Week 3

Question 1

How do you explain the Hockey Stick of GDP growth?

Answer 1

Technological revolution

capitalism and democracy

externalities

Question 2

How can outcome be unfair? (2)

Answer 2

• becasue the allocation is unfair
  distributive justice
• because the rules of the game are unfair
  procedural justice

Question 3

What is a pareto improvement?

Answer 3

a reallocation of resources that make at least one individual better off without making anyone worse off

Question 4

what is pareto efficiency

Answer 4

achieved when it is impossible to make one individual better off without making at least one other individual worse off

Question 5

Can you give some examples of inequality

Answer 5

income

health status

happiness

freedom

Question 6

What are some of the grounds to object to inequality

Answer 6

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

Question 7

What are people’s perceptions of inequality

Answer 7

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

Question 8

What did John Rawls come up with

Answer 8

the veil of ignorance

Question 9

What is the veil of ignorance and what does/doesnt it tell us

Answer 9

John Rawls

1. fairness applies equally to all people taking part in the interaction
2. imagine a veil of ignorance
3. 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

Question 10

what can economics clarify

Answer 10

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

Question 11

How will a reduction in FF adversly impact some economies

Answer 11

• 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

Question 12

What are some of the S,M,L term measures that can reduce adverse impact of ff reduction?

Answer 12

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

Question 13

What is grandfathering

Answer 13

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

Question 14

What are the three tools in public policies

Answer 14

prohibitions and directives eg. incadescent lights

incentives - ETS and permits are costly

information

Question 15

What are the three tools in public policies and give an example of each

Answer 15

prohibitions and directives eg. incadescent lights

incentives - ETS and permits are costly

information - energy efficiency info on fridges etc.

Question 16

What is some examples of randomized control trials

Answer 16

• 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

Question 17

What is the general sign of success for a policy

Answer 17

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

Question 18

What are some of the challenges associated with evaluating policies

Answer 18

impact of confounding variables

requirement of detailed data

natural experiments - might not have control over everything in the experiment

Question 19

What is the effect of an ETS in France?

Answer 19

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

Question 20

What is the idea of difference in difference methods?

Answer 20

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

Question 21

What are the ways in which an economic outcome can be evaluated

Answer 21

Efficiency
Fairness
conformity to values
freedom
diveristy

Question 22

What is price elasticity of demand?

Answer 22

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.