And studies have confirmed that people tend to undergo a kind of withdrawal: A study a few years ago from Swansea University found that people experienced the psychological symptoms of withdrawal when they stopped using (this went for all internet use, not just social media).

It triggers more sadness, less well-being

The more we use social media, the less happy we seem to be. One study a few years ago found that Facebook use was linked to both less moment-to-moment happiness and less life satisfaction—the more people used Facebook in a day, the more these two variables dropped off

In fact, another study found that social media use is linked to greater feelings of social isolation.

Comparing our lives with others is mentally unhealthy

One study looked at how we make comparisons to others posts, in “upward” or “downward” directions—that is, feeling that we’re either better or worse off than our friends.

It can lead to jealousy—and a vicious cycle

Studies have certainly shown that social media use triggers feelings of jealousy. The authors of one study, looking at jealousy and other negative feelings while using Facebook, wrote that “This magnitude of envy incidents taking place on FB alone is astounding, providing evidence that FB offers a breeding ground for invidious feelings."

We get caught in the delusion of thinking it will help

Part of the unhealthy cycle is that we keep coming back to social media, even though it doesn’t make us feel very good.

This is probably because of what’s known as a forecasting error: Like a drug, we think getting a fix will help, but it actually makes us feel worse, which comes down to an error in our ability to predict our own response.

More friends on social doesn’t mean you’re more social

A couple of years ago, a study found that more friends on social media doesn’t necessarily mean you have a better social life—there seems to be a cap on the number of friends a person’s brain can handle, and it takes actual social interaction (not virtual) to keep up these friendships

All of this is not to say that there’s no benefit to social media—obviously it keeps us connected across great distances, and helps us find people we’d lost touch with years ago

Learning how to make friends is a major part of growing up, and friendship requires a certain amount of risk-taking. This is true for making a new friend, but it’s also true for maintaining friendships. When there are problems that need to be faced—big ones or small ones—it takes courage to be honest about your feelings and then hear what the other person has to say

But when friendship is conducted online and through texts, kids are doing this in a context stripped of many of the most personal—and sometimes intimidating—aspects of communication

The other big danger that comes from kids communicating more indirectly is that it has gotten easier to be cruel. “Kids text all sorts of things that you would never in a million years contemplate saying to anyone’s face,”

“Girls are socialized more to compare themselves to other people, girls in particular, to develop their identities, so it makes them more vulnerable to the downside of all this.” She warns that a lack of solid self-esteem is often to blame. “We forget that relational aggression comes from insecurity and feeling awful about yourself, and wanting to put other people down so you feel better.”

. Teenage girls sort through hundreds of photos, agonizing over which ones to post online. Boys compete for attention by trying to out-gross one other, pushing the envelope as much as they can in the already disinhibited atmosphere online.

Another big change that has come with new technology and especially smart phones is that we are never really alone. Kids update their status, share what they’re watching, listening to, and reading, and have apps that let their friends know their specific location on a map at all times.

Offline, the gold standard advice for helping kids build healthy self-esteem is to get them involved in something that they’re interested in

The ‘urge’ to check one’s social media may be linked to both instant gratification (the need to experience fast, short term pleasure) and dopamine production (the chemical in the brain associated with reward and pleasure).

The popular concept of Fear of Missing Out (FOMO) refers to ‘a pervasive apprehension that others might be having rewarding experiences from which one is absent’ and is ‘characterised by the desire to stay continually connected with what others are doing’.

What is dangerous about this compulsive use is that, if gratification is not experienced, users may internalise beliefs that this is due to being ‘unpopular’, ‘unfunny’ etc. A lack of ‘likes’ on a status update may cause negative self-reflection, prompting continual ‘refreshing’ of the page in the hope of seeing that another person has ‘enjoyed’ the post, thus helping to achieve personal validation.

The University of Glasgow found that young people found it difficult to relax following night time social media use, reducing their brain’s ability to prepare for sleep. Sleep loss works in a vicious cycle of reinforcement with mental health; that is, that loss of sleep due to night time social media use can lead to poorer mental health, and poor mental health can lead to intense night time use and sleep loss

Data from qualitative studies has shown that using social media compulsively can damage sleeping patterns, having an adverse effect on young people’s performance in school

FOMO has been linked to intensive social media use and is associated with lower mood and life satisfaction.

