Economics Archives

What’s an Open Economic System?

Is the economy an open or a closed system? Why does traditional economics treat the economy as a closed system? According to Kate Raworth, traditional economics has a closed-system model for the economy, which operates simply as a series of “inflows” and “outflows” of money, closed off from everything else. This model puts the economy in isolation and treats it as a machine, governed by a simple and predictable set of inputs and outputs. In an open economic system, on the other hand, the economy is embedded within the environment and the planet itself. Here’s why the economy is an

The Assumption of Rational Behavior in Economics

What is rational behavior in economics? How accurate is this assumption that humans are inherently rational agents seeking to maximize their economic utility at the expense of everything else? In economics, human beings are seen as largely rational agents. The rational economic man cares only about increasing his material wealth and will always follow incentives to do so. According to Kate Raworth, this portrait of humankind is grossly inaccurate. In her book Doughnut Economics, she calls into question the power of extrinsic incentives in driving human behavior. Here’s why the assumption of rational behavior is ultimately flawed.

Kate Raworth: The Doughnut Model Explained

What is the doughnut model in economics? How has economic growth pushed us outside the doughnut? According to Kate Raworth, the author of Doughnut Economics, the goal of economic policy should be to stay within the inner ring of the metaphorical doughnut. This entails designing an economy that is productive enough to ensure that everyone on the planet has their basic material needs met, but that does not grow so fast as to deplete our natural resources and degrade the environment. Here’s what we can do to stay within the doughnut, according to Raworth.

Poor Economics: Book Overview & Key Takeaways

What is Esther Duflo and Abhijit Banerjee’s book Poor Economics about? What is the key message to take away from the book? In their book Poor Economics, MIT professors Esther Duflo and Abhijit Banerjee analyze poverty by asking small, pointed questions about specific aspects of the lives of the poor. Their goal is to develop a detailed picture of how the poor live and how policy interventions affect their lives so that policymakers can better design interventions that help them. Below is a brief overview of Poor Economics by Esther Duflo and Abhijit Banerjee.

Income Inequality: The 4 Potential Solutions

Can income inequality be solved? What can be done to bridge the global divide between the rich and the poor? Income inequality is a global problem—it plagues all countries to some extent. A small minority of the world’s population has amassed vast fortunes, while billions of people remain mired in extreme poverty. But hope remains. In her book Doughnut Economics, Kate Raworth proposes four income inequality solutions that can reduce the gap between the rich and the poor. Let’s take a look at Raworth’s solutions for income inequality.

What Are the Main Causes of Malnutrition?

What are the main causes of malnutrition? Why are the poor malnourished in spite of the efforts of policymakers? In Poor Economics, MIT professors Esther Duflo and Abhijit Banerjee discuss a well-known problem among the poor: malnutrition. They argue that this problem doesn’t stem from lack of food per se, but from lack of nutrition. In other words, the poor are not starving for calories, they are starving for nutrients. Here’s what MIT professors Esther Duflo and Abhijit Banerjee have to say about the causes of malnutrition amongst the poor.

Why a Regenerative Economy Is the Future

Is economic progress destroying the planet? How does the focus on economic growth deplete the planet’s resources? Most economies are inherently extractive and wasteful. If we continue at this rate, it’s only a matter of time until we reach a point of no return. To prevent this from happening, we need a top-to-bottom redesign of our global economic order: away from an extractive economy and toward a regenerative economy. Here’s why an economic revolution is in order, according to Kate Raworth.

Duflo and Banerjee: Poverty and Healthcare Access

Do poor countries have access to healthcare? What obstacles do the poor face in accessing healthcare? Many affordable and effective healthcare resources are available to the poor, yet they don’t use them as much as they should. According to Duflo and Banerjee, the authors of Poor Economics, there are four factors affecting the poor’s approach to their healthcare. Here’s a look at poverty and healthcare access.

Why Long-Term Economic Growth Isn’t Sustainable

Is economic growth destroying the planet? Can long-term economic growth be sustainable? According to Kate Raworth, we have pushed economic growth so far that some bad environmental outcomes may now be unavoidable. If we don’t act now, grave consequences are in order. Here’s how the overwhelming focus on growth endangers the health of our economy and the planet.

Why Do Poor People Stay Poor? The 3 Main Reasons

Why do poor people stay poor? How does the financial industry trap people in poverty? There are several factors that keep people in the poverty trap. One of them is the poor’s inability to access financial services. Wealthy people benefit from financial services, such as comprehensive insurance and easy-to-access credit. Despite the fact that the poor also need these services, businesses rarely provide them. Here’s why the poor have difficulty making use of financial services and how it perpetuates the cycle of poverty.