Book Description

This collection of essays, coauthored with other distinguished economists, offers new perspectives on saving, intergenerational economic ties, retirement planning, and the distribution of wealth. The book links life-cycle microeconomic behavior to important macroeconomic outcomes, including the roughly 50 percent postwar decline in America's rate of saving and its increasing wealth inequality. The book traces these outcomes to the government's five-decade-long policy of transferring, in the form of annuities, ever larger sums from young savers to old spenders. The book presents new theoretical and empirical analyses of altruism that rule out the possibility that private intergenerational transfers have offset those by the government.

While rational life-cycle behavior can explain broad economic outcomes, the book also shows that a significant minority of households fail to make coherent life-cycle saving and insurance decisions. These mistakes are compounded by reliance on conventional financial planning tools, which the book compares with Economic Security Planner (ESPlanner), a new life-cycle financial planning software program. The application of ESPlanner to U.S. data indicates that most Americans approaching retirement age are saving at much lower rates than they should be, given potential major cuts in Social Security benefits. ... Read more

Book Description

These two volumes of readings attempt to bring some degree of structure to a relatively diffuse field. Because of the sheer volume of high-quality work in development economics research, they are intended as a sampling of work at the frontier of the field, rather than as a comprehensive overview.

Volume I: Micro-Theory focuses on theoretical work. Topics covered include sharecropping as a principle-agent problem, fragmented duopolies, credit market imperfections, poverty traps, peer monitoring in credit cooperatives, coordination failures, human capital accumulation as an engine of growth, and environmental issues in development. ... Read more

Reviews (1)

Excelent
This is an excellent book, it introduces the economists in topics that they are usually treated by philosophers and to the philosophers in topics that they are usually treated by economists. With an interesting proposal of the equality of opportunities, it uses the instrumental one intensively mathematical. ... Read more

Book Description

In this book Bernard Salani studies situations where competitive markets fail to achieve a collective optimum and the interventions used to remedy these so-called market failures. He includes discussions of theories of collective decision making, as well as elementary models of public economics and industrial organization. Although public economics is traditionally defined as the positive and normative study of government action over the economy, Salani confines himself to microeconomic aspects of welfare economics; he considers taxation and the effects of public spending only as potential remedies for market failures. He concludes with a discussion of the theory of general equilibrium in incomplete markets. ... Read more

Reviews (1)

Excellent complement and starting point
In this extremely elegant and condensed work, Salanie once again provides a great externality to his readers (continuing after "The Economics of Contracts"): at the end it leaves a unequivocal desire to dive deeper in the subject.

Limitations? As mentioned in the introduction, the book is extracted from a series of lectures the author gave; lets say, they are great lectures but without the session of Q&A (questions and answers). Therefore, there is little communication with the reader's questions, the reader is required to investigate more in his/her own, e.g. no end of chapter problems or things like those.

In short, I will strongly recommended it along with the traditional material of a General Equilibrium course (e.g. Mas-Colell et.al.). But do not expect a treatise, it is more a general overview. ... Read more

Book Description

The classic on crashes and financial crises

Manias, Panics, and Crashes, Fifth Edition is a scholarly and entertaining account of the way that mismanagement of money and credit has led to financial explosions over the centuries. Covering such topics as the history and anatomy of crises, speculative manias, and the lender of last resort, this book has been hailed as "a true classic . . . both timely and timeless." In this new, updated Fifth Edition, Kindleberger and Aliber expand upon the ideas presented in the previous edition, and include two new chapters on the real estate price bubble that occurred in Norway, Sweden, and Finland at the end of the 1980s, and the three asset price bubbles that occurred between 1985 and 2000 in Japan and other Asian countries. Selected as one of the 10 best investment books of all time by the Financial Times, Manias, Panics, and Crashes puts the turbulence of the financial world in perspective.

Charles P. Kindleberger was the Ford Professor of Economics at MIT for 33 years. He was a financial historian and prolific writer who has published 30 books. Robert Aliber (Chicago, IL) is a professor of international economics and finance at the University of Chicago Graduate School of Business, where he has been a faculty member since 1965. ... Read more

Book Description

In these notes, Professor Kreps surveys the standard models of choice under uncertainty that lie at the heart of microeconomic theory. Choice and preference, ordinal utility, von Neumann-Morganstern utility and utility functions for money, and subjective probability and subjective expected utility are among the standard topics covered. These notes provide a rigorous but accessible introduction to the theory of choice for mathematically inclined undergraduates and/or graduate students in economics, finance, and related disciplines. ... Read more