Social media has been linked to poor self-esteem and self-image through the advent of image manipulation on photo sharing platforms. In particular, the notion of the ‘idealised body image’ has arguably been detrimental to self-esteem and image, especially that of young women. The 24/7 circulation of easily viewable manipulated images promotes and entrenches unrealistic expectations of how young people should look and behave.

The evidence suggests that social media use is strongly associated with anxiety, loneliness and depression

FOMO—fear of missing out—also plays a role

A 2018 British study tied social media use to decreased, disrupted, and delayed sleep, which is associated with depression, memory loss, and poor academic performance.

Social media use can affect users’ physical health even more directly. Researchers know the connection between the mind and the gut can turn anxiety and depression into nausea, headaches, muscle tension, and tremors.

The earlier teens start using social media, the greater impact the platforms have on mental health. This is especially true for females. While teen males tend to express aggression physically, females do so relationally by excluding others and sharing hurtful comments. Social media increases the opportunity for such harmful interactions.

In the past, teens read magazines that contained altered photos of models. Now, these images are one thumb-scroll away at any given time. Apps that provide the user with airbrushing, teeth whitening, and more filters are easy to find and easier to use. It’s not only celebrities who look perfect—it’s everyone.

In recent years, plastic surgeons have seen an uptick in requests from patients who want to look like their filtered Snapchat and Instagram photos.

A person experiences impostor syndrome when feeling chronic self-doubt and a sense of being exposed as ‘a fraud’ in terms of success and intellect. “Whether it’s another pretty vacation or someone’s bouquet of flowers, my mind went from ‘Why not me?’ to ‘I don’t deserve those things, and I don’t know why,’ and it made me feel awful.”

Sperling encourages people to conduct their own behavior experiments by rating their emotions on a scale of 0-10, with 10 being the most intensely one could experience an emotion, before and after using social media sites at the same time each day for a week.

It’s what they use to track prey and avoid predation.

The theory of mind is so obvious it’s nearly invisible: it tells us that behavior is the result of the joint operation of pairs of beliefs and desires.

The desires are about the ways we want things to turn out in the future. The beliefs are about the way things are now.

The theory of mind turns what people do into a story with a plot by pairing up the content of beliefs and desires, what they are about.

Psycholinguistics has shown that the theory of mind is necessary for learning language and almost anything else our parents teach us.

Imitating others requires using the theory to figure out what they want us to do and in what order. Without it, you can’t learn much beyond what other higher primates can.

The theory of mind makes us construct stories obsessively, and thus encourages us to see the past as a set of them.

When popular historians seek to know why Hitler declared war on the U.S. (when he didn’t have to), they put the theory of mind to work: What did he believe and what was it that he wanted that made him do such a foolish thing?

he trouble is that the theory of mind is completely wrong about the way the mind, i.e. the brain, actually works. We can’t help but use it to guess what is going on in other people’s minds, and historians rely on it, but the evidence from neuroscience shows that in fact what’s “going on” in anyone’s mind is not decision about what to do in the light of beliefs and desire, but rather a series of neural circuitry firings.

The wrongness of the theory of mind is so profound it makes false all the stories we know and love, in narrative history (and in historical novels).

Neuroscience reveals that the brain is not organized even remotely to work the way the theory of mind says it does. The fact that narrative histories give persistently different answers to questions historians have been asking for centuries should be evidence that storytelling is not where the real answers can be found.

Crucially, they discovered that while different parts of the brain control different things, the neurons’ electrical signals don’t differ in “content”; they are not about different subjects. They are not about anything at all. Each neuron is just in a different part of the mid-brain, doing its job in exactly the same way all other neurons do, sending the same electrochemical oscillations.

There is nothing in our brains to vindicate the theory’s description of how anyone ever makes up his or her mind. And that explains a lot about how bad the theory of mind is at predicting anything much about the future, or explaining anything much about the past.

If we really want historical knowledge we’ll need to use the same tools scientists use — models and theories we can quantify and test. Guessing what was going through Hitler’s mind, and weaving it into a story is no substitute for empirical science.

