Public econ lecture1

Lecture Introduction

Course: ECON5530 Public EconomicsLecturer: Dr. Fernanda Leite Lopez de LeonEducation: BA and MA in Economics from Universidade de São Paulo, PhD from Cornell UniversityResearch Focus: Economics of Science, Political Behavior, Media Competition, Labor Economics, and Public Policy Analysis.Academic Role: Employability Director, Senior Lecturer in Applied Microeconomics, known for integrating theoretical economic principles with practical applications in public policy.

Course Overview

Module Aim: To provide a comprehensive introduction to the various theories that analyze the economic role of the state in society and the implications of government regulation.

• Key Focus Areas: Emphasis is placed on microeconomic theory, empirical analysis, and the examination of government policies and their socioeconomic impacts.

• Discussion Topics: Engaging discussions will address the economic rationale for and against government intervention in markets, with particular attention to market failures and public goods.

• Integration: Behavioral economics principles will be interwoven into public policy analysis to examine how psychological factors influence economic decision-making and policy effectiveness.

Module Organization

Structure:

• Lectures: 10 interactive lectures, with one week (Week 30) designated as a break for self-study and review.

• Assessment: Weekly quizzes for formative assessment will be conducted on the Moodle platform to enhance learning retention and understanding of the material.

• Practical Application: Math exercises will be provided weekly to reinforce economic concepts and analytical skills.

• Seminars: 6 seminars designed to foster discussion, critical thinking, and formative assessment of learning.

• Consultation Hours: Available for personalized guidance and support on Mondays from 9:30-10:30 and Thursdays from 16:00-17:00 at Sibson Office 131 or via an online platform for accessibility.

Assessment Details

Essay Assignment:

• Word Count: 1250-word essay due on April 1st (Week 35).

• Weight: The essay will contribute 20% to the final mark.

• Submission: Assignments must be submitted online by noon on the due date to ensure timely feedback.

• Resources: Example essays and assignment guidelines will be available on the Moodle to guide students in their writing process.

Summer Exam:

• The comprehensive exam will account for 80% of the final mark, testing students on the entire course content.

Essay Requirements

• Topic Relevance: Essays must apply concepts from public economics to evaluate a current public issue or policy challenge from January to March 2024.

• Structure:

  • Introduction: Provide a succinct overview of the chosen topic.

  • Application of Economic Theory: Utilize relevant economic theories to analyze the selected issue critically.

  • Conclusion: Present informed opinions and policy recommendations rooted in economic analysis, grounded by theoretical insights.

• Potential Topics: Topics of interest may include, but are not limited to:

  • Minimum price regulations on alcohol

  • Tax implications and policies concerning unhealthy foods

  • Examining the energy crisis and addressing climate change

  • The National Health Service (NHS) and its funding challenges

  • Analysis of immigration laws and their economic impact

  • Comparative studies of the UK education system and its effectiveness.

Recommended Readings

Primary Text: Economics of the Public Sector by Joseph E. Stiglitz, 3rd edition, will serve as the foundational text.

• Additional Readings: Supplementary materials will be outlined in the module, with weekly updates provided in class sessions. Students are encouraged to stay informed about current events related to public health, education policies, and economic developments.

Behavioral Economics Focus

Overview: A detailed examination of behavioral economics will illuminate how individuals often prioritize immediate rewards over long-term planning, impacting decision-making in areas such as healthcare, retirement savings, and pension planning.

Time Management Strategies

Importance of Organization: Strategic planning is essential to avoid last-minute submissions and ensure quality work.

• Stay proactive about upcoming debates, assignment deadlines, and examinations, preparing thoroughly for a productive conclusion to the module.

Module Structure: Part 1

Theory and Tools:

• A comprehensive analysis of Welfare Theorems and market efficiency (Week 24).

• In-depth exploration of market failures as a critical rationale for establishing a robust public sector (Weeks 25-28).

• Emphasis on cost-benefit analysis as a vital tool for effective public policy-making (Week 29).

• Discussion on the challenges faced by the public sector in aggregating preferences and addressing collective action problems (Week 34).

Module Structure: Part 2

Applications and Examples:

• Detailed exploration of principal-agent problems and behavioral perspectives pertinent to public economics (Weeks 31-32).

• Focused discussions on application scenarios in the fields of education and healthcare (Week 33).

Understanding the Public Sector

Comparison Categories:

• Distinct classifications of goods:

  • Goods produced and financed by the private sector.

  • Goods financed by charities or third-sector organizations.

  • Goods exclusively produced and financed by the public sector.

Economic Models Overview

Purpose: Economic models will be employed to ensure coherent arguments and establish a logical basis for public policies.

• Considerations: It is crucial to recognize the limitations and assumptions inherent in these models, especially concerning government involvement in welfare and public goods provision.

Positive vs. Normative Economics

Definitions:

• Positive Economics: Concentrates on describing and understanding the actual economic impacts and outcomes of policies (what is).

• Normative Economics: Involves value-laden judgments and recommendations regarding the most beneficial policies (what should be).

Case Studies of Positive vs. Normative

Example 1:

• Statement: "Poverty should be reduced..."

  • Normative: Advocating for a decrease in malnutrition.

  • Normative: Aspiring to enhance economic growth.

  • Positive: Establishing a correlation between poverty reduction and increased economic growth.

Example 2:

• Farm Program Objective:

  • Positive: Aiming to ensure a reasonable standard of living for farmers.

  • Positive: Contributing to consistent and fair commodity pricing.

  • Normative: Making assertions about the fairness of pricing strategies for both farmers and workers.

Next Steps for Students

• Immediate Actions: Review the comprehensive module outline to make informed decisions regarding course continuation.

• Reading: Begin by reading Chapter 1 of Stiglitz's book to grasp foundational concepts.

• Preparation: Engage with the materials and prepare for the upcoming Week 1 Quiz available on Moodle to ensure early comprehension and success in the course.