Reviews (4)

Start thinking with a decision-theorist mind
The book seems harmless at the beginning with the mathematical proofs of some binary relations, which require a little bit of logic - and very careful writing down, if you have to turn in the problems as homework. But it gets more and more challenging - and pushes you to use some Real Analysis and Probability Theory concepts to really master the issues presented. This is not a reference book, nor a traditional textbook: it is a collection of lectures on economics of decision. The Von Neumann Morgernstern model is developed in all its magnitude, going further than any game theory textbook. You start to feel the 3 axioms and the numerical representation as second nature! But then, the Aumann/Anscombe and Savage models are introduced, as well as the limitations of the perfect VNM model. Everything you've learned seems to fall apart.
The problem sets are mainly excursions, in the very Kreps' style (if you have read his Course on Microeconomic Theory, you know what half a page problem without any equation is). In general, you don't need economics to get a good grip of the content: it is decision theory, not micro theory. Engineers and mathematicians will love it - and some economists will find it too tough!

Useful, concise, requires some background
I think this book certainly deserves its good reputation as a primer on the variations and developments of utility theory. It must be noted that the book requires a fair amount of mathematical background that students coming to choice theory from non-economic backgrounds might not have. The book may be almost inscrutable if you are not ready to think mathematically about choice an aren't familiar with mathematic-decision speak. To that reader, I would refer you to a book called "Thinking and Deciding" by Jonathan Baron and/or the Psychology of Judgment and Decision Making by Scott Plous. For a reader with a psychology background such as myself, those were much gentler introductions, although the material in this book is worth mastering if you want to do serious work in the field of decision making research.

Terrific
A terrific book. If you want a comprehensible introduction to decision theory which includes all the most important stuff (von Neumann-Morgenstern, Savage, Anscombe-Aumann), look no further. You will not find anything else even close.

a splendid book
I have read this book more than 10 times since I came across it. Every time I read this book, I find something new. This book is based on lecture notes on axiomatic choice theory presented by David Kreps(the author) at the Stanford University. If you want to major in economics, in particular, choice theory, this book will enable you to access this area very easily. ... Read more

Book Description

Reviews (1)

This book positively affected the way I deal with life
I read this book as a young man and dellighted to find I can now get another copy to replace my long lost volume. The book gives very clear explanations of game theory, zero-sum and non-zero sum, game trees and related subjects. It then goes on to weave a philosophy of civilized communication based on the mathematics.

The style is clear and pleasant to read, and what ought to be a dry subject is becomes a pleasant walk through a garden of interesting concepts.

I look forward to reading it again after many years. ... Read more

Book Description

Spanning two centuries and across three continents (Europe, America and Asia), the author provides a fascinating history on some famous and not so famous financial events. Beginning with the 1720s Mississippi and South Sea Companies to the great global crashes of 1929 and 1987, Bernice Cohen provides us with a strategy for tracking market trends and cycles, and protecting our investments against the next financial crash. ... Read more

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Summary of the book
Introduction

The objectives of the book are:  To study in detail the stock market crashes, to discover what went wrong and to learn from these past traumatic episodes; and  To identify and explain the underlying structure of the financial market behavior.

Chaos is Discovered Newtonian vs. Chaos For the last 300 years, our thoughts have been profoundly influenced by the Newtonian theory, which, as we know, rests on assumption of a linear system. This theory is best applied to system with two objects interacting with each other. When used to elucidate the system with three objects or more, Newtonian theory collapses.

Chaos theory, which is based on complex and non-linear system, is a relatively new discipline (circa 30 years). Its use in social science and field of physics have gained wide acceptance. The author attempts to apply the theory to the financial market.

Chaos Rules

Chaos describes unpredictable behavior that is governed by rules. Ian Stewart in his book, "Does God Play Dice?" gives the following definition: "Chaos is lawless behavior governed entirely by law".

Chaos in Financial Market

The author comment regarding the stock market behaviors using the chaos theory is as follows:  Financial market is inherently unstable and dynamic system, and the mood of the majority of its player can flip almost instantaneously from one state to another. Hence financial market resembles a chaotic system. An orderly phase may dissolve into chaos & then tip back to a more ordered state.  Stock markets are holistic that sometimes their collective behaviors will be different from that of their component unit (i.e. individuals & investors).

Chaos Theory in Actions After noting the similarities between financial markets behavior and chaos theory, the author studied several important financial crises over the last 300 years to see whether there was any underlying structure beneath the crashes. She discovered that many speculative bubbles shared a cluster of common features. \ The author does not try to predict when the crash will happen. Instead, she seeks to uncover what is the underlying structure of financial market and how investor can profit from it by assessing in which phase he is at a particular time.

