SOME "PREDICTIONS" FOR 2004
Richard Ball is an associate professor of economics who specializes in microeconomics and is interested in worldwide economic policy, the economic development in less-developed countries, and game theory.
“The study of economics is changing in ways that mirror changes underway in Haverford’s academic programs: it is becoming more integrated.
The methodological approaches and perspectives taken by economists are being integrated with the approaches and perspectives of other social sciences. In standard neoclassical economics, individuals are assumed to care only about their personal well-being, firms are assumed to care only about maximizing their profits, and little attention is paid to the institutional environment (political and legal systems, bureaucratic and corporate structures, and social norms) in which exchange takes place.
Increasingly, though, economists are enriching their analyses with insights from psychology, sociology, political science, history, and anthropology. Large bodies of recent and current research are focused on the effects of factors traditionally considered to be non-economic—like people’s feelings about envy and fairness, peer pressure, and cognitive limitations on people’s ability to make choices—on processes traditionally considered to be economic—like the determination of wages and employment relations, investor behavior in the stock market, and economic development in poor countries.
Behavioral approaches to economics have taken firm root in the discipline, but in coming years their theoretical and empirical foundations will continue to develop and their influence on the profession will continue to grow.
The kinds of problems that economists study are being shaped by the increasing integration of the global economy. We are still far from a world in which goods, financial assets, and people can pass freely across international borders, but the loosening of some restrictions, along with reductions in the costs of transportation and communication, have dramatically increased the degree to which the nations of the world are interdependent on one another. It is impossible to study monetary and fiscal policy within a single country without considering the effects that will be felt through international capital markets; American labor unions have a stake in employment policy in Asia; and agricultural policy in Europe affects the welfare of corn producers in Zimbabwe. It will become increasingly difficult to analyze almost any economic question about a particular country, group of people, or sector of the economy without reference to its linkages with the rest of the world economy.
Finally, the Internet has integrated vast numbers of people, businesses, governments, and organizations into an online community and marketplace. Our understanding of the economic implications of this phenomenon is in its infancy.
We have seen the inflation and explosion of one bubble based on enthusiastic expectations for this 'new economy.' We can only speculate about what joys or miseries the networked economy will bring us in the coming decades. But it is clear that the new information technologies will be central to our economic and social lives.”