The 007s — Week 6

Image Source: The Economics Review

This week I slipped into the Youtube blackhole several times and did a lot of research-paper-reading (not sure how much I enjoyed it, System 2 was very strained). The list is a hodgepodge of determinants of consumer behaviour, human-centred economics and policy concepts.

• Ikea Effect: Named in a 2011 paper in the Journal of Consumer Psychology by Michael Norton, Daniel Mochon and Dan Ariely: The IKEA effect (taking after the Swedish furniture giant), describes how people tend to value an object more if they make (or assemble) it themselves. More broadly, the IKEA effect speaks to how we tend to like things more if we’ve expended effort to create them. The IKEA effect is very similar to another cognitive bias called the endowment effect, wherein people value items more highly if they belong to them — or even if they just feel a sense of ownership over them. There are some researchers that argue that labour leads to increased valuation only when labour results in the successful completion of tasks; thus when people built and then destroyed their creations, or failed to complete them, the IKEA effect dissipated.

• Greenfield City: A greenfield city is an underdeveloped area, where greater development is proposed allowing it to develop into a city. Greenfield cities are usually small because is not easy to create large greenfield cities owing to the fact that large tracts of unoccupied land are not common in modern-day India. Moreover, a large body of infrastructure is necessary for a city to develop and this is not easy to create in an underdeveloped area in a short period of time. As a part of the Smart City Mission, the central government plans to create 100 smart cities across the country — entirely new cities will be considered greenfield and those built out of existing cities will be considered brownfield cities.
• Bechdel Test: The Bechdel Test, or Bechdel-Wallace Test, sometimes called the Mo Movie Measure or Bechdel Rule is a simple test for female representation in movies, based on the following three criteria: (1) it has to have at least two women in it, who (2) who talk to each other, about (3) something besides a man. The test was popularized by Alison Bechdel’s comic in a 1985 strip called The Rule. While passing the Bechdel Test is no indication of a film’s feminist leanings, the sheer number of releases that don’t meet its basic requirements is staggering.

• Laffer curve: The Laffer Curve is a theory formalized by a Professor at the University of Chicago and supply-side economist Arthur Laffer, to show the relationship between tax rates and the amount of tax revenue earned by governments. He theorized that in certain cases, lower tax rates could increase total tax revenue and higher tax rates could decrease the total tax revenue, challenging the belief that the higher the tax rates, the higher would be the income accrued to a government.

• Circular Migration: Circular migration or repeat migration is the temporary and usually repetitive movement of a migrant worker between home and host areas, typically for the purpose of employment. It represents an established pattern of population mobility, whether cross-country or rural-urban. The proposed definition of circular migration (for cross-country) as per the UNECE (Taskforce on Measuring Circular Migration): a circular migrant is a person who has crossed the national borders of the reporting country at least 3 times over the past 10 years, each time with duration of stay (abroad or in the country) of at least 12 months.

• Footloose Workers: Jan Breman came up with the concept of ‘footloose workers’ in the context of changing nature of the agrarian social and class structure of India. He considered that with the changes in agriculture through land reforms, commercialisation of agriculture — the organic linkage between agriculture labourers and the agriculture system was broken. Due to this phenomenon, the agriculture labourers could not rely only on agriculture for their survival. The agri-labourers thus now have to engage in different kinds of short-term jobs and also migrate from one place to other, seeking such alternative opportunities. The labourers get detached from agriculture and specific regions of agriculture and hence become “Footloose”.
• Ghost towns: A ghost town is an abandoned village, town, or city, usually one that contains substantial visible remaining buildings and infrastructure such as roads. A town often becomes a ghost town because the economic activity that supported it (usually industrial or agricultural) failed or ended for any reason. The town could also have declined due to natural or human-caused disasters such as floods, prolonged droughts, extreme heat or extreme cold, government actions, uncontrolled lawlessness, war, pollution, or nuclear disasters. The term can sometimes refer to cities, towns, and neighbourhoods that are still populated, but significantly less so than in past years; for example, those affected by high levels of unemployment and dereliction. There are some 3,800 ghost towns in the United States, most abandoned in the 19th and early 20th centuries in favour of bigger cities, or casualties of changing industry.