The central idea behind Causal Economics is that optimal decision making happens when costs and resulting benefits are tied together. This is a simplification similar to that of boiling Behavioral Economics down to the idea of Nudging (a form of Libertarian Paternalism). Going a step further, Causal Economics asserts that people are rewarded for their
CE is a unifying theory of economics because the other major models of economics can be derived from it at both a micro and macro level. At a micro level, major decision models, such as BE and EU, can be derived from CE through particular restrictions. Specifically, cost and benefit, both deliberate and uncertain are
This post is a theoretical, not very practical, consideration of what the government tax and spend system ‘should’ look like to be fair and Pareto Optimal. It’s theoretical because even tiny changes to the massive entrenched machine of the current tax and spend system face monumental inertia. An entire universe of politicians, civil servants, unions, lobbies,
Nudge theory is powerful and top of mind with many of today’s government, academic and business leaders. It’s earned its place there. But, if one is to pick up on Phil Kotler’s comment that behavioral economics is a fancy new formalization of marketing, certainly it could be said that nudging is even more so directly
Many of the predictions of Causal Economics center on the impact of consolidated power, because that is one of the main conditions that allows for decoupling, driving up B/C ratios for those with power and driving down B/C ratios for those without power. Economic freedom and economic consolidation are at opposite ends of the spectrum.
It’s commonplace to see increasing real GDP as a measure of improved utility in society. But it’s less common to imagine an even better scenario of increasing real GDP and deflation. In such a situation, real incomes are increasing in a strong and sustainable fashion, as we’ll show here. The word ‘deflation’ itself conjures up
100% Pure Socialism and Capitalism each convey unstable long-term extremes. Raw socialism will snuff out productive growth and innovation as individual entrepreneurship gives way to reliance on big government, run by bureaucratic elites. It simply removes incentives to innovation. Raw Capitalism will produce powerful capital holders that naturally steer societal rules to their own benefit
The mainstream economics most of us learned in school is known as neoclassical economics, and it quite simply doesn’t explain human behavior. It’s all built on the 100% rational economic man – homo economicus. And well, people are regularly observed to be irrational/emotional. The recent surge in popularity of Behavioral Economics came about to fill the