The State of my Economics Education

As my second to last semester in my undergraduate studies comes to an end I am compelled to check on the status of my education. What have I discovered? I LOVE industrial organizations. Hopefully I can do some sort of graduate school for this. I think I enjoy it so much because it feels applicable and relevant. Also the subject matter is more fun than basically any other class I have taken. I don't know of another class where you get to play games (albeit game theory), or discover why monopolists act the way they do. The only other classes I like are my labor economics class and economic development class. I am endlessly excited to do econometrics next semester. I get to pick one other economics class to take before they cut me off from econ classes, I registered for topics in microeconomics since I am partial to micro. I have debated taking money and banking systems but I think topic in micro will help me put perspective on what I have learned. On a note different from economics, I'm taking a class called the social construction of sexuality which I have heard numerous good things about. Also my brother and I may take an elective together, it should be fun.

At this point the debate of whether to go to grad school or not is still undecided.

Are we rational or irrational?

It seems as though there is a conflict in world of economics. As an economist in the making I have been taught that for economic models to be effective we must first make assumptions about what we are attempting to model. Constantly I have been reading or watching or listening about information on economics and most of the time they start with talking about the assumption of rationality (or irrationality). It seems entirely unclear as to whether the economic community believes that humans are rational thinkers and actors or if they are irrational. I think it changes from time to time, and from subject to subject. It seems the more I research the more I find that the 20th century was full of assumptions of irrationality, but that is the only time when such assumptions were widespread. Even now, not even a decade later than that time period it seems that we have moved back into the realm of assuming people act rationally. What is to the cause of such changes? I certainly have no definitive answer, I'm not that well versed in economics... yet. If I had to give it a guess I would say it has to do with the political climate and the perceived ability of humans to do the right thing. It could also be linked with whether people are acting selfishly (a sign of rationality) or as a whole the society in question is acting selflessly (a sign of irrationality). This bring into question how do we measure the true selfishness/selflessness of a persons actions. Tangent aside, I suppose the whole rationality debate is based on opinion and the only way to find the solution is to make models (possibly with both assumed) and see if they hold up.

To fund pro-positive or anti-negative externalities and more

The other day in my political economy of the middle east class we were talking about externalities. The professor asked us whether it was smarter to subsidize negative or positive externalities. I answer with negative and at the same time another students says positive. The conventional answer is that governments should subsidize positive externalities so that there is incentive for people to do good things. I then took the opportunity to rationalize my thought. Here is my argument: positive externalities have a built in or intrinsic value to the "offender" while negative externalities are usually driven by selfishness and a lack of care of anything other than the immediate interest of the "offender." In this sense it would make sense to subsidize or more accurately give an incentive for people perpetuating negative externalities to no longer partake whatever it is they are doing. Positive externalities will continue to be acted out based on the benefit that the "offender" and all of society gains. Obviously my point relies on the assumptions that people have feelings of benevolence and that the "offender" is aware of the externalities which they are putting forth. Although in a more strict sense of the term selfishness it would seem as though most negative externalities are perpetrated out of laziness or thoughtlessness than that of pure selfishness.

On a related note to this argument which I coincidently didn't even end up knowing about until I randomly stumbled across it on the internet last night, There is a BBC documentary by Adam Curtis called The Trap: What Happened To Our Dream Of Freedom. I have only watched the first episode but it is an interesting look at game theory applied to the real world. It is related in the sense of the politicians basis of action: selfishness. Ok, so it isn't exactly related by there is a psuedo-similar general topic there. And the video has a very interesting concept even if it is difficult to believe.

What is this?

Blogging is the new trendy thing to do. So I figured I would jump on the ship before it sails and something newer and more trendy comes into port. This is economSTAR. It is named as such because in some search engines typing econom* will bring up results of econom with different suffixes, allowing the search for basically all things economics related. I found this an apt title since I want this to be things that I see, read, hear, or come up with relating to economics in every sense. Be warned I will talk about things from my classes, I read economics blogs everyday and may borrow some of their stories, and I do come up with some strange stuff, if you don't know something and are curious ask, or just wikipedia it. This is my first attempt at blogging so we will see how it all pans out.

PS - I am far more interested in microeconomics than I am macroeconomics but the two are interrelated so I hope to be able to blog about both.