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Money can’t buy happiness - the backward sloping supply curve tells me so

Thursday, February 07, 2013

Like many teachers, I'm firmly of the belief that money is not the root of happiness.  I have to think like that - otherwise how do I argue with my old university friends who went to join the big banks that there’s more to life than big cars and foreign holiday homes ("Come and join us, Jon," they used to say to me, "you can set your own Libor rate and everything" ).  It's important that we remind the 'those-who-can't-do' brigade that teaching is a life-style.  It's a vocation.  A calling.

Well, according to research by US academics Daniel Sacks, Betsey Stevenson and Justin Wolfers, the evidence suggests that wealth is a determining factor in happiness after all.  Apparently, the data shows that there are no upper limits to happiness with regards to money – yes, the increase in happiness slows down but still rises. 

Quick, somebody tell Victoria Beckham before David gives away all of his cash to the Paris children.

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Unit 4 Macro: Fair Trade and Micro Finance - Spurs to Development?

Sunday, January 20, 2013

Mark Austen writes on this essay title: Evaluate the impact that the micro-finance and Fair Trade movements can have in supporting development in some of the world’s poorest countries.

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econoMAX - Who’s for a Living Wage?

Saturday, January 19, 2013

Robert Nutter explains that, over recent years, the fear that the minimum wage would cause increased unemployment has not materialised, although since the start of the current economic crisis employers have expressed some concerns that employment may be affected in low paid jobs. Another concern has been the belief that a national minimum wage is inappropriate for an economy where costs and labour market conditions vary significantly between regions. The national minimum wage may perhaps provide a living wage in North-East England but certainly not in London.

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Unit 4 Macro: Overseas Aid and Economic Development - Benefits and Costs

Tuesday, January 15, 2013

Does aid help or hinder economic growth and development? This is the subject of a fierce debate in the development economics literature

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Unit 4 Macro: GDP and PPP Adjustments

Tuesday, January 08, 2013

Gross domestic product (GDP) is the total value of output in an economy and is used to measure change in economic activity

GDP for different countries is usually measured in a common currency – normally we use the US dollar. But there are two problems in using exchange rates to measure GDP

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Unit 2 Macro: Key Term Glossary

Friday, January 04, 2013

An updated glossary of key terms for AS macro

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econoMAX - Educating Girls Worldwide

Tuesday, January 01, 2013

Liz Veal (Editor of econoMAX) writes: Here in the UK we take for granted our education – my daughters have the same educational opportunities as my son; my sisters and I had the same chances as my brother. Education for all, irrespective of gender, is highly valued in our society and we are well-aware of the private and external benefits of education. In economics, we teach that the market would fail to provide enough education as it would be under-consumed because of the extra benefits to society that private individuals do not appreciate. This information failure is overcome with public sector provision of education, compulsory by law until aged 16.

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Economics of a Living Wage

Wednesday, November 14, 2012

Get Adobe Flash player My AS macroeconomics students this week are researching the topical issue of a living wage  and the possible macroeconomic effects. The title of the assignment is:

"The introduction of a living wage in Britain to supplement a minimum wage will improve the long term performance of the UK economy" Discuss. (20 marks)

I have put together some news articles and videos on this topic using a Pinterest Board. You can find it by clicking here

BBC Newsnight Report on Living Wages - July 2012 - click here 

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Unit 4 Macro: UK to End Financial Aid to India from 2015

Monday, November 12, 2012

Here are some links connected to the news that the United Kingdom is drawing to a close financial aid to India by the year 2015. The focus will shift from aid to trade. Bilateral trade between the countries in 2010 was worth £10 bn. The countries have set a target of £20 bn by 2015. We also link to a new Inside Story programme from Al Jaxzeerah on the continuing debate over the effectiveness of and future of overseas aid in the world economy.

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National Stress Awareness Day

Wednesday, November 07, 2012

You may have been too busy to notice but today has been National Stress Awareness Day.  This comes just a few days after Ed Milliband's speech about the taboo of Mental Health and how it impacts upon people's lives.  If you haven't done so recently, do check out the World Health Organisation 's website which has lots of data on the prevalence of mental health issues around the world with the most startling facts being that 1 in 4 people around the world suffer from mental health issues at some point in their lifetime affecting as many as 450 million people.

