Real-World Economics Review

from C. P. Chandrasekhar and Jayati Ghosh The latest IPCC report makes it clear: the planet is now dangerously close to a tipping point and reliance on fossil fuels has to be drastically curtailed and even fully eliminated soon, to avoid catastrophic climate changes. Obviously, this urgent call fell on deaf ears where it matters. It didn’t take long, or even very much, for world leaders—especially those who should really know better and have the means to do otherwise—to renege on their...

from Dean Baker The New York Times had an editorial about the corruption of the patent system in recent decades. It noted that the patent office is clearly not following the legal standards for issuing a patent, including that the item being patented is a genuine innovation and that it works. Among other things, it pointed out that Theranos had been issued dozens of patents for a technique that clearly did not work. As the editorial notes, the worst patent abuses occur with prescription...

from Lars Syll In Economics Rules (Oxford University Press, 2015), Dani Rodrik maintains that ‘imaginative empirical methods’ — such as game theoretical applications, natural experiments, field experiments, lab experiments, RCTs — can help us to answer questions concerning the external validity of economic models. In Rodrik’s view, they are more or less tests of ‘an underlying economic model’ and enable economists to make the right selection from the ever-expanding ‘collection of...

from David Ruccio Everyone knows that inflation in the United States is increasing. Anyone who has read the news, or for that matter has gone shopping lately. Prices are rising at the fastest rate in decades. The Consumer Price Index rose 8.6 percent in March, which is the highest rate of increase since December 1981 (when it was 8.9 percent). Clearly, inflation is hurting lots of people—especially the elderly living on fixed incomes and workers whose wages aren’t keeping up the price...

from Jorge Buzaglo and Leo Buzaglo Olofsgård and current RWER issue Ecological Damage Index The ecological dimension of the extended failure index includes only one indicator. There are of course many other sources of ecological damage, but climate warming is by far the most dangerous and urgent. GHG per capita emissions: That is, the annual greenhouse gas emissions of the average individual in the country. The personal GHG footprint reflects the country’s...

from Jorge Buzaglo and Leo Buzaglo Olofsgård and current RWER issue The extensive failure index defines six dimensions of economic and social malaise: socio-economic dysfunction, ecological damage, exclusion, distress, militarism, and alienation. Each of these dimensions is composed of a number of indicators of particular flaws. The (re-indexed) average of the indicators makes the index of the dimension. The (re-indexed) average of the indices for the six dimensions mentioned makes the...

from Dean Baker   It is our policy on technology that drives inequality, it is not the technology. I rarely disagree with Paul Krugman’s columns, but every now and then he does say something that I have to issue with. In a column last month, Krugman complained about the enormous costs associated with China’s zero COVID-19 policy. He tied it to its reliance on old-fashioned Chinese vaccines that used dead virus material, instead of using the mRNA vaccines developed by researchers in the...

from David Ruccio It’s not price gouging, corporations tell us—it’s inflation. You know, supply and demand. Not enough supply, because of forces beyond their control, and too much demand, but they’re doing the best they can to meet it. Not a word about profits, though. Not from the corporations. And not from mainstream economists and pundits (or, for that matter, from the Biden administration, which prefers to point the finger at Putin). When they do go beyond supply and demand, they...

While Russian billionaires have been the focus of attention due to the ongoing fighting in Ukraine and the ensuing sanctions against Russian individuals and entities, their counterparts in the United States have accumulated an additional $1.7 trillion of net worth since the start of the pandemic two years ago. This marks an increase of 57 percent compared to March 2020 data from Forbes aggregated by U.S.-based organization Americans For Tax Fairness (ATF). As our chart shows, four of the...

from Lars Syll Although the expected utility theory is obviously both theoretically and descriptively inadequate, colleagues and microeconomics textbook writers all over the world gladly continue to use it, as though its deficiencies were unknown or unheard of. Daniel Kahneman writes — in Thinking, Fast and Slow — that expected utility theory is seriously flawed since it doesn’t take into consideration the basic fact that people’s choices are influenced by changes in their wealth. Where...