Why we keep taking unprofitable risks : Lessons from local Exhibitions

 I often visit local exhibitions in my city during my free time. My mother and some of her friends and relatives have participated in these events by setting up stalls to sell artwork, food items, and other products. However, many of them struggled to make a profit. Often, they couldn’t even recover their basic cost

Curious about this pattern, I observed that several stall owners experience losses despite putting in considerable effort and investment. They spend on stall rent, materials, and other fixed costs, yet their returns are minimal.

In contrast, the organiser earns a steady income from stall rentals, regardless of how well the stalls perform.

So, why do people still continue to participate?

A few sellers—those offering unique products, having strong branding, or operating with lower costs—manage to earn profits. But many others don’t, and yet they keep coming back. Why?

Here are the possible reasons that I found after researching up on the internet :

1. Sunk Cost Fallacy – Having already invested, sellers hesitate to back out.

2. Marketing Opportunity – Exhibitions are seen as platforms for exposure. Like giving away samples of your newly opened business will help increase brand visibility.

3. Social Proof – Seeing others participate creates a bandwagon effect.

4. Product Testing – A chance to try out new products on a small scale and get feedbacks before launcing the product in the market.

Stakeholder	Revenue Source	Risk Level	Incentive
Organiser	Stall Rent (Fixed)	Low	Guaranteed income
Stall Owner	Product Sales	High	Profit, visibility, brand promotion
Customer	Leisure/Shopping	Very Low	Entertainment, novelty, food, deals

(The above table has been generated using ChatGPT. It helped me visualize better. Hope it helps you too!)

The organisers seem to have an unfair advantage, right? Not really.

Fairness Check:

• Organisers aren’t necessarily unfair—they provide space, electricity, security, and infrastructure and thus are entitled for the rent

• Stall owners enter willingly, based on mutual agreement.the stall owner does not force them to put up a stall in his exhibition.

How Can Stall Owners Improve Outcomes?

1. Control Costs – Be mindful of spending and avoid overstocking. Plan before and have a clear estimate of sales, the type of crowd that will be visiting the exhibition ,etc

2. Use Smart Marketing – Attract the right audience with engaging strategies. For example. Providing a sample tasting piece if you have a food stall, guiding the customers with some styling tips if you put up a jewelry stall, will help build a connection with the customers .

3. Build Customer Connections – Collect data during the exhibition for future follow-ups. This will help in finding potential customers.

To make exhibitions more beneficial for stall owners, the model could be rethought to reduce financial risks and improve outcomes. One suggestion is to implement a flexible rent structure, where organisers charge a base fee plus a small percentage of the profits. This would ease the burden on low-earning stalls while still compensating organisers fairly. Additionally, collecting pre-sale data—such as expected footfall, past performance of similar stalls, or visitor preferences—can help participants make more informed decisions about whether to invest. Stall owners should also focus on selling high-margin products, which offer better profit potential even with moderate sales. Most importantly, it’s crucial to define clear goals before participating—whether the aim is to make sales, gain visibility, or test new products—so that resources can be used wisely and expectations are realistic. (Note- The ideas are a combination of my thinking, articles available online, and ChatGPT -either way, we find a solution to the problem, and that's important!)

Exhibitions are more than just weekend events—they represent the hopes of small businesses and entrepreneurs. But for these dreams to thrive, we must rethink the current model. With better planning, data, and support, more stall owners can find success in these vibrant marketplaces.

Comment down below and let me know your thoughts on this idea !!

Breaking News!Economics Has Two Sides You Need to Know

 Two terms every beginner in Economics comes across are Positive Economics and Normative Economics .

• Positive Economics = Facts or What it is 
• Normative Economics = Opinions or What it should be 

Here's an image that explains the concept clearly 

Image one states the fact "Legislation intended to strengthen border enforcement." , whereas image two states an opinion "The new law is too harsh and violates rights."

Union Budget India 2025-26:Welfare focus,Tax surprises & Bihar’s Big Boost

 India’s Union budget for FY 2025-26 was presented in the parliament on Saturday, February 1, by Finance Minister Nirmala Sitaraman. Sitaraman began the budget speech by quoting Telugu poet  Shri Gurajada Appa Rao's famous saying,

                        

          “A country is not just its soil; a country is its people.”

 

With the theme "Sabka Vikas" the budget proposed developments spanning ten broad areas focusing on the Poor(garib), Youth(yuva), Farmer(annadata), and Women(nari). The budget continues efforts to accelerate growth, secure inclusive development, promote private investments, uplift household sentiments, and enhance the spending power of Indian middle class. Our 4 powerful engines for development are agriculture, MSMEs, investment, and exports. 

But beyond the headlines, what does Budget 2025 truly offer—who benefits the most, what’s the big tax surprise, why is Bihar at the centre of major investments, and how does the government plan to balance its books?

