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Behavioral Economics

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Need to stop the pandemic

The novel Covid-19 brought real damage to world economies that the economies might never recover as long as it is there. The disease has several effects that must be dealt with before expecting a complete recovery (Norouzi, Rubens, Choubanpishehzafar, & Enevoldsen, 2020). First of all, the infection causes workforce death across the fields; a continuing to reduce workforce cannot produce as its initial strength. Secondly, measures to curb the coronavirus such as lockdowns and night curfews have reduced buying and selling, therefore, hurting the economy; a genuine recovery must first eliminate the precautions, which can only happen if coronavirus is managed.

Bound rationality

Bound rationality is a theory that originated in 1957 by Simon Herbert. It posits that consumers will always choose optimal decisions in line with their interests but, faced with limited rational decision-making, such as time, cognitive, and imperfect information, will always make a suboptimal decision (Farhi, & Werning, 2018). For example, a waiter may rush a client to give orders making the customer make suboptimal decisions over what to eat.

Framing meaning

Framing is a cognitive bias that arises when individuals decide on options according to how they are presented; that is, negative and positive connotations. Framing can avoid risk if presented as a positive choice and choose it if presented as a negative thing (Stecula, & Merkley, 2019). An example is facemasks; it was presented as a positive thing that prevents the novel coronavirus infections. Therefore, it has attracted everyone from across the globe to wear them and work to avoid negative economic repercussions.  Failing to wear a mask is associated with a risk of catching and spreading the disease and missing government services; as a good thing, it has received huge acceptance.

Framing the case masks

Wearing of mask significantly reduces the rate of infections. On the other hand, failing to wear mask increases by huge margins infections rate (Greenhalgh et al., 2020). Thus, a mask presented with framing was an appealing thing, thereby making people avoid catching the disease, dying, or failing to be economically productive. It can be presented as a positive thing when it is evidenced to protect people and allow them to continue with their jobs without disruptions.

Economic consequences of infection rates

A failure to wear masks results in more infections, thereby impacting the economy in various ways. One way is the closure of businesses; economies depend on buying and selling. Therefore closure of companies, manufacturing plants, and retailing shops put a dent on the economy. Increased debt burdens. Developing countries are forced to borrow more to help in recovery while they are supposed to service running loans despite a decline in tax, customers, and jobs (Stecula, & Merkley, 2019).  The diseases forced a decline in market rates making world central banks have little funds to support counter-economic review.

Opinion on wearing mask choice

States and the federal government have presented wearing masks as a choice with positive enables people to avoid infections. However, with the negative side effects of masks coming, states ought to review their presentation of choice to wear or not wear masks as an important tool to avoid allowing people to continue to work irrespective of the situation. When it guarantees health, wearing will be guaranteed, and people will continue to work.

References

Norouzi, N., de Rubens, G. Z., Choubanpishehzafar, S., & Enevoldsen, P. (2020). When pandemics impact economies and climate change: exploring the impacts of COVID-19 on oil and electricity demand in China. Energy Research & Social Science68, 101654.

Farhi, E., & Werning, I. (2019). Monetary policy, bounded rationality, and incomplete markets. American Economic Review109(11), 3887-3928.

Greenhalgh, T., Schmid, M. B., Czypionka, T., Bassler, D., & Gruer, L. (2020). Face masks for the public during the covid-19 crisis. Bmj369.

Stecula, D. A., & Merkley, E. (2019). Framing climate change: economics, ideology, and uncertainty in American news media content from 1988 to 2014. Frontiers in Communication4, 6.

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