The reason is that the best available evidence on how the brain works shows that the brain does not deal with the kind of things that beliefs and desires are supposed to trade with: contents.

When we believe or desire, something is believed or desired: that I have bread, that it rains, that the Parliament passes the bill, etc. Beliefs and desires are about something.

. After being presented with the assassin and the crime, the book moves on to explain why, even if always wrong, narratives in general, and historical narratives in particular, are so compelling for us. Even if we have no claim to truth or correctness for our narratives, narratives seem to be highly convincing in moving us to act

Furthermore, we cannot but think in terms of them. Rosenberg's explanation for this 'addiction to stories' is that it has been entrenched in us by evolutionary processes that took place over the last million years of natural history

Narrative explanations emerged out of Darwinian processes of natural selection -- or "environmental filtration", in the less purposive parlance Rosenberg prefers -- that allowed our ancestors to coordinate efforts, collaborate and flourish, moving from the bottom to the top of the Pleistocene's food chain. Rosenberg argues that while the basic mechanisms of mindreading pervasive in the animal kingdom, based on mutual tracking and monitoring of animals' behavior, are a sound method for getting agents to coordinate behavior, these mechanisms' more recent successor, the theory of mind, crafted by the use of co-evolved languages, turned those mindreading abilities into a theory with empirical hypothesis about agents' beliefs and desires but no facts to match them.

The error historians allegedly make lies in mistaking stories for real explanations, surmising that behind our behavior there are purposes, rational motivations.

Historians -- in particular narrative historians -- make a pervasive use of folk psychological explanations, i.e., explanations that describe events in terms of the beliefs and desires of historical agents, including individuals and groups.

In order for folk psychological and historical narratives to be right there have to be facts of the matter about what sentences in such explanation refer to that make them true.

Folk psychological explanations of actions in terms of platitudes about beliefs and desires pairings evolved in natural history closely related to mind-reading mechanisms that allowed our ancestors to deal with cooperation and coordination problems.

There are no interpretative mechanisms in the brain (at any level of description) that can vindicate the attribution of contents to beliefs and desires.

There are no facts of the matter that allow us to select belief/desire pairings as those actually operating 'behind' an agent's behavior.

Folk psychological explanations do not track any facts and thus can't be correct.

Historians are no longer grandees at the centre of a fixed civilisation; they are simply journalists writing about celebrities who haven't got the grace to be alive any more

There are those who wonder if the whole of history is now valuable only as a politically correct lesson in the stupidity and cruelty of monarchs, aristocrats, industrialists and generals

You don't even have to dignify it with ideological abstractions any more; history is really the story of a series of subjugations, oppressions, exploitations and abuses.

The biggest challenge facing the great teachers and communicators of history is not to teach history itself, nor even the lessons of history, but why history matters.

A history in which historians have to stand on one side of an argument or another, for, in between, they are nothing but dry-as-dust statisticians

we measure the exponential growth in the public appetite for history

Certainly, history is popular in grand traditional forms, but new subgenres of history have, for the last 20 years, exploded in popularity, too.

After all, isn't that what poetry and novels show, that humanity is best comprehended by understanding humans rather than ideas? But for some, this leads to the worry that history can now only mean witness

History, then, as one long, grovelling apology or act of self-abasement and self-laceration.

We haven't arrived at our own moral and ethical imperatives by each of us working them out from first principles; we have inherited them and they were born out of blood and suffering, as all human things and human beings are.

This does not stop us from admiring and praising the progressive heroes who got there early and risked their lives to advance causes that we now take for granted.

In the end, I suppose history is all about imagination rather than facts

If you cannot feel what our ancestors felt when they cried: 'Wilkes and Liberty!' or, indeed, cried: 'Death to Wilkes!', if you cannot feel with them, then all you can do is judge them and condemn them, or praise them and over-adulate them.

History is not the story of strangers, aliens from another realm; it is the story of us had we been born a little earlier

History is memory

It’s also a valuable tool when it comes to understanding those who are different from us. Global, national, and regional history books help us understand how other cultures affect our own.

3. History helps us learn to understand other people.

A large part of that is learning where you fit into the story of your country or the global community in the grand scheme of things. History tells you the story of how your nation, city, or community came to be everything that it is. It tells you where your ancestors came from and tells you who they were.

