Bank & Business Accounting Affairs Plus Behavioral Economic Concepts
Just like buying direct from the source cuts out the middleman, sticking to a proven financial model works (for instance, if one purchased bank checks from the check manufacturer instead of the bank, you get faster service and a quality product at half off).
Can politicians, policymakers and corporate executives trust finance economics experts? This is the million-dollar question. Or rather the multi-billion dollar question. Given the current recession, the legitimacy of many top analysts has been called into question. Some of this damaging slander is overstated, since there are a number of businesses with their own economists that seem to be faring just fine. Bank checks proved viable and business safety rating raised no eyebrows, not yet.
A number of new economics books are focusing on how the calculations may have been off, leading to the current recession. A number of voices were calling out the warnings all along, it seemed, but they were drowned out by others who were overtly confident that the system itself could never fail.
One of the criticisms of finance economics and macro economics theories is that it never considers how the inner-workings of bank and financial institutions can impact the larger economy. "That's the view of microeconomics theorists," they scoff. In turn, micro-economists are looking at how financial institution decisions affect consumer spending and behavior, rather than scaling up.
Behavioral economists, on the other hand, take a more psychological approach to finance. They examine how economic decisions by borrowers, consumers and financial institutions affect market prices, returns, values and allocation of resources. Market trends, bubbles, crashes, socioeconomic and market trends, prospect theory; these are all terms used in that discipline, which tends to consider more microeconomics theories.
"We don't realize how much of our lives is absolutely random," said top market behavioral economist Robert Shiller of Yale. In the nineties, he had warned, "We are in the biggest real-estate boom we've ever seen. Something is going to happen to end this."
Indeed his predictions came true and brought many respected economists out of the haze. Macro, micro, behavioral and finance economics all must work together, combining theories and testing what forecasters are most relevant to the global marketplace. If we've learned anything from this current crisis, at least it's that.
The simple answer is to let the markets decide allowing market forces to self-control. Adam Smith's model of pure capitalism works. However, what government or politician do you know who can keep their hands off?
Can politicians, policymakers and corporate executives trust finance economics experts? This is the million-dollar question. Or rather the multi-billion dollar question. Given the current recession, the legitimacy of many top analysts has been called into question. Some of this damaging slander is overstated, since there are a number of businesses with their own economists that seem to be faring just fine. Bank checks proved viable and business safety rating raised no eyebrows, not yet.
A number of new economics books are focusing on how the calculations may have been off, leading to the current recession. A number of voices were calling out the warnings all along, it seemed, but they were drowned out by others who were overtly confident that the system itself could never fail.
One of the criticisms of finance economics and macro economics theories is that it never considers how the inner-workings of bank and financial institutions can impact the larger economy. "That's the view of microeconomics theorists," they scoff. In turn, micro-economists are looking at how financial institution decisions affect consumer spending and behavior, rather than scaling up.
Behavioral economists, on the other hand, take a more psychological approach to finance. They examine how economic decisions by borrowers, consumers and financial institutions affect market prices, returns, values and allocation of resources. Market trends, bubbles, crashes, socioeconomic and market trends, prospect theory; these are all terms used in that discipline, which tends to consider more microeconomics theories.
"We don't realize how much of our lives is absolutely random," said top market behavioral economist Robert Shiller of Yale. In the nineties, he had warned, "We are in the biggest real-estate boom we've ever seen. Something is going to happen to end this."
Indeed his predictions came true and brought many respected economists out of the haze. Macro, micro, behavioral and finance economics all must work together, combining theories and testing what forecasters are most relevant to the global marketplace. If we've learned anything from this current crisis, at least it's that.
The simple answer is to let the markets decide allowing market forces to self-control. Adam Smith's model of pure capitalism works. However, what government or politician do you know who can keep their hands off?
About the Author:
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posted by Vittoria @ July 04, 2013
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