And yet, when was the last time you used this as an example of labour market failure or poor economic performance?

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Unit 4 Macro: Micro Finance, Fair Trade and Development

Wednesday, October 31, 2012

Here is a streamed revision presentation on aspects of micro finance and fair trade as part of a course on development economics.

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A Living Wage part 2 - some evidence for student analysis

Monday, October 29, 2012

Jonny Clark has beaten me to it with his blog about today's news about the Living Wage  - there is a rich seam of resources here for issues for study around poverty and inequality. The concept has high level support - hailed by Boris Johnson as it is "....not only morally right, but (it)makes good business sense too." and endorsed by Ed Miliband as " A really important idea". I would like to add a trio of items from the BBC website which could add evidence to student analysis - particularly as Nov 4th-10th is designated Living Wage Week , so this could make a timely topic on the return from half term!

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A Living Wage

You might see a raft of stories out today regarding the latest report from KPMG on the number of people within the UK who would appear to be earning below the identified 'Living Wage' in the UK.  The rate of this living wage is higher than the statutory minimum wage (£7.30 per hour for those outside of London compared to standard £6.19 per hour n.m.w.) and attempts to set a rate at which people can earn enough to pay for the basic cost of living.  The report states that approximately 1 in 5 people in the UK earn below the Living Wage (with the situation varying around the UK) and this is an increase on the number who were below the threshold during the last audit.  The Independent includes the image above and gives a brief (if slightly politicised) summary.  The Living Wage and National Minimum wage are good indicators for students giving responses on relative poverty.  A good exercise might be to ask students why there is a difference between the two standards or use the information and graphics here to determine why there are wage differentials for the jobs outlined above.  If you want to give your students some  extended work you might like to get them to read the document below which attempts to explain and give rationales with regards to the calculation of the Living Wage or get them to have a look at the Living Wage website  which shows what the campaign is trying to achieve.


Doughnut Economics- very tasty!

Thursday, October 18, 2012

Today I went to a fascinating and very thought-provoking lecture from Kate Raworth, a Senior Researcher for Oxfam GB. She introduced the audience to the idea of doughnut economics, and certainly convinced me about the usefulness of this very elegant and accessible development economics theory. I can't wait to share it with my classes when we're discussing sustainable development next year!

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Unit 4 Macro: Economics of Overseas Aid

Sunday, October 14, 2012

I have uploaded onto slide share a revised short classroom presentation on the economics of overseas aid as part of our study of economic development.

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Unit 4 Macro: Video Shorts on Economic Growth and Inequality

Wednesday, October 10, 2012

When teaching economic growth and inequality as part of our A2 macro course, I used these news clips to support the lesson and discussion. 

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The Big Issue of Poverty in the UK

Tuesday, October 02, 2012

This article in the BBC  about the 21st anniversary of the launch of the Big Issue newspaper acts as a timely reminder that we can find our very own examples of absolute as well as relative poverty in the UK.

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Unit 4 Macro: Progress in Meeting Development Goals in India

Sunday, September 30, 2012

Explain and discuss four indicators of progress made by India in achieving her main development goals.

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LSE lecture: Policy Challenges for Growth in Africa and South Asia

Wednesday, September 26, 2012

Yesterday I took some Oundelians to attend the Public Policy lecture at the LSE, entitled Policy Challenges for Growth in Africa and South Asia. It was sponsored by the IGC – the International Growth Centre: - as part of the LSE Growth Week .

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Unit 4 Macro: Development Economics - Focussed Links

Thursday, September 20, 2012

An autumnal hat tip to Mo Tanweer for providing this really useful selection of economic development related links

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Unit 4 Macro: Income and Wealth Inequality

Sunday, September 09, 2012

Globalisation has brought about a sustained rise in the value of global production, trade and wealth and has helped to lift hundreds of millions of people out of extreme poverty. But one of the paradoxes of globalisation is that, despite bringing about a degree of convergence in incomes between countries, the scale of relative poverty in income and wealth within nations has increased in many cases.

