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When students first ask what economics is all about, I always find it tricky not to give a very long answer. It’s the same when starting to plan those induction lessons in economics: what will help them to understand the base principles of the subject but also develop an awareness of the economist’s mindset? At IB, the Foundations of Economics section of the syllabus sets out what to cover quite nicely. I've shared a few useful resource links below.read more...»
A new study finds that incentives to switch to green vehicles produce big health benefitsread more...»
Why do we get summer holiday blockbusters? They seem to matter more and more to Hollywood studios. According to one professor "the entertainment industry is moving more towards a winner-take-all-market". Yet it wasn't supposed to be like this. A best-selling 2008 book, The Long Tail, argued that the mainstream was going to be "shattered into a zillion different cultural shards," as fickle consumers "scattered to the winds" using the internet to find the books, films and songs that met their unique taste. So what might be going on?read more...»
Many readers at this time of the year will be looking forward to their summer break, perhaps contemplating with a certain amount of envy their colleagues who have already departed. But is leisure good for you? A bit of a no brainer one might think. Indeed, until recently the consensus amongst applied economists was that even enforced leisure, by being made unemployed, seemed to be a good thing.read more...»
Fed up with the closure of a cracked road between Bristol and Bath where repairs were likely to last several months, a farmer has invested £150,000 to build a temporary 365m toll road which saves motorists from having to make a 10 mile detour. The businessman is charging cars £2 and motor cycles £1 for each journey and is offering a £10 offer for regular users who need to use the road on twelve occasions.
This is a lovely example of the difference between a quasi public good and a private good. The toll road has its own booth for collecting the charges and seems to have found favour with local residents. Whether or not sufficient cars make the journey to cover the operating costs remains to be seen. Repair work on the A431 at Kelston are likely to take five months and mean that 1,000 vehicles per day are needed for the project to break even.
The businessman Mike Watts has been using You Tube to provide the background to his decision to build the toll road!read more...»
How much money do you need for an 'adequate' standard of living? This short video from the Joseph Rowntree Foundation considers the levels of income needed to sustain a modest but adequate life-style in the UK in 2014.read more...»
In this blog, Professor Simon Wren-Lewis from Oxford University bemoans the absence of debate over the notion of a maximum wage - with specific reference to the pay of senior executives.read more...»
A report out yesterday from the Health and Social Care Information Centre shows a dramatic fall in the consumption by young people (aged 11 to 15) of our favourite demerit goods – alcohol, cigarettes and drugs. The report suggests that over the last decade regular smoking fell from 9% to 3% of 11- to 15-year-olds. Regular alcohol drinking dropped from 25% to 9%. Drug use has halved from 12% to 6% over this 10 year period.
This, of course, is very good news with regards to the relative health of our youth. As an economics teacher the first question I would ask my students is how this downturn has been achieved? What has happened either within the market or with government intervention to shift consumption in this way? It could be argued that this represents the most successful example of government intervention into markets to change behaviour and can be attributed to regulation, restriction of use and good old education! Information failure does not appear to have had an impact and the political will to succeed has been fairly uniform among the major parties in power.
For me, of course, it also offers the opportunity to do the next in my series of numerical activities in preparation for the arrival of the new specifications in 2015!read more...»
This is a super report from BBC Newsnight on the issue of our throwaway society and the externalities of waste. How can the link between consumption and the discarding of unwanted and broken products be weakened? What role can innovation play - for example the rise of modular phones where parts can be replaced when broken. The fundamental problem is that traditional manufacturing business models are based on mass production and sales. How are increasing world commodity prices affecting this model?read more...»
People do care about fairness, social norms and not just about a cold calculation of marginal cost and marginal benefit. In this excellent short interview on BBC World, Joe Gladstone, Behavioural Scientist at the University of Cambridge, discusses the new form of "Pay What You Want" pricing. This means consumers can decide themselves how much they want to pay for a good or service. The catalyst is that several French hotels are experimenting with a pay what you like approach for their guests.read more...»
The UK economy is doing well. Even so, it is not often that we are placed unequivocally at the top of a world ranking of any kind. But a team of economists led by Nicholas Gruen of Lateral Economics in Melbourne has done just that. In their recent report on the economic potential created by the concept of open data, it turns out that the UK government has been leading the world. On the Open Data Index, we score 100 compared to America’s 93. There is then a big gap to the next group, Australia, Canada and Germany, placed in the high 60s.read more...»
