arXiv subjects

Ali Zeytoon-Nejad

Publications and source records attributed to Ali Zeytoon-Nejad.

9 recordsLinked to original sources

arXiv2026

AI and the Economy: An Economic Examination of Production, Distribution, Firms, Labor, and Welfare

Artificial Intelligence (AI) is rapidly transforming economic systems by altering production processes, labor markets, and the structure of firms and industries. AI is not merely a technological innovation. It is fundamentally a major economic phenomenon and a new wave of innovation with important implications for productivity, employment, market structure, public policy, long-run economic growth, and collective welfare. This essay examines the economics of AI by analyzing the multiple channels through which AI influences economic activity and societal well-being. It argues that AI should be understood simultaneously as a form of capital, a form of synthetic labor, a general-purpose technology, as well as an economic infrastructure. The analysis shows that AI functions as a multi-channel engine of productivity growth through automation, augmentation, optimization, prediction, and innovation. It is argued that AI has the potential to increase output, reduce costs, stimulate entrepreneurship, and accelerate economic growth, while also reshaping labor markets through labor substitution, labor complementarity, and creative destruction. The essay further examines AI's effects on competition, market concentration, and entrepreneurship. Finally, it explores the welfare implications of AI for consumers, producers, workers, governments, and society as a whole, and concludes by outlining policy considerations aimed at maximizing the benefits of AI while mitigating its potential adverse consequences.

econ.GN↗

arXiv2025

Price risk aversion vs payoff risk aversion: a gender comparison through a laboratory experiment

Purpose: This paper explores gender differences in two distinct forms of risk aversion -- Payoff Risk Aversion (PaRA) and Price Risk Aversion (PrRA) -- in order to provide a more nuanced understanding of how men and women respond to different types of economic uncertainty. Design/methodology/approach: The study employs a laboratory experiment using Multiple-Choice-List (MCL) risk-elicitation tasks based on both Direct Utility Function (DUF) and Indirect Utility Function (IUF) frameworks. These tasks present stochastic payoffs and stochastic prices, respectively. The analysis uses statistical hypothesis testing to compare gender-specific responses across three experimental designs. Findings: The key results of the study indicate that women typically exhibit higher degrees of PaRA than men, which is a consistent finding with the mainstream literature. However, remarkably, the results from all the three indirect MCL designs show that women typically exhibit lower degrees of PrRA than men, and this result is robust across different MCL designs. The paper also introduces an 'irrationality gap' as the difference between PaRA and PrRA and explores the size of the irrationality gap within either gender group, finding it larger and statistically significant for men, while smaller and statistically insignificant for women. Originality/value: This study is the first to distinguish between PaRA and PrRA in a gender comparison, using experimentally validated methods. It provides new behavioral insights into the nature of gender-specific risk preferences and introduces the irrationality gap as a novel concept with implications for understanding financial decision-making and the design of gender-sensitive economic policies.

econ.GN↗

arXiv2025

Econometric Modeling of Input-Driven Output Risk through a Versatile CES Production Function

The conventional functional form of the Constant-Elasticity-of-Substitution (CES) production function is a general production function nesting a number of other forms of production functions. Examples of such functions include Leontief, Cobb-Douglas, and linear production functions. Nevertheless, the conventional form of the CES production specification is still restrictive in multiple aspects. One example is the fact that the marginal effect of increasing input use always has to be to increase the variability of output quantity by the conventional construction of this function. This paper proposes a generalized variant of the CES production function that allows for various input effects on the probability distribution of output. Failure to allow for this possible input-output risk structure is indeed one of the limitations of the conventional form of the CES production function. This limitation may result in false inferences about input-driven output risk. In light of this, the present paper proposes a solution to this problem. First, it is shown that the familiar CES formulation suffers from very restrictive structural assumptions regarding risk considerations, and that such restrictions may lead to biased and inefficient estimates of production quantity and production risk. Following the general theme of Just and Pope's approach, a CES-based production-function specification that overcomes this shortcoming of the original CES production function is introduced, and a three-stage Nonlinear Least-Squares (NLS) estimation procedure for the estimation of the proposed functional form is presented. To illustrate the proposed approaches in this paper, two empirical applications in irrigation and fertilizer response using the famous Hexem-Heady experimental dataset are provided. Finally, implications for modeling input-driven production risks are discussed.

econ.GN↗

arXiv2025

The Quantitative Comparative Economics: indices of similarity to economic systems

This paper presents a novel quantitative approach for comparative economic studies, addressing limitations in current classification methods. Conventional approaches in comparative economics often rely on ad hoc and categorical classifications, leading to subjective judgments and disregarding the continuous nature of the spectrum of economic systems. These can result in subjectivity and significant information loss, particularly for countries with systems near categorical borders. To overcome these shortcomings, the present paper proposes distance-based indices for objective categorization, considering economic foundations and using hard data. Accordingly, the paper introduces institutional similarity indices--Capitalism Similarity Index (CapSI), Communism Similarity Index (ComSI), and Socialism Similarity Index (SocSI)-which reflect countries' positions along the economic system continuum. These indices adhere to mathematical rigor and are grounded in the mathematical fields of real analysis, metric spaces, and distance functions. By classifying 135 countries and creating GIS maps, the practical applicability of the proposed approach is demonstrated. Results show a high explanatory power of the introduced indices, suggesting their beneficial usage in comparative economic studies. The paper advocates for their adoption due to their objectivity and ability to capture structural and institutional nuances without subjective judgments while also considering the continuous nature of the spectrum of economic systems.

econ.GN↗

arXiv2025

Milton Friedman's spending matrix revisited: 'Spending efficiency' and 'preference compatibility' across different economic systems