Video: Joseph Stiglitz on rising income inequality in the United States (December 2012)

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The Complex Relationship Between GDP and Economic Welfare

Saturday, September 08, 2012

The link between GDP and living standards is one that is increasingly questioned. A raft of books, from Richard Layard’s “Happiness” to Richard Wilkinson and Kate Pickett’s “The Spirit Level” and beyond, argue that there is more to life than the pursuit of economic growth. Indeed there are many other measures of welfare that have been compiled, all of which offer alternative indicators of well-being.

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Unit 1 Micro: Child Poverty 2012 - It Shouldn’t Happen Here

Wednesday, September 05, 2012

In an important new report, Save the Children has highlighted the rising scale and intensity of poverty facing millions of children living in Britain's poorest families. Rising food prices,sharp increases in property rent, fewer employment opportunities and steep hikes in energy bills are just three of the factors that have affected hundreds of thousands of Britain's most vulnerable households. In the United States food stamps are required by millions. In Britain we are seeing a rapid expansion of and demand for food banks  provided by charities to offer assistance to families who live hand-to-mouth for weeks and months on end.

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Can we really measure happiness with a calculator?

Tuesday, August 21, 2012

Earlier this summer, I was fortunate to attend Political economy and the outlook for capitalism, the annual conference of the Association for Heterodox Economics at the University of Paris, La Sorbonne.  The main theme was to review how we best measure quality of life and living standards, with a discussion as to whether economists should rely upon mathematical models and equations to come to judgements about this.  In the conference introduction, Professor Tony Lawson from the University of Cambridge advocated a move away from Neo-Classical economic models into further use of behavioural economics to support such research.

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Unit 4 Macro: World Income Groups - 2012 Classification

Tuesday, August 14, 2012

As of 1 July 2012, the World Bank income classifications by GNI per capita are as follows:

• Low income: $1,025 or less
• Lower middle income: $1,026 to $4,035
• Upper middle income: $4,036 to $12,475
• High income: $12,476 or more

Of the 192 member states of the United Nations, only 52 are currently classified as high-income countries. In other words, 140 countries (73 per cent) are still considered developing economies.

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Unit 4 Macro: Esther Duflo - Development Economist

Tuesday, July 17, 2012

This blog provides an updated Storify on videos featuring development economist Esther Duflo, co-author of the best-selling book Poor Economics. Poor Economics maps out a third way between those experts who believe aid does more harm than good, such as William Easterly and Dambisa Moyo, and those who believe the reverse, like Jeffrey Sachs.

Banerjee and Duflo say the three main reasons aid is ineffective are “ideology, ignorance and inertia”. “Precisely because [the poor] have so little,” they write, “we often find them putting much careful thought into their choices: They have to be sophisticated economists just to survive.”

The two authors are part of a group of economists known as the “randomistas”. They have used randomised control trials across five continents to test the impact of policies aimed at beating poverty, from the provision of free anti-malaria bed-nets to education subsidies.

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Unit 4 Macro: Poverty Reduction Strategies in Brazil

Sunday, July 15, 2012

The Brazilian government has invested heavily in anti-poverty programmes over the last ten to fifteen years and has lauded as an example of a country where a well designed combination of policies can have a significant effect. The percentage of the Brazilian population in extreme poverty has fallen from 23% in 1993 to 8.3% in 2009, and Brazil has achieved its own Millennium Development Goal to cut back extreme poverty in 2015 to ¼ of the level experienced in 1990 – this target was achieved in 2007.

Much remains to be done for despite sustained economic growth, Brazil remains a highly unequal country and sixteen million people continue to experience extreme poverty living below the $1.25 per day UN benchmark. That said Brazil has seen their Gini coefficient fall by 9% between 2011 and 2009.

