Archive for the 'Economic Behaviour' Category


Our Moral Footprint

As such, my blogger friend Michele Roohani connected the thread to my earlier post on Globalisation :by the same author: to under noted article of published in recent New York Times..


OVER the past few years the questions have been asked ever more forcefully whether global climate changes occur in natural cycles or not, to what degree we humans contribute to them, what threats stem from them and what can be done to prevent them. Scientific studies demonstrate that any changes in temperature and energy cycles on a planetary scale could mean danger for all people on all continents.

It is also obvious from published research that human activity is a cause of change; we just don’t know how big its contribution is. Is it necessary to know that to the last percentage point, though? By waiting for incontrovertible precision, aren’t we simply wasting time when we could be taking measures that are relatively painless compared to those we would have to adopt after further delays ?


Maybe we should start considering our sojourn on earth as a loan. There can be no doubt that for the past hundred years at least, Europe and the United States have been running up a debt, and now other parts of the world are following their example. Nature is issuing warnings that we must not only stop the debt from growing but start to pay it back. There is little point in asking whether we have borrowed too much or what would happen if we postponed the repayments. Anyone with a mortgage or a bank loan can easily imagine the answer.

The effects of possible climate changes are hard to estimate. Our planet has never been in a state of balance from which it could deviate through human or other influence and then, in time, return to its original state. The climate is not like a pendulum that will return to its original position after a certain period. It has evolved turbulently over billions of years into a gigantic complex of networks, and of networks within networks, where everything is interlinked in diverse ways.

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An Oracle for Our Time, Part Man, Part Machine


IN the 12th century A.D., when the Arabic treatise “On the Hindu Art of Reckoning” was translated into Latin, the modern decimal system was bestowed on the Western world — an advance that can best be appreciated by trying to do long division with Roman numerals. The name of the author, the Baghdad scholar Muhammad ibn Musa al-Khwarizmi, was Latinized as Algoritmi, which mutated somehow into algorismus and, in English, algorithm — meaning nothing more than a recipe for solving problems step by step.

It was the Internet that stripped the word of its innocence. Algorithms, as closely guarded as state secrets, buy and sell stocks and mortgage-backed securities, sometimes with a dispassionate zeal that crashes markets. Algorithms promise to find the news that fits you, and even your perfect mate. You can’t visit without being confronted with a list of books and other products that the Great Algoritmi recommends.

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An Anatomy of Consumption

Sold for a Record $100 Million, a Bejeweled Skull Embodies a Simple Truth: You Can’t Take It With You

Damien Hirst, the British artist most famous for displaying sharks and sheep floating in formaldehyde, has just sold a platinum cast of a human skull, covered in 8,601 diamonds, for $100 million. That makes Hirst the best-selling living artist of our era, beating the previous record — also set by him, earlier this summer — by a factor of five. White Cube, Hirst’s prestigious London gallery, announced last week that the piece, “For the Love of God,” was sold to “an investment group” for the full sticker price posted at the artist’s summer show.

Normally, such a record doesn’t tell us much, least of all about art. It just tells us that someone, somewhere, has way too much cash — which isn’t really much in the way of news, given the money we’ve seen spent on 500-foot yachts and flights into space and other conspicuous consumption. It’s said that the only thing an auction record proves is the existence of two dumb rich guys, competing to pay more for something than anyone else on the planet has ever thought it was worth. Hirst’s gallery sale, you’d think, would prove something similar.


If, that is, there’s really much of a sale to talk about. With the identity of the purchasers kept secret, the piece could in fact have been “bought” by a consortium of Hirst’s confidants and cronies, eager not to see the piece discounted. We do know that Hirst himself has “retained a participation in the piece,” as his gallery puts it. British papers say that makes him part of the so-called investment group, though White Cube continues to insist he isn’t.

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Sleeping on the Job

To improve productivity, take a nap

You’re no Marie Curie.

That was the painful accusation lobbed at me by a reader in response to an essay in which I presented some scientific arguments (real scientists’, not my own!) for cognitive differences between women and men.

It hurt. Sure, I’m a writer, an English major, and the only college-level science class I ever took was “Human Biology,” a bonehead course designed to help arts majors fill out their requirements for graduation. But I love to read about neuroscience and evolutionary biology and to think and write about what I have read. And, like Madame Curie, who exposed herself to deadly radiation in the name of scientific discovery, I am willing to make certain sacrifices to further my own understanding of human biology.

