the first italian university to offer a degree in economics in 1902 … welcome to bocconi! … and...

The first Italian University to offer a degree in Economics in 1902 …

Welcome to Bocconi!

… and one of the leading European Universities in Economics, Business, and Law today

What is economics about?

… but let’s start from the beginning

“An Inquiry into the Nature and Causes of the Wealth of Nations” (Adam Smith, 1776)

(with roots in moral philosophy)

Some Questions

Why are some countries richer than others?

Why have some countries become richer (poorer)?

Not only “wealth of nations” but also of social groups, organizations, individuals

Different levels

World

Countries

Organizations (e.g. Bocconi, Microsoft, the baker near your house)

Families, Individuals

Economics is about CONSTRAINTS:

The “Dismal” Science

You cannot spend more than what you earn (… or of what you can return after borrowing)

This is true of individuals, families, organizations, countries

Therefore, to spend more ultimately you have to produce more

Thus, economics is about how to produce more (and spend better)

The “Dismal” Science

At all the levels of individuals, families, organizations, countries, the World

Thus, preliminary answers

But why they produce more?

Some countries are richer because they produce more/better

Which is the richest country of the world today? (easy)

“Trivias”

And in 1850? (somewhat easy)

And in 1700? (more difficult)

And in 1500? (difficult)

USA 2001: $ 28,000

Italy 2001: $ 19,000

UK 1850: $ 2,300

NL 1700: $ 2,130

Italy 1500: $ 1,100

What are the annual incomes (per capita) of these countries?

Africa 2001: $ 1,500

Countries with per capita income > 20K USD in 2001

Countries with per capita income > 15K USD in 2001

Countries with per capita income > 10K USD in 2001

And in the Future?

Growth of income per capita in 16 countries: 500-2001

GDP Per CapitaIndex = 100 in year 500

100 100 122 155

2009

0

500

1000

1500

2000

2500

0 500 1000 1500 2000 2500

Year

Source: Angus Maddison, A Millennium Perspective

What do these countries have in common?

Trivia again

Political Democracy

Economic Democracy You can buy and sell many things at your

will, and can retain a good part of what you earn

A set of rules, norms, laws, which govern in a “clear and predictable way” the interactions amongst citizens

Political Democracy Role of the State and its institutions (e.g.

Central Bank), functioning of the economic system (Macroeconomics)

Economic Democracy Firms, consumers (Microeconomics,

Business/ Management Studies)

Rules Law (Commercial, Administrative, Criminal,

including history of how norms are formed and evolve)

The Big Subject Areas

Where it comes from and why is it relevant

1688 The Glorious Revolution

Division of labor (Adam Smith, once again)

Some more about economic democracy … and rules

But this has to be governed: Rules Role of the State

Law and institutions

Freedom of enterprise / markets Management (how to organize business)

Competition (Strategy)

Inventiveness

Multidisciplinarity Economics: Macro, micro, business studies

Law

Mathematics, statistics (the “tools” to understand)

Social Sciences: Sociology, economic history (b/c economics & business cannot do it alone)

Languages, computers (“tools” again)

Real applicability (from macro problems to everyday life)

Features of Economic & Business Studies

You have an important responsibility

Future is yours

All the Best!

Fulfill your own ambitions and goals in life but don’t forget the moral philosophy root

Economics (Business, Law) were made to understand how to make countries, firms, institutions, and ultimately the world betterThere is still a lot of work to do!