4. History teaches a working understanding of change.

. Each of us has a different experience with the rest of the world – an experience shaped by societal norms, cultural differences, personal experiences, and more. We know when we as individuals crave change and why. History helps us better understand how, when, and why change occurs (or should be sought) on a larger scale.

5. History gives us the tools we need to be decent citizens.

Good citizens are always informed citizens, and no one can consider himself to be an informed citizen without a working knowledge of history

6. History makes us better decision makers.

History gives us the opportunity to learn from past mistakes. It helps us understand the many reasons why people may behave the way they do.

Our judicial system is a perfect example of this concept at work.

7. History helps us develop a new level of appreciation for just about everything.  

History is more than just the living record of nations, leaders, and wars. It’s also the story of us. It’s packed with tales of how someone stood up for what they believed in, or died for love, or worked hard to make their dreams come true.

Hate crime reports increased 17 percent in the United States in 2017 according to the FBI, increasing for the third consecutive year.

It is not just LGBTQ+ hate crime that is on the rise. 2018 saw a 99 percent increase in anti-Semitic incidents versus 2015, according to the Anti-Defamation League. When it strictly came to race/ethnicity/ancestry motivated crimes, the increase was 18.4 percent between 2016 and 2017. It is a dangerous time if you are not a cisgender, white, Christian in America, but that is not new.

A hundred years ago, in 1920, the National Socialist German Workers’ (Nazi) Party was founded in Germany. It started a generation of Germans that came of age around World War II, meaning they were young adults in 1939.

This is not really surprising. History repeats itself. And people forget about history.

The Anti-Defamation League says it like it is: Anti-Semitism in the U.S. is as bad as it was in the 1930s

The Nazis held a rally in New York City, where they were protected from protesters by the NYPD. This occurred a full six years after the concentration camps started in Germany. American history sometimes casually likes to omit those events in its recounting of World War II. Americans were undoubtedly the good guys of World War II, saving many countries and millions of people worldwide from fascism, but it has also done a poor job at ensuring these fascists ideas stay out of the country in recent years.

How can we protect history and avoid making the same mistakes we made in the past when we forget what happened?

In the same survey, 93 percent of respondents said that students should learn about the Holocaust in school. Americans understand the importance of passing down the knowledge of this dark past, but we have a government that still refuses to condemn groups promoting the same ideas that tore the world apart 80 years ago.

Those events took so many lives, led to a collective awakening to the plight of the Jewish people and now, 80 years later, we are falling back into old patterns.

In the early months of the pandemic, the economic downturn in low- and middle-income countries was almost certainly worse than any other recent global economic crisis that we know of, whether the Asian financial crisis of the late 1990s, the Great Recession that started in 2008, or the more recent Ebola crisis,

The pandemic has produced some hopeful innovations, including a partnership between the government of Togo in West Africa and UC Berkeley's Center for Effective Global Action (CEGA) on a system to provide relief payments via digital networks.

The new study -- the first of its kind globally -- reports that after two decades of growth in many low- and middle-income countries, the economic crisis resulting from the COVID-19 pandemic threatens profound long-term impact: Reduced childhood nutrition could have health consequences later in life.

The study was launched in spring 2020, as China, Europe and the U.S. led global efforts to check spread of the virus through ambitious lockdowns of business, schools and transit. Three independent research teams, including CEGA, joined to conduct surveys in the countries where they already worked.

"COVID-19 and its economic shock present a stark threat to residents of low- and middle-income countries -- where most of the world's population resides -- which lack the social safety nets that exist in rich countries,

Reports early in the pandemic suggested that developing countries might be less vulnerable because their populations are so much younger than those in Europe and North America.

In Colombia, 87% of respondents nationwide reported lost income in the early phase of the pandemic. Such losses were reported by more than 80% of people nationwide in Rwanda and Ghana.

In the Philippines, 77% of respondents nationwide said they faced difficulty purchasing food because stores were closed, transport was shut down or food supplies were inadequate. Similar reports came from 68% of Colombians and 64% of respondents in Sierra Leone; rates were similar for some communities within other countries.

