We will examine economic behavior in extreme situations. While extreme situations themselves are rare, the underlying economic forces shape our world even in normal times. The lecture will touch upon both differences and similarities of incentives, decisions and outcomes compared to standard scenarios. The topics are divided into four parts. First, we will highlight the importance of law and order for economic prosperity and the impacts of lack thereof. The methodological approach relies on empirical spatial models. Second, we will discuss how violence shapes economics, both on the macroeconomic level through wars or civil conflict and at the microeconomic level of terrorists. The focus will be on theory models of decision making and empirical models of timing. Third, we will discuss topics relating to health, including both diseases and pandemics as well as age and (natural) death. Methodically, we will turn towards empirical approaches to model forward-looking parameters. Fourth, we will close the lecture series with topics relating to extreme nature phenomena. We will see how weather affects economic outcomes, with special emphasis on the impact of climate change, and evaluate the costs of and reactions after natural disasters. We will use the examples to explain econometric methods to identify causal relationships in non-experimental data. Lectures may have several specific components: First, an economic theory or empirical approach tailored to a topic will usually kick-off or will be incorporated in a lecture. The methodological background will link extreme examples to standard economic tools which is can be used in any undergraduate or graduate course, while motivating students how such basic knowledge can be applied to fascinating cases. Second, we will discuss peer-reviewed articles from top journals for each topic to show the depth of economic research and the broadness of how economics touches diverse aspects of life. Third, many lectures will feature non-standard teaching styles depending on each topic. The teaching will stimulate senses other than listening to amend the learning experience, and we will use practical examples from policy-making. Given the topic of this lecture series, the papers may be thought-provoking and controversial. In-class discussions are encouraged. Moreover, 20% of the final grade will be determined by a written paper that shall specifically criticize the content and/or presented view of the course based on competing papers and economic rationale. 80% of the grade will be determined by a written exam. Provisional table of contents with examples: 1. Introduction: Course overview including content, teaching style, evaluation. Discussion of first introductory topics regarding sports corruption, diplomatic immunity or interstellar trade. Part I: Extreme Crime 2. Organized crime: political economy of the Mafia, piracy, drug cartels. 3. Unorganized crime: cybersecurity, prisons, 911 calls. 4. Financial crime: tax misreporting, international profit shifting, aid capture. Part II: Extreme Violence 5. Terrorism: decision-making of suicide terrorists, , taxation by non-state actors, rebel leaders. 6. War and civil conflicts: identity formation, private sector in civil conflicts, soccer teams. 7. Domestic violence: divorce laws, gold price, prostitution. Part III: Extreme Health 8. Environment: airports, pollution, insects. 9. Diseases and pandemics: de-worming, mental health, obesity. 10. Age and death: demographic change, labor standards, bequest taxation. Part IV: Extreme Nature 11. Weather: rainfall, hurricanes, drought. 12. Climate: historical shipping, fossil fuels, cap-and-trade 13. Natural disasters: tsunamis, earth quakes, volcanoes.
Please note that the order of lectures or its content is subject to updates during the semester.
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