Discrimination has long been a central topic in the study of labour markets and economic behaviour, with economists attempting to understand not only its moral and social implications but also its economic causes and consequences. At its core, the economics of discrimination explores how differences in treatment based on race, gender, ethnicity, or other characteristics affect employment, wages, and productivity, and how market forces interact with these behaviours. The field was first formalised in Gary Becker’s The Economics of Discrimination (1957), which applied the tools of microeconomics to the question of why discrimination persists and under what conditions it might diminish. Later contributions, including those of Thomas Sowell, further investigated the incentives shaping discriminatory practices and the economic outcomes across different groups.
Read MoreBayesian statistics has become an increasingly influential framework in economics, offering an alternative to the frequentist methods that dominated much of the twentieth century. At its core, the Bayesian approach is built around the idea of probability as a degree of belief rather than as a long-run frequency. Rooted in the eighteenth-century work of Thomas Bayes and formalised by Pierre-Simon Laplace, the Bayesian method uses Bayes’ theorem to update prior beliefs in light of new evidence. This simple but powerful principle—posterior belief equals prior belief updated by data—has profound implications for how economists model uncertainty, interpret evidence, and make decisions.
Read MorePaul Ormerod’s Butterfly Economics (1998) represents one of the more accessible and provocative attempts to challenge the orthodoxies of mainstream economics. Drawing inspiration from complexity theory and the natural sciences, Ormerod argues that economies should not be understood as mechanical systems tending towards equilibrium, but rather as complex adaptive systems in which small changes can have disproportionately large effects. The title refers to the “butterfly effect” in chaos theory, where the flap of a butterfly’s wings might set off a chain of events culminating in a hurricane. In economic terms, this metaphor captures the idea that minor, seemingly insignificant decisions by individuals or firms can cascade into large-scale, systemic outcomes.
Read MoreThe Nash–Cournot equilibrium is one of the foundational concepts in industrial organisation, shaping how economists think about competition in oligopolistic markets. It builds on the work of Augustin Cournot, who in 1838 published his seminal Researches into the Mathematical Principles of the Theory of Wealth. Cournot considered the case of two firms (a duopoly) producing a homogeneous good, each deciding how much quantity to supply. He showed that each firm’s optimal output depends on its expectations of the other firm’s decision, and that the interaction of these strategic choices leads to a determinate outcome where neither firm has an incentive to deviate. This equilibrium, rediscovered and reformulated in the twentieth century with the formalisation of game theory, came to be understood as a specific instance of a Nash equilibrium, named after John Nash, who generalised the concept of mutual best responses in strategic settings.
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