Food insecurity rose sharply.

: In Bangladesh, 69% of landless agricultural households reported that they were forced to eat less, along with 48% of households in rural Kenya

Between April and early July 2020, they connected with 30,000 households, including over 100,000 people, in nine countries with a combined population of 500 million: Burkina Faso, Ghana, Kenya, Rwanda and Sierra Leone in Africa; Bangladesh, Nepal and the Philippines in Asia; and Colombia in South America. The surveys were conducted by telephone.

The evidence we've collected shows dire economic consequences ... which, if left unchecked, could thrust millions of vulnerable households into poverty."

In North America and Europe, nations may be struggling with vaccination plans, but vaccines have barely arrived in most low-income countries, he said

If we can spread the wealth in terms of pandemic relief assistance and vaccine distribution, we're all going to get out of this hole faster."

If this variability increases by one degree Celsius, economic growth is reduced on average by 5 percentage-points."

"We find that familiarity with temperature variations is important: Economies in Canada or Russia, where average monthly temperature varies by more than 40°C within a year, seem better prepared to cope with daily temperature fluctuations than low-latitude regions such as parts of Latin America or Southeast Asia, where seasonal temperature differences can be as small as 3°C.

Furthermore, income protects against losses,

Comparing each year's day-to-day temperature variability between 1979 and 2018 with the corresponding regional economic data, the researchers analyzed a total of 29,000 individual observations.

"Rapid temperature variability is something completely different than long-term changes," explains Co-Author Anders Levermann from PIK and Columbia University, New York.

"The real problem caused by a changing climate are the unexpected impacts, because they are more difficult to adapt to. Farmers and other businesses around the world have started to adapt to climate change. But what if weather becomes simply more erratic and unpredictable? What we have shown is that erratic weather slows down the economy. Policy makers and industry need to take this into account when discussing the real cost of climate change."

Sorrentino said the study defined economic impact by the extent that a city's economy was closed -- businesses like restaurants, gyms, salons and airports that would lose business without people's physical presence.

The study took into account both the costs associated with quarantining (which requires supervision costs as well as costs due to lowered productivity) as well as social distancing (which incurs costs only due to productivity).

"But our model shows that even before we achieve herd immunity, we can relax social distancing compared to the situation prior to immunization."

The analysis looked at Seattle, beginning on December 14, 2020, when the vaccine was first being administered. Even with this limited data, the effect of vaccinations was dramatic, impacting the so-called "optimal control solution."

While the optimal interventions would vary depending on a number of factors, we always saw that a gradual relaxation of social distancing was possible after roughly 10% of the population got vaccinated," he said.

After just 20 days, the trend was becoming clear when comparing with the case in which the effects of vaccinations were not incorporated in the model.

Sorrentino emphasizes also that everyone should continue to follow the current policy and health guidelines, and that the relaxing of social distancing should adhere to these guidelines and be gradual. And of course, that guidance may change, based on the rates of spread of the virus and the variants.

Unionization rates in the U.S. have declined for decades. "Unionization is highest in the public sector, but this has been challenged by state and local austerity since the recession in 2008-09," Warner said.

Warner said that the role of the federal government is to provide funds to states and local governments to support critical public services, such as schools and roads

While the federal government can play a redistributive role, as with the recent COVID relief package, this is less likely in states that have more corporate influence in their legislative policymaking,

"In the new political economy of place, the corporate interests undermine the potential for inclusive economic growth."

The study also found that small differences in projections for future climate conditions can yield very large differences in the economic outcomes for water scarcity.

A river basin can be considered economically robust if it is able to adapt to drought with alternative sources of water or adjust economic activity to limit usage.

The conditions that lead to these tipping points are highly variable from basin to basin, depending on a combination of local factors and global conditions

As climate change makes the physical and economic effects of water scarcity more challenging for policy makers to understand, the researchers hope their work will provide the basis for similar analyses and draw attention to the importance of expanded data collection to improve modeling and decision making.

Consumers were assigned the renewable package unless they opted out, a behavioural mechanism known to have success in a range of settings.

Further analysis of customer data in the household sector showed that women were around 6 per cent more likely than men to accept the green default, while women business owners were 8 per cent more likely to stick with the renewable package.

