Thinking about money

While the general principles behind wise competition policy are well understood, their application in particular industries and particular cases calls for careful analytical thinking.

It is important to understand pro- innovation competition policy, because several kinds of innovation are important in the modern economy. Technical innovation is one of those, of course. Another important example is business model or marketing innovation by overseas entrants into individual country markets.

'In a paper on competition policy, Stanford University economist Timothy Bresnahan writes: "Sometimes innovation comes from outsiders. Sometimes, for whatever reason, even very capable incumbent firms cannot see innovative opportunities. In those circumstances, which we may call Schumpeterian, outsiders bring competition or competitive pressure to bear on incumbents."

This result underscores the importance of building a competitive economy, and provides a warning against shielding existing firms from potential rivals. A low-tax business environment where it is easy to start a new business is more likely to spawn great innovations. And that, of course, benefits consumers. '

Source: Adam Smith blog







Thinking about money makes people more self centered and less concerned with others. One study shows that people become less mindful and empathetic toward each other immediately after thinking about money. They become more calculating and rational, and less sociable and collaborative. Their attention moves away from other people's problems, concerns, stories and are reluctant to ask for help if they run into problems themselves. They keep distance from other people in public spaces, and their choice of work goes for the ones that can be done independently rather than in a teamwork. Therefore the risk of being fined awakes the economist in you, hence, move people away from sociability.

However all that applies to thinking about daily money matters and has nothing to do with a sense of wealth, which in fact makes one more supportive of other people's misfortunes!