoxEU is part of the Centre for Economic Policy Research which offers concise, research-based commentary on pressing economic issues. It features articles written by economists and researchers, covering a wide range of topics such as macroeconomics, finance, trade, labor markets, and policy debates. The columns distill academic research into accessible insights, helping readers, including policymakers, academics, and the general public, stay informed about the latest economic trends and evidence-based policy discussions. 6. Noahpinion Noah Smith’s "Noahpinion" offers engaging commentary on economic trends, technology, and policy. Smith has a background in finance and economics. He offers clear and helpful insights into current events and economic theory. He often looks at how technology is changing the economy. He also explores how these areas affect one another. His approachable style and ability to explain technical concepts make his blog a favourite among both novices and experts. 7. Bruegel Commentaries The Bruegel Commentaries, managed by the Bruegel think tank, is a great resource. It offers detailed insights into European and global economic policy. It includes input from various experts. They give clear comments on topics like EU economic rules, the digital economy, and global trade. The blog focuses on policy issues and has top contributors. This makes it an important resource for both policymakers and scholars. 8. The Undercover Economist Tim Harford’s "The Undercover Economist" continues to demystify economics for the everyday reader. Harford explains complex economic ideas with relatable stories. People enjoy seeing how these concepts apply to everyday life. 9. The Conversable Economist Timothy Taylor, author of "The Conversable Economist," offers comprehensive and accessible discussions on economic trends and policy. Taylor can explain difficult topics in simple ways. This makes his blog helpful for both experienced economists and new readers. 10. Econbrowser Econbrowser, managed by James Hamilton and Menzie Chinn, provides a detailed examination of macroeconomic and international economic issues. They focus on data and current economic trends. This makes it a useful resource. It helps anyone who wants to understand the complexities of the global economy. 11. Digitopoly Digitopoly studies how the digital world affects economics, covering innovation, competition, and technology's influence on markets. Joshua Gans and his co-authors provide expert insights into how the digital economy is reshaping traditional economic paradigms. 12. The Global Economy and Development Blog The "Research and Commentary" section covers global development issues and provides in-depth policy evaluations. Experts share views and research-driven reports on economic growth, poverty reduction, and global policy. This makes it a helpful resource for understanding global economic issues. 13. Naked Capitalism Naked Capitalism often provides critical analysis and commentary focusing on the flaws in mainstream economic thinking and corporate influence. It offers original articles and curated news links that discuss financial markets, banking, economic policy, inequality, and corporate governance. If you’re looking for alternative viewpoints on economic and political matters this blog is for you. 14. Enlightenment Economics Diane Coyle an economist, provides thoughtful commentary and analysis on economics, focusing on the intersection of economics, technology, and public policy. It includes reviews of economics books, reflections on economic theory, and insights on current economic issues, with an emphasis on how technological change is shaping the economy. 15. Focus Economics News The News section of FocusEconomics provides readers with up-to-date economic news and analysis, covering global economic trends, country-specific data, and key indicators like GDP, inflation, trade, and financial markets. It delivers concise reports on the latest economic developments from various regions, offering insights for businesses, investors, and policymakers. The section is valuable for tracking macroeconomic trends and forecasts across countries and industries. 16. INOMICS Blog Finally a shameless plug for our own blog, with a focus on economics careers and economics education, as well as insights into interesting areas of economics research that can guide and inspire economics students and young economics researchers. But then you are already here, so you already knew that! Conclusion We selected these top economics blogs for their expertise, quality content, and relevance to today's economic topics. Following them will keep you informed about the latest trends, debates, and research in the field of economics. These blogs provide useful information for students, teachers, and workers. They can help you understand the economy better. Each blog has its niche or specialty that it focuses on; use this to your advantage, and find the right blog for you! Keep being curious and explore these resources to learn more and stay updated in the changing world of economics.
Staying informed on economic trends, policies, and research is key to gaining valuable insights into the ever-changing global economy. Whether you're an economics student, educator, or enthusiast, exploring different viewpoints is essential. Economics bloggers and podcasters come in all forms—some are academics like Gregory Mankiw and Paul Krugman, while others are insightful thought leaders like John Cochrane and Tyler Cowen. Their expertise spans from real estate to public policy and macroeconomic trends.