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Unit 4 Macro M-PESA supporting growth and development

Saturday, July 14, 2012

M-PESA is a mobile payment solution launched in March 2007 and credited with having a significant impact on economic development in Kenya. This blog will carry updated resources on M-PESA and it’s economic and social impact. Click below for resources

Basic Background:

* Launched in March 2007
* Named after the Swahili for money (pesa)
* Operated by Safaricom (40% owned by UK mobile phone business Vodafone)
* Originally a micro-finance project
* Less than 10% of Kenyans have access to financial services - huge un tapped / repressed demand for basic banking
* Nine out of ten adults have access to a mobile phone in Kenya
* By 2009 M-PESA had 6.5 million customers, more recent figure suggests 15.1 million on the system
* Around 20% of Kenyan GDP washes through the M-PESA system
* Safaricom is not allowed to make a profit on the interest and neither is the customer
* Interest earnings go into a charitable M-PESA foundation
* M-PESA has been very successful in Tanzania but has had less impact in Afghanistan and India
* Airtel is the main domestic rival, formerly called Zain and now owned by India’s Bharti Airtel,

M-PESA used in myriad different ways - Kenyans pay school fees, collect their salaries, shop for groceries, buy everything from drinks in beer shacks to airline tickets thanks to mobile money, sending transfers at the push of a few buttons on a mobile telephone. As per capita incomes rise, people will make savings using the system or might be able to take out loans.

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Unit 4 Macro: Rapid Wage Inflation in China

Friday, July 13, 2012

Wage inflation in China

Wages are rising fast in China – many economists believe that China has hit a stage in its development at which demand for labour starts to grow faster than supply, creating labour shortages and pushing up salaries. This is known as a Lewis Turning Point.

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Environmental Economics: Natural Capital

Friday, July 06, 2012

There is growing interest among policy makers about the importance of protecting and enhancing natural capital to support sustainable growth and development. I have put together a selection of recent news video resources on natural capital that might be useful for students and teachers who are new to the idea and who might want to look at it as part of their study of environmental and development economics.

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Unit 4 Macro: How Do We Measure Poverty?

Saturday, June 30, 2012

The World Bank has this short 3 minute video on measuring poverty

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Unit 4 Macro: Inclusive Wealth and Sustainable Development

Sunday, June 24, 2012

To mark the 2012 Rio Summit, the United Nations has started to publish an Inclusive Wealth Index which builds into an evaluation of a country’s wealth the impact of economic growth and development on the stock of a country’s natural capital. This chart from the Economist would be an excellent starting point for discussion of changes in natural wealth for a range of countries.

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Unit 4 Macro: China and Reinventing Innovation

Sunday, June 17, 2012

This 101 East programme from Al Jazeerah shown in June 2012 looks at attempts within China to fast track investment and progress in product innovation as part of the drive to sustain growth and make the leap from middle to higher income living standards. The programme is 25 minutes long. China faces allegations of unfair trade practices and intellectual piracy by some of its major trading partners in the US and Europe

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How do you define poverty?

Thursday, June 14, 2012

This has been a focus of debate today, sparked on the one hand by new data showing that the number of children living in poverty in the UK last year fell by 300,000, or by 2% to 18% of children living below the poverty line. This is based on the government’s Households Below Average Income statistics which define child poverty as children living in homes taking in less than 60% of the median UK income.

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The Economics Teacher Network on Twitter

Sunday, June 10, 2012

A year ago today a group of teachers established an informal twitter network within a matter of seconds by collectively using the hash tag #ecbusteach to connext with each other and share links, ideas and resources. Over the last year for many of use Twitter has become a tremendously useful platform for collaborating, supporting and enriching our passion for Economics. If you would like to connect to like-minded colleagues on Twitter then please post a tweet with the hash tag #ecbusteach and in a few days we will create a new network map teaching colleagues using this link.

Unit 2 Macro: Migration and the UK Economy

Sunday, May 20, 2012

A revision blog on the economic impact of migration on the UK economy

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Unit 2 Macro: Human Development Index (HDI)

The Human Development Index (HDI) forms part of the annual human development report and is a composite measure of economic and social welfare that has three main components. 

At its most basic the HDI focuses on longevity, basic education and minimal income and progress made by countries in improving these three outcomes. 