It is sometimes argued that the introduction of green energy defaults leads to an increase in energy use -- because the energy is 'clean' consumers are more relaxed about using it.

Large green default effects can considerably reduce CO2 emissions in countries with high fossil fuel share in their energy mix. Taking Germany as a case study and assuming a default effect of 80% in the household sector, the study calculated a CO2 reduction of about 45 million tonnes and a positive welfare effect of €1,240 million.

While the impact of default effects can be massive, the exact CO2 reduction figures and welfare gains depend on the CO2 emission factor and social cost of carbon.

But the US also just hit a record 13 straight years without 3% real GDP growth

While the US has had a record period of economic expansion, it's not setting the world on fire. It's been a record 13 straight years without reaching 3% real gross domestic product growth. The US has come close, hitting 2.9% growth in 2018, but America hasn't hit a real GDP growth of 3% since 2005, when it grew 3.5%

The decade-long expansion has generated 20 million jobs

With economic growth stretching the past decade, key figures continue to get better. A 3.4% year-over-year wage growth is the strongest in more than a decade, a good sign as stagnant wages have kept the US middle class at bay

Still, the jobless rate fell to 3.8%

Sleep deprivation costs the US economy billions of dollars

More than a third of the US adult population doesn't get enough sleep, and that costs the US $411 billion through the loss of 1.2 million work days each year.

The lack of sleep can come from a variety of factors, whether it's overworking, poor health habits, or even the horrid blue light from electronics

About $100,000 separates the middle class from the upper class

The sports industry is worth nearly $75 billion

Generation Z might spend as much as $143 billion next year

Generation Z, the population born between 1997 and 2012, will make up 40% of US consumers by next year.

The average car part crosses into Mexico and Canada eight times in production

Mexico is the top trade partner, with the US exporting $21.9 billion worth of products to its southern neighbor and importing $27.7 billion, making up 14.8% of all US trade. Canada, meanwhile, makes up 13.8% of US trade as it imports $22.6 billion worth of American goods and sends in $23.4 billion

If California were a country, it would have the fifth highest GDP in the world

With a gross domestic product of $2.747 trillion, California would only trail Germany, Japan, China, and the US as a whole.

The US spends more on defense than the next seven nations combined

That $610 billion is good for 15% of all federal spending

The US national debt is at an all-time high

In February, US government debt hit an all-time high of $22 trillion

In 2011, 51% of Americans were considered middle class, and that number grew slightly to 52% in 2016

A sports-industry report back in 2015 predicted the market in North America would be worth more than $73.5 billion by this year.

Over multiple years, family income fluctuates, and so the distribution of multiyear income is moderately more equal than the distribution of single-year income.

n one sense, the growth of inequality in the last part of the twentieth century comes as a surprise. In the 1950s, the bottom part of the income distribution contained large concentrations of two kinds of families: farm families whose in-kind income was not counted in Census data, and elderly families, many of whom were ineligible for the new Social Security program

Over subsequent decades, farm families declined as a proportion of the population while increased Social Security benefits and an expanding private pension system lifted elderly incomes. Both trends favored greater income equality but were outweighed by four main factors.

Family structure. Over time, the two-parent, one-earner family was increasingly replaced by low-income single-parent families and higher-income two-parent, two-earner families

Trade and technology increasingly shifted demand away from less-educated and less-skilled workers toward workers with higher education or particular skills. The result was a growing earnings gap between more- and less-educated/skilled workers.

With improved communications and transportation, people increasingly functioned in national, rather than local, markets. In these broader markets, persons with unique talents could command particularly high salaries.

In 2002, immigrants who had entered the country since 1980 constituted nearly 11 percent of the labor force (see immigration). A relatively high proportion of these immigrants had low levels of education and increased the number of workers competing for low-paid work.

A second offset to estimated inequality is economic mobility. Because most family incomes increase as people’s careers develop, long-run incomes are more equal than standard single-year statistics suggest

Is inequality of wages and incomes bad? The question seems ludicrous. Of course inequality is bad, isn’t it? Actually, no. What matters crucially is how the inequality came about.