 

·       Agriculture and allied activities

 

Agriculture being the largest contributor to GDP of the country, Government has introduced the PM Dhan-Dhaanya Krishi Yojana , a new Agri District programme covering 100 districts to boost agricultural productivity and benefit 1.7 Crore farmers. 

Additionally, A six-year mission focussing on Tur, Urad and Masoor, with procurement by NAFED (National Agricultural Cooperative Marketing Federation of India) & NCCF(National Cooperative Consumer’s Federation of India) has been introduced to achieve self-sufficiency in pulses. Advanced research and commercialization will be carried out to develop 100 + varieties of high-yielding seed. India being the second largest fish-producing country in the world, the government decides to boost its production further by creating sustainable fishing economic zones in Andaman, Nicobar and Lakshadweep islands.

 

·        MSMEs and Startups

 

MSMEs being the backbone of economy, the budget updated classification criteria for MSMEs to promote expansion and stimulate economic activities.

Following is the updated criteria :

 

Enterprise Type	Investment Limit (₹ Crores)	Turnover Limit (₹ Crores)
Micro	Up to 2.5	Up to 10
Small	Up to 25	Up to 100
Medium	Up to 125	Up to 500

 

With a vision to be global start up hub, financial support of Rs.10,000 Crore has been allocated for setting up and expansion of startups.

·        Education and Skilling and Gig worker welfare 

 

Renewing the focus on skilling and innovation, the Budget announces expansion of IITs and promises to raise 75000 medical seats in next 5 years. Emphasizing digital learning, 500 crore rupees will be invested in ‘Centre for Excellence in AI’

Acknowledging the rising gig economy, Budget introduces welfare measures like identity cards for gig workers including social security benefits, insurance coverage, and financial support via  E-Shram registration and PMJAY. Several flagship government schemes have been revamped with enhanced allocations and structural improvements to ensure better reach and efficiency.

 

 

·        Reforms in tax regime

 

 There are many surprising reforms in direct and indirect tax regime.36 new drugs were added to the exempt list along with 6 medicines included in 5 % duty category

The personal income tax system has been revised benefiting the middle class and income upto 12 lakh is made tax free aiming to increase the personal disposable income and ultimately the money flow in the economy. The TDS (tax deducted at source) and TCS (tax collected at source) have also been revised benefiting the citizens.

Here are the proposed income tax slabs under new tax regime

Income tax slabs(Rs)	Income tax rate (%)
From 0 to 4 lakh	0
From 4 lakh to 8 lakh	5
From 8 lakh to 12 lakh	10
From 12 lakh to 16 lakh	15
From 16 lakh to 20 lakh	20
From 20 lakh to 24 lakh	25
From 24 lakh & above	30

 

 

·        Bihar’s big boost

 

With Bihar’s elections approaching by, the state has earnmarked several infrastructural projects .A Makhana Board will be established to enhance the production, processing, and marketing of makhana, benefiting local farmers and the food industry. Additionally, Bihar’s irrigation sector will receive a boost through financial support under the Western Kochi Canal Project. The state will also see major infrastructure upgrades with the construction of a new airport and the expansion of Patna Airport, improving connectivity and fostering regional growth.

·        Where rupee comes from and where it goes?

                                                                 

 

 

 

To sum up, the Union Budget 2025-2026 will impact everyone from a tax payer ,an investor, a student to a senior citizen. With its multifaceted approach centered on welfare, tax reforms, and targeted regional investments, the budget represents a decisive step toward realizing India’s vision of a 5-trillion economy. Ultimately, its success will depend on effective implementation and the ability to convert policy into tangible progress.

 RESOURCE:  Budget Speech on Mint’s YouTube Channel

THE OPPORTUNITY COST TREE

THE OPPORTUNITY COST TREE

Opportunity cost refers to what you have to give up to buy what you want in terms of other goods or services. Everything in this world has opportunity cost and we deal with it every day in our life !

The above image of a tree represents the concept of opportunity cost. The branch of the tree divides itself into two, indicating the two available choices for an individual to choose from. From the left to right side of the tree, the choices are as follows- Studying vs. Watching TV, Cooking at home vs. ordering food online, 

Going to a movie vs. saving money, and family time vs. overtime at work. The fruits represent the gains like a good career after studying well, good health after cooking at home, etc.

In simple words, the opportunity cost of watching TV is studying and the gains that you could have gained from it.

Did you like the doodle? Comment down below your thoughts and ideas. 

You can write me at srushti.kulkarni.pas09@gmail.com 

 

Exploring the Diverse World of Economics: 10 Economics Branches Explained

Economics is a vast discipline with many fields to choose from. Here's a list of some popular fields.

