Economics and its flaws (1 Viewer)

[Saintly Devil]

Is it just me, or is economics a really cynical subject?

 

[bobo123]

explain?

 

[Saintly Devil]

isn't one of the basic assumptions of economics that people behave rationally?
And isn't the basis of this rationality that people behave in ways that serve their own interests - thus meaning buying a present for someone (with no expectation of a return favour) is totally irrational?!?

So wouldn't you say that this assumption of rationalism is a great flaw?
Out of curiousity, does anyone know if there is a branch of economics that specifically deals with irrational behaviour? I've heard of behavioural economics, but I think thats more to do with the presentation of facts influencing people behaviour (i think gittins had an article related to it)

 

[Minai]

hang on a sec:

it isnt irrational for a person to buy a gift and not expect anything in return if that person's benefit is greater or at least equal to the cost. Benefits may be anything from appreciation by the gift recipient or anything. Just because you dont get any physical returns doesnt mean you dont gain benefits, and a rational person will only undertake an activity if benefit > cost

your statement is true then if that person's benefits (ie. nothing) < cost, so therefore a person that does this is irrational. Most ppl in the world are irrational

i'll ask you a question:
Say u had $20 that u want to spend -
If u went and bought a $10 movie ticket, then lost it, would you buy another one (since u have the money)?
And say instead of losing the ticket, you lost $10 before u got to the cinema, would u still buy the ticket?

 

[BMWM3]

i think economics is the other way around. i think it's too rational it makes too many assumptions like absolute and comparitive advantage what country is going to have all thing equal and say well according to the principle of comparative advantage we'll produce motorbikes instead of socks

 

[AGB]

well obviously in reality, comparative and absolute advantage are never going to exist.......but the point of having this theory is to demonstrate how things can be applied to situations in the real world......using the model of comparative advantage provides a justification for removing protection from industries.....sure it is never going to truly exist, but the idea that if specialisation occurs in the most efficient industries then nations will benefit, is conveyed through that model

 

[AGB]

Originally posted by Saintly Devil
buying a present for someone (with no expectation of a return favour) is totally irrational?!?

i dont understand why you would think that is irrational.......a person has a demand for a good - it doesnt matter why they are buying it - nobody cares - the fact is that they bought it ??? ???

 

[Saintly Devil]

THIS is what I was talking about:

http://www.smh.com.au/articles/2003/06/06/1054700387631.html

as you can see, gittins is much better at explaining things than I am. but the basic concept was the same.