Abstract
Two major methodological approaches can be discerned in the literature on economic decision-making.1 One approach has devoted itself to the development of economic decision-making studies based on cost-benefit techniques,2 capital budgeting3 and valuation of industrial projects,4 especially as the associated problems with this approach emanates from the firm’s balance-sheet and the income statement.5
This chapter was published under the title ‘A Conceptual Foundation of Economic Decision Making in an Islamic Framework’, Humanomics, vol. 1, no. 3, 1985.
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Notes and References
L. E. Bussey, The Economic Analysis of Industrial Projects (Englewood Cliffs, N. J. Prentice-Hall, 1978).
D. Vickers, The Theory of the Firm: Production, Capital and Finance (New York: McGraw-Hill 1968).
W. H. Jean, The Analytical Theory of Finance (New York: Holt, Rinehart & Winston, 1970).
K. J. Arrow, and M. Kurz, Public Investment, the Rate of Return, and Optimal Fiscal Policy (Baltimore, Md: Johns Hopkins University Press. 1970).
W. Sharpe, Portfolio Theory and Capital Markets (New York: McGraw-Hill Inc., 1970).
G. A. Taylor, Managerial and Engineering Economy (New York: Van Nostrand Co., 1975) chap. 1.
V. L. Smith, Investment and Production (Cambridge, Mass.: Harvard University Press, 1966) chap. v.
K. J. Arrow, Social Choice and Individual Values (New York: Wiley & Sons, 1951).
W. J. Baumol, Welfare Economics and the Theory of the State (London: Bell, 1965).
H. B. Chenery, ‘The Interdependence of Investment Decisions’, in Readings in Welfare Economics, ed. K. J. Arrow and T. Scitovsky (Homewood, Ill.: Irwin 1969).
J. Hirshleifer, Investment, Interest and Capital (Englewoods Cliffs, N. J. Prentice-Hall, 1970). chap 9 and 10.
J. M. Henderson, and R. E. Quandt, Microeconomic Theory (New York: McGraw-Hill Inc., 1971) chap. 7.
P. A. Samuelson, Foundations of Economic Analysis (New York: Atheneum, 1970) chap. VII.
M. A. Mannan, Islamic Economics (Lahore, Sh. Muhammad Ashraf, 1975).
M. A. Choudhury, ‘The Rate of Capitalization in Valuation Models in an Islamic Economy’, Fiscal Policy and Resource Allocation in Islam, ed. Z. Ahmed et al. (Jeddah: International Centre for Research in Islamic Economics, King Abdulaziz University, and Institute of Policy Studies, Islamabad, Pakistan, 1983).
W. W. Rostow, The Stages of Economic Growth (New York: Cambridge University Press, 1967).
An interesting pioneering study on the economics of altruism is to be found in David Collard’s, Altruism and Economy: A Study in Non-Selfish Economics (New York and Oxford: Oxford University Press, 1978).
Even in a Western economy the non-profit sector called the ‘third sector’ is found to contribute significantly to aggregate economic activity. See Burton A. Weisbrod’s, The Voluntary Non-Profit Sector: An Economic Analysis (Lexington, Mass., and Toronto: Heath, Lexington Books, 1977).
The usual types of stochastic processes covered are Markov processes. See K. Borch, ‘Decision Rules depending on the Probability of Ruin’, Oxford Economic Papers (Mar 1968); F. Hanssman, ‘Probability of Survival as an Investment Criterion’, Management Science (Sep 1968); J. Steindl, Random Processes and the Growth of Firms (New York: Hafner Publishing Co., 1965) chaps iv and v.
R. Dorfman, P. A. Samuelson, and R. M. Solow, ‘Efficient Programs of Capital Accumulation’, in Linear Programming and Economic Analysis (New York: McGraw-Hill Inc., 1958).
A similar problem, but for a consumer and over intertemporal time horizon is solved by J. M. Henderson, and R. E. Quandt, in their Microeconomic Theory (New York: McGraw-Hill Inc., 1971) chap. 8.
J. L. Riggs, Engineering Economics (McGraw-Hill, 1977) chap. i.
M. A. Choudhury, An Islamic Social Welfare Function (Indianapolis, Ind.: American Trust Publication, Jan 1983) Chapter III.
L. E. Bussey, The Economic Analysis of Industrial Projects (Englewoods Cliffs. N. J. Prentice-Hall 1978) chap. 3.
M. D. Intrilligator, Mathematical Optimization and Economic Theory (Englewoods Cliffs, N. J.: Prentice-Hall, 1971) chap. 10.
Note that due to the predominance of investment activity and of consumer durables, the idea of human capital can be treated in an Islamic framework more from an investment approach. See H. G. Johnson, ‘Towards a Generalized Capital Accumulation Approach to Economic Development’, Residual Factor and Economic Growth, (Paris: OECD 1964).
P. A. Neher, Economic Growth and Development (Wiley & Sons, 1971) chap.
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© 1986 Masudul Alam Choudhury
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Choudhury, M.A. (1986). Microeconomic Decision-making in an Islamic Framework. In: Contributions to Islamic Economic Theory. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-07728-1_8
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