Chapter 3

Question 1

List the reasons why the state play a role in benefit provision. [1.25]

Answer 1

Redistribution ✓
Market failures ✓
Public sector provision may be more efficient ✓
External pressure to improve social development ✓
Social colture or political promises
Address specific concerns in healthcare

Question 2

List some of the reasons of market failures. [1.25]

Answer 2

• behavioural biases ✓
• externalities and knock-on effects ✓✓
• asymmetric information ✓
• imperfect competition ✓

Question 3

List the different groups across which the state wants to distribute costs. [1]

Answer 3

Across different…
generations ✓
income levels ✓
health status ✓
protects the needs of the disadvantaged segments of the population✓.

Question 4

What are the two main factors that affect the state’s role in the provision of benefits? [0.5]

Answer 4

Societal values and
State constraints. ✓✓

Question 5

Describe the term societal values. [1.25]

Answer 5

Societal values refer to the preferences✓ of a particular society✓, for example, beliefs around caring for the vulnerable in society✓ and emphasis on state involvement and regulation✓, as opposed to personal freedom and choice✓.

Question 6

Describe the term state constraint. [1.75]

Answer 6

State constraints refers to the capacity of the economy✓ to afford state benefits✓, the needs of the population✓, the state’s capacity to perform tasks effectively✓, and how benefit provision affects individuals’ incentives to change behaviour✓. Other factors include moral hazard and inertia.✓✓