The author studied the following crashes and described the sequence of events using the ten phase structure: 1. Bubbles of 1720  Mississippi Madness  South Sea Fiasco 2. Modern Bubbles  Great Crash 1929  Global Crash 1987  Japanese Bubble  Bonds Bubble

So what if we know the history and chaos theory?

How To Be Prepared? Compiling a checklist based on the structure of crash scenario (ten-phase structure) has the following purposes:

 It is a systematic way of dealing with the situation. It provides an orderly framework to analyze the signals and prepare oneself for any occurrence of the crash; and

 It helps the investors to judge more clearly how far along the route of chaos scenario has progressed.

(The checklist is elaborated in the textbook).

In addition to the checklist, there is also a need to look out for other cluster of symptoms or occurrence of other events (such as emergence of new financial tools, collapse of big corporations etc) to confirm the findings from the checklist.

What to do with the checklist? To avoid any avalanche of selling, one must be able to identify at least the first 3-5 phases and clear your position at phase 5 or 6 (i.e. when gullible public joins in or when doubt starts to form).

However, if one misses the signal and fails to sell off by phase 6, it is still not too late to do so as long as it is done before the markets reach the bottom. This will allow one to cash out and reinvest when the markets hit the bottom.

What if u misses all the phases? - As the chaos theory shows, the market will turn around eventually. However, the issue is how long will it take? No one knows.

Timing the Crash - Is it possible? Whilst it may not be too difficult to identify the signals of an impending crash (based on the phases in the structure of crashes), one can never accurately predict the timing of occurrence. Time is the most untrustworthy and unpredictable element. As shown in the charts, the points might get squeezed together or pulled part -- this is a common feature of a chaotic system.

Since predicting the exact timing of crashes is highly unreliable, in order to avoid being caught off guard, one has to closely watch for any trigger event that may unleash a selling cascade. Another strategy is to give up the hope of catching the extreme peak and bottom and be contended as long as you buy near the bottom and sell near the top.

Conclusion

Chaos theory has taught investors how to preserve their capitals from the disaster of a crash. The 3 main points to bear in mind are as follows:

 Need to recognize any unintentional actions of the financial authorities which may create a classic chaos conditions and prepare own course of actions;

 Even the most sophisticated and cautious long term investors can become irrational and act in tandem with the speculators; and

 Understand that falling bond prices with rising interest rate may result from the collapse of a financial pump instead of a reflection of the fundamental outlook of the economy.

One of the most important events to watch is the action by the presiding authorities which may trigger a financial pump and set the phase transition in motion. When it happens, one should know how to react.

In conclusion, as a Fund Manager, one should

 Be fully aware of what is happening in the financial, political and economic sectors around the world. One of them could be the trigger event.  Be able to identify at which phase the financial market is in and predict the transition and the edge of chaos.  Be able to clear his position and not to be influenced by the herd behavior if he concludes that the market at peak and near the point of collapse. This is a tough discipline to follow especially if he has a strict mandate and the clients' expectations increase during the boom. ... Read more

Book Description

In this classic text, first published in 1973, Amartya Sen relates the theory of welfare economics to the study of economic inequality. He presents a systematic treatment of the conceptual framework as well as the practical problems of measurement of inequality. In his masterful analysis, Sen assesses various approaches to measuring inequality and delineates the causes and effects of economic disparities. Containing the four lectures from the original edition as well as a new introduction, this timeless study is essential reading for economists, philosophers, and social scientists.

In a new introduction, Amartya Sen, jointly with James Foster, critically surveys the literature that followed the publication of this book, and also evaluates the main analytical issues in the appraisal of economic inequality and poverty. ... Read more

Reviews (1)

A key to evaluating inequality
I learned a lot from Sen's and Foster's book. It is an important key to the understanding of inequality measures. Especially the welfare funcion seems to be a much better measure to describe income than the average per capita income.

I, however, have one objection. Sen is careful enough not to completely reject Theil's formula (see formula 2.11 in "On Economic Inequality"). And although Sen and James E. Foster are puzzled by the application of entropy to economics, they seemingly also feel, that it is interesting enough to be discussed.