This is why, for two weeks in the middle of an extremely busy life, I allowed myself to become a guinea pig testing the scientific theories of the Nap Lady.

Take a nap, change your life


When I first heard her on NPR’s “Talk of the Nation,” research scientist Sara Mednick, affectionately known as the Nap Lady, was explaining that there is “an intelligent way to sleep” and that napping is a skill like any other–one you have to practice to perfect. Dr. Mednick–her PhD in Psychology is from Harvard University–had recently completed a three-year fellowship at the Salk Institute for Biological Studies and published a book based on her findings: Take a Nap! Change Your Life.

Taking a nap sounded like a really good idea at the time, and I was also feeling a definite need to change my life. I logged on to Mednick’s website, where there first thing I did was take a test to determine my level of daytime sleepiness. According to the Epworth Sleepiness Scale–which asked me to rate how likely I felt I was to doze off under a variety of conditions, from sitting and reading to sitting in a car stopped in traffic–I was a desperate case. With a score of 17 (people with narcolepsy score about 17.5), I was suffering from “severe sleepiness. People in this range should speak to their physicians about testing for a sleep disorder, while also being sure to take regular naps.”

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Globalisation’s human cost

Pl care to read and ponder speech by Václav Havel on human and socio-economic cost of Globalisation..

Václav Havel, (born 1936 in Prague) is a Czech writer and dramatist. He was the ninth and last President of Czechoslovakia (1989-1992) and the first President of the Czech Republic (1993-2003).

“The salvation of this human world lies nowhere else than in the human heart, in the human power to reflect, in human meekness and human responsibility.”

Václav Havel: A Speech on the UPS / Longitudes 04 Conference Living in a Synchronized Global Economy”

Paris, Intercontinental Le Grand Hotel, October 26, 2004

Ladies and Gentlemen, & Honoured guests,

Quite recently I happened to spend a day that caused me to do a bit of thinking once more about so-called globalisation, or more precisely, about the evolution of our present-day civilisation and the many dangers it poses.



In the afternoon I went shopping at a supermarket. It was as big as a railway station and I got a bit lost and marvelled, as I always do, at the incredible variety of foods on offer and how they artfully entice shoppers to buy far more groceries than they intended. I succumbed too, of course. Although I had originally only gone there for a kilo of apples I carted off a trolley full of interesting things. There was one item, however, that I didn’t cart off, even though I put it in my trolley at first. It was an oven-ready product made of seasoned ground meat of some kind that you just stick under the grill and you have a hamburger. An older shop assistant who was standing near the meat display, had recognised me, and quietly advised me not to buy the item. He told me it wasn’t one of their products but was brought in – apparently to the entire chain – from God knows where and God knows what went into it. So I put the item back on the shelf, chiefly, I expect, out of politeness. I asked him where in that particular town I might find a normal butcher’s where they would grind up exactly what I chose on the spot. The man looked around conspiratively and then said softly: “They wiped us out.” So he must have once been a butcher, and I expect he found it somewhat humiliating at his age having to stand by a display cabinet with products he hadn’t helped prepare.

I know that supermarkets also have counters were meat is cut and ground according to the customer’s wishes. However it occurs to me that these chains are slowly and imperceptibly driving many of small shops and businesses out of the towns and villages. From the purely economic point of view – in other words, in terms of productivity and profit – it is no doubt an advantage to concentrate the bulk of production and distribution under the umbrella of large supranational organisations that have the money and the “know-how”. But there are other considerations besides purely economic ones – considerations that are equally important, if not more so.

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The Devil Sells Prada

Book Review–NYT. August 26, 2007


How Luxury Lost Its Luster.- By Dana Thomas.

The Penguin Press.

“Luxury,” Socrates once declared, “is artificial poverty.” I’m not poor, but there’s nothing like an afternoon spent shopping for luxury goods to make me feel that way. On a recent jaunt through some of Midtown Manhattan’s snazzier stores, I began to wonder why this should be the case. When, I asked myself, did it become commonplace to charge several thousand dollars for a mass-produced handbag? How could the flimsy designer sundress I bought on sale — a “steal,” the saleswoman assured me — still wind up costing a whole month’s salary? Why is my favorite brand of lipstick more expensive than a nice bottle of Italian wine? When did these products’ values grow so distorted, and what is the would-be customer to make of it all ?


