Week 3 Flashcards
How do you explain the Hockey Stick of GDP growth?
Technological revolution
capitalism and democracy
externalities
How can outcome be unfair? (2)
- becasue the allocation is unfair
distributive justice - because the rules of the game are unfair
procedural justice
What is a pareto improvement?
a reallocation of resources that make at least one individual better off without making anyone worse off
what is pareto efficiency
achieved when it is impossible to make one individual better off without making at least one other individual worse off
Can you give some examples of inequality
income
health status
happiness
freedom
What are some of the grounds to object to inequality
we dont all start at the some point - have different choices and incomes
people should get second chances
economic inequalities may undermine deomcracy
disngity and respect matter in society
What are people’s perceptions of inequality
tend to think it is more equal than it actually is
the poorer tend to be in favour redistribution - they accept some inequality but want more - might be a self-interest argument
What did John Rawls come up with
the veil of ignorance
What is the veil of ignorance and what does/doesnt it tell us
John Rawls
- fairness applies equally to all people taking part in the interaction
- imagine a veil of ignorance
- from behind the veil of ignorance, we can make a judgement - choice of institutions or rules
this doesn’t tell us WHAT we should choose in terms of equality and justice - substantive judgements
but it gives us a way of thinking about how inequality comes about - procedural judgements
what can economics clarify
how the dimensions of unfairness may be connected
trade-offs between the objective of fairness and efficiency
public policies to address concerns about unfairness
the effects of the introduction of new policies
How will a reduction in FF adversly impact some economies
- job losses in the ff extraction economies
- little opp to retrain and reskill
- energy prices rise for poorer households
- richer countries have more tools at their disposal to invest in renewable energy sources
- policies might leave some people behind - regressive or progressive policies
need to learn from Ostrom and her 8 principles which you totally get right kit
What are some of the S,M,L term measures that can reduce adverse impact of ff reduction?
ST
employment and wage protections
MT
retaining and investment in alternative industries
LT
education and innovation investment - ensure protection and prosperity for people and communities
What is grandfathering
along things from a previous system to slot into a newer one eg. carbon permit
allowed to emit but have to have a permit, slowly reduce the number of permits in line with what you want to achieve
but this is in conflict with polluter pays principle
What are the three tools in public policies
prohibitions and directives eg. incadescent lights
incentives - ETS and permits are costly
information
What are the three tools in public policies and give an example of each
prohibitions and directives eg. incadescent lights
incentives - ETS and permits are costly
information - energy efficiency info on fridges etc.
What is some examples of randomized control trials
- giving firms management practices
- energy consumption feedback - how much are you using compared to your neighbours
-Fuel consumptions feedback to pilots
- giving students in HK incentives to protest- random treatment is the incentive to protest, see if it changed their behaviour to protest - more likely to protest
What is the general sign of success for a policy
if they change the nash equilibrium - the outcome of the policy must be the result of everyone doing the best that they can, driven what everyone else is doing under the change in policy
but can be adverse responses to policy
- economic incentives have crowded out social preferences - went fines or prices have unintended consequences
What are some of the challenges associated with evaluating policies
impact of confounding variables
requirement of detailed data
natural experiments - might not have control over everything in the experiment
What is the effect of an ETS in France?
ETS was implemented in 2005
2008 increased emissions trading system - changed the rule of the game
2008 also a big recession - production went down and so did emissions
there was a discrete trend, the confounding factors
but not everyone is regulated under the ETS - found that there was a 10% reduction in emissions caused by the ETS
What is the idea of difference in difference methods?
Look at one variable and compare it states where that variable is or isn’t and see if it changes another variable
eg. womens ability to vote impacting the amount of govt spending
allows you to understand if there is a causal relationships
What are the ways in which an economic outcome can be evaluated
Efficiency
Fairness
conformity to values
freedom
diveristy
What is price elasticity of demand?
The percentage change in demand that would occur in response to a 1% increase in price. We express this as a positive number. Demand is elastic if this is greater than 1, and inelastic if less than 1.