Wednesday, October 3, 2012

What do you do for a living?

Good morning everyone. I would like to share with you today something that happened to me a couple of weeks ago. Before I do that, though, allow me a short introduction.

 A well known branch of economics that is gaining momentum is behavioral economics. Behavioral economics differs from traditional economics because it does away with the assumption of a rational selfish agent who is after maximizing unemotional enjoyment. Instead behavioral economics studies human reaction which sometimes may deemed to be irrational.

Although there is a school of thought which attempts to marry behavioral and traditional economics (I am an avid supporter of this school), there is a general belief that during the past few years the traditional rational agent is becoming extinct. Could it be that an economic recession could alter human behavior in ways that are not financially motivated?
Sometime ago I attended a function where I met a lot of people that I was not acquainted with. Traditionally, the flow of conversation would have started with the "what is your name" question,  "nice to meet you" greeting, to "how are you". Naturally, to keep the conversation going, my next question would normally be "what do you do for a living"? This time around, I avoided asking this question as the probability of someone being unemployed is rather high. I wanted to avoid the awkward discussion that would eventually follow. I had to alter my normal behavior because of the recession impact on unemployment.

I figured if the other person was employed, he/she would probably ask the question themselves...or would they? If we employ the theory of rational expectations, then other people would also avoid asking such question out of fear that the other conversing party is unemployed. Result? A change in social behavior which in under different circumstances would have deemed to be normal.

So, what do you do for a living? Have a nice day! 

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