Aggregating Social Preferences Flashcards
Name the ways to control behaviour
Law (command and control)
Economics (use of markets, taxes etc)
Convention (norms, habits, values)
Give an example of an economic control on behaviour in UK
UK charging 5p for a plastic bag
Define institutions
Human devised constraints that structure human interaction
What is institutional economics?
Formal constraints (rules and laws) and informal constraints (behaviours and conventions) and their enforcement characteristics
What are market based solutions necessary?
Environmental harm is not internalised in costs so laws have to regulate it
What is the solution?
Assignment of property rights
When are private markets efficient?
No public goods No monopoly buyers/sellers No transaction costs No common property Perfect Information No externalities
Define transaction costs?
Costs of setting up an agreement; accruing knowledge, negotiation, monitoring/enforcement
What are 1st order legal decisions?
Who has the entitlements (to pollute/hunt/extract)
What are 2nd order legal decisions?
Manner in which those entitlements are protected, traded, sold
Name the types of entitlements
Those protect by property rules - least state involvement
Those protected by liability rules - state intervention
Inalienable entitlements - transfers not permitted
What are the considerations when setting Entitlements?
Economic efficiency (minimise admin costs) Distribution preferences (distribution of wealth, goods etc) Justice considerations (morals)
What is Arrow Impossibility?
Social ordering
Voters paradox demonstrates the difficulty of aggregating social preferences
Media often manipulate the way people vote
What is the effect of 1% increase in immigrant share of labour force?
2-3% increase in productivity
What is the lifetime contribution of an EEA immigrant arriving in 2016?
~£78,000 to UK public finances