The Economics of Pokémon: Development, Pricing, and Wealth
The world that Pokémon presents has won over the hearts of kids and adults alike for decades. Trading cards, video games, movies and TV shows, collectible plushies, action figures, and much, much more have been commissioned from the franchise, earning it an impressive (estimated) $98.8 billion since its inception in 19961. The way this fictional world functions has some interesting implications for the economics of the society living there. Let’s assume that the internal logic of the world – people and Pokémon living in harmony in a seemingly modern world, where Pokémon can battle but do no lasting harm – is reasonable, and examine the implications for the economy. Domestication and industrialization in the Pokémon world The clear place to begin is by examining the economic implications of the Pokémon themselves. The Pokémon world features an absolute abundance of these essentially magical creatures, and they’re both unquestionably friendly to humans and easy to domesticate. The existence of Pokémon should lead to a massive boost in economic productivity compared to a world without these creatures, leading to rapid industrialization with a fraction of the human population. In our world, domesticating creatures like oxen, horses, cows, and camels led to massive changes in our quality of life, allowing humans to cultivate consistent sources of wool, meat, and muscle power. Both livestock and work animals were major factors helping early humans build their societies and grow – in fact, according to Jared Diamond’s Guns, Germs and Steel and other research, having animals nearby that were domesticable and useful was a major factor in determining how rich societies would be centuries later. Now, just picture an ox that can control the weather in addition to pulling your plow, and you’ll have a good idea of why early Pokémon-world societies would have skyrocketed past our own in development. Many Pokémon have powers relating to one of the nineteen elements identified by the franchise. One of the most obviously beneficial to an economy is the Electric type. In numerous episodes and video games, it’s been shown that a small number of Electric Pokémon can produce a massive amount of power. In Pokémon Gold and Silver, for instance, a single Pokémon powers the lighthouse for the port city Olivine, and it was (evidently) so reliable that when it gets sick, the lighthouse shuts down. The city didn’t have any contingency plan for this single-Pokémon power generator, presumably because it hadn’t ever needed to worry about it. Energy is crucial to the function of the economy, and developing electrical systems that could efficiently power our society took hundreds of years of innovation. To this day, producing power cheaply and efficiently is a major concern for nations around the world, and the prices of energy are a major concern for consumers. If easily-domesticated, electricity-generating Pokémon were readily available, power would (very likely) be incredibly cheap across the board, and Pokémon society probably would have advanced to utilizing electrical energy with incredible speed compared to our own. Perhaps the Industrial Revolution would have skipped the usage of coal and other fossil fuels entirely, producing electricity by sustainably harnessing the friendly lightning monsters (though it’s worth noting that there is a rock-and-fire Pokémon made of coal that could have spurred the Industrial Revolution as we know it on its own, so they could have gone that route too). This may even explain why the human population in Pokémon appears to be pretty low compared to our world. In Pokémon, there are relatively few major cities spread wide across various continents, each populated with thousands of people (to give a generous estimate). But if it was far easier for people to industrialize – especially as Pokémon can help provide labor to actually build things – it’s feasible that a much smaller human population was able to modernize extremely fast, before exponential population growth was able to produce as many people as we have in our world today. In the Pokémon world, Thomas Malthus may even have been an optimist. Infrastructure and the environment Electricity isn’t the only benefit these creatures provide to their human counterparts, though. Other Pokémon have been shown to be consistently useful and reliable throughout the franchise’s history, providing services such as labor (helping with construction projects and moving services), helping with gardening, ferrying across water, digging, delivering mail, assisting with cooking, and much more. For example, flying Pokémon have been used to taxi people around entire nations free of charge, ensuring rapid travel (for example, the Corviknight taxis shown in Pokémon Sword and Shield). Although a bird probably can’t fly as fast as an airplane, having an accessible and free taxi service would be immensely useful as a supplement for riding the subway or driving. In fact, very