Today’s announcement that the Competition and Markets Authority (CMA) are recommending that the High Street Banks’ provision of current accounts should be investigated for lack of competition may not surprise many. The case study may be valuable when looking at competition in oligopolistic markets and a report can be found from this link. The BBC take on the story can be found from this link.
I also thought it offered a chance to do some calculations! Given my current theme of bringing the new levels of assessment of numeracy and quantitative methods in the 2015 specifications of A level economics ever increasingly to the attention of our teaching community, where better to do some number work than when looking at market share in the banking industry!read more...»
The UK Financial Conduct Authority has announced direct interventions in the market for payday loans - the high cost short term loans market which has expanded rapidly in recent years led by businesses such as Wonga. The decision is the result of a detailed assessment of the industry which had flagged up a number of market failures.read more...»
You will probably be aware that assessment in the new AS and A level in Economics (starting in September 2015) will have a much greater emphasis on numeracy and quantitative methods. 20% of marks will be awarded to answers based upon number work and interpretation of graphs, charts and tables.
Whatever your view on the merits of this change, there is no doubt that it brings one of the biggest challenges to teachers of economics since the year 2000. Tutor2u have put together a team of experienced teachers with different awarding body knowledge to create resources and give advice through a series of CPD events during the 2014-2015 academic year.
If you look through any of the specimen papers from the three main awarding bodies you won’t be surprised to see a huge emphasis on calculation of percentages, use of index numbers and the need to understanding fractions and ratios. You can already imagine the increased use of elasticity calculations and having to work out costs and revenues.
Did you know however (depending on your exam board choice) that your students may have to calculate opportunity cost ratios for comparative advantage, dependency ratios, quantity theory of money, terms of trade index, national income multiplier and marginal propensity to consume? Imagine a marginal social cost/benefit diagram with figures included! Have you ever asked students to convert money in real terms? How do you think they will cope with medians and quartiles?
Our team are working on resources and advice to hand out to teachers for our ‘New to A level Economics – Quantitative Methods’ CPD days. Details about times, dates and locations to follow soon.
So, farewell then England! Yet another failure by our boys at the highest levels of the game. Despite their stupendous salaries, they seem once again to be unable to exhibit the necessary skills, a point which seems to exercise many fans of the game. Tens of thousands, if not millions, of words have been written about the purely footballing aspect already. But one topic which is hiding away under this torrent is the question of incentives.read more...»
Here’s a light-hearted one! What could we have had instead of 2 billion views of Gangnam Style?The Economist ponders that question.read more...»
Here is your starter for ten. What do the Uber app and David Ricardo have in common? Ricardo, I hear you ask. Scarcely known outside academic economics, he ranks equal with Adam Smith and Keynes as the greatest ever British economist. His classic Principles of Political Economy was published in 1816. He made millions of pounds on the stock market, at a time when a million was a vast amount of money.read more...»
The price mechanism should help the economy to allocate resources more efficiently. Scarcity drives up prices, sending a signal to the economy – giving firms an incentive to produce more, and households the motivation to ration their consumption.
Could ‘smart’ electricity meters, linked to dynamic electricity prices, achieve something similar?read more...»
I am really grateful to Bob Denham from Econ Films who has shared with us this newly launched video from the International Growth Centre. It focuses on the competitive challenges facing Pakistan's football manufacturing sector as it loses market share to countries such as China and Indonesia. Footballs in Pakistan are still made mainly by hand, stitching together hexagons and pentagons - a process that leads to a lot of waste and higher unit costs and which then affects the profitability of businesses in what is already a low-margin sector.
Could a team of economists find better ways of cutting the patterns for footballs and then align the incentives of workers and owners? This is a fascinating short video which captures many aspects of the Unit 4 development economics course. Enjoy!read more...»
I have been greatly enjoying Gerd Gigerenzer's new book on Risk Savvy citizens - here he is discussing some of the key themes in his book at a TED talk in Zurich in the autumn of 2013read more...»
This Channel 4 news report looks at va growing protest movement among food industry workers campaigning against zero hours contracts and persistent low pay. Zero-hours contracts do not guarantee a minimum number of hours of employment. It has been estimated that 583,000 people, around 2% of the UK workforce, were employed on zero-hours contracts between October and December 2013. The actual figure is likely to be substantially higher than that.read more...»
