ECON 211 Notes - Week 3
ECON 211 Notes - Week 3 Econ 211
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This 6 page Class Notes was uploaded by Gabby Greenberg on Wednesday September 14, 2016. The Class Notes belongs to Econ 211 at Colorado State University taught by Arpan Ganguly in Fall 2016. Since its upload, it has received 9 views. For similar materials see Gender in the Economy in Economics at Colorado State University.
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Date Created: 09/14/16
HOUSEHOLD AS THE FOCUS OF RESEARCH New Focus of Neoclassical Theory Investigating the strengths and weaknesses of using household as an alternative economic agent. For consumption as well as labor supply decisions, the crucial units not the individual, but the household. This is a deviation from traditional mainstream theory. Self interested individual in the market and altruistic in households. Locating/Identifying the Household Author rejects the idea of the household being synonymous with the nuclear family (mom, dad, kids) Instead, identifying the household as: o Basic social unit of society, a unit that is bounded b common agreement on the management of its resources, both the management of the resource inflows into the household and their use and distribution. Place, culture, and history affects household membership: household membership characterized by individuals with very different relationships, kin or kinship, depending upon the special context. Modeling the Household Question: How to model factors affecting the livelihood decisions of the household? o By identifying the household o By describing the individual's movements between the formal, informal, nonmarket, and social economy. o By analyzing the movements and their factors affecting people's decisions to change the combinations of their productive and socially reproductive activities. Household objectives: to sustain itself within the changing world. Types of Household Income: wages, market sales, rent, transfers, and subsistence. Welfare: o Consumption of goods and services by households is not a good measure/proxy for welfare, unlike in neoclassical theory. o How much and what do they consume (neoclassical theory) o Rather, welfare is affected by factors such as recognition, appreciation, love by others, feelings of self worth, participation in the community, and so on. Strategy and Rationality: o In traditional neoclassical theory, strategy means rational decision making applied to long term plans. o Instead, activities of HHs are multidimensional: behavior that is rational in economic terms may not be rational for the nurturing objectives of the household. A new Institutional Approach to the Household New home economics of Gary Becker: opportunity cost as a way to explain household divisions of paid and unpaid workers. Substantive Institutional (or New Institutional) analysis: o Looks at power and power relations. Moves away from atomistic individualism that ignores the household as a family unit. o Focus on cultural processes and the social construction of knowledge to understand the nature of rational choice when people form and maintain households together. o How relationships between household and the economy evolves over time. o Endogenous preferences at the HH level. Rejects the idea of exogenous preferences as in the neoclassical approach. Introduction to Political Economy Neoclassical Vs. Political Economy Neoclassical o Focuses on individual behavior based on given exogenous preferences. o The context in which the market exists and in which individuals act is NOT relevant to neoclassical. o Views the economy as relatively static - focus on equilibrium (a point at space and time, now they are trying to find the plot or set of points over time to be more dynamic) Political Economy o Behavior that is not only individual, but social as well. o We are all individuals, but we are all also members of social groups. o The emphasis on group behavior is what puts the "political" in political economy. o Individuals come to the market with unequal power and unequal access to resources - an unleveled playing field. o Views the economy as relatively dynamic - focus on conflict and change. The Four C's Context o Economic behavior does not occur in a vacuum; it can only be fully understood within the historical, institutional, and cultural contexts in which it occurs. o Preferences are not exogenous, but endogenous: they are shaped by the context in which choices are made Customary beliefs, institutional configurations, popular ideologies, distribution of wealth and power, and cultural stigmas. Collective Behavior o Individuals influence behavior, but groups also influence individual behavior. o Social institutions affect the way we act. o Gaining power and control over economic resources requires strength in numbers. o The social group we are (randomly/naturally) assigned to by birth - such as race, gender, and class is important in determining our economic success or failure. Technically, anyone in the US can become rich or be elected president, but it is less likely for some than it is for others, depending on the social groups they belong to. Conflicting Interests o Group goals, if met, mean one group gains at the expense of another. There are opposing motivations and interests, which results in a conflict. EX: Capitalist VS. Workers - Capitalists want wages low for cost of capital but workers want higher wages to earn what they are working for. o Many types of groups may be in conflict: male vs. female, American workers vs. Mexican workers, white-collar vs. blue-collar (big vs. small business) Change o Ongoing conflicts between groups result in changes in the relative power of each group. o If individuals' economic status is partly