Behavioral: Difference between revisions
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<p align="center">"People tend to be happy when they live up to how they think they should be; and they are, correspondingly, unhappy when they fail to live up to those norms." (Akerlof 9) | <p align="center">"People tend to be happy when they live up to how they think they should be; and they are, correspondingly, unhappy when they fail to live up to those norms." (Akerlof 9) | ||
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An Introduction to Economic Theory Before the Behavioral Approach: [[The Keynesian Approach]] | An Introduction to Economic Theory Before the Behavioral Approach: [[The Keynesian Approach]] | ||
Revision as of 00:29, 3 December 2007
Behavioral Economics
by: Eli Brill Katharine Burmeister Sharyn Foster Ludmila Palei Stacie Smeal
"People tend to be happy when they live up to how they think they should be; and they are, correspondingly, unhappy when they fail to live up to those norms." (Akerlof 9)
An Introduction to Economic Theory Before the Behavioral Approach: The Keynesian Approach
In his 2006 speech, "The Missing Motivation in Macroeconomics," George Akerlof, a Nobel Prize-winning economist, challenges some ideas about macroeconomics that were established by the well-respected John Maynard Keynes.
The five neutralities discussed by Akerlof are:
1. Ricardian equivalence
2. 1. The independence of consumption and current income. Akerlof addresses the neutrality of consumption and current income. Keynes argues that an individual will make economic decisions based on current income. However, Akerlof's research suggests that an individual will consider other things occurring in their lives, also. (Katie)
3. The independence of investment and finance decisions
4. Inflation stability only at the natural rate of unemployment
5. The ineffectiveness of macro-stabilization policy with rational expectations
Bibliography Akerlof, George A. "The Missing Motivation in Macroeconomics". [1]
