Wednesday, September 24, 2008

The doctor of capitalism to swallow his own medicine

“Now the world need a new openness in international finance that would require private financial institutions to disclose far more information about their loans around the world and force investors to pay their share of the cost of bailing out troubled nations. The global economy cannot live with the kinds of vast and systemic disruptions”

Was the word above a criticism to Wall Street’s practice of slicing and hiding risky investment among myriad of exotic financial engineering that caused recent financial meltdown?

Nope, it was Robert E. Rubin, US treasury secretary in Clinton administration, pointing out weaknesses in Asian countries ‘ financial system including Indonesia ten years ago (original article here).


Tuesday, September 16, 2008

rasionalitas kemiskinan

Meninggalnya 21 orang saat menerima zakat di Pasuruan, sangat memprihatinkan (disini). Zakat, disatu sisi merupakan salah satu mekanisme untuk distribusi pendapatan, namun disisi lain kesalahan dalam penyalurannya justru menyebabkan moral hazard, insiden seperti di Pasuruan maupun ketidakmandirian. Ketimpangan pendapatan jelas terlihat dari 40% penduduk dengan pendapatan terendah hanya menikmati 20% pendapatan sementara 20% penduduk dengan pendapatan tertinggi menikmati 40% pendapatan (disini).

Sebagai gambaran, potensi zakat di Indonesia cukup besar, sekitar Rp 17 trilyun setiap tahunnya (disini) bandingkan dengan alokasi dana untuk bantuan langsung tunai (BLT) sebagai kompensasi atas kenaikan BBM tahun 2008, sekitar Rp 14 trilyun (disini). Seandainya potensi zakat ini bisa maksimal, saat ini baru 2,5%-nya sekitar Rp 700 milyar, pemerintah tidak perlu mengeluarkan BLT dan alokasi BLT bisa digunakan untuk pengembangan program lainnya.

Insiden pasuruan juga mengungkap fakta nyata kemiskinan yang membelit masyarakat kita. Rasionalitas macam apa yang dimiliki oleh orang-orang yang 'mau' bersesak-sesak meng-antri pembagian zakat di Pasuruan itu? Bagi kita, mengantri untuk Rp 30 ribu mungkin tidak rasional, tapi bagi mereka yang kekurangan uang berapapun sangat bernilai. Saya teringat dalam ekonomi ada yang disebut bounded rasionality, rasionalitas yang tidak sempurna karena tidak cukupnya informasi (disini, disini). Kemungkinan besar ini yang sedang terjadi.

Ke depan, tampaknya perlu ada perbaikan mekanisme penyaluran bantuan (zakat, BLT dsb) agar lebih menjawab problema kemiskinan daripada sekedar menyentuh permukaannya saja. Tidak kalah penting, pemberdayaan yang menyertai penyaluran bantuan-bantuan tersebut, akan membangun kemandirian masyarakat.

Monday, September 15, 2008

The Economics of Bukber

One of the things that come with ramadhan is the bukber (buka puasa bersama) invitation.

From the casual meal with office friends to gatherings of highschool/uni/sport club, from circle of family to high power meeting (and yes, romantically inclined randezvous) can come under the label of bukber.

So what's with the rush of eating together?

Two economics concepts thought up by two Nobel Prize winner are involved: transaction cost and focal point.

Assuming eat together is preferable than alone (not too restrictive and realistic assumption), then people would not dine together if the cost and coordination is manageble.

People eat all the time but to coordinate time and dine together is rather complicated. In big & busy city with tight schedule it is very difficult to have many people together in the same time.

But during Ramadhan all of people that fast will eat at the same time, so the around sunset time is a focal point of time to meet. Coordination effort (transaction cost) can be focused on finding a place and getting people to come.

There are also demonstration effect, where the more people you know come the more you want to come.

After all, having decent meal
with great companions is indeed a step closer to heaven on earth.

Have a great bukber!

Tuesday, September 09, 2008

How to make the motorist behave?

According to Kompas, there are 575 death motorist during January to August 2008 period. In fact, there are 3,029 accidents occur during the same period. How to reduce this incidents for getting intensify?

Some people argued that it occurs due to lack of discipline among motorist as well as lack of particular infrastructure for motorcycle rider, i.e. special line for motorcycle. However, if we understand the behavior of motorist you maybe need to read and understand about Peltzman Effect. The key issue in Peltzman Effect as far as I understand is we need to compensate motorists lack of concern on risk of their bad behavior during riding motorcycle.

As we may seen recently, the technology and safety equipment for riding motorcycle are getting enhanced and sophisticated. All of those support system for making the motorist getting safer during ride make them feel secure and abandon the safety riding method during travel. In addition, the method to buy new motorcycle is getting easier with credit payment system. Combining those situation, we will see two simple fact about motorists and their motorcycle: 1) their population (motorists as well as their motorcycle) will increase sharply, 2) their behavior will become more "barbaric" and potentially increasing number of motorcycle related accidents.

Now, what is the effective solution to reduce that problem? My simple solution is raise the cost of admission for motorcycle licences (to get SIM C in Indonesia). In fact, if possible, we need to make that getting motorcycle licence (SIM C) should a lot more expensive than getting driving (car) licence (SIM A). Why? Higher price need to be established in motorcycle licence as signaling that riding motorcycle are having more risks than driving cars. With such policy, we will obtain two results:

1) reducing number of motorist
Of course, we will have "rich vs poor" motorist that potentially discriminate them on riding motorcycle. But, since the rich might be able to pay for the risk (of having accident) then it should make sense to give them more chance to ride motorcycle.

2) increasing discipline among motorist
Higher price of getting licence for riding motorcycle will make only selected and better-skill motorist that able to ride motorcycle. With extensive bribery activities in police department who issued such licences, higher price is the only way to maximize the objective to reduce number of accidents while facing lack of law enforcement in traffic.

What do you think, guys?

Monday, September 01, 2008

The Economics of Fasting

In welcoming the holy month of Ramadhan, I want to continue my long neglected first post on islamist economics series. But I first I must point out that fasting is not an exclusive domain of Islam, it is known in all religions and many ancient culture.

More is better, as the standard assumption in economics goes. Thus reducing consumption, the definition of fasting, should bring less utility right?

But there are also first Gossen law on diminishing marginal utility, meaning the more you consume of the same things the utility would be less on one additional unit of consumption. So less is more.

The first gulp of water at the end of long fasting day could worth more than a lavish meal on a full stomach. As they say, we don’t know what we got till we don’t get it.

So taking the two propositions above, could I conclude that less is better?


There are also interesting studies on how reducing calorie intake make bodies healthier and slow the aging process. Apparently human body work more efficiently if it has less inputs.