Microeconomics

Macroeconomics

Behavioral Economics

Economic History

Development Economics

Environmental Economics

International Economics

Labor Economics

Public/Political Economics

Health Economics

Agricultural Economics

Financial Economics

Industrial Organization

Urban and Regional Economics

Econometrics

Game Theory   

Here's a short description of the top 10 fields -

1)Microeconomics

Microeconomics is a microscopic study of the economy. It studies individual firms and households, individual income, the price of particular products, etc. by using the slicing method. Business analyst, pricing strategist, consultant in competition policy, and economic researcher are some of the job roles in microeconomics.

2)Macroeconomics

Macroeconomics is the study of the economy as a whole. Its scope ranges from the study of aggregate demand and supply, and general price level to national income and fiscal policy It deals with problems like poverty and unemployment. Job roles include economist at central banks, policy advisor, investment analyst, and government economist.

3)Behavioural economics 

This field focuses on the analysis of psychological factors influencing economic decisions. the traditional economic theories sometimes can't explain human behavior, that's when behavioral economics steps in! After a master's degree in behavioral economics, you can take up these roles-behavioral insights consultant, marketing analyst, and policy designer for nudges.

4)Economic History

Economic history is the study of how economic systems, institutions, and structures have evolved over time. It combines tools from both history and economics to understand the causes and effects of past economic events and trends, such as the Industrial Revolution, trade expansion, financial crises, and the development of global markets. Job roles include - Economic historian, Policy advisor, Historian analyst Economic consultant, etc.

5)Development Economist

Development economics studies the economic aspects of developing countries, aiming to understand and improve factors like poverty, inequality, education, health, and infrastructure. It focuses on policies and strategies to foster sustainable economic growth and improve living standards. Development economist, policy analyst, impact evaluation specialist, international trade specialist, sustainable development advisor, academic or researcher, data analyst/statistician, and social entrepreneur are the job roles in this field.

6)Environmental economics

Climate change is the biggest concern right now. Environmental economics targets exactly this field and explores the economic impacts of environmental policies and natural resource management. The job roles are unique yet impact-driven, they include Sustainability consultant, environmental policy analyst, climate economist, and researcher at think tanks.

7)International economics 

International economics studies the flow of goods, services, capital, and labor across countries. It examines how nations interact economically through trade, investment, and policy agreements. Key areas include trade theories, exchange rate systems, balance of payments, globalization, and international economic policies. Job roles -International trade economist, global policy analyst, export-import analyst, international business consultant, foreign exchange specialist, trade compliance officer, economic diplomat, research economist, market access consultant, and international finance advisor.

8)Labour economics

Examines employment, wages, labor market policies, and workforce productivity Job roles include  HR economist, labor policy advisor, workforce planning analyst, and academic researcher.

9)Econometrics

Econometrics applies statistical and mathematical methods to test economic theories, analyze data, and make forecasts. It bridges theory and empirical analysis, allowing economists to evaluate policies, predict trends, and understand relationships between variables. You can work as an Econometrician, data scientist, quantitative analyst, financial modeler, economic consultant, market research analyst, policy evaluator, academic researcher, operations researcher, and forecasting specialist.

10)Public economics

Public economics studies government policies, taxation, public spending, and their impact on the economy. It explores the role of government in promoting welfare, efficiency, and equity, focusing on topics like public goods, social insurance, and income redistribution. Public finance economist, tax policy analyst, budget analyst, welfare economist, fiscal policy advisor, government economist, economic researcher, academic professor, social policy advisor, and public expenditure analyst are the job roles in this field.

Among the fields mentioned above, microeconomics is the most common field of study as it forms the basis of decision-making. Financial economics is the highest-paying field because careers in investment banking, quantitative analysis, and financial consulting offer the highest salaries due to the critical role of finance in the global economy. A bachelor's degree in any of the above fields can help you start your career in that field but this can vary depending on the level of the position, with advanced roles often requiring higher degrees or specialized training. Additionally, relevant work experience, certifications (such as CFA for finance-related roles), and proficiency in programming or statistical software are often essential in these fields.

I hope this blog helped gain insights into fields in economics before deep diving into them or even choosing them as your career !!

Unlocking Economics :A Quick Guide to10 Books Every Economist Should Read

 Reading books and gaining extra knowledge on varied themes of economics is crucial in becoming a skilled economist. It broadens your understanding of diverse economic theories and concepts beyond the standard curriculum and also enhances critical thinking by exposing you to different perspectives and real-world applications. And trust me, that's when economics seems to be a fascinating subject. Reading keeps you updated with the latest trends and developments in economics, enabling you to analyze complex issues more effectively and make informed decisions in a personal or professional setting.

Here is a list of 10 books on themes related to economics along with short description of each book.

1. The Economic Naturalist: Frank explains how everyday puzzles and questions can be unraveled using basic economic principles, making complex ideas more relatable by applying them to real-life scenarios. I am reading this book currently and I believe is one of the best books for beginners.