The inclusion of education and health indicators is a sign of successful government policies in providing access to important merit goods such as health care, sanitation and education. 

Click here for the World Human Development Map

1.Knowledge: First an educational component made up of two statistics – mean years of schooling and expected years of schooling

2.Long and healthy life: Second a life expectancy component is calculated using a minimum value for life expectancy of 25 years and maximum value of 85 years

3.A decent standard of living: The final element is gross national income (GNI) per capita adjusted to purchasing power parity standard (PPP)

“Human development is the expansion of people’s freedom to live long, healthy and creative lives; to advance other goals they have reason to value; and to engage actively in shaping development equitably and sustainably on a shared planet. People are both the beneficiaries and the drivers of human development, as individuals and in groups” Source: HDR Report, November 2010

HDI Indicator Gateway

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Unit 4 Macro: African Human Development Report 2012

Tuesday, May 15, 2012

The African Human Development Report 2012 is a key reference point for students and teachers who are passionate about their development economics. The issue of focus in the report this year is food security.

“Sub-Saharan Africa cannot sustain its present economic resurgence unless it eliminates the hunger that affects nearly a quarter of its people, the United Nations Development Programme (UNDP) argues. More than one in four Africans - close to 218 million people - is undernourished, African governments spend between 5-10% of their budgets on agriculture, well below the 20% average that Asian governments devoted to the sector during the green revolution there.”


African Human Development Report 2012

Guardian: Sub-Saharan Africa can only grow if it solves hunger crisis – UNDP

The Plant Stat African Human Development Map is superb for students to use - it includes the facility to export your own charts for inclusion in assignments and classnotes - click here to access it 

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Under-employment - the dark side of flexible working or just a sign of the recession?

Today, TUC figures showed that the number of men working part time who are looking for full time work has doubled in the last four years from 293,000 to nearly 600,000. Is this a sign of the recession or is it an inevitable result of a move towards more flexible working?

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Unit 1 Micro: Minimum Wages and Living Wages

Wednesday, May 09, 2012

The campaign for a living wage has gained renewed prominence in the last year or so. Students and teachers wanting to know more about the minimum and the living wage debate might find this background blog from Channel 4 news relevant and useful. More here on the living wage from the Citizens UK web page.

Tullow Oil and African Development

Wednesday, April 25, 2012

Yesterday I spent a fascinating evening in the company of Aidan Heavey, Founder and CEO of Tullow Oil plc, Africa’s leading independent oil exploration business and the top performer among FTSE-100 listed businesses on the UK stock exchange. It has approximately 100 production and exploration licenses in 22 countries.

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Unit 4 Macro: Managing the Global Commons - Limits to GDP

Sunday, April 15, 2012

In this excellent 20 minute talk Professor Geoffrey Heal from Columbia University discusses the broad concept of society’s capital including natural capital. He focuses on the limits of GDP as a measure of economic progress in a world that depletes all forms of capital including natural capital. Net Domestic Product (rather than GDP), HDI, HPI and adjusted net savings all get a mention in his talk. Being rich and being sustainable are rarely the same thing.

He defines sustainability as “keeping the total value of a nation’s capital stock in tact” and this definition encompasses all forms of capital (physical, intellectual, social, human, natural). Economic development changes the profile of a nation’s capital stock - for example industrialisation leads to deforestation and a rapid run down of natural capital, replaced often by life-changing physical capital, intellectual capital and human capital.

Living standards have been raised through this substitution process but the fundamental question central to the whole environmental debate is the extent to which the natural stock of capital can continue to be run down at present rates.

The weight of scientific knowledge says that the answer is no - we cannot replace a stable climate by more human and physical capital under a business as usual pathway. Heal argues for strong sustainability - giving bigger emphasis to protecting and maintaining eco-systems.

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Unit 1 Micro: Market Failure in Private Health Care

Sunday, April 08, 2012

The supply of health care in the UK is an important economic, social and political issue. Demand for health care treatments grows year by year as the population expands, ages and as incomes rise. For millions of people private health care is regarded as a necessity even though the NHS provides a vast range of services free at the point of use. Treatments such as cosmetic surgery, hand surgery, laser eye treatment, physiotherapy, weight loss services and hip and knee replacements are offered by a range of private sector providers in addition to state health care facilities.

