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Showing posts with the label Wuhan virus

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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ICMR, Pandemic Data and Prophylaxis: Some Thoughts

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In the last couple of months or so, there have been number of posts on the Chinese flu and its consequent impact on socio-economic life in India and across the world. One of the recent posts talked about the Indian strategy in Unlock 2.0. Throughout the lockdown and unlock versions, there have been debates on the feasibility of the same or the alternative solutions to thereof. Many of the previous posts have captured these debates at good length. One post   talked about the importance of the understanding the rate limiting step of the corona virus so that it might enable a mitigating strategy. Similarly, this post discussed the merits or the lack of it about the debate on herd immunity. This post talked about the possible strategy that needs to be factored in while exiting the lockdown. Also this post discusses the disruption in the healthcare equilibrium and how it needs to be tackled as the country faced the pandemic. The economic impact of the same among others is captured in s
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Will the Indian Lockdown Create Inflationary Tendencies?

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Some studies indicate a possibility of high inflation even in the excess of 10% within the next year. The expected inflation as per the surveys seem to point towards a jump of 3-4%. Interestingly, there is a divide among the economists over the after-effects of the Wuhan pandemic. The world having locked down for more than a month has without doubt created economic disruption both through Aggregate Demand (AD) and Aggregate Supply (AS) There has been an induced halt to aggregate demand with a similar restriction on aggregate supply. Furthermore, even with the lifting of lockdown, the propensity to self-protect might make prospective consumers wary of shopping thus lower AD. At the same time, the reluctance of the workers given the risks associated with the job tasks might make them skip from work thus adding to constraints in AS. Therefore an analysis would be worth pursuing over the likely inflationary impact or otherwise of the economic shutdown caused by the Wuhan flu. There
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Wuhan Pandemic, Fatality Rate and Statistical Determinants

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The post “ Investigating Wuhan Pandemic Spread and Determinants ” discussed the statistical determinants of the Wuhan pandemic. The analysis used the death incidence as the dependent variable and tested its susceptibility to changes in different independent variables. A couple of interesting pointers emerged. The first was the significant differences in death incidence between advanced economies and emerging or underdeveloped economies. One of the possible explanations was the probability of deaths being attributed to several other causes rather than Chinese virus induced Wuhan flu. There was a possibility that cases were being under-reported and deaths occurring were delinked from the COVID-19. Secondly, contrary to arguments by experts, there was no significance of BCG vaccine programmes on the death incidence. This was little puzzling given the opinion of experts. In the meantime there are anecdotal notes about the impact of temperature on the incidence of coronavirus. It is
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Peak End Experience of Wuhan VIrus Lockdown

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Thanks to the virus originating from Wuhan, China and the destruction it has spawned as it traverses across the world, seemingly the whole world is shut down. The economic activity is down to a standstill with experts talking about a long recession ahead globally. There are a few however who believe the world is headed towards a V shaped recovery- a sharp dip in growth rates followed by equally sharp recovery. As the economies shut down, a lot of discussion is happening over the duration of the lockdown. With no vaccine or cure in sight, options seem to be very limited with either a priority on health implying a long lockdown or a priority on economy which carries the burden of swifter spread of the infection. The debate between advocates of economy first and advocates of health first has been captured in this post . Aside of the debate is a serious question of the socio-eco-political consequences that arise of the decision in extending or exiting the lockdown. In India, politic
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The Post Pandemic Globalization

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While the world fights the Wuhan originated virus, it is unlikely that the post COVID-19 world would be the same. As with any war, the post war architecture undergoes a transformation change with little similarity to the past. The new normal is something different. The current global architecture in social, economic, political, cultural, military and technological governance is a product of the discussions and thinking that emerged in the immediate post World War II regime. The end of the Cold War with the collapse of the Soviet Union or rather a little earlier through a collapse of the Berlin Wall drove the world into an era of unabashed globalization. The outcome of such an era was the optimization of business resources perhaps an euphemism for cost minimization given the level of price. This led the business to seek new hunting grounds for production something that led them to China. The post “ Coronavirus, Global Economy and Redundancy ” captures the need for redundancies du
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Information Assymetry, Diya and Wuhan Virus

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Economics assumes rational action by agents under perfect available information. Yet the cognitive constraints in gathering and processing information makes agents take decisions under uncertainty. Rationality thus is bounded by cognitive abilities of the agents. In real life, contrary to theory, bounded rationality is evident. It is not to suggest irrationality in decision making but each action by an economic agent is a rational action undertaken through a grasp of cost benefit dynamics under the existing constraints. Information asymmetry between agents and among agents necessitate different approach to decision making. The buyer knows something about herself which the seller does not know. This could have significant implications in industries like insurance and banking. Suppose a person has a certain disability or disease while going for insurance which he or she can hide the same. Alternatively someone is going for fire insurance with a hidden objective of setting house or
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