This article expands Milton Friedman's spending matrix to analyse 'spending efficiency' and 'preference compatibility' across different economic systems against five key outcome criteria. By generalising Friedman's typology, it compares efficiency and freedom as systems shift from laissez-faire capitalism to communism, illustrating a gradual deterioration in their key outcomes. While government intervention is sometimes necessary to address market failures, its role should always be carefully limited to avoid inefficiency and misalignment with individual preferences. The insights may provide guidance for policymakers in designing economic systems and policies that promote both economic prosperity and personal liberty.

econ.GN↗

arXiv2025

Backward Growth Accounting: An Economic Tool for Strategic Planning of Business Growth

Business growth is a goal of great importance for its both private and social benefits. Many firms view business growth as an imperative for their survival, stability, and long-term success. Business growth can be socially beneficial, too, as it enables businesses to expand into new territories where they can stimulate economic growth and development, creates more jobs, increase living standards, and better serve their communities by giving back more through Corporate Social Responsibility initiatives. Business growth must be planned reasonably and optimally so that it can effectively achieve its critical ambitions in business practice. The current common practices for planning the supply side of business growth are usually ad-hoc and lack well-established mathematical and economic foundations. The present paper argues that business growth planning can be pursued more structurally, reliably, and meaningfully within the framework of Growth Accounting (GA), which was first introduced by Economics Nobel Laureate Robert Solow to study economic growth. It is shown that, although GA was initially put forth as a procedure to explain "economic growth" ex-post, it can similarly be used to plan "business growth" ex-ante when a general backward approach is taken in its procedure-called Backward Growth Accounting (BGA) in this paper. Taking this well-established economic-mathematical approach to planning business growth will enhance the current practices conceptually and structurally, as it is built on the basis of economic logic and mathematical tools. BGA can help businesses identify and plan for key drivers of output growth and assess shortcomings in the growth process, such as poor productivity, inadequate labor utilization, or insufficient capital investment. The paper outlines an eight-step procedure for planning business growth using BGA and includes appendices with real-world examples.

econ.GN↗

arXiv2025

The Big Tradeoff averted: five avenues to promote efficiency and equality simultaneously

Society as a whole faces a host of economic tradeoffs, many of which emerge around economic policies. An example of tradeoffs that any society faces in many economic realms is the tradeoff between economic efficiency and income equality (aka the efficiency-equality tradeoff). This tradeoff has been called "the Big Tradeoff" by the esteemed economist Arthur Okun, who also termed it "the Double Standard of a Capitalist Democracy." Although the efficiency-equality tradeoff is more or less an inevitable tradeoff in most societal settings and economic contexts, there are still some special circumstances in which this tradeoff can be avoided. This paper identifies five such avenues and elaborates on why and how the tradeoff between these two somewhat contradictory societal goals-efficiency and equality-can be deftly averted under the mentioned circumstances. These avenues with their transformative potential can and should be used so that a capitalist society as an integrated whole can promote both efficiency and equality at the same time under these scenarios and avoid facing the Big Tradeoff in cases where it is evitable. Static and dynamic economic models are developed, solved, and applied to facilitate the articulation and exposition of the main points of each solution with formal rigor and logical coherence. Finally, policy implications are discussed.

econ.GN↗

arXiv2022

The Coronavirus Tradeoff -- Life vs. Economy: Handling the Tradeoff Rationally and Optimally

The recent coronavirus outbreak has made governments face an inconvenient tradeoff choice, i.e. the choice between saving lives and saving the economy, forcing them to make immensely consequential decisions among alternative courses of actions without knowing what the ultimate results would be for the society as a whole. This paper attempts to frame the coronavirus tradeoff problem as an economic optimization problem and proposes mathematical optimization methods to make rationally optimal decisions when faced with trade-off situations such as those involved in managing through the recent coronavirus pandemic. The framework introduced and the method proposed in this paper are on the basis of the theory of rational choice at a societal level, which assumes that the government is a rational, benevolent agent that systematically and purposefully takes into account the social marginal costs and social marginal benefits of its actions to its citizens and makes decisions that maximize the society's well-being as a whole. We approach solving this tradeoff problem from a static as well as a dynamic point of view. Finally, we provide several numerical examples clarifying how the proposed framework and methods can be applied in the real-world context.

econ.GN↗

arXiv2022

Measuring Price Risk Aversion through Indirect Utility Functions: A Laboratory Experiment

The present paper introduces a theoretical framework through which the degree of risk aversion with respect to uncertain prices can be measured through the context of the indirect utility function (IUF) using a lab experiment. First, the paper introduces the main elements of the duality theory (DT) in economics. Next, it proposes the context of IUFs as a suitable framework for measuring price risk aversion through varying prices as opposed to varying payoffs, which has been common practice in the mainstream of experimental economics. Indeed, the DT in modern microeconomics indicates that the direct utility function (DUF) and the IUF are dual to each other, implicitly suggesting that the degree of risk aversion (or risk seeking) that a given rational subject exhibits in the context of the DUF must be equivalent to the degree of risk aversion (or risk seeking) elicited through the context of the IUF. This paper tests the accuracy of this theoretical prediction through a lab experiment using a series of relevant statistical tests. This study uses the multiple price list (MPL) method, which has been one of the most popular sets of elicitation procedures in experimental economics to study risk preferences in the experimental laboratory using non-interactive settings. The key findings of this study indicate that price risk aversion (PrRA) is statistically significantly greater than payoff risk aversion (PaRA). Additionally, it is shown that the risk preferences elicited under the expected utility theory (EUT) are somewhat subject to context. Other findings imply that the risk premium (RP), as a measure of willingness to pay for insuring an uncertain situation, is statistically significantly greater for stochastic prices compared to that for stochastic payoffs. These results are robust across different MPL designs and various statistical tests that are utilized.

econ.GN↗