Inequality of wages and incomes is clearly bad if it results from government privileges. Many people would find such an outcome unjust, but even more important to many economists is that such inequality sets up perverse incentives.

But inequality in wages and incomes in relatively free economies serves two important social functions.

Applied welfare economics is the fruition of microeconomics.

It is hard to imagine a basic course in microeconomics failing to include numerous cases and examples drawn from all of the fields listed above. This is because microeconomics is so basic. It represents the trunk of the tree from which all the listed subfields have branche

The specialization of production and the institutions of trade, commerce, and markets long antedated the science of economics. Indeed, one can fairly say that from the very outset the science of economics entailed the study of the market forms that arose quite naturally (and without any help from economists) out of human behavior

In microeconomics this is translated into the notion of people maximizing their personal “utility,” or welfare.

At the beginning of the process, those who adopted the new hybrids made handsome profits.

The economics of supply and demand has a sort of moral or normative overtone, at least when it comes to dealing with a wide range of market distortions. In an undistorted market, buyers pay the market price up to the point where they judge further units not to be worth that price, while competitive sellers supply added units as long as they can make money on each increment.

The strength of microeconomics comes from the simplicity of its underlying structure and its close touch with the real world. In a nutshell, microeconomics has to do with supply and demand, and with the way they interact in various markets.

If price controls keep bread (or anything else) artificially cheap, the predictable result is that less will be supplied than is demanded.

Had the government given wheat farmers coupons, each of which permitted the farmer to market one bushel of wheat, wheat marketings could have been cut by the desired amount. Production inefficiencies could be avoided by allowing the farmers to buy and sell coupons among themselves.

monopoly represents the artificial restriction of production by an entity having sufficient “market power” to do so.

Modern monopolies are a bit less transparent, for two reasons. First, even though governments still grant monopolies, they usually grant them to the producers. Second, some monopolies just happen without government creating them, although these are usually short-lived.

A final example of what occurs with official prices that are too high is the phenomenon of “rent seeking,” which occurs when someone enters a business to earn a profit that the government has tried to make unusually high.

If the wage does not adjust downward to equate supply and demand, the rate of urban unemployment will rise until further migration is deterred. Still other examples are in banking and drugs.

Rent seeking also occurs when something of value (like import licenses or radio/TV franchises) is being given away or sold below its true value

The great unifying principles of microeconomics are, ever and always, supply and demand. The normative overtone of microeconomics comes from the fact that competitive supply price represents value as seen by suppliers, and competitive demand price represents value as seen by demanders.

Investment is usually the result of forgoing consumption. In a purely agrarian society, early humans had to choose how much grain to eat after the harvest and how much to save for future planting. The latter was investment.

In a more modern society, we allocate our productive capacity to producing pure consumer goods such as hamburgers and hot dogs, and investment goods such as semiconductor foundries. If we create one dollar worth of hamburgers today, then our gross national product is higher by one dollar.

Investment need not always take the form of a privately owned physical product. The most common example of nonphysical investment is investment in human capital.

In an economy that is closed to the outside world, investment can come only from the forgone consumption—the saving—of private individuals, private firms, or government.

In an open economy, however, investment can surge at the same time that a nation’s saving is low because a country can borrow the resources necessary to invest from neighboring countries.

That economists have a fairly strong understanding of firms’ investment behavior makes sense. A firm that maximizes its profits must address investment using the framework discussed in this article.

This method of financing investment has been very important in the United States. The industrial base of the United States in the nineteenth century—railroads, factories, and so on—was built on foreign finance, especially from Britain. More recently, the United States has repeatedly posted significant investment growth and very low savings.

Investment fluctuates a lot because the fundamentals that drive investment—output prices, interest rates, and taxes—also fluctuate. But economists do not fully understand fluctuations in investment. Indeed, the sharp swings in investment that occur might require an extension to the Jorgenson theory.

In Jorgenson’s user cost model, firms will purchase a machine if the extra revenue the machine generates is a smidgen more than its cost.

The general conclusion is that there is a gain to waiting if there is uncertainty and if the installation of the machine entails sunk costs, that is, costs that cannot be recovered once spent.

Although quantifying this gain exactly is a highly mathematical exercise, the reasoning is straightforward. That would explain why firms typically want to invest only in projects that have a high expected profit.

