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The dairy sector: hailstorm or disaster?

Thursday the 23th of June in the East of Brabant a hailstorm like no one has ever seen before caused damage on cars and roofs. Farmers were also hit by damage of their glasshouses, barns as well as crops. This on top of damage by flooded fields due to heavy rainfall this season makes the crop season 2015 – 2016 a disaster for farmers of the southeast of the Netherlands. The estimated damage, of which part is insured and part is not, is around 500 million euros according to farmer organization ZLTO.

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An Economic Parallel between Animals and Humans

It’s been established that when it comes to behavior, animals are not that different from humans. Both have feelings of compassion, empathy, as well as possess the ability to work in teams to consulate each other and even to free-ride. The similarities do not end there, humans and animals have been found to make the same economic decisions. We can trace the same patterns in both species’ behavior and actions when it comes to demand, consumption, and allocation of resources.

Animals, like humans, optimize their energy intake and are motivated by their material self-interest, like the need for food. They are rational and make decision in accordance with their own preferences, just like us always seeking to maximize our utility. For any kind of species gaining food and comfort is connected to incurring costs. Humans as an example need to give up part of their income, even sometimes their savings, in return for the goods and items that they desire. When looking at animals, their costs generally consist of the time and the effort they spend to gather the food needed or to build or find shelter.

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Working for an algorithm

According to the Dutch research institute TNO 18 percent of the working population in the Netherlands has tried to find work in the gig economy, also known as crowdwork. These two abstract terms describe a new phenomenon on the labour market brought by the digitization of this age. Uber drivers or Foodora delivers are prime examples of workers in this part economy. Independent workers can find job oppurtunities from a simple app they installed on their phones.

Nationaal economie debat in de nw Liefde in Amsterdam.
copyright: Sander Nieuwenhuys

Globalization Needs a Second Chance

Globalization makes it possible for goods to be traded without boundaries. The countries who produce a good most efficiently, will produce that good and trade it in order to get other goods. This means that the most efficient country will produce, which is positive for the economy. This also means that many factories are moved to low-wage countries, causing people to loose their jobs and causing environmental damage.  Therefore the resistance against globalization grows, but is globalization worth a second chance?

Last week, I went to the FD National Economist Debate. The debate was about globalization and its different sides. What is the opinion of notable economists, professors, politicians and students on globalization and trade agreements?

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Danish Pride and Prejudice

The (bad) drinking habit I talked about in the previous article about my exchange in Copenhagen brings me to the most heard prejudice about Denmark. “Beer is so expensive there!” A lot of people think that the beer in the supermarkets, terraces, clubs and pubs is way more expensive than in the Netherlands. In fact, the beer at Nyhavn – I often call it the Champs-Élysées from Copenhagen – is indeed really expensive. It is not uncommon to pay 50 Danish kroner (€ 6,70) for a small glass of beer. But besides being in the chic clubs you will be able to buy your beers for prices equal to the Dutch prices.

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Dating tips from a Behavioral Economist

Still single? Maybe you should use some economic theory to solve your problem. There are many theories on human decision making which can be applied to your dating life.  In the field of behavioral economics there is the well-known phenomenon called the asymmetric dominance effect or the decoy theory.   This theory suggests that when people are confronted with a choice between two options they have a hard time making a decision. However, adding a third option that is inferior but also similar to one of the options makes the first decision much easier. Namely, the option that is similar to the inferior option will be preferred by most people.  This effect is called the decoy effect because the third option will never be chosen and is therefore just a decoy.

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The dairy sector: phosphate rights

At the first of April 2015, the milk quota was abolished after 30 years. Farmers now have the right to produce an unlimited amount of milk. Many Dutch dairy farmers responded by expanding their farms. Not surprisingly, the livestock has been growing in number of cows these past couple of years. However, this free market system causes new challenges and problems, such as the introduction of phosphate rights.

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Stay Connected (or not?)

In 1994, the first commercial smartphone was available. It could send and receive faxes and emails and had an address book, calculator, and even a touch screen display. Since 1994, there have been many developments in this area. And the past decades,  smartphone usage has gone up tremendously.  Almost everyone in the western world owns a smartphone. But should you stay connected?