few cars and roads are shown in the Pokémon world, probably because of the existence of these free taxis, and the fact that individuals can simply train their own flying Pokémon to take them around. But that’s not to say that the Pokémon world is bereft of infrastructure. Paved and unpaved roads, highways, and especially ferry, train and subway systems abound. There’s even a space station and a naval base housing research submarines in Pokémon Ruby and Sapphire. It just so happens that personal automobiles are relatively rare throughout the series, most likely because of the ease of transit that flying Pokémon willingly provide. This lack of cars and fossil fuels contributes to another factor that Pokémon seem to have helped with – environmental friendliness. The usage of Pokémon in many capacities such as power generation and travel has allowed the societies in the Pokémon world to become extraordinarily sustainable by our standards. Nature is abundant in almost every single Pokémon setting that’s been shown, and pollution is nearly unheard of. This is consistent in a world where neighborhood animals can be domesticated and harnessed to perform such a wide variety of useful economic functions. There are even poison-type Pokémon that eat trash as part of their diet, making cleanup even easier! As we’ve discussed on our blog before, nature is incredibly valuable to our societies, but is also very fragile. If Pokémon had existed in our world and helped us develop with such high levels of sustainability throughout history, it’s likely that global warming – one of the major challenges currently facing our generation – would be very mild or even nonexistent. While our world is still struggling to transition to green energy, the world of Pokémon was able to leverage domestic creatures to produce green energy from the start. And, the abundance of energy likely means that energy prices are very cheap. But certain goods in the Pokémon world are anything but… Interpreting Pokémon’s Odd Prices For Consumer Goods Clearly, the Pokémon world gained a myriad of benefits from the titular “pocket monsters” themselves that allowed society to flourish. One would expect the Pokémon economy to be doing quite well, then. But the prices seen throughout the world (especially via the games) often vary greatly compared to our own, and seem to make no sense on first glance. For example, in the original Pokémon games, a single bike costs one million “dollars”! The bike is completely unpurchasable, as the character can only hold up to $999,999 (the English translations call the currency “Pokémon dollars”, but the Japanese originals use yen – here we simply refer to dollars, and use the $ symbol). Other prices seem nonsensical too. Vitamins such as iron, zinc, and calcium are widely available for purchase, but often cost around $10,000. Meanwhile, many other valuable items are priced far cheaper than mundane objects like bikes. For instance, Pokéballs – the items used to catch and house friendly Pokémon – typically cost only $100, and valuables like a “big nugget” of gold typically sell for $10,000, while a high-quality pearl goes for $3,750. But, rather than throw this evidence away as the unrealistic manifestations of a kid’s fantasy world, if we assume that Pokémon prices are rational, we can learn why the Pokémon economy may have reached such a wildly different equilibrium than ours. There are some explanations for why these prices seem so odd, but could be legitimate. First, as cars are rare and Pokémon themselves often available for transport, bicycles may actually be a premium transportation option. Why buy a bike when you can just catch a small bird Pokémon for $100 that can fly you across the city, protect you from wild animals, and also be your favorite pet? Vitamins may be expensive for a different, very important reason: feeding your Pokémon vitamins makes them stronger. In a world where Pokémon are so ubiquitous and useful, items that can make them stronger are likely in high demand, especially because Pokémon themselves are so easy to domesticate. This would massively increase the demand for supplements like vitamins compared to our own world. And, as Econ 101 has taught us, high demand for a limited supply of goods will increase the price. Meanwhile, the ‘low’ prices for what we consider valuables like gold and pearls (only thousands of dollars compared to vitamins’ tens of thousands) can be explained by Pokémon, too. The cat-like Meowth wears a gold coin on its forehead, and has been depicted throwing a seemingly limitless supply of gold coins around. It even learns a battle move called Pay Day, which showers the participants in actual money that can be picked up by the Pokémon trainers, and spent (though this may be a herald of hyperinflation to come…). Similarly, Gholdengo is a Pokémon made of gold that also slings coins around with reckless abandon. What about pearls? Clamperl is a very common bivalve Pokémon that makes one pearl during its lifetime. But in our world, natural