The fact of irreversibility might explain the large fluctuations in investment that we observe.

The theory of investment dates back to the giants of economics. irving fisher, arthur cecil pigou, and alfred marshall all made contributions; as did john maynard keynes, whose Marshallian user cost theory is a central feature in his General Theory.

Consumer behavior is harder to study than firms’ behavior. Market forces that drive irrational people out of the marketplace are much weaker than market forces that drive bad companies from the market.

Because the saving response of consumers must be known if one is to fully understand the impact of any investment policy, and because saving behavior is so poorly understood, much work remains to be done.

Such trading on information originating outside the company is generally not covered by insider trading regulation.

Insider trading is quite different from market manipulation, disclosure of false or misleading information to the market, or direct expropriation of the corporation’s wealth by insiders.

Regulation of insider trading began in the United States at the turn of the twentieth century, when judges in several states became willing to rescind corporate insiders’ transactions with uninformed shareholders.

One of the earliest (and unsuccessful) federal attempts to regulate insider trading occurred after the 1912–1913 congressional hearings before the Pujo Committee, which concluded that “the scandalous practices of officers and directors in speculating upon inside and advance information as to the action of their corporations may be curtailed if not stopped.”

The Securities Acts of 1933–1934, passed by the U.S. Congress in the aftermath of the stock market crash, though aimed primarily at prohibiting fraud and market manipulation, also targeted insider trading.

As of 2004, at least ninety-three countries, the vast majority of nations that possess organized securities markets, had laws regulating insider trading

Several factors explain the rapid emergence of such regulation, particularly during the last twenty years: namely, the growth of the securities industry worldwide, pressures to make national securities markets look more attractive in the eyes of outside investors, and the pressure the SEC exerted on foreign lawmakers and regulators to increase the effectiveness of domestic enforcement by identifying and punishing offenders and their associates operating outside the United States.

Many researchers argue that trading on inside information is a zero-sum game, benefiting insiders at the expense of outsiders. But most outsiders who bought from or sold to insiders would have traded anyway, and possibly at a worse price (Manne 1970). So, for example, if the insider sells stock because he expects the price to fall, the very act of selling may bring the price down to the buyer.

A controversial case is that of abstaining from trading on the basis of inside information (Fried 2003).

There is little disagreement that insider trading makes securities markets more efficient by moving the current market price closer to the future postdisclosure price. In other words, insiders’ transactions, even if they are anonymous, signal future price trends to others and make the current stock price reflect relevant information sooner.

Accurately priced stocks give valuable signals to investors and ensure more efficient allocation of capital.

The controversial question is whether insider trading is more or less effective than public disclosure.

Insider trading’s advantage is that it introduces individual profit motives, does not directly reveal sensitive intercorporate information, and mitigates the management’s aversion to disclosing negative information (

Probably the most controversial issue in the economic analysis of insider trading is whether it is an efficient way to pay managers for their entrepreneurial services to the corporation. Some researchers believe that insider trading gives managers a monetary incentive to innovate, search for, and produce valuable information, as well as to take risks that increase the firm’s value (Carlton and Fischel 1983; Manne 1966).

Another economic argument for insider trading is that it provides efficient compensation to holders of large blocks of stock

A common contention is that the presence of insider trading decreases public confidence in, and deters many potential investors from, equity markets, making them less liquid (Loss 1970).

Empirical research generally supports skepticism that regulation of insider trading has been effective in either the United States or internationally, as evidenced by the persistent trading profits of insiders, behavior of stock prices around corporate announcements, and relatively infrequent prosecution rates (Bhattacharya and Daouk 2002; Bris 2005).

Despite numerous and extensive debates, economists and legal scholars do not agree on a desirable government policy toward insider trading. On the one hand, absolute information parity is clearly infeasible, and information-based trading generally increases the pricing efficiency of financial markets. Information, after all, is a scarce economic good that is costly to produce or acquire, and its subsequent use and dissemination are difficult to control. On the other hand, insider trading, as opposed to other forms of informed trading, may produce unintended adverse consequences for the functioning of the corporate enterprise, the market-wide system of publicly mandated disclosure, or the market for information.