In the midst of my consumerist crisis, the question I should have been asking was: Dana Thomas, where have you been all my life? In “Deluxe: How Luxury Lost Its Luster,” Thomas investigates the business of designer clothing, leather goods and cosmetics, and finds it wanting. Hijacked, over the past two or three decades, by corporate profiteers with a “single-minded focus on profitability,” the luxury industry has “sacrificed its integrity, undermined its products, tarnished its history and hoodwinked its consumers.” Hoodwinked? The truth hurts. After I read “Deluxe,” suddenly my new sundress no longer looked like such a steal. Au contraire, the book’s line of argument suggested, it was I who’d been robbed.

For Thomas, a cultural and fashion writer for Newsweek in Paris and the Paris correspondent for the Australian Harper’s Bazaar, the luxury industry is a sham because its offerings in no way merit the high price tags they command. Yet once upon a time, they most certainly did. In the 19th and early 20th centuries, when many of luxury’s founding fathers first set up shop, paying more money meant getting something truly exceptional. Dresses from Christian Dior, luggage from Louis Vuitton, jewelry from Cartier: in the golden period of luxury, these items carried prestige because of their superior craftsmanship and design. True, only the very privileged could afford them, but it was this exclusivity that gave them their cachet. Although they may have “cared about making a profit,” the merchants who served this pampered class aimed chiefly “to produce the finest products possible.”

All that changed, however, in the last decades of the 20th century, when a new breed of luxury purveyor, epitomized by Bernard Arnault, now the chairman and chief executive of the multibillion-dollar LVMH Moët Hennessy Louis Vuitton conglomerate, first came on the scene. “A businessman, not a fashion person,” Arnault realized that the mystique of the great brand names represented an invaluable — and historically underexploited — asset. Identifying the luxury sector as “the only area in which it is possible to make luxury margins,” Arnault snapped up Dior, Vuitton and a clutch of other star brands. Then, by spending hundreds of millions on advertising, dressing celebrities for the red carpet, “splashing the logo on everything from handbags to bikinis,” and pushing product in duty-free stores and flagship boutiques all around the world, he turned these brands into objects of global consumer desire. In so doing, Arnault changed “the course of luxury forever.”

And strictly, Thomas argues, for the worse. Insofar as luxury has gone corporate, relentlessly focused on the bottom line, quality has disappeared. In order to keep margins high (in 2005, LVMH recorded more than $17 billion in sales and a net profit of almost $1.8 billion), Arnault and his competitors have cut costs wherever and whenever possible. The most obvious strategies involve using cheaper materials, replacing skilled artisans with computers and machines and outsourcing labor to less expensive markets like China. Sneakier tactics include “cutting sleeves a half an inch shorter” (“when you get to 1,000, you see the savings,” one employee told the author), replacing finished seams with raw edges and eliminating linings on the grounds that “women don’t really need” them. A grouchy aside: my aforementioned sundress is (a) an LVMH brand and (b) unlined. It is also (c) white, which means that a lining would sure have come in handy. But if Arnault can amass a personal fortune of more than $21 billion by forcing me to display my underwear, then who am I to complain?

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eBay- nomics

Modern economists have assumed that people in auctions behave rationally. Then came eBay.

By Christopher Shea | June 10, 2007

In Rome, they called it calor licitantis, or “bidder’s heat.” If you got swept up in the passion of an auction and paid way too much for something, you could plead a form of temporary insanity, and the judges might step in and let you off the hook (and get you your money back).

Good luck finding that kind of help the next time you overbid on that used iPod on eBay. You bid for it, you pressed the button, you bought it.

The Romans knew something that modern economists lost sight of at some point: Auctions lead people to do weird things. For a long time, economists have explored and even reveled in the supposed purity of auctions, viewing them as uncannily efficient means of moving goods into the hands of people who value them the most.


In fact, studying auctions has long been a fertile subfield within economics. The late economist William Vickrey won a Nobel in economic science, in part for his work in auctions. A 1961 paper of Vickrey’s detailed the elegance of so-called sealed-bid, second-price auctions, in which the winner pays the price submitted by the second-place bidder. (Among other advantages, such auctions reduce the likelihood that a bidder will overpay for an item.) This spring, Harvard’s Susan Athey, who helped British Columbia design timber auctions crucial to its economy, won the John Bates Clark Medal, given to the most accomplished economist under 40.

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