pearls are rare – occurring in only one in every 10,000 mollusks naturally. By comparison, the Pokémon world would have a massive supply of natural pearls, since there is a 100% chance for any random clam to supply a pearl at least once (compared to the paltry 0.01% chance in our world). Naturally, this would reduce the price of a high-quality natural pearl compared to our world, and relative to other goods in the Pokémon economy. More money, less problems These conclusions also imply that being rich is a huge advantage in the world of Pokémon; rich people can afford to travel to catch rare Pokémon across the world, perhaps Pokémon like Gholdengo or Meowth who can simply create gold for them whenever they want. And, rich trainers would be able to afford a pharmacy’s worth of supplements to make their Pokémon grow more powerful faster than an average Pokémon trainer would be able to. To that end, it’s worth noting that most of the professional Pokémon trainers shown throughout the series, like gym leaders and Elite Four members, often have no other job than to battle Pokémon and win tournaments. Meanwhile, most “regular” trainers that players in the Pokémon games encounter do have normal jobs – as janitors, chefs, daycare workers, actors, scientists, radio show hosts, and many more. This supports the idea that being rich allows someone the resources and time to “be the very best, like no one ever was”. Despite this advantage, wealth inequality in Pokémon doesn’t appear to be a big issue. This, too, is sensible. In real life, sustaining oneself requires a large expenditure of effort to farm and maintain a home (or, to hunt and gather). In modern society, participating in the labor force by working is necessary to sustain oneself – few people have the expertise needed to leave society, move to the wilderness, and survive on their own (if there was even land available for them to legally do so). But in the Pokémon world, the readily available aid of friendly creatures with (essentially) magical powers makes it much easier for individuals to support themselves. People could easily make a living with their Pokémon helping to support them, and protect them from wild animals. Further, the availability of widespread and free veterinary healthcare (in the form of Pokémon Centers) makes this even easier. Even tiny towns in Pokémon often have free Pokémon Centers. Therefore, wealth itself seems to be less important for Pokémon people than it is for us. In fact, everyone in the Pokémon world – average people, the greatest trainers of all, even schoolchildren – consistently fork over real money to the winner of a Pokémon battle. This is an unspoken norm, and seemingly never a problem for anyone – people simply pay what they can to the winner. This cultural norm can be likened to a form of friendly, low-stakes, buy-in poker. In our world, friends sometimes come together, put a small sum of money into a “pot”, and let the winner take all for a fun game night. But this practice or norm rarely extends beyond a group of trusted friends. The unspoken agreement to have a friendly wager in the Pokémon world for every battle, even between complete strangers, suggests both widespread trust and that wealth itself is simply less valuable for these people than it is for us. Few people seem bothered about losing some cash for the sake of a Pokémon battle, which seems very much like a sport for them. Pokémon Sword and Shield especially depicts Pokémon battles as a nationwide sport, and combatants are always depicted as friendly challengers – certainly more friendly than boxers in a ring. In the Pokémon world, people already have freely accessible transportation, booming economies, easily domesticable magical creatures, and more – so why worry about a bit of loose change? In summary Human society in the Pokémon world benefited greatly from its titular creatures. Their domestication spurred far-reaching and rapid economic growth, developing society to a modern-like level of technology, seemingly without a negative impact on the environment or even a difficult transition period to using green energy. The Pokémon’s abundance and friendliness further led to a prosperous society where people seem to have few needs, and where the creatures themselves – understandably – are a central feature of the culture. While we don’t have Pokémon in our world, we do have domestic animals, many of which are dearly beloved – and many of which carried our early societies on their backs. Remember, we owe a great debt to nature and to our livestock, even if they might not be able to summon rain or fly you to the supermarket. References 1: Highest-grossing media franchises on Wikipedia Header image credit: toxmendoza via Pixabay (Free for use under the Pixabay Content License)
Almost everyone has heard of Pokémon: it’s the highest-grossing media franchise in the world1. The core concept is also familiar to most people – in the Pokémon world, quasi-magical creatures live alongside people in idyllic, family-friendly harmony.