Looking for a quick activity to help test revision of some of the key economic terms needed for the up-coming exams? Here's a nice little test of knowledge that can either be used as an in-class activity or for individual students to use to test their own revision.
Called 'The Usual Suspects', students are given one minute to identify the definitions of as many key phrases from the micro and macro curriculum as they can. Each phrase is shown alongside 4 possible definitions (from the wider pool). Students must identify which is the correct answer. If an incorrect answer is given, the student has to click to remove a 'bar' to allow them to continue with the test.
60 key phrases are included with each of the two resources below, so the activity can be run several times. Who can get the highest score in one minute!
Click on this link for the macro version of the activity.
Click on this link for the micro version of the activity.
A document containing the key diagrams and terms for Unit 1 Micro is streamed below.
For more revision support for AS Micro, visit our dedicated AS Micro blog channel. We also have a free AS Micro revision class on our sister site Zondle and a wide collection of revision notes for AS Micro here on the tutor2u website.read more...»
Demand is the quantity of a good or service that consumers are willing and able to buy at a given price in a given time periodread more...»
Here is a streamed presentation covering sone "Thoughts on Improving Your Economics Papers"read more...»
CEP Director, John Van Reenen, explains the reasons why inequality in the UK has been rising. For more films covering aspects of economic policy we recommend you take a look at the Facebook page - Click here! https://www.facebook.com/EconFilmsread more...»
Here is an updated revision presentation covering aspects of market imperfections / market failure in the UK housing industry.
I have also linked to a recent presentation on the economics of rent controls.read more...»
Britain’s crisis of housing affordability is nothing to do with foreign speculators, according to Paul Cheshire writing in the Spring 2014 issue of CentrePiece magazine. Rather, it is a result of decades of misguided planning policies that constrain the supply of land and turn houses into something like gold or artworks. Houses have been converted from places in which to live into people’s most important financial asset.
Income and wealth inequality in the UK are higher than most people think they are and higher than they think they should be. These are among the messages of a new online infographics film:read more...»
Here is a streamed version of a revision presentation on the Crossrail project, a good example to use when teaching transport economics and the main principles and issues governing a cost benefit analysis approach to infrastructure investment appraisal. It is designed for use with AS and A2 economics students.read more...»
Here is an example of a product which has important market failure implications. BBC Newsnight investigates the open sale of legal highs - not approved for human consumption - but which are a growing presence even on mainstream high streets.read more...»
Here are twelve more questions covering markets and market failure - test your understanding with this zondle-powered quiz!read more...»
Here are some revision quizzes for students to check their understanding of market failureread more...»
Being able to construct diagrams are an important part of a good student response to many Economics exams questions. These resources are aimed at testing students ability to remember some key aspects of some of the major diagrams.
Designed by the same team who contribute to our Wow Economics Teacher CPD event, these resources are aimed at giving teachers a quick (10 minute) resource in their revision class or for students looking to test their knowledge. This first set of resources are aimed at AS Micro Economic students.
1. Click here to download a Powerpoint file that displays the 10 diagrams in a scrolling show (with musical accompaniment) and then allows the teacher to go through the answers.
2. Click here to download a document that can be printed off for either students or teachers to test knowledge. The document contains the same 10 diagrams as the Powerpoint but allows anyone to answer the questions in their own time.
Note: A2 Micro and AS & A2 Macro versions of these resources will be posted to the t2u website over the next few days.
A production possibility frontier (PPF) shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employedread more...»
Revision blog on factor rewards / factor incomes together with a revision quiz to check your understandingread more...»
There are only a finite number of workers, machines, acres of land and reserves of oil and other natural resources on the earth. Because most resources are finite, we cannot produce an unlimited number of different goods and services. Indeed by supplying more for an ever-growing and richer population we are in danger of destroying the natural resources of the planet.read more...»
An economic system is a network of organisations used by a society to resolve the basic problem of what, how much, how and for whom to produce.read more...»
In economics, “there is no such thing as a free lunch!” Even if we are not asked to pay money for something, scarce resources are used up in production and there is an opportunity cost involved.read more...»
Here's a quick a fun resource to help students learn the predicted economic growth of the world's major economies. Although a student wouldn't be expected to quote percentage growth statistics, it is always handy to have some figures ready to use as evidence or, at least, an understanding of the world's fastest growing states.
