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Germany’s Drag

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The remarkably large effect of bad macroeconomic ideas.
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cjheinz
2 days ago
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#helicoptermoney
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Beautiful Street Mural Honors SFF’s Heroines, Reminds Us “We Can Be Heroes”

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Heroine mural, We Can Be Heroes

In the words of the (hopefully) immortal David Bowie, “We can be heroes.” Some enterprising artist has taken up the cry to remind the women of the world that they have that power, too, with a gorgeous mural found by Twitter user KSully54.

The wall is a beautiful array of misfits, from the current set of Ghostbusters to Jessica Jones to Tank Girl to a mash-up of at least two Clone Club members to a couple of DC’s greatest superheroes.

Now… is it just me, or do Supergirl and Wonder Woman look like Piper and Alex from Orange is the New Black? If that’s the case, I would like to petition for more OITNB characters as current superheroes: Poussey as Captain Marvel? Taystee as Storm? Suzanne as Squirrel Girl? Red as… well, Red is pretty much already a superhero. Or maybe a supervillain.

The emergence of this work could not be more meaningful in light of the recent and ongoing attacks against Leslie Jones, which have increased in intensity since the release of Ghostbusters. We can only hope that gorgeous tributes like this will continue to crop up, helping to counterbalance some of the ugliness. Jones deserves more of this praise, as do all the characters and actors showcased on this wall.

No word as to who the artist is yet—let us know if come across a name or a handle!

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cjheinz
2 days ago
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Nice!
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Why Behavioral Economics Is Really Marketing Science

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Not only do economists ignore the role of banks in their models, they also omit marketing and the malleability of consumer preferences.
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cjheinz
2 days ago
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Why Behavioral Economics Is Really Marketing Science

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By Philip Kotler

Economists rarely mention marketing. Occasionally an article appears in the American Economic Review on advertising or promotion or warranties. But to most economists, marketing is a sideshow in the economy. It is filled with too many particulars and virtually no theory. A cynical economist would even hold that marketing activity hurts the efficiency of the economy. Promotions distort the true price and lead consumers to buy on brand name, not real value.

Ironically, the discipline of marketing was started by economists! Marketing textbooks first made their appearance in the 1900-1910 period. Their authors were economists who were institutionally oriented rather than theory-oriented. These economists wanted to examine the role that different distribution organizations – wholesalers, jobbers, agents, retailers – played in the economy. They also wanted to describe and analyze the different promotion tools – advertising, sales discounts, guarantees and warrantees—and determine whether they actually shifted demand.

Somehow classically-trained economists didn’t view marketing as an intrinsic economic activity. They couldn’t fit it into either macroeconomic theory or microeconomic theory. They didn’t see a role for mathematics in the discipline. Marketing was seen as much more of a psychological and sociological discipline than an economic discipline.

An irony today. If you picked up a recent copy of the Journal of the Academy of Marketing Science (JAMS), you can easily mistake it for the American Economic Review in terms of the articles’ mathematical sophistication – they are almost unreadable to the lay reader. Although traditional economists are not doing much mathematical analysis of marketing tools and strategies, marketing scientists are producing quite interesting and complex analyses of marketplace economics.

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The greatest irony is that traditional economics is now facing a new competitor, namely behavioral economics. Behavioral economics attacks the crucial assumption that consumers engage in maximizing behavior. Aiming to maximize utility or profits is the key to building economic decision models. Otherwise, economists would have to work with another assumption, that consumers are basically “satisficing,” stopping short of spending time to maximize and being happy enough to achieve enough of what they want. But the mathematics aren’t there for this behavior and hence the claim of economics to be a science is also weakened.

Behavioral economists, instead of assuming that consumers and producers are maximizers, have to study how different marketing actors actually behave. This involves collecting empirical data. This will lead to recognizing many instances of non-rational or even irrational behavior. How do we explain people paying so much more for coffee at Starbucks or ice cream from Haagen Dazs? How do we explain some low income people voting for Republican candidates when the empirical evidence shows that poor people have done better during Democratic administrations than Republican administrations?

If economists now have to study and explain how consumers actually make their choices, they need to turn to marketing. For a hundred years, marketers have collected data on what, how and why consumers buy what they buy. The data is there. The only conclusion we can draw is that behavioral economics is, ironically, another word for marketing. Marketers have been the behavioral economists!

What about producers’ decision making? Traditional economics says that producers aim to maximize their profits? But this ignores the role of risks. Every producer can take on higher levels of risk in the pursuit of higher profits. But producers, in practice, have risk aversion. They have different appetites for risk. This undercuts the notion that they only concentrate on profit maximization. When risk is include, we might say that producers aim for a balanced ratio of profit to risk.

When producers face a big risky decision such as buying another company, many market estimates must be made. What will happen to market size and market share? Many different scenarios can take place. Estimating their respective success probabilities is difficult. Many acquisitions in practice are motivated by CEO’s egos that leave them less sensitive to actual risk. Again, the task of behavioral economists is to collect data on how these difficult acquisition decisions are actually made. And part of it is to determine how much marketing estimation and game-theory thinking occurs in the process.

The main conclusion is that economists, both traditional and behavioral, will benefit from paying closer attention to developments in the marketing discipline and marketers looking for more theory will benefit from paying closer attention to both traditional and behavioral economics.

For related discussion, see Philip Kotler, Confronting Democracy: Real Solutions for a Troubled Economic System (AMACOM 2015). Also see the author’s site, www.fixcapitalism.com 

2016 August 24

The post Why Behavioral Economics Is Really Marketing Science appeared first on Evonomics.

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cjheinz
3 days ago
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Hmmm.
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The Scarecrow of National Debt

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Many people think that, however burdensome heavy taxes are, it is more honest for governments to raise them to pay for their spending than it is to incur debt. But public debt in the US and the UK is far below the level at which it would crowd out private spending today or depress future generations' consumption.



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cjheinz
4 days ago
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It’s Time to Bring More Realistic Models of Human Behavior into Economic Policy and Regulation

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David Halpern at Bank Underground:

It’s time to bring more realistic models of human behaviour into economic policy and regulation: The Centre for Central Banking Studies recently hosted their annual Chief Economists Workshop, whose theme was “What can policymakers learn from other disciplines”.  In this guest post, one of the keynote speakers at the event, David Halpern, CEO of the Behavioural Insights Team, argues that insights from behavior science can improve the design and effectiveness of economic policy interventions.

Behavior science has had major impacts on policy in recent years. Introducing a more realistic model of human behavior – to replace the ‘rational’ utility-maximizer – has enabled policymakers to boost savings; increase tax payments; encourage healthier choices; reduce energy consumption; boost educational attendance; reduce crime; and increase charitable giving. But there remain important areas where its potential has yet to be realized, including macroeconomic policy and large areas of regulatory practice. Businesses, consumers, and even regulators are subject to similar systematic biases to other humans. These include overconfidence; being overly influenced by what others are doing; and being influenced by irrelevant information. The good news is that behavioral science offers the prospect of helping regulators address some of their most pressing issues. This includes: anticipating and addressing ‘animal spirits’ that drive bubbles or sentiment-driven slowdowns; reducing corrupt market practices; and encouraging financial products that are comprehensible to humans. ...[continue]...

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cjheinz
5 days ago
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Tweeted.
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