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Unit 2 Macro: Revision on Real Disposable Income

Monday, April 02, 2012

Real Disposable Income

Real disposable income (RDI) measures income after taxes and benefits, adjusted for the effects of inflation. It is a guide to the quantity of goods and services that people can buy after the tax and benefit system has adjusted original incomes and we have made allowance for the effect of price changes.

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Unit 2 Macro: Gross National Happiness in Bhutan

Saturday, March 31, 2012

On Monday 2nd April 2012 a landmark resolution (number 65) is before the United Nations General Assembly. Bhutan has a population under 800,000, the average income is about $110 per month - low enough for the vast majority of people in Bhutan not to have to pay taxes. The fledgling Bhutanese constitution requires that at least 60% of the country remains under forest cover forever and its stated policy is to be 100% organic in its agricultural production. Major progress has been made in achieving rising per capita incomes, reduced infant mortality, higher life expectancy and a rising percentage of females in education.

Resolution 65 states that “happiness is a fundamental human goal and universal aspiration; that GDP by its nature does not reflect that goal; that unsustainable patterns of production and consumption impede sustainable development; and that more inclusive, equitable and balanced approach is needed to promote sustainability, eradicate poverty and enhance well-being”.

The passing of resolution 65 is a small stepping stone towards a wider recognition that ecological sustainability, equity, and life satisfaction are being given great emphasis in global politics. But whether gross national happiness (GNH) will ever substitue Gross National Income as one of the default measures of economic progress is doubtful.

Bhutan leads the world to a new economy of happiness (Guardian)

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Budget 2012 - analysis with evidence

Thursday, March 22, 2012

As ever, there are loads of sources that students can use to analyse the Budget and to extract pieces of Evidence for the Examples they will need to add depth to their analysis in essays. Those who are attending the current round of revision workshops will recognise this as a key part of ensuring that they write essays which PEEL the answer (each paragraph makes one Point, using Examples with Evidence, offering Evaluation and Linking to the question). As start points, I would suggest these sources which are reasonably free of opinions:
BBC website: Budget 2012 at a glance, Farewell 50p tax rate, and Over 65-s tax-free income freeze
The Guardian Budget 2012: welfare cuts, tax cuts too, but retreat on child benefit and for the visual learners a nice graphic version: Tax and spending plans visualised

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Unit 1 Micro: Inequality - The Rise of Fuel Poverty

Thursday, March 15, 2012

A new report headed up by Professor John Hills from the LSE highlights the growing risks of fuel poverty facing millions of people in the UK and especially those living in lower-income families. At present, the definition of fuel poverty based on whether a household needs to spend more than 10 per cent of its income each year on energy. But this measure has been criticised because it ignores the significant seasonal variation in energy bills and the financial distress that a really large bill can have on people with little or not savings to fall back on.

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Unit 1 Micro - Labour Migration and the Economy

Monday, March 05, 2012

Migration from one country to another has become an increasingly important feature of our globalizing world and it raises many important economic, social and political issues. About 200-million people — about 3% of the world’s population — now live in countries in which they were not born. In the United Kingdom in 2010, the number of international migrants as a percentage of the population rose above 10% for the first time after several years of high rates of net inward migration

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Unit 2 Macro: Rosling on China and the UK Converging

Friday, February 24, 2012

Here is a lovely three minute Newsnight video featuring Hans Rosling on the convergence in income per capita and health outcomes between China and the UK. Great presentation.

Unit 1 Economics: Panorama - Poor America

Friday, February 17, 2012

For those of you who missed this week’s panorama “Poor America” it is well worth 30 minutes of your time.  Students often assume that a high GDP per capita always leads to the good life for all- this programme highlights inequality well.

Video clip: Poor America: ‘Some kids are making ketchup soup’

The Panorama programme on America’s poor is available to view for the next 12 months - click here

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