Why study economics

The benefits of studying economics Why Study Economics? It also provides information to teachers and parents. Where can students study economics? Over 95 departments across the UK offer an Economics degree.

Why study economics

Why study economics

Nudge theory Richard Thalerwinner of the Nobel Prize in economics Nudge is a concept in behavioral sciencepolitical theory and economics which proposes positive reinforcement and indirect suggestions as ways to influence the behavior and decision making of groups or individuals.

Nudging contrasts with other ways to achieve compliance, such as educationlegislation or enforcement. The concept has influenced British and American politicians. The first formulation of the term and associated principles was developed in cybernetics by James Wilk before and described by Brunel University academic D.

Stewart as "the art of the nudge" sometimes referred to as micronudges [38]. It also drew on methodological influences from clinical psychotherapy tracing back to Gregory Batesonincluding contributions from Milton EricksonWatzlawickWeakland and Fisch, and Bill O'Hanlon. It also gained a following among US and UK politicians, in the private sector and in public health.

A nudge, as we will use the term, is any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives.

To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not. In this form, drawing on behavioral economics, the nudge is more generally applied to influence behaviour.

One of the most frequently cited examples of a nudge is the etching of the image of a housefly into the men's room urinals at Amsterdam's Schiphol Airport, which Why study economics intended to "improve the aim".

In Why study economics words, a nudge alters the environment so that when heuristic, or System 1, decision-making is used, the resulting choice will be the most positive or desired outcome. Regarding its application to HSE, one of the primary goals of nudge is to achieve a "zero accident culture".

These companies are using nudges in various forms to increase the productivity and happiness of employees. Recently, further companies are gaining interest in using what is called "nudge management" to improve the productivity of their white-collar workers.

Tammy Boyce, from public health foundation The King's Fundhas said: Ethicists have debated this rigorously. Similarly, legal scholars have discussed the role of nudges and the law.

Behavioral finance[ edit ] Robert J. Shillerwinner of the Nobel Prize in economics The central issue in behavioral finance is explaining why market participants make irrational systematic errors contrary to assumption of rational market participants.

The study of behavioral finance also investigates how other participants take advantage arbitrage of such errors and market inefficiencies. Behavioral finance highlights inefficiencies, such as under- or over-reactions to information, as causes of market trends and, in extreme cases, of bubbles and crashes.

Such reactions have been attributed to limited investor attention, overconfidence, overoptimism, mimicry herding instinct and noise trading.

Technical analysts consider behavioral finance to be behavioral economics' "academic cousin" and the theoretical basis for technical analysis.

Why study economics

Loss aversion appears to manifest itself in investor behavior as a reluctance to sell shares or other equity if doing so would result in a nominal loss.

Benartzi and Thaler, applying a version of prospect theoryclaim to have solved the equity premium puzzlesomething conventional finance models so far have been unable to do. Quantitative behavioral finance[ edit ] Quantitative behavioral finance uses mathematical and statistical methodology to understand behavioral biases.

In marketing research, a study shows little evidence that escalating biases impact marketing decisions. Thaler's model of price reactions to information, with three phases underreaction, adjustment, and overreactioncreating a price trend.

One characteristic of overreaction is that average returns following announcements of good news is lower than following bad news. In other words, overreaction occurs if the market reacts too strongly or for too long to news, thus requiring an adjustment in the opposite direction.

As a result, outperforming assets in one period is likely to underperform in the following period. This also applies to customers' irrational purchasing habits. They contend that behavioral finance is more a collection of anomalies than a true branch of finance and that these anomalies are either quickly priced out of the market or explained by appealing to market microstructure arguments.

However, individual cognitive biases are distinct from social biases; the former can be averaged out by the market, while the other can create positive feedback loops that drive the market further and further from a " fair price " equilibrium. Similarly, for an anomaly to violate market efficiency, an investor must be able to trade against it and earn abnormal profits; this is not the case for many anomalies.

It is argued that the cause is entry barriers both practical and psychological and that returns between stocks and bonds should equalize as electronic resources open up the stock market to more traders.

Experiments include testing deviations from typical simplifications of economic theory such as the independence axiom [77] and neglect of altruism[78] fairness[79] and framing effects.Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.

Behind this definition are two key ideas in economics: that goods are scarce and that society must use its resources efficiently. Studybay is an academic writing service for students: essays, term papers, dissertations and much more! We're trusted and chosen by many students all over the world!

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Business and related subjects (such as the FAME group – finance, accounting, management and economics) are among the most popular fields of study at universities worldwide, particularly at graduate level. You might have some vague ideas about why this is the case – .

The study of economics provides a rigorous, analytic perspective on human behavior. It commands respect and has the ability to influence policies that address important issues.

A degree in economics will help you understand and participate in these policy debates, putting you in a good position to change the world for the better. Part 1 – The private sector.

What are the opportunities available to students studying economics? If you are in the second or final year of your economics degree and interested in securing an internship or graduate job you will be faced with a bewildering array of options.

Many students who pursue a career in business must study economics to help better understand why businesses make certain decisions based on the current economic state.

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