determined by their social groups, then they will try to improve the position of their respective groups. Class Exploitation Class: a group of people who have the same relation to the "means of production" ad the generation of surplus. o Surplus: output above the needed level to replace the capital and labor used in the production process. o The capitalist class owns the means of production (capital), giving them property rights to the surplus, which they can then sell to try to make a social profit o The working class provides labor in exchange for wages. They are exploited because they have no legal right to ownership of he surplus they helped to generate. o The less the capitalists pay the workers, the more of surplus they get to keep for themselves. Racial Exclusion Context: the history of slavery and genocide in the US can influence the treatment of racial minorities in the present. (context matters in the sense of how minorities are seen by society) Collective Behavior: It may be a behavior norm for people in some racial groups to not associate with people from other racial groups Geographical segregation can exclude racial minorities from important public resources like good schools and hospitals, good jobs, social networks, etc. and can lead to the targeting of communities by law enforcement Gender Domination The ability of men to assert their authority over or to rule over the women in their lives It can take many forms o Foot-binding o Pornography o Wife-beating o Sexual harassment o Rape Historically, women have been barred from many types of jobs, and some women have been barred from wage labor or working altogether Matrix of Oppression Exploitation Exclusion Domination Class Low wages, Legacy preferences at Rewards for workers obedience, job loss threats elite colleges status perks for managers Race Low minority Housing segregation Minorities limited wages, to service jobs lack of employment Gender Unpaid Marriage bars, Male control over housework, occupational household decisions women's low segregation wages Bottom Line of Political Economy Political economy falls somewhere in between. In order to fully understand the economic choices individuals make, we have to take into account the socio-cultural context in which they make these choices. Feminist Economics Folbre argues: feminist economists stand between two groups of political economists. Contribution of Feminists Economists: o Brings a different set of questions to the economic discourse: Family Sexual division of labor Division of housework or household labor Costs of childcare Issues of domestic violence o Offers a synthesis between neoclassical and Marxian PE o Offers an alternate reading of HET: 'Greed' Vs 'Lust' in HET Greed implies self interested behavior for wealth acquisitions Lust implies sexual organization of economic life (patriarchal norms) o Offers a synthesis between self interest and altruism Family/Households vs Marketplace: Selfishness vs altruism 'Love' is about interdependence. Is a tension that exists between selfishness and altruism Individual vs the group Conflict and Collective Action There are conflicts between individuals and larger groups (collectives). People normally have allegiances to more than one group. Often interests of these groups are conflictive. Some groups to analyze: Types of economists. o Mainstream vs Marxian political economist Mainstream theory and the feminist approach: AGENTS REM: Rational Economic man Neoclassical theory: o Focuses on the rational choices of self-interested agents o Homo-economicus is prevalent in the way they understand human action Feminist criticism: o Taking too much as given o Basic assumptions seem to be at odd with reality o People engage in collective action that serve their economic interest IRSEP: imperfectly rational, somewhat economic person Neoclassical institutionalism: o The world is full of complex social institutions o The future is uncertain, information costly and asymmetric, markets fail and their scope is limited. o Exchange and cooperation are not the only important process: social institutions require coordination o Although more realistic, undermines any strong claims about market efficiency Feminist criticism o No insight on exercise of power beyond the microeconomic level of the firm or family o Bargaining and coordination vs. conflict, confrontation, and organized violence o Collective behavior analyzed limited to interest groups that people join voluntarily Beyond Rational Feminism Self interest had an enormous impact in the way economists view economics. THREE ironies of self interest: o When introduced to analyze the household, it becomes questionable. o Affection, sympathy, love, are not expectations to the rule of self interest: they are the rule. Who could be here without them? o Our understanding of self-interest is culturally constructed. Economics has turned rationality into a subject of desire Individuals may have some needs and wants that are autonomous and some that are interdependent and enmeshed. Rational Choice Vs. Purposeful Choice o Allows collective action Marxian Theory and Feminist Theory: Structures Mr. Prol: Marx's Homo Economicus: o Mr. Prol is a wage earner. He is a member of the working class and, by definition, has nothing to sell except his labor power. Choices are a luxury to him; his world is almost pure constraint He is exploited, has the ability to organize and can be replaced by any willing member of the reserve army of unemployed For Mr. Prol what matters the most is class struggle. Even if there is exploitative practices based on other categories (like race or gender), conflict is attributed to class. Class is the ultimate vector of collective action.
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