02 August 2021 09:50

Habits and economics

or How to get out of the crisis with minimal losses

During crises, people behave irrationally, unpredictably. How to adjust the influence of psychological, social and emotional factors on economic decisions? How to restore the economy of regions and communities? The answers to these questions are sought by the team of scientists of the State Institution “Institute of Regional Studies named after M.I. Dolishniy of the National Academy of Science of Ukraine”. 

The project supervisor Halyna Vozniak said that the first signs of the economic crisis caused by the pandemic began to appear in all sectors of the economy in the spring of 2020. It was necessary to look for answers to the question: how do investment, financial, managerial decisions that are being made at different levels of government affect the economy of regions, territorial communities, the well-being of residents? Are these decisions rational? Are regulatory restrictions justified?

And most importantly – how to restore the economy of regions and communities? 

Saving or investing 

Regions, communities and individuals needed to respond to the challenges of the crisis and, at the same time, understand that it opens up new opportunities, – explained Halyna Vasylivna.

Scientists have decided that it is time to turn to behavioral economics and to use its rules. 

From crisis to growth 

In Ukraine, the behavioral economy is currently in its infancy, so the project carried out by Lviv scientists is quite pioneering. 

The researchers decided to explore the key factors in ensuring financial stability and to offer scenarios and proposals for overcoming the crisis. In particular, they analyzed the factors of maintaining price stability, ensuring the sustainability of public finances, attracting investment and improving the business climate, reducing the shadow economy, budget security and more. Different models of household behavior in the regions of Ukraine – consumer, investment, savings – were also studied by the scientists. They ascertained that in conditions of uncertainty, private and external investors took a wait-and-see attitude and lost the opportunity to take advantage of new opportunities.

At the first stage of the project, scientists generalized the theoretical basis of the study, because the project is still fundamental, and began to test hypotheses.  They followed the levels of regions, communities, and households. First of all, they substantiated the modern vision of the development of regions and territorial communities, which provides for overcoming the challenges and risks of the crisis and stimulating the economy. Secondly, they examined the budgetary security of the regions and proposed measures to strengthen it. 

Researchers also surveyed 500 respondents and analyzed why people migrate and what they are dissatisfied with. They found that among the causes of migration – the inability to meet the needs of working conditions and economic security, in other words, economic security today comes to the forefront of science. 

Scenarios of the future 

Scientists plan to get both theoretical and applied results, make recommendations for central authorities and local governments. 

Scientists are confident that their recommendations will be of interest to ordinary people as well, so they plan to promote the results of the project, create “live scenarios” and proposals. 

After writing the application, do not forget to send it 

We ask the project supervisor: “What is needed to win the competition?”. 

Halyna Vasylivna advised not to postpone the application for the last day, because she knows the case when a strong team wrote a great project and, sending it in the last minutes of the competition, forgot to click “Submit” out of excitement. 

 Grant support of the fund provides new opportunities to realize oneself in science, to be useful for the community and people, to implement important initiatives, – added Ms. Halyna. – And the most important thing for the victory is to be brave and not to be afraid of difficulties! 

Svitlana GALATA

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