The game is called 'Higher or Lower' and is very simple. You are presented with the name of a country (e.g. China) and the predicted growth in GDP (compared to 2013) for 2014, as calculated by the IMF. You are also presented with the name of another country (e.g. United Kingdom). Your task is to say whether you think that the UK's predicted GDP growth is either higher or lower than that of China. Get the answer correct you earn a point and are presented with a third country and must predict whether their growth is higher or lower than that of the UK. However, get an answer wrong, you are out of the game! The maximum score of 37 (the number of countries in the database). Play the game a few times and really start to get a feel for the statistics for the different countries. The game is randomly set up so you can run it a few times a get a different sequence of countries each time.
Challenge your friends! Alternatively, you can go to the table on slide 3 of the resource and learn all of the figures off-by-heart!
Click on this link to upload the game. It is a Powerpoint-based game so you will need to have Powerpoint on your PC or Mac (versions beyond 2003). When prompted you should 'enable' macros. Sorry, this game does not work on mobile devices or OS like Android.
Here’s a good example of overlaps between market failure, government failure and the problem of asymmetric information contributing to these problems. The UK government spent £500m stockpiling the drug Tamiflu in the hope that it would help prevent serious side-effects from a feared flu epidemic. It turns out the drug would probably be no more helpful than paracetamol. But the bigger scandal is that Roche (who make the drug) broke no law by withholding vital information on how well its drug works (or doesn’t).read more...»
Our normal laws of demand suggest that as prices increase demand decreases whilst firms attempt to supply more (with the opposite happening as prices decrease). The concept of elasticity extends this understanding by asking the question ‘by how much does demand and supply change?’read more...»
Revision notes from our workshop session 1 covering introductory concepts in Economics. Test yourself with some zondle quizzes embedded below!read more...»
Anti-smoking measures, such as taxes and bans, eventually lead people to eat better and lose weight. That is the central conclusion of research by Luca Savorelli, Francesco Manaresi and Davide Dragone, to be presented at the Royal Economic Society’s 2014 annual conference. The three economists overturn the conventional wisdom that kicking the smoking habit is healthy but results in weight gain.
The introduction of a national minimum wage does not lead to job losses. That is the central finding of research by Peter Dolton and
Michael Stops, to be presented at the Royal Economic Society’s 2014 conference.
Here is an example of reverse capital-labour substitution! A hat tip to Dave Sowden for spotting this one! Read through the article and consider the motivations, opportunities and challenges facing Toyota with this change of approach.
I'm sure that introducing the concept of normative statements is something that most Economics' teachers introduce early in the curriculum to show the dangers of expressing opinions without evidence. It's a tricky balancing act that we have to play - as students start to write longer, evaluative pieces we are keen for them to make reasoned arguments that don't sit on the fence but warn them of the dangers of starting to rant.
I thought that the two reports included on the document here might prove an interesting activity. The file contains two reports into a possible plan from the Welsh Assembly to introduce a ban on the smoking of E-cigarettes in public places (akin to the current ban on smoking of 'traditional' cigarettes) in Wales. The articles are interesting in their own right in explaining the reasons behind such a plan and as an example of Government intervention to solve a possible market failure (although one of the articles clearly identifies E Cigarettes as a solution to a market failure itself).
You could also ask students to read through the two articles and answer the following questions:
- Which of the two articles appears to offer more opinion-based evidence than the other?
- Highlight any words or phrases that indicate a value judgement rather than evidence-based reporting.
- Based upon your own reading and picking up on journalistic styles, have a guess which newspaper each article was published in.
The answer to this final question is in the 'read more...' section of this blog.read more...»
The Premier League season draws to an exciting close. It is by no means clear who will be champions, or who will gain the coveted top five European qualifying spots. There could even be a surprise. If Liverpool win, for the first time since 1995 a team from outside Manchester and North London will be crowned. Even then it was Blackburn. In the previous 21 seasons of the Premier League, all the winners have come from either the North West or London. So a Scouse victory would not alter this.read more...»
According to the Guardian, Carpetright and four other flooring and furniture retailers have promised to clean up their pricing after reaching a settlement with the Office of Fair Trading (OFT). It looks like a good example of the potential for market failure arising out of asymmetric information.read more...»