The Lorax and market failure.
Dr Suess’ “The Lorax” has been a staple video of mine for a long time when teaching the market failure topic - there are numerous examples of negative externalities of production (and consumption), all set to music. Now a movie length version has been released in the USA and will follow in other markets around the world over the next couple of months.
read more...»Unit 1 Micro: Ten Approaches to Curbing Binge Drinking
Economics is a social science involving the study of human behaviour. we know that binge drinking is an economic and social issue that probably requires a range of policy interventions to address effectively over time. This BBC news magazine article offer ten policy prescriptions - students can easily add to the catalogue - but provides a really good example of how to build good evaluation into an AS micro market failure / government failure question.
The Economics of Climate Change - Stern 5 Years On
Lord Nick Stern tonight gave the first of three lectures on the ethics and economics of climate change as the annual lecture series in honour of Lionel Robbins started at the LSE.
It is over five years since the publication of the Stern Report and much has happened in the intervening period. Stern however was at pains to emphasise that his core message remained undimmed, namely that the costs of inaction are enormous but the costs of early action to cut emissions are manageable. We have seen in recent years rapid technological change much of which is hugely encouraging in taking us closer to de-coupling the relationship between production and consumption and carbon emissions. But more is needed, Stern is arguing in these three lectures for a new industrial revolution, a deep set of changes to production processes and technologies that happens across every sector. The economics and politics of how progress might be made in moving towards a new revolution will be the focus of the second and third lectures.
LECTURE 1 - Tuesday 21 February 2012
What we risk and how we should cast the economics and ethics
LECTURE 2 - Wednesday 22 February 2012
How we can respond and prosper
LECTURE 3 - Thursday 23 February 2012
How we can get there: building national and international action
10 Solutions to Binge Drinking
Last week David Cameron called binge drinking a “scandal” and referred to the negative externalities that are incurred by 3rd parties - in this case the NHS, to the tune of £2.7bn a year. He pledged to introduce drunk tanks whilst there are plans for a minimum price for alcohol.
read more...»Unit 3 Micro: Inside the iPhone and Intellectual Property
This is a remarkable video featuring Geoff McCormick, director of UK design firm The Alloy that looks inside an iPhone at the component parts. Each and every iPhone contains thousands of patented components, ideas, designs and processes. Fantastic when teaching about the economics of intellectual property and the patent wars dominating the courts.
read more...»Unit 1 Economics: Panorama - Poor America
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
read more...»Unit 1 Micro: Public Goods
Public goods provide an example of market failure resulting from missing markets.
The characteristics of pure public goods are the opposite of private goods:
1. Non-excludability: The benefits derived from pure public goods cannot be confined solely to those who have paid for it. Indeed non-payers can enjoy the benefits of consumption at no financial cost – economists call this the ‘free-rider’ problem. With private goods, consumption ultimately depends on the ability to pay
2. Non-rival consumption: Consumption by one consumer does not restrict consumption by other consumers – in other words the marginal cost of supplying a public good to an extra person is zero. If it is supplied to one person, it is available to all.
3. Non-rejectable: The collective supply of a public good for all means that it cannot be rejected by people, a good example is a nuclear defence system or flood defence projects.
There are relatively few examples of pure public goods. Examples include flood control systems, some of the broadcasting services provided by the BBC, public water supplies, street lighting for roads and motorways, lighthouse protection for ships and also national defence services.
read more...»China bans its airlines from paying EU carbon tax
On 1st January this year, the EU introduced an Emissions Trading Scheme (ETS) which levies a charge on flights in EU airspace based on carbon emissions. They estimate that this will add between 2 and 12 euros to flight tickets. Airlines are required to purchase emissions permits, like utilities and heavy industry in the EU, and airlines that do not comply face fines of 100 euros for each tonne of carbon dioxide emitted for which they have not surrendered allowances. In the case of persistent offenders, the EU has the right to ban airlines from its airports.
read more...»Unit 3 Micro: Video Resources on Carbon Taxation
The crucial issue of how best to tackle climate change and make significant progress towards a low-carbon economy is one that gives students tremendous opportunities to hone their analysis and evaluation skills. A few weeks ago the Australian government was successful in getting through the Senate proposals for a new carbon tax and in this blog we link to some excellent video reports on the background to this decision.
read more...»Russia’s monopoly power over gas supplies
It has been a bit chilly in the UK for the last few days, but nothing compared to the temperatures as low as -35 which have hit parts of central and eastern Europe. Of course, they are used to far colder winters than us, and have different ways of dealing with the weather, but reliance on gas supplies from Russia for the majority of their heating fuel leaves countries including Bulgaria, Serbia and Bosnia vulnerable to disruption in that supply.
read more...»Unit 2 Macro: The Economic Disaster of Youth Unemployment
The official figures show that there are now more than one million young people counted as unemployed in the UK although the precise scale of the jobless crisis is difficult to measure accurately. Nonetheless, it represents a fundamental economic, social and political problem and one that policy makers must address.
In this video report from Al Jazeerah, Lawrence Lee visits Leeds to find a well qualified nineteen year old with good qualifications but who cannot afford to go to university and is finding it tough to win a place in the police force - his main ambition.
read more...»Unit 1 Micro: Can the UK Computer Games Industry Grow
Britain is one of the world’s biggest exporters of creative products - from live TV shows and music to books, arts, architecture and films the economy has built up an enviable global reputation for excellence and a growing trade surplus to aid our balance of payments.