Unfortunately though, Sen called Theil's formula not only "interesting", but also "arbitrary". Here is an example for how Sen's further comments on Theil's measure successfully inhibited other researchers to develop an understanding for entropy measures. "Sen ... describes the major flaw in T very nicely when he states that it 'is not a measure that is exactly overflowing with intuitive sense'. Why then would econometricians - or anyone else - want to use T?" This response (from a participant from Macquarie University, 1991 Conference of the Australian Association for Research in Education) is regrettable. I wish, Sen and Foster would reevaluate entropy measures and their application to the measurement of inequality.

"Intuitive" understanding of entropy is rare. (That is why confusing entropy problems with energy problems is common.) The major flaw in evaluating entropy measures often is lack of common knowledge in physics as well as lack of intuition. If sociologists and economists don't trust physicists or engineers, they at least should observe how the "Shannon index" is used in statistical ecology.

As for economics, you find excellent examples for how to use Theil's measure in James K. Galbraith's "Created Unequal" (1998, ISBN 0-684-84988-7). ... Read more

Book Description

A century and a half of America's consumer economy in one easy-to-use volume.This second edition of the highly successful Value of a Dollar records the actual prices of thousands of items that consumers purchased from the Civil War to the present, along with facts about investment options and income opportunities.The first edition, published by Gale Research in 1993, covered the period from 1860 to 1989.This second edition has been completely redesigned and revised and now contains two new chapters, 1990-1994 and 1995-1999.Each 5-year chapter includes a Historical Snapshot, Consumer Expenditures, Investments, Selected Income, Income/Standard Jobs, Food Basket, Standard Prices and Miscellany.This interesting and useful publication will be widely used in any reference collection. ... Read more

Reviews (2)

An Invaluable Research Tool!
This book is a highly detailed and simply invaluable research tool for writers, historians, teachers, etc. Some books give you a quick sampling -- ie, bread cost so much, milk cost so much, a car cost so much -- without giving you any more specifics or backing up their stated facts with sources. But THE VALUE OF A DOLLAR digs deeper, giving you comparisons (high end cars, low end cars), plus charts of how much people in various professions made (while Elvis made ten million in one year in the '50's, a secretary with typing and shorthand typically earned around $85 a week). You can check out the grocery section to see how fruits, vegetables, and all household staples stacked up against a person's basic salary and how much of their income went for basic necessities -- or look at the cost of entertainments (movies, theater tickets, sporting events, games) in any particular era. Simply fascinating reading, carefully documented (columns typically list which publications the prices or salaries came from). If you're a writer of any kind of history or historian of any kind, don't be without it!

GREAT BOOK
IT IS A GREAT BOOK. I USED IT FOR MY SCHOOL, ON A HISTORY PROJECT I FOUND EVERY THING I NEEDED IN FROM THE YEARS OF1955-1989-1999 I RECOMEND IT TO ALL PEOPLE! ... Read more

Book Description

This book is about the cost effectiveness of present and future medical technologies. Methods of analyzing cost effectiveness are described in terms of choices that take into consideration dollar values of treatment, quality of life and the rationale for deciding who should receive treatment in situations of rationed care. Essays in the book range from lay level to technical state of the art, making the book of interest to a wide variety of readers. ... Read more

Book Description

This book imparts an understanding of microecnomics through clear and logical expostition and demonstrates with examples the applicability of microeconomic tools to the Indian context. It covers current developments in the field, and shows the vitality and dynamism of microeconomic theory. ... Read more

Amazon.com

At some point, someone must have believed in the adage that "a rising tide lifts all boats." But the recent economic boom has been more of a hurricane for those unskilled workers living on the least seaworthy craft. While wealth escalates, the economic expectancy of the poorest people around the world just gets worse, bringing to mind Adam Smith's famous assertion that "for one very rich man, there must be at least 500 poor." This brings up one of the oldest questions of society and economics: Why should the rich and the middle classes care about the poor? Because, as Ethan Kapstein argues in Sharing the Wealth, when they don't, bad things happen. Very bad things. In fact, it can be argued that the mass changes of the Industrial Revolution in Western economies during the 19th century led to the major upheavals of the 20th: World War I, the Russian revolution, the Great Depression, World War II.

It's now fashionable to assume that the American welfare state, begun with the New Deal and steadily expanded until recently, was the root of many of society's problems. But Kapstein argues that the social safety nets of government programs actually made American prosperity possible in the 20th century (as it did in European societies going back to the 16th century). And, conversely, that a return to 19th-century-style economic Darwinism would halt that prosperity. Kapstein believes we need a global economy. His concern, though, is for the workers whose lives are affected by these shifts. While Sharing the Wealth is an academic work, Kapstein's passion for his thesis is clear on every page. There's something here for any reader interested in business, politics, history, or economics. --Lou Schuler ... Read more