A little deviation from my usual reading and hence explains why it took me more than two months to complete the book. It was rather complicated and confusing for my pea sized brain so it served as a sleeping pill on several occasions. Regardless there were few ideas that answered some of our behaviours and the decisions in the market and economy.
Money illusion - I experienced this when the most awaited happiness for civil servants happened in 2023 with a 50-74% lump sum pay raise in 2023. Even before we received the raise, house owners raised their rents, taxi drivers started charging more and groceries also started to become expensive. Never realising the effect of the inflation I was so happy to spend more because I felt my income has increased. I never thought to account for inflation. Basically my income remained the same if I had accounted for the inflation. That was me not being rational. I am sure I am not alone in this because it seems justifiable to behave that way, given that not all of us run to flip the pages of economics everyday to make our decisions.
Theory of fairness - deviating from this book we know and keep complaining about how things feel unfair when you become the victim of the situation but you enjoy it when you reap the benefits of the situation so I wonder if the word “fair” itself is fair. This book has more to say about it though.
Confidence - I would like to translate the word confidence used in this book to trust because most of our decisions are determined by the trust we have on the situation or the person. So this book says when people lose confidence in the economy they will start keeping more cash, reducing their investments and ultimately causing the economy to enter a recession. On the similar line, the confidence the people have in their leaders plays a vital role for the health of the economy because it seems to be performing better during the tenure of some leaders while it struggles in other cases. In that case I wonder if the charisma of the leader also plays a role in building the confidence of the people in their leaders.
Actually, this theory explains how the influencers are able to market the products because the viewers have confidence in the products used by their idols so they also invest or consume the same. The suppliers are taking advantage of this theory without even realizing and have made it as one of the channels of marketing cuz my fyp is definitely flooded with the unboxing of the PR packages lately. Do you agree with me on this one?
In-Voluntary employment- we start our education with the hope to be employed one day but hope alone isn’t enough and some people remain unemployed despite 15 years of education because most of the employers seek for experience rather than education. As for the experience one is not able to get it simply from going through the textbooks. Moreover the demand and supply doesn’t match hence some people remain employed involuntarily. For some they remain unemployed voluntarily because they can’t match the right job for their skills. I don’t mean this for all but for most it is.
In all the books of economics, it is always assumed that firms and individuals are always rational in their everyday decisions but in reality are we always rational?
