Motivation

Why study microeconomics?: 

Why study microeconomics? We have lost a 100 million women in Asia!!!

Slide2: 

Amartya Sen won the Nobel Prize in Economics in 1988 In December 20, 1990 he wrote an article in The New York Review of Books entitled “More than a 100 million women are missing” The basic observation was that the ratio women to men in Europe and America was around 1.05 but… ”In South Asia, West Asia, and China, the ratio of women to men can be as low as 0.94, or even lower, and it varies widely elsewhere in Asia, in Africa, and in Latin America.”

Slide3: 

Europe, USA and Japan, 1.03 India and Pakistan: 0.94 Bangladesh: 0.9 Punjab and Haryana, India: 0.86 He observed that, although at birth there seem to be more men than women the ratio in Europe and America balances because… “after conception, biology seems on the whole to favor women.” When given the same care as males, females tend to have better survival rates than males.

Slide4: 

He goes on a rampage destroying two simple explanations: Intrinsic difference between East and West: 1- There are places in the east (Japan) much similar to the west and among eastern countries the ratio differs a lot. 2- In many aspects the east is more prone to accept women: i.e. there are more women politicians in some countries in the East than in America Underdevelopment (lack of health care an proper nutrition) is more damaging for women: 1- Countries with the same level of underdevelopment do not show systematically a higher ratio of men

Slide5: 

There might be some power in these two but they can not be the full explanation. “ We have to examine the complex ways in which economic, social, and cultural factors can influence the regional differences.” Can the answer be related to human behavior? Can we have an economic explanation for this phenomenon?

Slide6: 

Gary Becker won the Nobel Prize in Economics in 1992 In 1976 he wrote a book called The Economic Approach to Human Behavior and in 1981 A Treatise on the Family. Basic Idea: all human behavior can be studied using economics. Among other things: kids can be seen as consumption or “production” goods.

Slide7: 

In this line Amartya Sen made the following observations The role of women as providers in the family differs across regions This role is less recognized the more difficult it is for women to earn outside income (gainful employment). Following this intuition he ranks places in Asia and Africa (except China) according to probability of female gainful employment and ratio of female to male: THEY MATCH. The he goes and studies China.

Slide8: 

After the 1979 reforms the life expectancy increase almost 30 years: low forties in 1950 and high sixties in 1979. This in turns helped developing the country but: The ratio women to men decrease between 1979 and 1986. How is this possible?

Slide9: 

How is this possible? He pointed out that in 1979 it has been introduced the policy of “one-child family”: There is evidence of female infanticide: “the rate of female infant mortality rose from 37.7 per thousand in 1978 to 67.2 per thousand in 1984.” The "responsibility system" (agriculture was centered in the family) Women are seen as less productive (gainful employment) Discrimination against due to (ill) perceived less productivity. Direct policy implication: Education can improve the chances of women in the market (Kerala, India)

Is Amartya Sen right?: 

Is Amartya Sen right? Emily Oster (2005), “Hepatitis B and the Case of the Missing Women”, JPE. Hepatitis B tends to increase the conception of males over females up o 50%. Hepatitis B is wide spread in places were the “missing women” hypothesis” was raised. Natural causes might be behind that and not the fact that we are evil economic agents. But….

Is Emily Oster right?: 

Is Emily Oster right? The number of cases fails to account for that big a number Is not a general explanation for all the cases Some minor technical mistakes We are back to Sen’s argument but: Is he right?

Slide13: 

The author is Avraham Y Ebenstein, PhD 2007 from UC Berkeley, Economics (actual Harvard University Scholar) The main idea is simple Take families with multiple kids Calculate the probability of having a second or third girl If behavior is behind the strange ratio then we should find Changes in the ratio after first or second girl Changes in ratios where there are restrictions on the number of kids Moreover, he finds that boys are worth something like 3 years income more than girls to the household.

Conclusion: 

Conclusion Microeconomics is a tool that helps analyze problems. It goes beyond business although we are going to mostly apply it to business situations. It helps understand the world and think about it from a different perspective.