Lecture 12: Public Policy and Well-being

Question 1

What is public policy?

Answer 1

Means by which government maintains order or addresses the needs of its citizens through actions defined by its constitution and legislature
* reflects the principles on which social laws are based
* the laws that govern the interactions between entities in society
* ex. persons, corporations, government
* social, moral & economic values that tie society together

Question 2

Economic indicators

Answer 2

• generation of economic wealth as a main purpose of public policy
• economic wealth as a primary driving force of society
• importance of collecting information about the pace & structure of economic activities to guide public policy

Question 3

Examples of indicators

Answer 3

GDP per capita
Savings rates
Interest rates
GDP growth Income
Profits & wages
Unemployment
Inflation rates
Currency values
Bankruptcies
Avg. work hours
Terms of trade
Stock prices
Inventories
Price levels Exports & imports Productivity Consumer debt Purchasing power Poverty rates
Tax rates

Question 4

Model of economic behavior and well-being + Problems

Answer 4

Recall the monetary desire-fulfillment theory of well-being
* the model of economic behaviour & well-being assumes that: * main aspect of work is income
* income increases options
* more options increase well-being

Question 5

Problems with model of economic behaviour and well-being

Answer 5

the model of economic behavior & well-being assumes that:
* that well-being is equal to preference realization

Problems:

*Choice: more options does not mean higher well-being
Market: markets do not allow for increasing income to increase options for all
Costs: preferences for work can be due to more than just income

*Although considerable resources used to generate & measure economic indicators, they just present snapshots of economic health of nation > vary overtime & across individuals

*How can monetary value be assigned to the other things we know contribute
to well-being? > ex. religion, spirituality, good social relationships, helping others?

*Cannot account for the shadow economy > black-market goods

*Some goods & services become part of national indicators at the expense of
well-being > ex. increases in GDP not offset by reduction in utility of manufacturing process for well-being

*Affect non-humans as well as future generations

*Cannot distinguish between beneficial products & detrimental ones > increase in # of private prisons may contribute positively to economic indicators, but does this increase reflect a gain in society’s well-being

Question 6

Social indicators of quality of life examples

Answer 6

Violent crime rate
Level of SO2 in the air
Home ownership
Teen birth rate
Labour force participation Per capita water consumption
% afraid to walk home alone after dark
Rates of volunteering Attendance at performing arts
Proportion of children receiving childcare
Participation in organized sports Enrollment in science & engineering
Longevity
Infant mortality Domain satisfaction
Obesity rate
Education Autonomy
Work

Question 7

Taxation policies

Answer 7

taxation that may unevenly affect quality of life of citizens
* ex.flat taxes

SWB approach supports progressive tax structures
* diminishing marginal utility of income
* tax burden differentially impacts the well-being of those at lower vs. higher income levels

Negative impact of pursuit of high income on well-being
* pursuit at expense of other things that contribute positively to well-being
* social comparison

High materialism

Question 8

Policies that promote gainful experience

Answer 8

• income for family and oneself
• variety in duties performed
• a safe working environment
• a purpose derived from providing a product or service
• positiveengagement&involvement
• a sense of performing well & meeting goals
• companionship of & loyalty to coworkers, bosses, and companies
• working environment that respects & appreciates diversity
• happiness & satisfaction