Computer games falls squarely into this category but, according to TIGA - the trade association representing the UK’s games industry - unless there is renewed government support, the future of this sector is at risk. TIGA claims that the British games industry is suffering a significant ‘brain drain’ as talented programmers and artists leave the country to work abroad.
read more...»Externalities in Action- TED Talk
I’ve just found this fascinating video from the amazing TED website which is an excellent example to show how ‘the market’ can can be used to solve an external cost
read more...»Video Resources on Rising Inequality
In this blog entry we will be bringing together some short video resources that might be useful when teaching and studying the economics of inequality. Please do add some more resources using the comment box at the bottom and we can add them to the listing.
read more...»Unit 1 Micro: Illegal logging and the human cost
This news report looks at the human cost of an example of the tragedy of the commons - illegal logging in the south Philippines which contributed to tens of deaths from the effects of flash flooding. Ecosystems and economic prospects are damaged at the same time because of failures in environmental management.
read more...»Externalities in song
I was listening to the radio this morning, and ‘Big Yellow Taxi’ was playing. This led me on to an interesting idea for thinking about externalities.
read more...»Externalities Cartoon
KAL, The Economist’s cartoonist, has produced an excellent cartoon in the latest issue perfect for a discussion of a very topical externalities issue in North America. And one that has also been ‘causing tremors’ in the news over here too!
read more...»Unit 2 Macro: Living below the Breadline
This article on the appalling depth of workless households in Liverpool is a reminder of the multiple aspects of relative poverty and economic/social exclusion.
The causes of unemployment are complex - many are structural - but it is hard to draw much if any optimism from reading this article. By some estimates over one third of households in Liverpool have no one in work and second and third generation unemployment is not uncommon. This is a must article for students to read if they want a better awareness of the human cost of non-employment. Read: Below the breadline on Liverpool’s workless estates
read more...»Unit 3 Micro: The Economics of Solar Subsidies
This blog provides a link to a new prezi presentation on the economics of solar subsidies - I have been using it as part of my teaching on aspects of environmental economics for Unit 3 AQA but it might also be useful for unit 1 market failure. I have kept theoretical diagrams out of it and plan to build up relevant analytical concepts such as economies of scale, consumer subsidies, economic and social welfare, government failure et al on a normal whiteboard rather than embed them into the Prezi. I hope it is useful.
Follow the tags at the bottom of the blog entry for more recent articles on solar subsidies such as feed-in-tariffs and other environmental economic resources.
read more...»Petrol, tax, and the downward sloping demand curve.
Nearly every country has a tax on petrol, although the amount varies widely. And given that the landed price of petrol is quite similar (see the graph below), it can be seen what effect the tax has on quantity demanded. The results are very much in line what economic theory would predict and there are also clear implications for countries that want to reduce petrol consumption.
read more...»Unit1 Micro: Processed Meat and Cancer Risk - Information Failure?
I do my level best to avoid the processed meat aisles in the supermarkets - or at least the lower end of what is on offer (I remember once the 5pence sausage that was a guaranteed 2 per cent pork!). But perhaps excessive consumption of processed meats - much of which finds a way into the traditional Full-English might be doing people much more harm than good? Follow this BBC news report for more details.
read more...»Unit 3 Micro: World’s Largest Solar Plant Opens
This autumn the world’s biggest solar plant power station opened in Spain. Comprising 600,000 parabolic mirrors, the Andasol 3 CSP plant is the size of 70 soccer fields and has 88km of piping. The economies of scale are huge and if solar power is going to work and be viable anywhere it is probably here or in North Africa.
read more...»Unit 3 Micro: Prezi on Environmental Economics
This term I am teaching some environmental economics to my A2 groups. The link below provides access to a Prezi on aspects of environmental issues such as the Tragedy of the Commons and the economics of waste and pollution. I will be updating and extending the Prezi as I develop the lessons. I hope that it is useful. I will try to include as many examples as I can on European and Global issues to do with environmental issues - the beauty of a Prezi of course is the flexibility of ordering course materials and the chance to embed lots of vivid You Tube clips and images into the resource.
read more...»Unit 1 Micro: Revision MC Questions on Public and Private Goods
Here is a quick revision multiple choice quiz on public and private goods created using Zondle
read more...»Unit 1 Micro: Revision MC Questions on Negative Externalities
Here is a quick and short revision quiz on negative externalities created usign Zondle
read more...»Unit 1 Micro: Prezi on the Economics of Negative Externalities
This blog provides a link to a constantly updated revision Prezi on negative externalities and market failure - designed for students taking AS Microeconomics Unit 1 and those studying externalities for the IB Diploma. The Prezi contains lots of short news videos on examples of externalities. Click on the link below to access the Prezi.
read more...»Unit 1 Micro: Externalities from Metal Theft
If a criminal steals metal from a building yard or a jewellers the impact is relatively isolated but when metal theft extends to lifitng metal from roofs, railway lines and many other public buildings, thousands are inconvenienced and left to pay the cost - negative externalities are clear.
This news report from Al Jazeera looks at the growing economic and social problem of metal theft in London and a second video report from Channel 4 news looks at the external costs of copper theft from cables on the rail network that delays services and puts lives at risk. What are the best options for dealing with this crime epidemic? The Met Police has set up a specialist metal theft unit as part of their response.
read more...»Unit 1 Micro: Biomass Subsidies and Timber Prices
If you are a fan of laminate flooring, wood panelled walls or neat wood-based fencing for the garden, the chances are that you will be paying higher prices in the years ahead. Despite the Britain offering a temperate climate for a plentiful supply of wood and a well organised system of land registry and plantation management, the UK market price of different types of timber has shot up over the last two years.
read more...»Unit 1 Micro: Video Clips on Negative Production Externalities
This blog entry provides a variety of news video clips illustrating examples of negative externalities from production.
read more...»What is the socially optimal level of concerts in Hyde Park?
It seems those fortunate enough to live next to Hyde Park are increasingly bothered by the negative externalities arising from the concerts put on there. This BBC article is a good illustration of the difficulties involved at arriving at a socially-optimal level of production.