2. The Armchair Economist:'Incentives' is one of the most important and fascinating concept in economics. In the following book, Landsburg takes readers through intriguing economic puzzles and counterintuitive insights, showing how incentives shape behavior in surprising ways, all through a witty and accessible approach.

3.The Undercover Economist:Harford uncovers the hidden forces behind everyday decisions and market dynamics, illustrating how economic theories are at work in situations as ordinary as supermarket pricing and urban traffic jams.This book will help you bring economics to life.

4.Discover your inner Economist:Cowen blends economics with psychology and practical advice, showing how applying economic reasoning can improve decision-making in personal and professional life.

5. Naked Economics: Wheelan demystifies the key concepts of economics without the jargon, focusing on the impact of markets, incentives, and government policies on individual choices and societal outcomes.

6. The new Economics: This one is unique !! Steve Keen challenges mainstream economic theories, particularly the reliance on equilibrium models, and advocates for a more dynamic approach to understanding the economy. He draws on complex systems theory and critiques conventional economic assumptions, proposing alternatives that better reflect real-world economic behavior.

7. Nudge: In Nudge, Thaler and Sunstein introduce the concept of "choice architecture," showing how small interventions or "nudges" can help people make better decisions in areas like health, finance, and environmental sustainability. They emphasize how behavioral economics can be used to design policies that improve individual and societal outcomes without limiting freedom of choice.If u are interested in behavioural econ this book is a must read for you.

8. Micromotives and Macrobehavior: A book by economist Thomas Schelling that explores how individual actions (micromotives) can lead to larger, often unintended outcomes in society (macrobehavior). Schelling uses examples like segregation in cities and traffic patterns to show how small decisions by individuals, based on personal preferences or incentives, can create large-scale patterns or behaviors that no one specifically intended. The book illustrates how even in the absence of a central authority, individual choices collectively shape social phenomena.

9. Gambling on Development: Why Some Countries Win and Others Lose by Stefan Dercon explores why some developing countries succeed in achieving economic growth while others fail. Dercon argues that successful development is not just about policies or resources, but about leaders making a "development bargain"—a commitment to prioritize long-term economic growth over short-term political gains.

10.Freakonomics:A book by  Steven D. Levitt and Stephen J. Dubner is a popular economics book that explores hidden incentives and unconventional causes behind everyday behavior and societal trends. Using real-world examples, such as why crime rates dropped in the 1990s and how schoolteachers might cheat on standardized tests, the authors show how economics can be applied to a wide range of surprising topics. The book challenges traditional thinking by revealing the underlying forces that drive human decisions, often through data analysis and economic reasoning. There's also a sequel to this book called - Superfreakonomics 

So what are you waiting for? Let's start this reading journey together from today!!

(All books are available on amazon) 

Comment down below if you have read any of the above books and if you have any more recommendations for the readers.

Traditions and Trends: Exploring Diwali Through the Lens of Behavioral Economics

    This Diwali, I found myself immersed in the warmth of age-old traditions while experiencing the excitement of modern trends. As I lit lamps, hung lanterns, and exchanged gifts, I began reflecting on how these timeless customs intersect with behavioral economics. Below are some of my observations on how modern behaviors during Diwali align with key concepts from behavioral economics.

   One of the most cherished Diwali traditions is buying new clothes. Diwali was often the only time new clothes were purchased in the past, particularly during our parents' childhood. Today, however, brands offer significant discounts and limited-time offers during the festive season. This is where the concept of anchoring comes into play: brands display high original prices to make discounted prices appear even more attractive. As a result, many people experience FOMO (fear of missing out) or loss aversion when faced with these deals, often leading them to purchase more than they actually need. While the tradition of shopping remains important, modern marketing strategies leverage behavioral biases to influence consumer decisions.

    Another interesting observation is the way social media has transformed Diwali. Decorating homes with lights and diyas holds deep spiritual significance, but the modern trend of showcasing these decorations online is a clear example of social proof. People feel compelled to display their Diwali decorations on social media simply because they see others doing the same, reinforcing the idea that one should participate in these trends.

    The traditional use of diyas has also evolved, influenced by government efforts to promote environmentally conscious choices. Nudging has played a role in encouraging the use of eco-friendly or clay-made diyas, as well as in the growing movement to ban firecrackers in favor of quieter, greener celebrations.

   Similarly, the custom of gift-giving during Diwali, originally tied to goodwill and blessings, has become influenced by the modern concept of reciprocity. The expectation to exchange gifts can create pressure to select expensive or extravagant presents, shifting the focus from the original sentiment of generosity to the need for equivalence.

   Diwali remains a celebration of light, tradition, and togetherness with family and friends. Yet, in today’s world, our behaviors are shaped not only by these ancient customs but also by modern psychological influences. As we continue to observe these changes, it becomes clear how deeply behavioral economics impacts even our most cherished celebration.